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"

?

We have a client who requested a plan termination due to acquisition effective December 18, 2017.  Plan Year end is 9/30 and is a safe harbor plan.  Termination paperwork has been signed.   We informed the client that the plan can still be safe harbor for a short final plan year if the plan termination is in connection with a 410(b)(6)(C ) transaction. 

Yesterday we hear from the client that the acquisition date has been pushed back to March 2018 due to insurance issues and that employees will continue to be paid by the current plan sponsor until then.  Our concern is that the termination date is earlier than the acquisition date and that the plan is now subject to ADP Testing and Top Heavy.  What are your thoughts regarding this?  Do we need to change the termination date of the plan to March in order to satisfy the acquisition exception? 

I have an attorney who has continually asked if it is acceptable to co-mingle ROTH contributions with regular salary deferrals in a single investment account.  I informed him that it is acceptable as long as you keep each source separated when performing the annual accounting meaning...   as long as you allocate earnings proportionately. 

Does anyone have an IRS cite saying that is an acceptable practice?  That is what he is looking for.

Thanks

A potential client has an existing defined benefit plan and would like to add a 401(k) Plan. His current TPA does not want anything to do with adding a 401(k) plan. Are there any pitfalls to adding a 401k plan to an existing defined benefit plan?

DB plan failed to adopt a good faith PPA amendment or a 436 amendment.  Also, the plan adopted its PPA restatement late and did not submit the plan for a PPA determination letter.  The plan received a favorable EGTRRA letter after entering a Closing Agreement with IRS regarding other late amendments (which were ultimately adopted under the Closing Agreement).

I am having trouble finding any guidance on how to submit these failures for coorection through VCP.  I know I can correct the nonamender failure as to the 436 amendment.  However, given that the plan has been restated for PPA, do I need to correct the good faith PPA-non-amender failure - or would that failure be considered "corrected" by the (late) PPA restatement?  Should I just submit the 436 non-amender and the late PPA restatement as non-amender failures and leave it at that?

Also, since the IRS has stopped accepting determination letter application (except in limited circumstances not present in my case), is there a "failure" for submitted the PPA determination letter request late?

Any thoughts on this would be appreciated!

Company A wants to add a profit sharing element to the existing 401(k) plan.  They want the vesting date for the profit sharing to be different from the employer match piece. The want the vesting date to begin on the effective date of when the profit sharing element is added and exclude all prior years of service.  Reading Section 411, I don't think they can do that but they think they should be able to. Would help hear thoughts on this?

Hi,
Thanks in advance for any and all comments.
Does a safe harbor floor offset arrangement in which the two plans are not permissively aggregated, and thus treated as two separate plans, required to have the same plan year for both the DB and DC?
In 1.401(a)(4)-8, it doesn't seem to be one of the requirements of a safe harbor design. If not, can I still test the rate groups prior to the offset and the AB% test net of the offset?
Thanks,
Sam Winikor

Hello

I have an operational failure whether otherwise eligible employees (all NHCEs) where included prior to meeting the plan's minimum service requirement.  The money was deposited in the Plan (a 401(k) Plan on a prototype document), but sat in cash for a couple of months.  It appears from the reading of EPCRS that this can be self-corrected by retroactively amending the plan to permit those employees to enter the plan.  I have three questions I was hoping to get your opinion on:

1. The example correction in Rev. Proc 2016-51 provides for SCP by retroactive amendment, but also includes the submission of the amendment to the IRS for a determination letter.  This would no longer be an option beginning 1/1/2017, correct? 

2.  Earnings would need to be applied - since these employees never directed their investments, this would be based on the default fund provided in the plan, correct? 

3.  What if instead the facts were an error was made where only some of the otherwise eligible employees (all NHCEs) were included prior to meeting the plan's minimum service requirement.  Can this be self corrected through SCP by only including those let in early or would that require a VCP submission?

Thank you for your time

If document doesn't specify, what is the measuring year for "break in service"?  Did not  work 500 hours in what 12 month period?

Plan year?

Calendar year?

Employment Anniversary year?

The year the document says to use for Eligibility?

The year the document says to use for vesting?

I have a situation in which a church defined benefit pension plan has two participating employers that have been giving participants contributions and have adopted the plan without an official participation agreement. One plan has been operating in the plan since the spring of 2017 and the other since the mid 1980's. I believe SCP might be able to be used for the first issue but VCP for the second. Any thoughts? The employers provide contributions on behalf of participants. 

So, employer has group health plan. Employee terminates in 2017, elects COBRA coverage. So far, so good.

Suppose the employer modifies the health coverage effective 1/1/2018, increasing deductibles, out of pocket expenses, etc., for everyone. To somewhat mitigate these effects, the employer institutes an HRA.

Is the employer required to offer COBRA coverage on the HRA to this participant for the remainder of the COBRA period established as of the original date of termination of employment?

I don't work with COBRA, but I wasn't able to find a definitive answer in a reasonable amount of time, and wondered if others had dealt with this issue. Thanks!

P.S. - FWIW, as I looked at some of the regulations, it seemed to me that under a "common sense" approach and looking at 54.4980B-3, it seems like since the "similarly situated" employees receive the HRA coverage, the COBRA participants with the same health coverage should also be able to be covered under the HRA...

P.P.S. - while looking at it a bit more, perhaps a more appropriate reference might be 54.4980B-5, Q-4(c).  Anyway, it does seem to point in the direction of, in this type of circumstance, requiring a COBRA election for the HRA to made available to the former employee - in this circumstance, all employees were allowed to choose among several health plan options, and the HRA was offered in conjunction with these health plan changes.