My question is on how to run the ACP test and the BRF test for 2 401k plans that are related but have different components - 2 related employers each have a safe harbor 401k plan providing the 3% safe harbor non-elective, but one 401k plan (401k plan 2) does not have a discretionary match (and this match formula is a tiered match based on years of service which requires a BRF test). The plans are being permissively aggregated to pass 410(b) coverage for the deferrals and safe harbor 3% non-elective purposes. It appears that the match component would have to be tested on a disaggregated basis because 401k plan 2 does not contain a match feature. So if the 2 plans pass coverage for purposes of the match by excluding the non-benefitting employees in 401k plan 2, then the ACP and BRF test for match would be run on the single plan level in 401k plan 1?

Any help would be appreciated.

Thanks!

Anyone know of plan document software that provides for 401(h) accounts in a money purchase plan?  I'm striking out everyplace I've checked.  Thanks!

One of the plan sponsors we work with recently mentioned that their U.S.-qualified plan has a couple of Puerto Rican employees participating in it. At least one of them has been contributing up to the 402(g) limit. No Form 480.70 or 6042 has ever been filed, although it's not clear to me whether this is a requirement or not. This brings up a few questions:

1. Should Puerto Rican employees participate in a 401(k) plan that does not have dual qualification?
2. If there is anything wrong with this situation, what needs to be done to fix it?

Thank you!

Dog

Hi

This question pertains to a plan that has less than 250,000$ so there was no need to file 5500EZ annually, and just need to file 5500 EZ for the final year of the plan.  If the plan was terminated near the end of 2017, but the assets were distributed in early 2018, I realize that you need to file 5500EZ for the short plan year of 2018.  However, do you also need to file 5500EZ for the year 2017 just because the plan was terminated in 2017?  What year is the final year of the plan in this case?  2017, the year the plan was terminated or 2018, the year assets were distributed?  

Thank you very much.

A governmental 401(a) plan has pick-up contributions only. Employees can elect different percentages to contribute based on the type of pay (e.g., up to 30% on payroll, up to 100% on bonus). If a participant goes over the 415 limit and has excess annual additions, does the plan distribute the excess to the participant?

Thanks.

Suppose I have a one person defined benefit plan. The owner is in the 55-62 age zone. If he wanted to draw his pension but not terminate the plan could he stop working for company x and start working for a newly formed company y? Company y does not enter into any kind of joinder or participation agreement regarding the plan of company x. In other words, is retirement on a controlled group basis or can it be viewed purely from the standpoint of the plan sponsor. I realize  many of the rules we apply are on a controlled group basis but was wondering if this a valid scheme 

We have a client who maintains a safe harbor 401(k) for 2017.   His spouse has a separate business and she wants to maximize a plan.  They do not participate in each other's businesses in any way.  The have a child who turned 21 in July 2017.

Spouses are considered a controlled group for testing purposes when there is a child under age 21.  The spouse has not opened her SEP or solo K yet and so at this time there is no child under 21.  But I will advise them that I assume the rule for 2017 is - a child under age 21 AT ANY TIME of the year unless I find otherwise.  I'm not able to find anything definitive yet.

Comments?  I was hoping to have her open a solo-k plan for 2017 and maximize if not a controlled group.  If deemed to be a controlled group, then I will have her sign a participation agreement with her husband's plan.  But that leads to another questionable item - can she defer $24,000 in this plan as her business is just now adopting his plan effective back to 1-1-2017 as a sole proprietor.  Or would her deferral be subject to ADP testing?

Tom

Client is a private High School with religious affiliation.

They want to include Rabbi/Head of School's parsonage allowance in the determination of the company contribution (5% of pay.)

I find for common law employee this is not taxable income so I don't see any authority to include this in wages.

is there something I am not finding?

Thank you

I've been talking to a woman whose ex-husband "forgot" to mention one or more retirement plans as assets in a divorce settlement. The ex is a physician who is the plan sponsor. She has been researching the plans and talking to ERISA attorneys and other who are knowledgeable about plans.

Apparently there was a money purchase plan that terminated in 2010 and the assets merged into a profit sharing plan. So far as we can tell, the profit sharing plan was still in existence at the time of the divorce.

