Anyone know how to to treat a "743(b)" election?  It's something like depreciation.  If anyone can point me to something on point I would appreciate.  Trying to see if I treat it like section 179.

"Anyone know how to to treat a "743(b)" election?  It's something like depreciation.  If anyone can point me to something on point I would appreciate.  Trying to see if I treat it like section 179.

So...

Box 14A $250,000

Sect 179: 0

"743(b)" related to a step-up in basis in the acquisition of a business:  $25.000.

Participant received a single life annuity payment for several years from a qualified plan. 1099-R incorrectly indicated that the annuity payment was eligible for tax-free rollover and the payments were made to the IRA.  Does anyone have any experience correcting this type of error?  Does it fall under EPCRS somewhere? It seems like there will be an excise tax issue on the excess contributions unless they can be waived under EPCRS.

Thanks.

Participant received a single life annuity payment for several years. 1099-R incorrectly indicated that the annuity payment was eligible for tax-free rollover and the payments were made to the IRA.  Does anyone have any experience correcting this type of error?  Does it fall under EPCRS somewhere? It seems like there will be an excise tax issue on the excess contributions unless they can be waived under EPCRS.

Thanks.

If a defined benefit plan is terminating and it has an Early Retirement Age of a certain age plus a number of years, do they have to continue to count years of service after the termination date to determine when someone is eligible for an early retirement benefit?

We have a client who thought their CPA had been filing the 5500 for the last 27 years.  No one (client or CPA) can find a copy of a form ever prepared.  I searched Freeerisa and was unable to find any filings.  Any suggestions?  Do you think I really need to file 27 returns?  I do have the records back to day one and I certainly would not mind the fees.

If a terminating plan has a short final plan year due to the completion of distributions, but files a 5558, is the extended due due what it would otherwise be if the plan wasn't terminating (9 1/2 months after the normal end of plan year), or is the extended due date based upon the end of the short plan year? Would you happen to have a citation?

Thanks for any responses!

We are working with a new 401(k) client and in reviewing the ownership structure, we see a number of IRA's listed as owners in the C-Corp. Is this permitted? The IRA's belong to employees (mostly with little or no ownership %). However, one of the IRA's belongs to  an officer/co-founder/employee who has 5% ownership in the company. Could this pose prohibited transaction violations?

As sometimes happens with one-person plans, the owner took multiple distributions that he intended to repay to the plan.  This goes back more years than there are records for.  In some cases, repayments were started, but not completed.  The IRS is doing a compliance check, and has offered VCP as an option for the owner.  The owner knows that there will be significant tax and maybe penalties to pay on these distributions. He's getting up in years and has his hands full with other things, so he's thinking of biting the bullet and letting the IRS disqualify the plan.  He'll pay the tax on the entire balance and move on.  Now that it's gotten this far, I doubt that simply terminating the plan is a viable solution.  Any amount rolled over would probably be disqualified, since an audit is very likely in the not too distant future.  Have any of you gone through a plan disqualification?  Other than paying the tax (no small thing, I know), how painful is it?

Several States now have their own version of FMLA.  If an employer is too small to follow Federal FMLA but large enough to follow the state version, what is the general consensus on Break In Service for the State version of FMLA?

I called FT William, their response was that one could make a case in either direction and it would depend on who is auditing.  The DOL may point to state law while the iRS may only look to Federal law.

What is the general consensus? Do you prevent a Break based on state law or say that ERISA law trumps state law.

We have a Plan that would like to remove the Auto Enroll provision EACA . None of the employees have ever been auto enrolled since they've always elected yes or no. The Plan year-end is 12/31. An Auto. Contribution Notice was provided in November of 2016 for the 2017 Plan Year. Can the Plan be amended to remove the EACA now or do we have to wait until November 2017 to make effective for January of 2018?

Aaron is an employee of Corporation X and a participant in X's DB plan. Corporation X is owned 100% by Zelmo, totally unrelated to Aaron.

Aaron also owns 100% of Company Y.

Assuming no ASG, would a loan from plan X to Company Y be a prohibited transaction under §4975(e)(2)(C)?

