An employee has reached the $270K salary cap but not the $18K deferral limit so deductions are still taking place. The question was asked: Are the deferrals still exempt from the applicable taxes even though the salary limit has been reached? Or does the tax savings stop since the $270k limit has been reached?

I have seen scant mention of plans within the Republican tax bills to discontinue recharacterizations of Roth IRA conversions.

I have made liberal use of these in recent years to lower impending RMD while controlling my taxable income to levels below undesirable breakpoints.

Do they really expect to increase revenue significantly by making this change?

An employer acting in their role as Plan Administrator learns of a pending divorce of a Plan Participant and that a potential Domestic Relations Order  may be completed as part of the settlement.  To date an order has not been received and the Plan Administrator is not even sure if the divorce has been finalized.

The Plan Participant in question is requesting a distribution from the Plan in which they are entitled to receive.    Is the Plan Administrator required to inquire about the potential Order prior to issuing a distribution.  Must the plan administrator "pump the brakes" on the distribution?

Hello All. I have  a few plans that receive a letter from the EBSA notifiying them of the VFCP corrections process since they reported late deposits on their 5500. These plans caught the error early and made the lost earnings deposits(self-corrected). Do you typically respond to this letter? I just called the EBSA and they just said it was to notify the plan only, but don't respond unless  they want to go forth with using VFCP. Just wanted to know what others did?

Thanks.

Plan is as follows: 

401(k) - 1 month of service and monthly entry

Profit Sharing - Age 21 - 1 YOS - Quarterly entry

The plan is top heavy. 

1) Can I use the comp while a participant in the profit sharing portion of the plan for the minimum gateway testing *(both 414(s) and 415) even though people not eligible for the profit sharing are receiving a TH min on the full year comp? 

2) For Relius users:  If the answer to #1 is yes for the comp while a participant, does Relius define the compensation for the gateway testing properly or does it have to be overridden? 

3) If I have a person hired on 11/14/2016, they are not eligible for the profit sharing (until 1/1/2018 so he has no eligible profit sharing compensation for 2017), but they get the TH min, what compensation do I use for the gateway test? 

4) Related to #3 above:  At this point, I am using full year comp as I do not have any comp while a ptp in the profit sharing portion.  FYI - They are in my stat employee group because I am using the plan entry option as I need the younger people to help pass the rate group testing.  (If I used the stat entry method, the younger group would be put in the OEE group and the test would fail.)

New to the board and not an ESOP person...lol

My company has a frozen ESOP plan and since it's been frozen we have been paying the retirees by buying back the company's stock annually and have been retiring the Company stock at that time...since it's an equity transaction within the Company (and not the ESOP), we haven't been taking a tax deduction for this "contribution".  We were told at some point in time that the ESOP couldn't make a "contribution" to the ESOP since it was frozen, so we have been retiring the stock.  

So, my question, is this.   Although our plan is frozen, can our Company still make a contribution of cash to the ESOP to pay the retirees?  Therefore, we would take a tax deduction and the shares the ESOP bought back I assume will be re-allocated (and not retired) among the remaining participants.  

Any thoughts would be greatly appreciated.  Is so, is there some authoritative guidance you can provide that I can reference that would be great...

We are now out of NOL carryforwards and it doesn't make sense that, although frozen, a Company paying retirees can't contribute cash to the ESOP to pay retirees and take a tax deduction....We are generating a sizable taxable gain due to selling assets to pay the retirees..so our past position doesn't make any sense to me...

Thanks so much for your help and expertise.  

We have a client that has a one-man plan that just got through a VCP filing due to loans that did not meet the dollar amount and repayment requirements.  Now, we're going to terminate the plan.  My feeling is that a 5310 should be filed to protect the rollover of what's left, but that $2,300 filing fee is certainly a deterrent.  The plan documents seem to be up to date, but I suppose there could be other problems.  Thought I would ask what others are doing.

We attach the entire audit report when filing large 5500s.  We have a client who's TPA only attached the accountant's opinion (the letter) to the filing.  So I'm wondering what others do. 

p.s.  we attach the Schedule of Assets Held and Reportable Transaction also even if they were included in the audit report. 

Question: if a Plan's AA says that the Plan defines HCEs by TPG in the ADP/ACP testing section would it define HCEs the same way for Gateway and rate group testing? So could they say that for ADP/ACP testing the plan uses TPG to identify HCEs, but for rate group and gateway testing it uses calendar year definition to identify HCEs?

