Quasi-governmental entity/employer affiliated with a City enrolls its employees in a State retirement plan.

10 years later State Retirement System determines employer is not eligible for State plan and refunds all contributions to employer entity.

Employer wants to propose a correction to IRS that would retain tax deferred "qualification" but facts don't seem to fit a VCP submission.

Where do you go (who you gonna call) for such a unique situation?

Please don't say "good ERISA attorney" without providing a specific name because I already meet the ERISA attorney part.

Thanks

I have always used 12/31 to terminate a calendar year full year safe harbor plan.  Some of my co-workers use 1/1 of the following plan year end to terminate the plan.  I'm curious as to what others are using.  

I am a caregiver for a 55-year-old woman disabled by mental illness since 2003. Her husband divorced her as soon as she became disabled, and she received alimony until he retired six months ago.  She was independent for the first several years I was with her, but I lived in her home as a safety measure because she was heavily medicated at night to keep her from having hallucinations that caused her to sleepwalk and even drive. She handled her own finances and I knew little except that even with disability and alimony she struggled financially due to the cost of her medications and paying for my room and board, which was the payment for my help.  After an accident in 2013 caused injuries to her brain and internal organs she became more dependent on me, and at the loss of driving privileges she became a recluse.  As soon as she receives her portion of her husband's retirement plan through a QDRO, I will be helping her find a residential care facility, as I am nearly 70 years old and ready to go. 

I apologize for the background, but it is necessary to my question.  She has recently told me in a rare lucid moment that she has not paid income taxes in eight years.  I did not mention to her that the IRS could levy her QDRO before she even receives it. Am I right?  I think she slipped under the radar since she has not received even a letter from them (I pick up our mail),  Her distribution will be $100k so they might take notice now, I'm afraid.  Thank you.

very little out there on this other than a couple of articles. anyone know why its not even on the IRS website yet?

Employer has a SIMPLE IRA and is being acquired. I know the rule is the employer must give notice to employees they plan to discontinue contributions by November 2. However for participants to roll over to any other IRA or plan they must have been in the SIMPLE for 2 years. Do you keep the SIMPLE plan open for 2 years even though the employer is going to sell its assets and presumably be dissolved so everyone can rollover to a non simple plan? Can you discontinue without terminating the plan?  

i understand the transition rules and i am guessing part of the reason is because of the 2 year rollover restriction. 

I have a participant that passed away last year.    His spouse passed away a few years earlier.    His wishes are for his full account balance to be divided up between charities.     What is the best way to fulfill his last wishes?   Can this be paid to the estate and then paid to the charities through the estate?   

Do I have to attach schedule A when a retirement plan trust is not funded using insurance contracts but the investment is held in the insurance company other financial products?

Facts:

Retirement Plan A invest portion of the plan trust in Principal Real Estate.

The parent Company - Principal Life Insurance Company issued Schedule A to Retirement Plan A .

In Part I  of this schedule A is shown Zero person covered in the insurance contract. In Part II Line 5 under separate accounts provided the current value of plan's interest at year end. 

Challenge:

Unfortunately, I can’t enter a value for separate account under schedule H Line 1c(10)(b) unless I attached schedule A.

In order to attach schedule A I must first tell on the main form 5500 that there will be schedule A attached by marking box 9a1,9b1,  and 10b3.

If a participant takes a Qualified Hurricane Distribution, which distribution code must be used. Because the 10% penalty is waived for Qualified Hurricane Distributions, would it be Code 2 if the participant is under 59 1/2? 

Thank you.

Hello -

A 401(k)/Profit Sharing Plan has made a number of profit sharing contributions over the years.  Unfortunately, it was recently discovered that several eligible employees were not given a profit sharing contribution. The sponsor is now deciding between VCP vs. SCP under EPCRS based on recommendations provided.  (1).  What do you call these missed contributions (plus earnings) once made?  Are they QNECs?  (2) Are these missed contributions 100% vested once deposited into the plan?  I assume so, if they are QNECs.

Thank you for your time.

Person A owns 100% of Company Y.

Person A owns 40% of Company Z. Persons B, C and D own 20% apiece of the remaining 60%.

So Y and Z are not a controlled group.

They both own the same brand/franchise so there is a lot of commonality in what needs to be done.

They sell a product; it's not a service business.

Company Y handles the following for Company Z, to take advantage of economies of scale: Payroll, Accounting (Payables, GL, CFO's time, invoicing, billing, etc). In exchange for these overhead services, Company Z pays Company Y $X per month as an overhead charge.  There is no itemization of any expenses. There is no extra charge in a "bad month" but the contract between the two is an arms length contract.

