Business owner also receives a 1099misc for consulting revenue that is paid to her personally and not run through her business.  No employees on the side revenue.  Can she as a sole prop become an adopting employer of the retirement plan of her business thereby using that income for plan calculations?  I would think so as long as the paperwork is in order, the plan allows outside adopting employers, and the sole prop formally adopts.  Any cause for concern?

Does an election to apply the balances to the required minimum or quarterly need to specify the amount applied? Specifically, 

Plan year is 6/1 - 5/31.

6/1/2016 Minimum is $700,000.

Prefunding Balance as of 6/1/2017 is $150,000.

Plan was frozen 6/1/2017.

6/1/2017 valuation is not complete yet, but minimum will surely be much less than $700,000 since there is no target normal cost. It will probably be about $300,000. Therefore, the 9/15/2017 quarterly will probably be about $67,500 (=$300,000 * 90% * 25%).

Can the plan sponsor just elect to apply whatever is needed to cover the quarterly? Should he elect to apply the whole $150,000?

Thanks for any responses!

relief not specifically mentioned but the IRS relief for Irma seems to reference all of the relief listed in Rev. Proc. 2007-56.  can anyone confirm i am reading this correctly and that specifically the september 15 deadline to fund DC contributions would be extended to January 31, 2018?

A cautionary tale.

https://www.laboremploymentperspectives.com/2017/09/11/401k403b-loan-borrowers-check-your-paystubs-2/

We administer a SHM 401K. Auto enrollment, default deferral 4% in order to get the 4% SHM.

it has come to light that a couple of the eligible employees were not given the opportunity to enroll in 2016.

Accountant seems to believe these people are due a QNEC; how is a QNEC determined in such a case?  Would the employer in this case be obligated to make the 4% contribution as well as a 4% match?

I have a plan where one of the employees went from a W-2 employee to a partner.  He received a W-2 and K-1 income.  While I agree that the two pieces need to be added together to calculate the profit sharing contribution, I am being told to ignore the fact that the participant was a w-2 employee when doing the earned income calc for the profit sharing contribution (i.e. not reduce Earned income by employer contribution for their share of the contribution on their w-2 compensation) and also adjust the SS Wage base for this individual. I looked in the ERISA Outline book and can't find anything specific on this. 

Can anyone shed some light on this or provide a solid reference siting?

We have a non-trivial amount of deferred vested participants who are well past their NRD. The terms of the plan technically require commencement at NRD (at least as has been explained to me, but that's not really the issue at hand).

Ignoring any ramifications of RMDs, have you seen any creative ways to encourage these participants to begin their pension and move into pay status? Letters reminding them of their pension, mailing unsolicited election kits, something else?

This is attractive from a potential annuitization/termination perspective because deferred lives are more costly to place with an insurance carrier than an inpay life. We have made multiple lump sum window offerings without much luck and we have good addresses for substantially all of them.

I have no experience (yet) with PEO's. Doctor participates in a PEO 401(k)/PS plan. Doctor wants to start a CB plan only for her business. I think that is OK so far?

To pass a4 CB plan needs a PS combo. How do I handle the PEO K and PS contributions for a4 testing? The PEO PS provisions are individual classifications and no allocation conditions, so I guess they should be able to contribute what is needed for these people, if I can use it. Is it just like it was a single employer PS/k plan for a4 purposes? Or, should the doctor just start both a CB plan and a PS plan?   

Seeking confirmation before I stick my neck out that if a 501(c)(3) org is maintaining a deferral only 403b and a separate 401a plan which receives employer matching and non-elective contributions there's no defensible argument that the deferral only plan is exempt from ERISA (and exempt from 5500 and plan audit), thanks

Just curious - the requirement that the plan be amended by 30 days before the end of the plan year seems very strange. The IRS was very helpful in allowing mid-year amendments on SH plans - has any organization (ASPPA, etc.) also been advocating for a change to this 30 day requirement? Obviously, I can see requiring the amendment to be signed by the end of the plan year, but this is a nonelective 3% we are talking about. Absent the amendment, the participants get nothing. What is the sense in penalizing participants just because the employer misses the 30 day deadline? Seems like a no-brainer to allow an employer to "opt in" at any time up to the end of the plan year, with no notice requirement, either.

