Is a husband required to make a new 2nd wife his profit sharing beneficiary?

I have been researching this all over, including BenefitsLink, and cannot find a definitive answer.  I'm finding dramatically different answers.  I'm working with the client's attorney who is doing the client's estate planning before the marriage takes place, and this the one loose end we cannot conclude.  Does anyone know and can point to the authority (ERISA, DOL, etc.) with which we can confirm the requirement and the client can not worry?  He want's to leave his PS account to his kids, who he named as PS Plan beneficiary after his divorce. Or, he's willing to give his new wife 1/4th.  He's opposed to asking her for a release since she blew up when he asked for a pre-nup.

Also, as I understand it, IRA's are not required to make spouses beneficiaries.  This gentleman is retired and would have no problem transferring all his PS Plan assets to an IRA, if it would work. 

Big mess just fell into our lap:

DB terminated 12/31/2006, distributed incorrectly calculated lump sums August 2007, employer finally files PBGC 501 (without any EA involvement) November 2012, PBGC audits and notifies ER last month (May 2017) that lump sums were calculated incorrectly and substantial additional sums likely owed to participants (plus lost earnings).

Since it's been almost 10 years since the initial distributions and over 4 years since the filing of the 501 we're wondering if there's a statute of limitations that might save this client?

When a medical insurance company provides its own insurance to its own employees, would that be considered Self Funded to the extent they would not file a Schedule A on their medical plan 5500? Should they be filing a Schedule C?

so i was asked the question- what are the consequences of the failure to issue 1099-R for the P,S. 58 costs. My thinking is it is the same as the failure to issue any other 1099-R. a reporting failure which according to the ERISA outlines is $250 penalty per incident.

I saw an older thread on here that said it was optional and that if the participant didnt pay the tax on the P.S. 58 the entire death benefit would be taxable. I don't agree with that answer .  the code is pretty clear that the tax on the P.S. 58 cost must be paid.

Have a 401(k) profit sharing plan, with safe harbor match provisions.  The plan is top heavy and the effective date of the plan termination is 7/1/17.  The owners made salary deferral contributions and received the match (or will, through the termination date, as will the couple of regular employees that participate in the plan).

I believe the approach to take for top heavy purposes is to consider it a short plan year of 1/1 - 7/1/17.  Anyone employed as of 7/1/17 would be eligible for the top heavy contribution.  The problem is, this employer has a number of seasonal employees that normally would not be employed as of 12/31, thus ineligible for the top heavy contribution.  If we go with the 7/1/17 date, this will pull in quite a few employees that have never received a contribution, and the amounts will be fairly small.  It doesn't seem like this would be the intent of the regulations.

Thoughts are appreciated!

Having a brain cramp. Suppose an owner of an LLC taxed as an s-corp sells the business. Plan is a calendar year Safe harbor plan. My understanding is that all employees terminated employment as of the sale date. (Is an LLC that is taxed as an S-corp automatically "dissolved" as of the sale, or does it continue to exist as a legal entity, until "dissolved"?) If the former owner wants to maximize contributions, do you see any problem with having the plan termination date of 12/31/2017, so there is no short plan/limitation year, and therefore no prorating of limits?

I have a 401(k) plan that has a two year wait for employer profit sharing contributions, with immediate vesting for that contribution.  The profit sharing provisions predated the implementation of a 401(k) program in the plan. There is, of course, a one year wait for 401(k) deferral contributions. The plan is currently top heavy, and the top heavy vesting schedule is 2/20. 
 
The question we have boils down to the following: can a plan run two concurrent vesting schedules for different employer contributions?  The profit sharing contribution is very generous, and the plan sponsor is adamant about keeping the two year wait to receive it, and intends to maintain full and immediate vesting on that contribution.  However, the plan sponsor wants to prolong vesting of the first year TH contribution as long as possible and utilize the 2/20 vesting for that contribution.
 
Is this possible?
 

Thanks!

