This is a situation most envy. I cannot find authority limiting the benefits to each of these. 

Scenario: Individual over 50 yrs old was a participant in a 401(k) plan for part of the year and put $22,500 into Employer 1's 401(k) plan. Individual then changes jobs and now qualifies to contribute to a 457 plan with Employer 2. Individual plans on maxing out contribution to Employer 2's 457 plan with $24,500 for 2018. Individual has a side job of rehabbing houses via a single member LLC (with no employees) and earned $300,000 there. Individual want to max out and contribute $55,000.  

It appears that Individual can contribute the $22,500 to the 401(k), the $24,500 to the 457, and the full $55,000 to the SEP for a total deferral to the three plans of $102,000. I have never heard of circumstances similar to this and want to see if anyone has more insight into a provision limiting the deferrals for the three plans that I am missing. I have done extensive research and cannot find anything. This appears to be permissible. Thanks.

I thought it was common knowledge that 2% shareholders cannot enroll in a 125 plan?  I read that if a 2% shareholder is enrolled, it can cause issues for the plan.  Does anyone have any practical experience how this is handled?  How would this have happened?

Have a welfare benefit plan funded from general assets of sponsor over 100 employees

Taking the position no audit required - so as far as I can tell all I file are the 3 pages of the 5500 -

no schedule H or schedule C?

thanks

If any employee has meet the eligible requirement(21/ 1 year/semi) and is now considered eligible, to date they have not contributed.  This employee is now no longer working full time and is  becoming a part time employee.  Can we now exclude them.  The documents says we can exclude"part-time, temporary or seasonal employees, i.e., employees whose regularly scheduled service is less than 1,000 Hours of Service during each 12-month eligibility computation period"   I'm leaning towards once they are in you can not exclude someone

Thanks

A husband and wife each operate their own consulting business. There are no other employees in either company. The husband has maintained a solo 401(k) for some time and the wife would now like to join. Do controlled group rules enable her to participate in the solo plan or would she need to be an employee of the husband's business?

A profit sharing plan issues loans in 2017 to two participants, both of which exceeded the maximum amount.  We just found out when we received the year-end data.  The plan has an in-service distribution provision at age 60.  For one participant, who is younger than age 60, the loan taken was for $50,000 but the maximum amount was $15,000.  The other participant, who is older than age 60, took a $13,000 loan but the maximum amount was $10,000.  The client does not want to file a VCP application.

For the younger participant, we advised that the 2017 Form 1099R be issued now for $35,000.  This is a deemed distribution.  The participant will continue to make the scheduled installment repayments until he repays the $15,000 plus interest.  At that point, if he defaults on the remaining $35,000 there will be no tax consequences since it's being reported now.  Obviously, there can't be any withholding now since it's after the fact but according to the EOB if the deemed distribution occurs at the time the loan is actually made, the plan is required to withhold against the loan proceeds.  Any real problem here?

For the older participant, we think there are two options.  The $3,000 excess can be treated as a deemed distribution, and we would follow the same procedure as above.  Alternatively, the excess can be treated as an actual in-service distribution.  In that case, the plan would modify the loan agreement and only carry a loan receivable of $10,000.  But again there would be the issue of missed withholding.  Any opinion on whether one of these options is preferable to the other?

Thanks.

What's the latest on the potential requirement for small medical plans to be required to file 5500 starting with plan year 2019?

Small client has closed his practice and was never enrolled in EFTPS.  2 participants have elected Lump Sum (total taxes round $2,000).  Normally taxes have been paid with the 945 form.  The accountant is questioning why we have to wait until January 2019 to submit the  check and 945 voucher.  Can the 945 be filed early??

Participant in a 401(k) Plan takes a participant loan and then goes on military leave.  The participant subsequently has a termination of employment from the employer who sponsors the 401(k) plan from which the participant loan was taken.  Per 414(u)(4), the plan may suspend the obligation to repay the loan during which the employee is performing service in the uniformed services.  Loan policy does not permit terminated participants to make ACH payments, allows participants to suspend payments during military leave, and upon termination loan is due payable unless part of eligible rollover distribution.

Question - What happens if this participant terminates employment while on military LOA with an outstanding loan?

A. Participant may still suspend the obligation to repay for the period of the military service.  Once military service ends, the participant would then fall under the normal rules for a terminated participant with an outstanding loan.  (FYI loan policy states upon termination loan is due payable unless part of an eligible rollover to another plan), OR

B. Participant is treated as a terminated employee and by the terms of the plan, the loan would be due payable unless part of an eligible rollover to another plan.