Thoughts?

Many of my clients, including me,  being in Florida took mild to substantial damage due to Hurricane Irma. Two questions:

1. I have a client located in Brevard County, Florida. Can any one determine if this client would qualify for special relief under Announcement 2017-13 and anything else? 

2. Under this announcement, even though special relief is being granted for qualifying for a hardship distribution, does anyone have an opinion on whether or not they would still be required to take a loan from the plan before the hardship distribution could be made?

Thanks for the help - Rick 

Many of my clients, including me,  being in Florida took mild to substantial damage due to Hurricane Irma. Two questions:

1. I have a client located in Brevard County, Florida. Can any one determine if this client would qualify for special relief under Announcement 2017-13 and anything else? 

2. Under this announcement, even though special relief is being granted for qualifying for a hardship distribution, does anyone have an opinion on whether or not they would still be required to take a loan from the plan before the hardship distribution could be made?

Thanks for the help - Rick 

non pbgc  cash balance plan is terminating and they cant locate a few participants. is it possible to send  participant benefits to state unclaimed property?  i realize they could come back and request an annuity but wondering if people have  a practical solution for his problem.

A 501(c)(3) org. has a non-ERISA deferral-only plan and meets the DOL safe harbor rules. If the plan/investment arrangement permits rollover contributions will the plan be subject to ERISA?

I am the second wife. I was designated as beneficiary on husbands plan when we married (2012), and one year later I became vested as the beneficiary (2013) In 2014 his ex wife got a QDRO in state court, designating her as surviving spouse. I objected as I did not sign waiver. She had not been awarded surviving spouse designation in their PSA,  it simply said 50% of the benefits accrued on the date of divorce.  The Plan administrator subsequently confirmed their view that the PSA itself was not a QDRO. The question is - who's survivor designation is correct? I am still the current beneficiary on the record of the plan.

The PBGC recently filed a bankruptcy claim for $937 million against a plan sponsor who went bankrupt last March but where the Defined Benefit Plan they sponsored had an AFTAP OF 115% in 2015 ($911 million in assets and $789 in liabilities).

In looking over the 5500 all the assets are reported as being in a Master Trust Investment Account. Could an MTIA really be worthless in a bankruptcy? Or could this be the PBGC filing a routine claim to protect themselves?

2015 5500 and PBGC claim letter attached

Westinghouse - pbgc claim-1.pdf

westinghouse-5500.pdf

We are looking at the taxation of benefits to provide for egg extraction and freezing.  

Publication 502 provides that:

Quote

You can include in medical expenses the cost of the following procedures to overcome an inability to have children.

-Procedures such as in vitro fertilization (including temporary storage of eggs or sperm).

Two questions:

1. Does the reference to "overcome an inability to have children" refer only to a current inability to have children, or a future inability?  For example, suppose someone has cancer, and is just about to have radiation treatments that will forever eliminate the ability have children--can we provide IVF on a tax-free basis?  What about someone who is trans, who is about to enter hormone treatment that may impair fertility?  Or what about someone who is 35 now and has no partner, but wants to preserve eggs for later when her fertility may have declined?
2. How long is "temporary" storage?  I have heard, though been unable to locate documentation,  that John Sapienza, IRS Office of Chief Counsel, made  remarks at a May 2002 ECFC Teleconference that "temporary" might mean that eggs were stored and used within the same year.  Obviously, that would in many instances be insufficient even in the case of current infertility (for someone who took a long time to get pregnant, or wanted to have a second child).  And it would certainly be insufficient in instances such as those described in 1, above.

Has anyone had any formal or informal contact with the IRS on either of these questions?  Or does anyone have a copy of Sapienza's remarks?