Two ERISA attorneys have suggested that she involve the IRS or DOL. I am aware of EBSA's call centers that assist plan participants. I don't know of anything similar on the IRS side.

Regardless, I'm at a loss to understand what either agency can do about the fact that the assets of the plan were not disclosed in a divorce settlement. What am I missing?

Two calendar year plans with unrelated employers, Company A and Company B with corresponding 401(k) plans, Plan A and Plan B.

Plan A will be top-heavy for 2018. Plan B will not be top-heavy in 2018.

Suppose Company A sells its stock to Company B on January 1, 2018. All participants in Plan A are merged into Plan B on January 1, 2018.

Thus, Plan A no longer exists on its after January 1, 2018.

Will Plan B have to re-determine its TH status for 2018 by including the 12/31/2017 data from Plan A? Do the Plan A participants get any top-heavy minimums for 2018? Or how is this handled?

Company has gone bankrupt. They sponsor a fully insured Wrap Plan.

Fees for most recent 5500 will not be paid.

Is there any reason to file future 5500's and who assumes responsibility?

Have a Plan that uses Grouping method with two classes A and B.  Each class passes coverage individually.  The allocation method in each class is based on compensation (pro-rata).  Plan is not top heavy.

They are wanting to do a 5% allocation to Group B but not do any allocation to Group A.  As each passes coverage individually and a safe harbor base allocation (pro-rata) is used for Group B I do not see any problem - anyone have different thoughts?

Appreciate in advance.

.

Plan fails ADP testing for 2016 plan year.

Company distributes HCEs' excess contributions in February 2017.

Excess contributions are subject to tax in year of distribution (2017).

Company provides a make whole payment to HCEs to account for the tax owed on the distributed excess contribution.  (Idea being that if the plan had passed ADP testing, the excess contributions would have stayed in the plan and would not have been subject to tax.)  

Payment to the HCEs is made outside of the plan -- structured as a bonus essentially.

Anyone see a problem with this?  I tend to think this is okay...

The plan sponsor failed to file the final/short form 5500 for the plan year ending 5/31/2016. We recommended DFVC, filed the return in November 2017 and paid the $2,000 penalty (this is a large plan) . The DOL's online calculator correctly indicates that the penalty is $2,000 (based on 313 days late).

The client received a letter from the DOL stating that they might have submitted an overpayment of $1,260 and included an ACH form for the plan sponsor to request the refund.  We called the DFVC number on the letter but got voicemail and have yet to receive a call back from them.

Any indications as to what might have triggered the letter? Anyone had any success in addressing this with the DOL? We don't want to overpay the penalty but we are pretty sure the penalty is $2,000 and not $740.

We have an individually-designed safe harbor plan that has 100% vesting for all accounts, including the profit sharing and discretionary match.  Is the plan required to adopt an interim amendment to provide that QNECs/QMACs will be vested when allocated?  I can't imagine they would.  

Let's say a plan allows for In-Plan Roth conversion. A participant has only Pre-Tax Deferrals in his account, but he's not yet 59 1/2. I have 2 questions:

1) Since Deferrals always have a 59 1/2 age restriction for In-Service Distribution, would he be able to convert his account to Roth?

2) If so, what if he decides to withhold a certain amount, let's say 10% on that distribution? Would that be permitted? Seems like it shouldn't be as the amount going to the Roth Conversion would be less than the original amount (the other 10% being the taxes paid).

Thanks,

Has anyone had to file a late Form 8955.  We have a new client and this was not filed for 2016.  It appears that DFVCP- is available and I am researching further.  There is no formal correction program but I saw instructions from the IRS saying file under DFVCP which I suppose means re-filing the 5500 and paying the penalty. 

Does anyone have experience with this?

Thank you,

Tom

Is anyone aware of provisions in the tax bills to allow 2017 conversions to be recharacterized in 2018 despite the elimination of that ability going forward?

Thanks

Michael

An LLC shareholder taxed as a sole prop wants to contribute a deferral but he gets no paycheck. How is that accomplished?