“(b) Military service. In accordance with section 414(u)(4), if a plan suspends the obligation to repay a loan made to an employee from the plan for any part of a period during which the employee is performing service in the uniformed services (as defined in 38 U.S.C. chapter 43), whether or not qualified military service, such suspension shall not be taken into account for purposes of section 72(p) or this section. Thus, if a plan suspends loan repayments for any part of a period during which the employee is performing military service described in the preceding sentence, such suspension shall not cause the loan to be deemed distributed even if the suspension exceeds one year and even if the term of the loan is extended. However, the loan will not satisfy the repayment term requirement of section 72(p)(2)(B) and the level amortization requirement of section 72(p)(2)(C) unless loan repayments resume upon the completion of such period of military service and the loan is repaid thereafter by amortization in substantially level installments over a period that ends not later than the latest permissible term of the loan.” 

For a stand alone vision plan... do they require COBRA notices to be sent?

Let's assume no other benefits are being offered.  Just vision insurance, that's it.

I am brooding over the interaction between the exemption from top heavy for safe harbor plans and a mid-year suspension of safe harbor contributions.   I am thinking about three issues.  For all three issues below, assume the plan would be top heavy but for the safe harbor exemption.  

Issue 1. 

The first is an old issue, but in re-reading Revenue Ruling 2004-13, I am having doubts now about Situation 4 in that ruling. 

Under Situation 4, the sponsor has a safe harbor match, but employees who at hire are eligible to make elective contributions have a 1 year of service requirement for the safe harbor match.

The IRS responds as follows: 

In Situation 4, under the plan, newly hired nonhighly compensated employees who make elective contributions will not be eligible to receive any matching contributions until they have completed 1 year of service. Since this will result in a greater rate of matching contributions for highly compensated employees than for nonhighly compensated employees, the matching contributions do not satisfy the requirements of § 401(k)(12) (or  § 401(m)(11)). Further, since all eligible nonhighly compensated employees under the plan do not receive safe harbor nonelective contributions or safe harbor matching contributions, the matching contributions made under the plan do not satisfy the requirements of § 401(k)(12). However, certain plans that provide for early participation may satisfy the requirements of § 401(k)(12) with respect to the portion of the plan that covers employees who have completed the minimum age and service requirements of § 410(a)(1), while satisfying the ADP test of § 401(k)(3)(A)(ii) for the eligible employees who have not completed the minimum age and service requirements. Unless a plan (within the meaning of § 414(l)) meets the requirements of § 416(g)(4)(H), no portion of the plan will satisfy § 416(g)(4)(H). (See Notice 2000-3, 2000-1 C.B. 413, Q&A-10.)

I added the bold. 

Is this saying everyone in the plan has to receive the top heavy contribution (minus any match), or just the otherwise excludible employees?  I thought for both 414(l) and top heavy purposes, the otherwise excludible employees were treated as one plan with the other participants.  But I also thought you only had to give the top heavy in this situation to otherwise excludible employees.  This is what has created my doubt.

Issue 2.  

What happens if the employer only makes safe harbor contributions during a year, but in the middle of that year suspends the SH contribution?  Up until the date of the suspension, the only contributions that were made were safe harbor contributions.  After the suspension, the plan is required to fall back on the ADP/ACP test.  Is it reasonable to take the position that the plan only received SH contributions for the year, and thus under 2004-13 the plan is still exempt from top heavy?  

I think the answer is no.  I think once the plan is amended mid-year to suspend the SH contribution, the contributions that were previously made are no longer considered SH contributions for purposes of the safe harbor exemption from top heavy status.  I could see, however, that one could argue that during the year the plan only received safe harbor contributions, and nothing else, and thus under 2004-13 the safe harbor exemption still applies.  I could also see an argument that the top heavy contribution is only required for compensation paid for the portion of the year the plan is no longer safe harbor.  Nonetheless, I think the best answer is that once the plan is amended mid-year to suspend the safe harbor, the plan is top heavy for the entire year.  

Issue 3.

We know that a plan that does not give the SH contribution to HCEs nonetheless qualifies as a SH plan (provided all other requirements are met).  In an ASPPA Q&A, the IRS said the HCEs who do not receive the safe harbor and who are not key employees are not eligible for the top heavy contribution.

What if the plan is amended mid-year to suspend the safe harbor contributions only for HCEs?  Would the analysis here be different from the analysis in Issue 2?  

I think the answer here is yes, meaning the plan remains a safe harbor plan for purposes of the top heavy exemption even if the plan is amended mid-year to suspend the safe harbor contributions only for HCEs.  If the plan can give the HCEs nothing for the entire year and still be safe harbor, it should be able to give the HCEs a safe harbor contribution for part of the year and still be safe harbor.  