A couple of questions that I probably know the answers to, but thought I run them past other experts:

1) Has anyone seen a QDRO that assigns 100% of the participant's accunt balance (401(k)/ps plan) to the alternate payee? 

2) I am an attorney who limits my practice to drafting QDROs for divorce attorneys. I always request a copy of the Judgment of Divorce or at least the section containing the retirement plan division. I have been retained to draft a QDRO that provides for a different division than the Judgment of Divorce provides for. I told the attorney the Judgment needs to be amended to comply with the QDRO. He refuses, saying amendment is not necessary, and that I should just draft the QDRO as told. I believe that the Judgment must be amended to agree with the QDRO, and told him so. Am I being unreasonable?

Let's say there is a catch-up eligible participant who defers $25,000 instead of the allowed $24,000 for 2017.

Let's say he then takes a distribution for excess deferral during 2017. Let's say the distribution is for $1,050 ($50 being the earnings). How would that be reported on 1099-R?

Would $1,050 be the taxable amount on 1099-R? In this case, wouldn't the participant end up paying taxes on the amount of excess twice? Once when it's distributed (on the 1099-R) and also when he files the taxes and the tax software doesn't let him deduct more than $24,000 limit. Or would a software allow a deduction of more than $24,000 in this case (since there is a corresponding distribution for the excess)?

Thanks,

If you have an existing account on the Message Boards (i.e., you've registered), you have a user name that appears next to any message you post. Your user name might be your real name (which generally is a very good idea for reputation and hence marketing purposes).

But you also might want to set up a second account on the Message Boards so that you can post a message (i.e., start a topic or post a reply to an existing topic) without revealing any information about yourself. Think of a second account as an "anonymous" account.

For example, the "profile" for your existing account might already show your real name, the name of your firm, your interests, and so forth. This is a Good Thing, because it helps people know how to contact you offline, which is a Good Thing because they might be potential customers or clients as a result of having seen the wise and helpful things you've said in your posted messages (each of which shows your user name next to the body of the message).

Perhaps you've also taken the time to enter a "signature block" into your profile, so that each message you've posted has a block beneath it that shows your name, your firm name, your web site, your telephone number, etc. (To edit your profile, select Profile from the drop-down menu that appears when you click the arrow next to your user name, toward the top right corner of any page on the message boards.)

But perhaps, from time to time, you'd like to be able to start a topic or post a reply message under an existing topic without revealing any identifying information. Maybe you ...

* want to talk about something that's controversial ("Most of our clients just aren't providing enough benefits for the rank-and-file employees; should we tell them?")

* want to help without anyone misinterpreting it as advice upon which they can rely and come after you in the event you're wrong ("In your situation, you probably don't need a Required Minimum Distribution this year because... ").

* want to say something without any chance of compromising your customers or clients ("An IRS agent says she can force us to provide her with a list of our clients -- has anybody else had this happen?")

* want to ask or comment on something and, for whatever personal reason, you'd be more comfortable with saying it anonymously

You'll need an email address that's different than the one you're using with your primary account. It might be a different username (or "alias," in tech-speak) at your existing firm, if that's easy for you to set up -- "jack@pensionpowered.com" in addition to your existing "john@pensionpowered.com".

Or, you could set up a free email account with any of the many companies that will provide one for you, such as gmail.com from Google. Here's a list of the places that offer a free email account:

https://www.thebalance.com/best-free-email-accounts-1356641

Once you have such a "secondary" email address, sign out of your primary account if you see your user name displayed toward the top right part of any page on the message boards. (To sign out, use the drop-down arrow next to your user name and select Sign Out. The web page then refreshes itself.)

Click the black "Sign Up" button you'll see toward the top right part of any page on the message boards. Assign a user name that's different from your primary user name. Enter your secondary email address (not the email address used with your primary account).

You'll need to be able to pick up email at your secondary email address at least once, because an automatic email is sent by the message boards software that has a link on which you must click, in order for you to use the secondary account (i.e., confirming your sign-up).

Once you've confirmed your secondary account, you can sign in using the user name you've assigned to it (or by entering the secondary email address; the message board software allows a sign-in using either way). Now, whenever you post a message while signed in with your secondary user name or email address, the secondary user name will appear next to such a message (rather than your primary user name).

Messages you've posted under your primary user name won't change at all. It's as if a completely different person has registered to use the message boards, so there is no effect on your existing messages.

By refraining from entering any identifying information in the profile associated with your new account, you basically have created an anonymous account for yourself.