I think it is.

Would the answer be any different if Company Y were a limited partnership and Aaron 99% limited partner and an unrelated entity 1% GP?

Does anyone know whether federal law has any help for the estate of a murdered spouse, where the murdering spouse was the ERISA plan participant, and community funds were used to contribute to the 401(k)?  It does not seem right that federal law would allow a murdering plan participant's benefits to be protected from a state claim by the murder victim/spouse. 

tpa firm cannot reconcile 5500 with prior year's trust on a new account.

thinking to file current 5500 with actual opening balance, which would not match prior year's 5500 closing balance, and also without amending prior year's 5500 since cannot reconcile that year's opening balance as well.

curious of other best approach practices to this scenario?

I administer a 401k plan (not SH) that will be top heavy in the current year (2017) based on last years valuation. Can the Employer amend the plan now for last year (after for the YE)  and add a provision to make a discretionary matching contribution for 2016? With the additional matching funds deposited for 2016, the plan would not be top heavy in 2017 and all of the employees not deferring would not get a contribution. Any guidance would be appreciated. THANKS

Long story short, no payments were made on a loan, which should have defaulted in 2015.  This was figured out in 2016.  In the midst of implementing the correction, the participant terminated and opted NOT to repay any portion of the loan.  1099 was issued in 2016.

The IRS is basically forcing us to use the "taxed in year of correction instead of year of default box" which sounds reasonable enough, EXCEPT that that correction requires the plan sponsor to pay for any related withholding.  Does anyone know what that actually means?  Does the plan sponsor make a contribution equal to the withholding to the participant's account?  If the participant rolled over their account, there is no withholding. Is plan sponsor off the hook?

We have a 401(k) plan with a profit sharing new comparability formula.  1000 hours & Last day requirement for the profit sharing contribution.  It is not top heavy.  There is no safe harbor nonelective or matching formula and it passes ADP just fine.  The new comparability formula puts eligible Individuals into their own classification category for profit sharing allocation purposes.  Owner wants the maximum so we gave all eligible employees with 1000+ hours & active on 12/31/16 a contribution of 1/3% of the owner to pass the gateway.  Alas, one of these profit sharing eligible employees terminated in January 2017 so they don't want to give him a profit sharing contribution for 2016.  It will still pass avg ben test & rate groups etc. if we give this otherwise eligible employee a "zero allocation" for the year.  The document appears to restrict PS contributions from those who worked less than 1000 hours and/or were not employed on 12/31 but not actually require a PS contribution to everyone otherwise eligible if one is made for the year.  Are we allowed to give this one employee a zero allocation for 2016 (for whatever reason) and give all other eligible EEs with 1000+ hours & active employment on 12/31 a PS contribution?  What do you think?

I just got off the PBGC website after setting up a premium payment for my clients' initial plan year.

At which point I started thinking that since the client is a husband and wife owned LLC, there may be a possibility they would not be covered (hopefully)??

A participant terminated from a qualified plan in 2016.  She will NOT be 70 1/2 until December 2017.  When she filled out her paperwork to roll her  money to an IRA - she ask that they also distribute her RMD.  The platform rolled it all to her IRA.  The IRA provider is claiming that amount of her RMD (which no one has calculated yet) should not have been rolled and is now an excess distribution that needs to be paid out of the IRA.   She still isn't 70 1/2, but will be by year end so does that muddy the waters?

If they pay it to her - will it be considered her RMD (I guess they plan to calculate it) and can it be split between her ROTH IRA and regular IRA.  There may be more tax issues I haven't though of, but this is enough for starters.

Isn't this for the IRA to deal with  now that it is out of the plan?

1. Generous employer provides post-retirement health benefits to retirees (pre-65 continued participation in group health plan, at 65 payment of Medicare Supplement and Part D premiums). Is there any reason these benefits would not be tax free to the retirees?

2. Same employer also pays premiums for a whole life insurance policy on each retiree until death. Is there any way this benefit can be tax free to the retiree and if not is the proper employer reporting to the employee a W-2 or 1099? 

Thanks