I recently met with grandfathered Civil Service postal employee who is contemplating retirement. She is 55.

She was divorced in 2003 and her attorney drafted a COAP in 2004 that was submitted to the OPM. The COAP provided that the former spouse was awarded 50% of the employee's gross monthly annuity multiplied by a fraction , the numerator of which is the total number of months of Creditable Service earned under the marrage, from 9/10/94 to 7/02/03, and the denominator of which is the total number of months of the employee's Creditable Service accrued under the Civil Service Retirement System. The attached Paragraph 10 of the COAP also awarded the former spouse a survivor annuity pursuant to section 8341 of Title 5 USC. 

Attached is the OPM response. Note in Paragraph 4 the author comments that he finds no reference to a survivor annuity in the COAP. The employee, and I for that matter, are confused. The existence of a survivor annuity impacts her monthly benefit. Can anyone explain the apparent conflict?

OPM Letter.pdf

Para 10 of COAP.pdf

I have a question about the application of the  exception to full correction in EPCRS allowing a sponsor to not make a corrective distribution of $75 or less "if the reasonable costs of processing and delivering the distribution to the participant or beneficiary would exceed the amount of the distribution." (section 6.02(5)(b) of Rev. Proc 2016-51. 

The provider's fee is $100 for each distribution and it is charged to the participant (rather than paid by the sponsor).  Is the $75 threshold applied to the full amount of the distribution before fees are taken out or to the amount of the distribution that the participant would be entitled to after fees are deducted? 

As an example, say a participant terminated some time back and no longer has an account balance - they have been paid out their balance in a prior plan year.  They are due a now correction of $90 for lost interest.  Given the $100 fee, for purposes of the de minimis exception, are they due $90 or $0 (net the fee).  

Similarly, if a participant has no balance and is due $110 (gross), that would be $10, net of the fee.  Presumably, the $100 fee would cover the reasonable costs of distributing the amount, so the vendor would need to send a check to the participant for $10.

The amounts of any distributions not made due to application of this de minimis exception would be allocated to other participants in the plan.  

Not that it matters for purposes of this question, but this error was the subject of a DOL investigation, and the DOL has already issued a closing letter.  They have requested that the client confirm deposit of the interest amounts and allocation to affected participants.  That will take care of the fiduciary issue.  I am comfortable proposing to DOL that amounts under $100 be reallocated to other participants, and expect that this will be acceptable to them.  However, I realize the qualification defect will also need to be corrected, so I don't want to think this is all wrapped up and then have the IRS tell us we need to do something else with those account balances between $75 and $100, likely several months after all of the other distributions have been made.  

IRS Gives Tax Relief to Victims of Hurricane Irma; Like Harvey, Extension Filers Have Until Jan. 31 to File; Additional Relief Planned

Current relief is limited to any area designated by the Federal Emergency Management Agency (FEMA), as qualifying for individual assistance.  Right now, that means US Virgin Island, Puerto Rico and some parts of Florida.  The scope of the relief will most definitely be broadened to include more Florida counties, but as of right now, the following counties have been designated as qualifying for individual assistance (and therefore tax relief):

• Brevard (added 9/13)
• Broward
• Charlotte
• Clay
• Collier
• Duval
• Flagler
• Hillsborough
• Lee
• Manatee
• Miami-Dade
• Monroe
• Orange (added 9/13)
• Palm Beach
• Pasco (added 9/13)
• Pinellas
• Polk (added 9/13)
• Putnam
• Sarasota
• St. Johns
• St. Lucie (added 9/13)

IRS Announcement 2017-13  allows loans and hardship withdrawals for Hurricane Irma victims, similar to relief announced for Hurricane Harvey

Useful links

FEMA disaster link You can use this link to view FEMA declared disasters by state or tribal government. 

IRS News Releases You can use this link view updated news releases from the IRS for the month of September

IRS Hurricane Irma Page

IRS Disaster Tax Relief page

Effens Thread on Funding Relief for DB Plans (Notice 2017-49)

* Edited to add more information when available