There is a multiple employer plan that has several adopting employers. One of the adopting employers has been operating under the plan without an adoption agreement since the spring of 2017. Can this be corrected with an amendment because it's still within that plan year or does it need to go through a correction program? 

Also, one of the adopting employers has merged into another adopting employer, does the merged plan need to sign a new participation agreement or should it be terminated? 

Client company adopted a QSEHRA.  Participants will purchase individual HDHP insurance policies and be reimbursed by QSEHRA.  May the company make direct HSA deposits on behalf of employees? (If employees make deposits, the amount is deductible on form 1040 but subject to FICA taxes.)  Is there a way for the company to make the deposits so that the company "does not offer a group health plan to any of its employees" and violate IRC 9831(d)(3)(B)(ii)?

One of my 401(k) client (plan sponsor/employer) is a gov't contractor specialized in staffing information technology and administrative fields.

From this client 2016 plan year employee census, I noticed there has been high employees turnover.

I find it difficult to determine whether this high turnover considered as a partial plan termination for the following reasons:

1. some of those employees separated from service, according to my office sales team,  either

• were  directly hired by the gov't agency sometimes later 
• or their contract ended because the plan sponsor/employer lost the bid
• or voluntarily left the plan sponsor/employer for a better position elsewhere

       2. whether this plan sponsor/employer that is a gov't contractor can be considered as any other staffing   agencies such as Robert Half that may or may not be under the same plan termination rule as regular employer

Let's say a QDRO creates a 50% separate interest - Participant is not yet retired and has not commenced a benefit, and is presently alive - and the QDRO creates a 50% separate interest in his accrued benefit during the period of marriage, for AP.  The QDRO also says that if Participant dies prior to the date the AP commencing her benefit, then the AP must be treated as Qualified Surviving Spouse under the plan, which provides by default for a QPSA equal to what they 100 percent QJSA would have been had the Participant retired the day before he died. So far, pretty standard? But the QDRO goes to state that if QPSA becomes payable to the AP, the extent of her entitlement is "50% of the benefit as set forth in Paragraph 5" which is the paragraph creating the separate interest. 

The actuary finds this confusing. Is she entitled to a QPSA calculated on 100% of participant's accrued benefit, 50%, or 50% of 50% (25%?) 

But, looking at 417, I think this QDRO is trying to do something contrary to the plan (and law). A qualified plan must offer a QPSA and a QPSA's payment must not be less than the amount that she would have received had he retired with a QJSA while alive, correct? 

If the QDRO orders that she's treated as the surviving spouse, and then Participant dies before commencing a benefit, isn't AP's separate interest irrelevant at that point? She's entitled to the QPSA actuarially equivalent to 100% of his accrued benefit, or am I wrong? Because if he had retired before death with a QJSA, that's how much would have been payable as a survivor annuity. 

But wait, the actuary's saying.. He "lost" 50% of his interest in the QDRO, so even if he'd been alive and retired with the 100 percent QJSA, it would be based only only 50% of what he had accrued prior to the QDRO. 

So, then is the AP's QPSA based on the 50% interest that Participant had retained after the QDRO but prior to death? 

Does this make sense? Thank you.

Hypothetically speaking, suppose you had debt owed by the ESOP to the selling shareholder totaling $4 million, with the company as the guarantor. Primarily because the company's payroll can't even come close to supporting a deductible contribution equal to the loan payment, the company made the loan payment directly to the selling shareholder in the prior year and that is continuing into the current year.

An option for solving what will be an annual problem is to have the company assume the ESOP's debt to the selling shareholder and negotiate a new inside loan between the company and the esop that can be supported by using deductible contributions to make the payments. Assume that would amount to $400,000. The term of the old and new esop notes would be the same so the share release would not change. The question/concern is does this restructuring create issues because of the uneven exchange of notes? A deemed dividend to the esop? A forgiveness of debt? Something else?

The parties are well aware that this hypothetical plan should not have been set up the way it was, nevertheless it was so they have to deal with what they have. Another option is a redemption, but for reasons of cost and an ongoing DOL audit the preference is to look at the restructuring first. Thoughts on the restructuring will be appreciated. Thanks.

If a Safe Harbor plan is terminated mid-year, what are the ramifications? It seems that it doesn't matter now if the plan is SH Match or SH Profit Sharing, since the IRS has provided additional guidance.

I've read from a few posters on here that the ADP/ACP testing must be done in this case. However, the IRS guidance seems to indicate that Final Short Plan Year is a valid reason to avoid testing: 

"The safe harbor plan regulations set out several exceptions to the requirement that plan provisions satisfying the rules of §§ 1.401(k)-3 and 1.401(m)-3 be adopted before the first day of the plan year and continue for an entire 12-month plan year. These include exceptions for (i) a short first plan year, (ii) a change in the plan year, (iii) a short final plan year"

So, the question is: does testing (ADP, ACP, and Top Heavy) have to be done for a Safe Harbor plan that terminated mid-year?

Also, does it matter what the reason is for termination? For instance, does it matter if the plan simply terminated or if it terminated due to a merger into another plan?

Thanks.

https://www.ssa.gov/OACT/COLA/autoAdj.html

this was on the soc sec website, taxable wage base = 128,700

What is required proof to obtain a residential loan from 401K?

