Client has an after tax value of $121,000 in employer stock. This amount is a portion of his 401(k) account. Can the shares be rolled into a Roth IRA or only the liquidated amount?

On November 30, 2016 plan sponsor decides they want to change the safe harbor match formula from plan year to pay period effective January 1, 2017. They call the vendor, vendor says no way it is too late as the safe harbor notice is due the next day. 

Plan sponsor decides to hand write on the document crossing out plan year and writing in pay period. Required signatures and dates are written in to the margin as well as the execution page making it clear their intent. Plan sponsor changes the safe harbor notice by typing the notice and just changing plan year to pay period.  Plan sponsor delivers the safe harbor notice timely with pay period wording. 

Plan sponsor sends the hand-written amendment and signatures to the vendor. Vendor refuses to honor the hand-written changes. 

Thoughts? Are hand written amendments acceptable? 

Thank you.

W have a client, dentist, who is selling his practice as an asset sale.  He intends to start a new practice in a different part of his state (not actually his state but the state where he practices).  He maintains a cash balance plan which he intends to continue to maintain in his new practice after he pays out the four participants who will terminate from his corporation at the time of the sale and go to work for the acquiring corporation.

In the year of the sale, he would like to contribute $500,000 which will put his plan assets $500,000 over the value of all cash balance accounts which consist, likely, of just his account.

Are there any issues I should be worried about?  415 is not an issue.  What lurks in my mind is that if the plan is terminated with excess assets reallocated within some time limit of the sale of the old practice, that the old practice employees should be included in the allocation of excess  assets.

Does anyone have any experience/success with the DOL in narrowing the scope of a national office request for a global review of 408(b)(2) disclosures?

Does anyone have any experience/success with the DOL in narrowing the scope of a national office request for a global review of 408(b)(2) disclosures?

Plan has SH3% non-elective, discretionary match and an excess- integrated PS contribution formula.  Plan is top heavy.   Working with a McKay Hochman document and Relius software

My understanding is that;

• the SHNEC satisfies the top heavy requirement for the plan but it cannot be used to satisfy permitted disparity.  
• the Discretionary Match contribution can be used to satisfy the 1st tier of the Excess Integrated Allocation Formula.  

In Relius,  I ran  Deferrals, SHNEC, Discretionary and  Match contributions.  All but two participants deferred at least 6%.  Those two participants did not defer a all during 2016. and were employed as of 12/31.  Ran a PS contribution, expecting to see that first  3%  of PS contribution was allocated to the two participants who did not defer but that didn't happen.  It appears that Relius used the 3% SHNEC to satisfy the first step of the excess integrated PS formula.   Those with earnings over the taxable wage base received the appropriate allocations and  the remaining PS contribution was pro-rata.    Shouldn't those two employees have received 3% first,  according to the formula. 

I used the top-heavy first, not top-heavy skim method for allocating the PS contribution.

Is my understanding of how the SHNEC can be used incorrect or have I coded the Relius specs incorrectly or is there a limitation in the Relius software that won't permit this transaction without a work-around?  

Help!

Hey Y'all!

Quick question for my fellow practitioners.

I am studying the DC-2 book to eventually get my QKA and I came across a sentence saying that corrective distributions (ADP & ACP corrections) are subject to 10% withholding unless the participant completes a Form W-4P. 

I was wondering who all was practicing this? I don't recall ever seeing a corrective distribution with any withholding applied in my short tenure.  

Thanks in advance!!

Have fun and keep those eyes safe.   I live in an area in the path of totality so I am geeking out today. 

My son says we need to watch the Avatar the Last Airbender episode where they attack the Fire Nation during the total solar eclipse to honor the day as true geeks. 

My chameleon suddenly was unable to change colors.

I took him to the vet and he diagnosed it as a reptile dysfunction.

In a PBGC plan termination, to qualify for standard termination, benefits needs to be fully funded.  To accomplish this, under 4041.21(b)(2), an owner of 50% or more can make an election to forego benefits.  Is anyone aware of the definition of majority owner being reconsidered?  It seems like if a partner of say 10% should be allowed to make a similar election; no staff is harmed and the IRS gets an extra tax dollar assuming the deduction is not taken on fully funding the benefit.

Second question: If the plan is not covered by the PBGC, what then?

Employee deferred in 2016 & 2017, rolled over large amount ($182k), then terminated in 06/2017 and rolled over all money to an IRA.  She wasn't eligible until 07/01/17.  Will look into retroactive amendment to make her (and others?) eligible; alternatively I am thinking:

• $182k rolled into plan ended up back in an IRA so net result is same as if had never gone into plan
• $1,136 deferrals were in 2016 and $4,498 were in 2017 and both ended up in an IRA.  Since she was withing IRA limits for each year (assuming she didn't have other IRA contributions), net result again is same as if she had just put into IRA and not into plan

Given above, we should just be able to document all this and consider issue self-corrected.

Thoughts?

Im horrible at searching and finding previous posts on a subject.  Forgive me if this has been answered before...

