If anyone is willing share, what types of clients do you find to be "ideal" target clients who could benefit from a cross-tested or new comparability plan?  I will be glad to share my thoughts.  I look for smaller businesses that have a lot of income with demographics that are favorable for the testing and with owners who want to sock away some money, take advantage of the tax deduction, and mitigate the costs of benefits to their staff.  

New client with a plan document which is on a 403(b) Adoption Agreement and the plan's name is "403(b) DC Plan" but the plan only permits a nonelective employer contribution: no deferrals.

Is this a 403(b) plan?

(Why do I care?  Because it is not a PPA document.  If it is a 403(b), then I can restate now; if it is not a 403(b) but a DC plan, it is a problem.)

Self employed owner funded a SEP for the first time based on "projected" income.  Later discovered he had a self employment loss.  He took back the SEP contribution, less losses incurred while invested (before his tax return due date).  Is there an excise tax 10% on this reportable on 5330?  Also, is the 1099-R reporting only for employees, and since he has none this is a non-issue?  Anything else to worry about?  Can he take the "loss" on his tax return somehow?

Hey Relius users using the financial interface  - I was looking today and see in my software that American Funds (both Premier and Recordkeeper) show as available under the vendor list.  I use the import function for Premier plans because you can use the Empower (Great West) option since those systems are the same.  I had not noticed the American Funds option before.  Has anyone used them?  If so, how do you generate a file in Recordkeeper that works with the import?

FWIW - I did look on the Relius "help" information and did not find anything there....

An employer allowed an employee to begin deferring in 2017, but they are not eligible until 2018.  The employer does not want to use the EPCRS amendment correction method so that the participant would be eligible for 2017, since they would be required to provide a top heavy minimum allocation.  If the early deferrals plus gain/loss are returned to the participant, what 1099 code should be used? It seems like it should be a 2017 tax event.

Company B is purchasing 100% of the assets of Company A.  All employees of Company A will terminate effective July 15.  Company A's 401(k) Plan is terminating.

Owners of Company A would like to make a discretionary profit sharing contribution to Company A 401(k) Plan for this final plan year.  

Even though the asset sale will occur on 7/15 and all employees/owners will terminate employment effective 7/15, can Company A elect to wait until 12/31 to formally adopt a resolution to terminate the plan, thus avoiding a reduction in the compensation limit, 415 limit, 1,000hrs allocation service requirement for PS, etc...?  As an added benefit, the employer would not have to provide top heavy minimum contributions since the limitation year would be extended to 12/31.

While I cannot find anything suggesting the plan is deemed terminated or must terminate as of the transaction date, it doesn't seem right that an employer could manipulate the staff funding requirements by postponing a formal plan termination.

Have Company A 100% owned by John.  Have Company B owned 100% by Bill.

In May 2018 Company A buys Company B and John is 100% owner and Bill is 0% owner

Each company had their own 401(k) plan in 2017, company B's plan is merged into company A's plan.  

Is Bill:

1)  a key employee in company A's plan based upon prior year ownership?

2) a former key employee in company A's plan?

3) or just a regular empoyee in company A's plan?

thanks

Is it reasonable that the Prefunding Balance can jump from $145M to $982M in one year? Previously the balance ranged between $100M to $200M. (That's about 25% of the Total Plan Assets).

Is this something to worry about? What might cause it?

The data came from my pension annual funding notice. I'm retired now.

https://benefitslink.com/src/ctop/Chamber_v_DOL_5thCir_Denial_of_Motion_to_Intervene_05022018.pdf

Seems that way...  The DOL is not defending it.

Curious to know what others think or know (i.e, because of legal knowledge about the process) regarding the future of this thing...

Participant - Husband is requesting a primary residence loan of $25,000.  Participant submitted paperwork showing the actual costs incident to the acquisition of a principal residence is $65,000.  The paperwork shows both the husband and wife on the purchase agreement.  Primary residence loans permitted in the plan and the loan is in the process of being approved.  Another loan request recently came in from another Participant in the Plan - the Wife for $50,000 with same purchase agreement submitted.  Individually, these amounts would be approved.  However, when added together, there is an extra $10,000 that would not be used for the actual costs of the principal residence.  I understand there are tracing rules on these residential loans.  Is there an issue on approving both loans in this case? I would think so, but if so, how do you avoid this issue from occurring in there were multiple unrelated plans?  Does self-certification help?

Thank you!

For the A-org test, if the purported FSO is an LLC that has elected to be taxed as a corporation and that is not a professional service corporation (or a professional service LLC), would it fail to be an FSO as a "corporation" that is not a professional service corporation since it is being treated as a corporation for tax purposes?  Or would it have to actually be incorporated under state law (and not just treated as a corporation for tax purposes) to be considered a corporation for purposes of this rule?   

