A NFP ["BCO"] created a Type 2 supporting organization* ["BCU"] for itself last year.  According to the accountant, BCU files it's own taxes with it's own EIN and there is a "majority overlap" of the boards, so she is telling us that this should be treated as a controlled group of non-profit organizations.

* "A what?"  Right.  The CPA gave me this link: https://www.irs.gov/charities-non-profits/charitable-organizations/supporting-organizations-requirements-and-types

There are 4 members of BCU's board... two of whom also sit on BCO's board.  BCO is responsible for appointing and removing BCU's board members.

No one told us about this until last week, so even though BCU was established almost a year ago, BCU hasn't adopted BCO's 403(b) plan.  Which is fine, actually - no one from BCU was allowed to defer, and there are no HCEs in BCO, so there is no nondiscrimination issue to worry about.

Does anyone have any experience with these "Type 2 supporting organizations" they'd like to share?  It certainly sounds like a controlled group, but I figured it couldn't hurt to be sure... thanks.

I've got a plan that is not top heavy.  In year 2, the owner realized the safe harbor 3% contribution was going to be too much of an expense.  The notice had the usual "we'll warn you at least 30 days out if we suspend the contribution" language in it, and indeed we amended in January 2017 to eliminate the SH, and the employer made the 3% deposits up through mid-February.

So now - I haven't run my ADP test yet, but I'm curious if the plan does fail, would I be able to use the seven weeks of safe harbor contributions in my ADP test?  Since safe harbor contributions are technically qualified, I suppose there's a shot of dumping them into the test.

Anyone try this before? 

(I haven't thought this out completely yet, but I presume I'll have the owner's own 3% amount working against me.)

The safe harbor was the only 2017 contribution beyond the 401(k).  (So I definitely don't want the owner having any QNEC outside the 401(k) test.)

If there's no regulatory hangup to it, I'll then double-check my plan document to make sure there's not further restrictive language.  (So at this point, I'm looking for at least theoretical justification.)

Thanks..

-bri

In five days I will be eligible to withdraw money from my 401(k) without incurring an early distribution penalty. Where does the time go?

Be on the lookout for a 36-year-old red-headed man who started BenefitsLink. Individual was last seen 23 years ago. May have dyed hair and beard gray since last sighting.

Could someone write me a match formula for the following? 

Match formula is as follows:

100% of first 4, 33.34% of next 3.  So if you put in 7% deferrals, you get 5% match

The last 3%.... payroll calcs it 33.34% for 5, 33.34% for 6, 33.34 for 7%... I know, a little different than what you might expect.

I'm proficient in excel, just not that proficient on the if/then statements.

Thanks

I think I remember that, regarding disclosures, it is the Participant's responsibility to keep their address up to date.  

If a lost participant is found, I think I remember that we do not have to send past notices, SAR, 404, etc.  But I cannot remember where I got this idea.

What do you all think?  Do we need to send past notices when we find someone?

We administer a safe harbor 401K  with Roth only deferrals.

W-2, boxes 1 & 5 are the same dollar amount,  employee deferred $5,000.

Wouldn't the deferral (whether Roth or not) be added to box 5 for the calculation of the safe harbor match??

Client is selling his dental practice. 

He said the sale is an asset purchase sale not a practice sale  so would the new owner be able to  continue the current retirement plan.  Or do they have to terminate the current plan and start a new one with the new owner?

I have a client with a company that sponsors a 401(k) plan,  The company also sponsors a Supplemental Retirement Plan for owners and select HCEs and managers.  One of the owners is turning age 70 1/2 and must take an RMD from the qualified plan.  Is there any requirement for RMDs from the SRP?

For Participants that don't respond to Distribution Election notices and since you can either buy annuities or pay to the PBGC, does the under $5,000 Lump Sum option exist so that the $1,000 balances can be rolled to IRAs?

Just hoping.  Thanks

Is the Clergy Housing allowance included for contributions?

Is the Clergy Housing allowance included for HCE determination?