If 10,000 is borrowed, but only $5,000 is used as a downpayment, is that acceptable?

is proof needed to get the loan or only if you happen to be audited?

Let's say that there is plan that defines a plan year as 1/1 to 12/31. The limitation year is based on the plan year, so if the plan is terminated, the 415 and 401(a)17 limits will be pro-rated. What if the plan terminates of 3/2/2017? How would the limits apply? Specifically, since the plan terminated during the month of March, should be limits be:

1) 270,000 * (3/12) and 54,000 * (3/12) for 401(a)17 and 415, respectively.

or,

2) 270,000 * (61/365) and 54,000 * (61/365) for 401(a)17 and 415, respectively.

Basically, when the pro-rated computation is done, is it based on the number of months or the number of days?

Thanks in advance.

the participant is 72 (already reached RBD).  ex wife does not receive her share of account pursuant to QDRO until 2017. does ex spouse have to pay her share of the 2017 RMD?  she had no account to value as of 12/31/2016 therefore i would say no RMD due from her. anyone agree or disagree?

My staff and I are really tired of keying in all the assets held, especially since we see it is a page in the audit report.  Does anyone just copy the pages from the audit report and include it that way?   Does that work (i.e., not get dinged by the IRS/DOL)?  Thanks.

I am trying to understand employer contribution limits to 403b9 plans and "includible compensation" for a church pastor who is behind on her retirement savings and trying to maximize total contributions. The church is willing to match the pastor's contributions up to IRS limits. 

For illustration, consider an ordained pastor age 58 of a church with a qualifying 403(b)(9) plan.  Her total church compensation is $64000 of which $20,000 is designated by the church session as housing allowance. From her remaining $44000 she elects to contribute the maximum $24,000 to her 403(b)(9) plan through salary reduction, which includes the $6000 catch-up contribution.  She also contributes $2500 for a qualifying Section 125 health care Flexible Spending Account. 

How much can the church employer contribute to her 403(b)(9) plan? 

My understanding is that total contributions from employer and employee is the lessor of  $60,000 or 100% of "includible compensations." But in the example does the $2500 FSA contribution and/or the $6000 catch-up contribution considered  "includible compensation."?  

Thanks for any guidance. 

I have esop through lowe's my last date of employment was 4/29/1998 over 10 years now I have my statements and I will be 59.5 years of age in November and I would like to cash out, currently lowe's do not handle the ESOP plan any more and went with the 401k plan partners of WELLS Fargo Bank do I go to them or is there another direction?

A client has decided to terminate one of their two pension plans.  They are not merging assets (403b and a 401a).  An active employee who is over age 70.5 has been deferring receipt of their RMD.  That employee has elected to rollover their benefit from the terminated plan into the continuing plan.  We are processing as a rollover and will be issuing a 1099.

Question:  Is an RMD required to be distributed from the terminating plan prior to the rollover?

If the participant were to rollover to an IRA I would say the RMD is required, but I cannot find if there are any exceptions since it’s the same sponsor.

Any input is appreciated.

the participant is 72 (already reached RBD).  ex wife does not receive her share of account pursuant to QDRO until 2017. does ex spouse have to pay her share of the 2017 RMD?  she had no account to value as of 12/31/2016 therefore i would say no RMD due from her. anyone agree or disagree?

We have a plan where the owner (more than 5%) started to participate in the plan when she was 72 years old (in 2015). When would be her RBD for the first RMD distribution?

In 2015, she made some contributions, but had no required RMD, because her 12/31/2014 was $0 in the plan.

In 2016, she is required to take an RMD because she has a 12/31/2015 balance. Does her first RMD in the plan have to be processed by 12/31/2016 or 4/1/2017?

This seems like a unique situation because the owner started to contribute to the plan after turning 70 1/2. The regulations state that the RBD for owners is April 1 following the year in which the owner turns 70 1/2. However, would be RBD for this participant (who at the time of the first RBD) is over 70 1/2 be April 1st of the following year or 12/31/2016 of the same year since the participant is over 70 1/2 at the time of the first RMD?

Thank you.

the Sept CPI-U was released today

so we should see

deferral = 18500

comp 275000

415 limit 55000

DB 220,000

no change to Key ee and HCE, they were very close

no change to catchup

(with my 'useless' spreadsheet)

indexed limits.xls

Hi, 

Hoping for some wisdom.

Plan has loan policy saying a participant may only have 2 outstanding loans at a time with the stipulation that one of the loans has to be a primary residence loan.  Sponsor is not involved in loan process having delegated all things loan related to vendor.  In 2016 vendor issued second loans to 3 participants that were not residential loans.     Sponsor would prefer not to ask participants to repay the second loan, though would be open to a refinance of the first loan if possible.   My only other thought is to retroactively amend loan provisions, but I believe this means going through VCP as this situation doesn't meet self-correction by plan amendment.

Thank you in advance for any thoughts.

Can a Qualified Plan invest in foreign ordinaries.

Seems to me that would be an investment not subj to US courts (like ADRs) so that answer would be no but I really don't know.

Any one know the answer?

Thank you

Does having a negative balance in my flex spending account allow my employer to say I am not qualified for COBRA? Thank you for you answer.