Employer had a 401(k)/Profit Sharing Plan, and for 2016 they put in a Cash Balance Plan.  The assets are:

Profit Sharing - $375,000
Cash Balance - $100,000 (all receivable)

Since the assets between the two plans are greater than $250k, is a 5500 required to be filed for the Cash Balance as well?  I'm actually not seeing the $250,000 requirement in the instructions directly, so I just wanted to be sure.

Thanks in advance!

Am I a newbie who knows nothing, or is this "weird IRS interpretation" ERISA 101?  They make it sound as though no one was following ERISA?  All the plan documents I have include the "safe harbor/1,000 hours in 12 months makes you eligible" language.

http://www.businessofbenefits.com/2017/10/articles/403b/403b-document-delays-the-once-in-always-in-rule-and-the-effective-date-addendum/

What is the correction method if an owner has been taking his IRA RMD out of his PSP? This has been going on for a few plan years.  Amended 1099?

Company has 401k plan and an ESOP with 10/31 yearends.  Plan year is limitation year.  Age 60 Participant defers 22,000 in calendar 2015.  None recharacterized as catch up on the 10/31/15 ADP test.  $2000 of that amount was deferred in Nov and Dec 2015.  In 2016, participant defers 16,000 from 1/1/-10/31/16.  415 additions from both plans = $63,000.  How much can be called "catchup" and not be subject to 415 correction?  $6,000 or $8,000?

Employer fails to withhold salary deferrals on 2016 Christmas bonuses.

Client discovers error in 2017.

Can client use the correction method set forth in Appendix A, Section .05(9)(b) (Safe harbor correction method for Employee Elective Deferral Failures that extend beyond three months but do not extent beyond the SCP correction period for significant failures)?

The following 3 conditions must be met to use this method (which requires an employer contribution = 25% of the missed deferrals, adjusted for earnings)

1. corrective deferrals begin no later than the earlier of the first payment of compensation made on or after the last day of the second plan year following the plan year in which the failure occurred.

2. Notice of the failure is given the affected participants not later than 45 days after the correct deferrals begin.

3. Corrective allocations are made in accordance with the timing requirements under SCP for significant operational failures.

I believe we meet requirements #1 & #3.

I am hung up on #2.

Deferrals since the first payroll after the Christmas bonus have been correct.

However, more than 45 days have passed since the date “corrective deferrals” began and no notice has been provided because we did not know about the missing deferrals until recently.

It seems like we should qualify for this safe harbor treatment but I don’t think we can meet the notice requirement.

Am I misinterpreting the requirements of this safe harbor?

When are we required to put a check mark for Schedule H - Line 4i(a)?

The instruction simply states, "In column (a), place an asterisk (*) on the line of each identified person known to be a party-in-interest to the plan."

Is there a different meaning for 'a party-in-interest' to the plan when it comes to Form 5500?

Kind of an offshoot of an earlier question. Governmental non-ERISA plan (public school). Health FSA.

Suppose you have a current plan year of 7/1 to 6/30. However, due to union contract negotiations, and some legal changes at the state level mandating certain changes, there is a one-time "disconnect" with making elections, and what is really needed is an election from 1/1/18 to 6/30/18, then getting back to an annual election from 7/1/18 to 6/30/19. Of course, they already have an annual election in place for 7/1/17 to 6/30/18.

Now, this leaves you with (at least) two major choices. First, you can consider the union contract change as an allowable "change in status." I think this is a stretch, but one might argue that the new union contract represents a "commencement of employment." I don't buy it as a valid argument, but looking for any approach that might work.

Second, and I think this is more valid, the plan could be amended to change the plan year to run a short plan year from 1/1/2018 to 6/30/2018. Then amend it back to a full year effective 7/1/2018. This would create two consecutive short plan years - one in 2017 and one in 2018. While I have heard that you can't have two consecutive short plan years, I haven't found any official support for that position. What I do find, in the proposed regulations under 1.125-1, is that a short plan year is permitted for "a valid business purpose."

It seems to me that this combination of circumstances would certainly constitute valid businesses purposes, as the purpose is most definitely not to "circumvent the rules of Section 125 or these regulations." So this is the approach that I would say is reasonable, and SHOULD be defensible.

I'd appreciate any and all thoughts. Any special holes/pitfalls I'm failing to consider? Etc.? Thanks.

Self employed person with no employees has a 401k and a DB Plan. Sched C income minus 1/2 SE tax is $120k in 2017. Required minimum DB plan contribution is $200k for 2017. If the only retirement plan contribution he makes for 2017 is the $200k contribution to DB Plan, I understand he can deduct only $120k of it in 2017, and will have a carryover of $80k deduction, which he can deduct in future year(s) if he has sufficient compensation in future.

can a sub s still adopt sep till 1/31/2018 with hurricane extension

Are fiduciary standards adhered to when a plan decides not to offer a Roth Deferral Alternative?