Hello,

Would a surviving spouse be eligible for the same tax exemption as the duty disability retiree? I see all kinds of documentation referring to federal tax exemption to the disability retiree but nothing referring me to how taxation works for the person picking up the pension after the death of the disability retiree. 

I was given a copy of PLR -167262-03 within it "...the benefits received by the surviving spouse  or dependent minor children of a recipient who was receiving service incurred benefits are also excludable from gross income...." 

Thanks!

When it comes to plan terminations, we have always obtained all benefit elections and then instructed the trustee to distribute benefits all at one time.

Is this really required?

For example, we handle a 10 participant non-covered traditional DB plan that terminated November 30. Is there any problem distributing the benefits to one of the two 50% shareholders of the plan sponsor now and all remaining participants 6 months from now?

All participants other than the one remaining 50% shareholder would receive their full benefits (including PVABs determined up to the distribution date). The one remaining shareholder will end up waiving about 10% of his benefit.

Thanks.

I want to make sure my understanding of the QJSA rules for DC plans is accurate.  As I read Rev. Rul. 2012-3, if a plan offers a single life annuity or a QJSA as the default form of distribution in the absence of a participant election, and also offers a lump sum, spousal consent is not required if the participant elects the lump sum prior to the participant's annuity starting date.  Assume the plan has no annuity investments, and thus, e.g., Situation 2 in Rev. Rul. 2012-3 would not apply.    

I got divorced in 2007 - at that time, my ex-wife was awarded 50% of my 401K.  A QDRO was done stating this.  She never took the money out - the Plan never divided the money, I even got a loan from the 401k twice (which I should not have been able to do before they split the money).   The loans have been paid back.  Fast forward to 2017, she is wanting the money and is unfortunately, not using a QDRO lawyer, just a divorce lawyer, so she keeps writing the Order wrong to the Plan Administrators. 

The first time the Plan Administrators told her the Order must clearly specify whether loans are included in the participants account balance prior to any calculations and to submit an amended draft or court-filled QDRO .  The lawyer answered that wrong. 

Second time, they asked for historical statements issued by the previous plan administrators and provide an amended QDRO containing a specified dollar amount to be awarded.  Unfortunately, that was in 2000 and the previous plan says they don't have that info.

Her answer is to sue me - a Motion to Modify Postdivorce Domestic Relations Order.  Anybody have an idea how to respond to this?  Any thoughts would be appreciated.

I was hoping someone could explain how the Most Valuable Allocation Rate is developed when cross testing a cash balance plan.

For the Normal Allocation Rate, I projected the cash balance to retirement age using the interest crediting rate of 2.80% (30-yr treasury rate) and then converted to a life annuity using the Plan’s Actuarial Equivalence (also 2.80% and the 2017 applicable mortality table (post-retirement only). I then converted this benefit accrual to a lump sum using the standard interest and mortality table (8.50% and UP1984) and then discounted it to their current age at 8.50%. This amount is divided by testing compensation to determine the Normal Equivalent Allocation Rate.

Now because this plan pays immediate lumps sums, I am getting conflicting directions on how the most valuable equivalent allocation rate should be determined.

Any help would be appreciated.

Appreciate all insight on merits of in-sourcing claims administration v. using a TPA v. using medical vendor for larger (Fortune 500 size) corporations.

Any insight appreciated.

We have a 403b plan that provides a 7% match but only to employees who contribute at least 5%.  Is the plan tested under the ACP test or the Nondiscrimination test under 401(a)(4)?   I assume the ACP since it is conditioned on the employee contributing. 

Plan at one time offered an annuity product as an investment to all.  After a while, they stopped offering to participants.

At the moment, the owner is the only one in the investment and he is making contributions therein.

Is this a BRF issue in that he's the only one allowed in the investment?  Or is it ok, because at one time it was offered to everyone and is now, for the plan, closed to new investors?

Starting to file first form 5500-ez. Line 6a has information information about value of asset in the begin and end of year. My contribution was 20k in 2016 that I deposited in March 2017 for 2016. This is with fidelity solo plan. How will IRS know I actually deposited 20k considering the value of plan(including mutual funds etc) went up by 40K in the year?