Doctor and Lawyer are married and have a child under age 21.  Doctor (our client) has 401(k) plan.  We are inquiring as to the spouse lawyer as to whether he maintains a plan (our first year admin).   Disregarding the child, they would not be considered a controlled group as they meet the 4-part CG exception and they are not in a community property state.  But my read is that the child trumps all this and does cause them to be a controlled group regardless of the fact that they are not in a community property state. 

Comments? Thanks Tom

Employer was given the calculation for employer SHM contribution for 2017.They contributed about 2X as much to participants' individual accounts and want the money returned.

The fundholder told them they could have the excess returned as a "mistake of fact" and send the employer the proper form to be completed.

I would not consider this a "mistake of fact" solely on the basis that the funds have already been allocated to the participants.

I would like to advise them to keep the money in the plan, use the same amount for 2018 SHM that was used for 2017 and allocated the difference as an employer profit sharing contribution.  The total employer contribution (PS and SHM) is within the 25% limitation.

Thoughts??

There is a safe harbor plan that is top heavy.  The plan also has a New Comp and wants to exclude 3 Non-Key employees from receiving a Profit Sharing.  These Non-Key Employees are also HCE that are excluded from receiving the Safe Harbor Non-Elective.  Can those individuals be excluded from receiving the 3% Top Heavy/Minimum Gateway OR do they have to receive a funding.

For many years, Client has sponsored a volume submitter SH plan with an Enhanced Match and discretionary integrated PS formula.  The SH notice was timely prepared and distributed for 2017 by December 1, 2016. Client became unhappy with TPA, fired them for 2017, and hired its Payroll service provider to do admin, effective December 29, 2017.

Payroll Service restated the Plan and changed it to a 3% SH Nonelective formula and changed the PS formula as well, and claims it's for the 2017 plan year.  Client didn't notice the changes in the two formulas until just now., but obviously discontinuing the SH match without Notice and amending the Plan mid year 2017 are clearly unacceptable.

Question is what to do next?  Does the former, volume submitter Safe Harbor match plan with the integrated formula control for 2017, or could there be a viable argument to use the 3% Nonelective plan with the comp to comp PS allocation formula?

For top heavy account balance determination in a DC plan, are unvested amounts that are forfeited included when adding back distributions for participants who terminated during the year? For example, a participant with a total account balance of $10K, of which $9K is vested, terminates during 2017 and takes a distribution during 2017. Would you add back $10K or $9K? EOB gives an example that says, "the former employee's account balance must be included in the top heavy ratio" [my emphasis added]. I can't seem to find anything definitive in the Regs., but logically, it seems like you would add back what would have been the full value of the account (unvested portion included) since that's the amount you would include for someone who wasn't terminated.

I took out a 401K loan in July 2016 for $3,800 to pay my past due mortgage since my employer was having trouble paying payroll.  I agreed in writing to have the money deducted from my payroll for 4 years.  I received a 1099-R from Transamerica this year for 2017.  I questioned Transamerica and they told me that I received the 1099-R because my employer had defaulted on loan.  My employer has been taking money out of my check every week for 401K loan pay $19.92 as well as my 401K $29.76 that Im paying into for my retirement.  My employer has not paid anything on my 401K loan.  I feel that my employer owes me $19.92 for every check since Aug 2016 and they are still taking money out.  The only difference is that I have not received an ADP payroll check in a couple months, just a paper check with no additional information.  I have asked and I am still waiting on an answer.  I have all my checks.  What are your thoughts.

If a recordkeeper’s compensation includes “revenue sharing”, 12b-1 fees, shareholder-service fees, or other compensation from investment funds, a sponsor/fiduciary’s informed approval depends on complete and accurate information about the compensation the recordkeeper receives from the investment funds.

Does anyone use a CPA firm or other means to test the accuracy of a recordkeeper’s reporting or disclosures about compensation from investment funds?

(2) Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);

OK so this participant is using the money towards the purchase of principal residence.

The problem here is, he won't own the principal residence, his girlfriend will.

I have approved things like this before where it is to prevent eviction or foreclosure, where it is easy enough to establish that the person is in fact living somewhere.  But this is a new twist.

One thing I thought of is gift taxes being a possible issue here.  The distribution is about $25,000.

Thoughts? Has this ever come up for anyone else?? 

Hello again Pension mavens! 

Quick question about the Plan Characteristic code 2A for DC Pension Features.

If the Plan has an integrated allocation would you list 2A as a characteristic code on the 5500? The description seems to suggest that you would since the allocation method provides for an additional rate on comp above the TWB threshold.

Thanks for your time!