* Nobody will see your email address (which already is the case for all accounts)

* Nobody will see the IP address from which you're posting a message (which already is the case for all accounts), except the message boards administrators (meaning yours truly, and two other people who work at BenefitsLink, as is already the case for all accounts), who would need to see the IP address only for some kind of temporary diagnostic purpose (e.g. you ask for help signing in)

When you want to return to your primary account, just sign out of the secondary account and then sign in using your primary account's user name or email address.

Questions? Post a reply message in this topic, or email me at davebaker@benefitslink.com

Employer has maintained a traditional 401(k) plan for years but, due to downsizing, would like to terminate the 401(k) by resolution before 12/31/17 and, sometime in 2018, establish a SIMPLE IRA plan.  [My understanding is contributions to a SIMPLE IRA cannot be made in the same calendar year as any 401(k) contributions and a SIMPLE IRA is not considered a 'successor plan']

My questions are:

1) Would all balances have to be distributed by 12/31/2017 to accomplish this?

 a) If the 401(k) trust accounts are not zeroed out until early in 2018, does this mean they would have to wait until 2019 to establish a SIMPLE IRA plan?

b) if all distributions are made by 12/31/17 [final 5500 would then be for 2017], would the effective date of the SIMPLE then have to be no less than 60 days after the SIMPLE IRA notice is disseminated?

My belief is, so long as no contributions to the 401(k) plan are made in 2018 then they may establish a SIMPLE IRA arrangement and commence contributions after a 60 day notice period.  IRC 408(p)(2)(D) also mentions 'or benefits were accrued', but I believe this is in reference to DB plan accruals. 

Thanks to any responses.

401(k) uses Safe Harbor Match & Cross-Tested Profit Sharing

Plan is not Top Heavy

4 EEs who have met 1/21 eligibility all with >1,000 hrs (no term EEs) - 2 HCEs (1 is the Owner)  / 2 NHCEs

Both HCEs & 1 NHCE made 401(k) contributions  (non Owner HCE was excluded from SHM)

HCEs receiving max PS

Is Gateway required for NHCE who did not defer?

We have a 401(a) DC plan that changed the vesting schedule from 100% immediate to a graded schedule only for employees hired on or after 2/1/2014.  The 100% immediate schedule continues to apply for those hired prior to 2/1/2014. Is BRF testing is necessary?  Thanks.

I cannot find a simple straightforward explanation of how someone reports a 60 day rollover on their 1040.

I know it has something to do with 16a and 16b, but is there another form?  Do they simply enter $15,000 on 16a (assuming that is the gross amount of the distribution) and $0 on 16b?  Is it just that easy?

Law firm wants two 401(k) plans, one for equity partners and non-attorney staff, the other for associate attorneys, to avoid top heavy minimums for associates.

They also want to offer a SH match in the partner plan (TH for associates is still an issue as they also expect to do PS contributions).   I've advised that the associate plan will also need SH match as the associate plan needs to aggregate with the partner plan for its CODA to pass coverage since most associates are HCEs and cannot aggregate SH and non-SH CODAs.

So, can the partner plan offer the SH match to all participants, HCEs and NHCEs alike, while the associate plan offers SH match just to NHCE associates should there be any?   Seems like this should work. 

A participant in a traditional DB plan retired and elected a life annuity to begin at age 65. When he is 85, the plan sponsor terminates the plan and lump sums are offered to all participants, including current retirees. The participant elects to rollover his remaining benefit, and the rollover is processed on 6/15, after he's already received 6 life annuity payments during the year. Does an RMD equal to 6 monthly payments need to be paid before the rollover is processed?

Thanks for any responses! 

We have an employee that took a cash distribution early in 2017.  Employee has since been rehired and wants to restore her account as there was enough non vested monies forfeited to warrant the restoration.

I'm all good with the employee sending back the entire amount and us restoring her account.  No real problem there.

My question is really for me as I am curious.   What about the 20% withholding already done on the cash out?  A 1099-R will be sent on the cash out.  How does the employee rectify or "get back" the withholding?  I'd assume at tax filing of her 2017 taxes, but I don't know.  Maybe she doesn't get the taxes "back"... 

Just curious.

The doc says measuring period for "break in service" for Eligibility  is the 12 months starting on the first day of employment.

Example:  No vested account balance

DOH   3-4-2008

DOT  5-15-2009

DO Rehire  7-5-12

DOT  6-20-2015

DO rehire  11-29-17

What date do I use to start my measuring period for counting "breaks in service"

?