A CPA I work with asked me what should be done... here is the situation -

His client works for a small company and has been deferring from his paycheck.  He was on track to defer around $13K for 2017.  After looking at his account he became concerned that the deferral deposits are not adding up. Significant discrepancy.  Come to find out the deferrals have been withheld BUT they were not being deposited.  In fact the company was using his (and maybe other participants) deferrals to cover some cash flow problems.  Not good.

I have never had this kind of problem.  What do people suggest the proper steps he should take? 

Thanks

I'd swear I've seen, and perhaps been involved in a discussion similar to this, but darned if I can find it, so...

Plan is currently a 3% nonelective "maybe" plan. So, at this point, they are NOT a safe harbor plan for 2017. Suppose many of the employees will now be entering a union. There's no problem with amending  the plan to exclude union employees. What I want to conform is this: since they will, for 2017, have both union and non-union wages, then for 410(b) purposes (1.410(b)-6(d)(2)(i)) they have "dual" status - so when it comes to testing profit sharing allocations,  they will be non-excluded for purposes of their non-union hours and wages, as well as top heavy. Once the plan amends into Safe Harbor status for the year, must they receive SH 3% on the non-union wages? My inclination is yes, but I'd appreciate any other opinions. Thanks.

(edited to remove a section that I intended to delete, but forgot to in original post)

Hello everyone,

Could someone please explain to me what balance forward earning accounting represent? I'm new to the benefit plan world, and I noted that our recordkeeper has an adjustment for "Balance Forward Earnings to Allocate". I understand that this balance is allocated to each plan participant however I don't understand the basis behind this adjustment.

Thank you for all your help!

Armand 

Normally, medical plan elections can roll over from year to year. However, the last couple years our company required employees to elect or decline medical coverage at open enrollment. I believe they wanted to get an affirmative answer, one way or another, with the advent of Affordable Care Act requirements.

Given some of the uncertainties at the time, I was okay with forcing people to make an OE election.  However, does anyone know of a reason or rule where by we should continue to do this practice? I would prefer to revert back to roll over elections again, but I want to be sure I'm not missing anything.

Required? Good practice or bad?  Thoughts welcome.  Thanks.

To draft a QDRO?  I get that a lot of stuff that we do the lines get blurred.  for example, perhaps complicated language in the other field of a volume submitter document, or perhaps requesting language changes to a QDRO for clarification.

I don;t know why I feel like drafting a QDRO goes over that line, but I think it's because a judge ends up signing the document.

Thoughts?

I have a governmental plan that is individually designed and has not been restated since 2001. If it is a cycle C (I realize that remedial amendment cycles are no longer around), what years should the plan have been restated? In other words, what years did the plan miss a required restatement? 

Nobody's brought it up so I will...the RecordkeeperDirect platform, which was perfect for micro plans, is changing pricing from an average account balance basis to a total assets basis.  A plan that was no cost with average assets of $5000 is now going to be $500 setup for a startup and $750 + $20/participant per year.  It's a punch in the gut for us; tough to add those prices to our fees when selling a plan for a handful of people.

So...what are the options?  John Hancock (meh)...Voya (meh)...?  I really really hate using individual brokerage accounts and effectively recordkeeping in house, manually. 

Appreciate any thoughts.

A situation I haven't encountered before, and I'm wrestling with it.

Suppose you have two non-profit corporations, A and B. A sponsors a non-ERISA 403(b) plan. B sponsors a SIMPLE-IRA. They merge, mid year, to form a new non-profit corporation C, with a new EIN, etc.

Apparently A & B no longer exist, although the information I have is far from comprehensive.

These are not plans that can be merged with any other plans.

Can you, for the remainder of 2017, treat each set of employees as still "separate" and continue the plans as before, and hope that if ever audited, the IRS is reasonable and accepts this as a good faith compliance effort? Do you treat each plan as terminated as of the merger date, and just start fresh with a new plan - which is problematic at best, since  the merger took place some time ago (date unknown - I only know that it was in 2017)? I'm reasonably certain that no plan termination notifications/resolutions/amendments were ever done prior to the merger. I don't yet know if deferrals/employer contributions to one or both plans have been made since the merger.

Quite a fiasco...

All thoughts appreciated!

I'm not finding anything in the cafeteria plan proposed regs that deals with this. So, let's say you have two non-profit corporations, only one of whom sponsors a cafeteria plan. The two corporations "merge" to form a new corporation, with a new employer id #. They do this mid-year.

In the qualified plan world, there is certain guidance for merger and acquisition situations, but I haven't seen anything on this for cafeteria plans. Anyone have any experience with this, or know of any guidance? If not, opinions on what is normally (or should be) done? Thanks.

Found some small amount of guidance which isn't really on point, but perhaps gives a tiny insight into general thinking by the IRS - seems tilted toward being reasonable - Revenue Ruling 2002-32. Since this is not on point, very old, and prior to the proposed regulations under 125, it ultimately isn't very useful, but is all I've been able to find...