I have a potential client what's to start a 401k plan. He is open to giving the employees the Safe Harbor 3% (discretionary) but is not sure he will be able to/want do it each year. He plans to only give SH 3% when he decides to participate since the plan will be Top-Heavy. The company is a partnership so I suggested he not contribute anything (including 401k) until after year end when he knows the income of the partnership. The obvious issue is he needs to decide if he will participate, thereby electing safe harbor for the year on Dec. 1, but really won't know his final income until March or so. He was adamant that he really wont be able to decide until after year end.

Is it possible to have a plan year from 5/1/18 - 4/30/19 (giving him until 4/1/19 to elect safe harbor), with a limitation year of 1/1/18 - 12/31/18. This way the employees will still be based on W-2 and not some 2018 wages and some 2019 wages. I'm also not sure how deductions would work. Would he have to Pro-rate his deduction 5/12 and 7/12?

Are there other solutions that I'm not thinking of?

In preparing a health and welfare Form 5500, I only include a Stop Loss Schedule A if the plan is under a trust since the stop loss benefit supports the Plan. For a Plan not under a trust I do not include a Schedule A since Stop loss is an employer benefit, not an employee benefit.

However, would a Stop Loss Schedule A be included in a 5500 that is not under a Trust, with the funding from employee contributions.  The Stop loss benefit is included in the Plan Sponsor's Wrap Plan Document and SPD. I have never heard of this scenario in the past. I am inclined to include in the Form 5500; however I am not confident.

Thank you for your help!

Had a first time request today - an intended future client of a one-time compliance project has asked if we can accept a Purchase Order from them in lieu of our signed service agreement. Not even sure how to react...

If an employer fails to deposit a top heavy minimum contribution for a prior year, should form 5330 be filed and an excise tax paid.  If so, it appears it would be shown as a prohibited transaction similar to late deposit of employee deferrals rather than a late required employer contribution under minimum funding standards.

A client maintains an employee stock option plan which reads in relevant part as follows: 

Regular Termination.  If an Optionee ceases to be employed by the Corporation, or by a corporation (or a parent or subsidiary of any such corporation) issuing or assuming a stock option in a transaction to which Section 424(a) of the Code applies, for any reason other than death, disability or termination of his employment by the Corporation other than for Cause, his option shall immediately terminate; provided, however, that the Committee may, in its discretion, allow such option to be exercised (to the extent otherwise exercisable on the date of termination of employment) at any time within three months after the date of termination of employment, unless the option terminates by its original terms (or the Plan otherwise provides for earlier termination) prior to such exercise. 

NOTE: the error above.  It should read "other than death, disability or termination for Cause" (not "other than for Cause").  Essentially the language excepts regular termination, but is meant to address regular termination so it doesn't say what happens on regular termination.

Company wants to amend the plan to correct this typo but afraid employee will take position his option doesn't terminate and doesn't have to exercise within 3 months.  Agreement with employee says option is a non-statutory stock option, not an ISO so presumably even if Company allows him to exercise, he may not want to for he would have to pay tax on the spread.

Suggestions on how to handle? Can the company allow this employee to hold on to his options post-termination?  Per terms of the Plan, option terminates upon the earlier of 10 yrs from grant date or the last date for exercising the option following termination of employment (presumably not addressed by the paragraph above due to the typo).  

I'm pretty new on here. It's a great resource, but I do have a question.  Does everyone work alone?  I work for a TPA and we ask our manager or other plan administrators when we have a question. It seems like no one else does that from all the questions I see.

Employer fell on hard times and suspended their match but informally promised participants that when their financial situation improved they would make up the missed matching contributions.

Employer is now ready to make up the missed matching contributions and several participants are no longer employed.

Is there a 415 problem with making contributions for participants who have no current compensation so long as the employer designates the contributions as relating to prior years when compensation would fully support the contributions?

This is a tax exempt employer so there's no 404 deduction issue.

With the DB prototypes finally getting approval letters - what dates should be used for effective date of restatement? 

2 scenarios -  1) Employee Doctor who is an officer of the medical practice in which he works wants to use IRA funds to purchase closely held REIT (owned by other doctors in the practice.  Practice would rent office space from the REIT.

2) is a 2% owner of the medical practice wants to do the same as the non-owner.  

Are these Prohibited Transactions? 

I think they are conflict of interest PT's as they clearly benefit from the transactions as officer and owner of the medical practice. I do not believe the practice is a disqualified person under 4975.