IRS Loses $175 Million Class Action Lawsuit

The basics:

IRS made PTINs mandatory 

IRS justifies annual PTIN fee with  31 U.S.C. § 9701, which allows agencies to charge for a service or value provided

Two CPAs sue the IRS claiming that the IRS was not allowed to require PTINs and was not allowed to charge PTIN fees

Court held that the IRS can require PTINs, but that the PTIN is not a service or of value to the preparer, so the IRS cannot charge PTIN fees

Furthermore, the IRS must refund PTIN fees to the class (which includes many of us)

I am confident that nonqualified top hat plans will need to address the final rule, specifically when disability is a payment trigger; however, is the rule applicable if disability only accelerates vesting and is not a payment trigger? Would seem so, but I'm not certain. What if the plan only contains disability respective to the cancellation of a deferral election? Would the rule apply here as well? Thoughts are greatly appreciated. Thanks!

Client opted to freeze its 401k plan effective 12/31/16.  I understand that there are no more benefit accruals after that point.  The plan year ending is 6/30.  So we have period in the plan year that runs from 7/1/16 to 6/30/17 that the plan was frozen.  What compensation is used for testing purposes for the 2016 plan year?

Do you know if it is possible to retroactively change the Plan termination date? 

For example if a sponsor terminated a plan effective 8/31/16, could they now say that the Plan is terminated effective 12/31/16?

I am not aware of any provision, but perhaps someone here is. I do know that choosing the effective date is a settlor function, but i don't know if that means that it can be changed. 

Thanks!

For a cross tested profit sharing safe harbor non-elective 3% plan, how are imputed EBAR's calculated?  Are we adding a calculated EBAR for the safe harbor and a separate imputed EBAR for the profit sharing?

Employee opts out of medical coverage for 2017 but elects general purpose health FSA coverage during open enrollment because he is covered under spouse's plan.  Spouse terminates employment mid-year.  Due to the change in status, the employee enrolls himself and spouse under employer's HDHP starting June 1 and wants to contribute to HSA starting then.  Employee has exhausted health FSA balance.  Can employee terminate FSA effective May 31 and start contributing to an HSA thereafter?  I think not but cannot seem to find support either way.  Any help is appreciated,

While preparing the 12/31/2016 accounting for a pooled profit sharing plan, I just found out today that the employer paid a terminated participant her vested balance of $684.  Her account is all safe harbor non-elective funds, so she was 100% vested.   The distribution was done a year ago in April 2016.   The problem is that it was paid from the employer's checking account, not the plan's checking account.   Since it wasn't paid from the plan, no taxes were withheld and no 1099R was issued.     The employer did not include the amount in her W-2 either.   I know the plan cannot reimburse the employer.   I'm not sure how to fix this.   Can the plan pay her the $684 and she then write a check back to the employer?  

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Odd situation here.  Just wondering if anyone has any insight.  Two business partners had a 401(k)/profit sharing plan.  The two owners were the only employees/participants.  Each owner oversaw the investment of his own plan investments. A couple of years ago, one of the partners had some significant life changes and left the business.  (Possible mental health issues present). Business was reorganized to now have only the single, remaining owner. The problem is that the former owner (I'll call him Bob) hasn't provided any detail (and has ignored/rejected multiple requests) on his plan account investments since then. Remaining owner wants to make sure plan is in compliance.  Because Bob won't provide info (and has probably spent his assets), we don't know how to handle formalizing the distribution of his plan assets (which are not under the control of remaining owner). Do we 'deem' those amounts distributed at some point? Even if we do that, we don't have the assets from which to take withholding. Do we deem them rolled over? To where/whom? Trying to figure out what to do so that the distribution to Bob can be documented, and because distribution (after termination of employment) is required by plan.  I have called around to try to get informal input from DOL and IRS.  DOL not interested, since no non-owner participants involved.  IRS contacts had varying views.  Once said ' get into Audit Cap, like yesterday.' Another said, that it seems more like a tax issue for Bob, and less of a Plan qualification issue.  I'm stumped on how to correct. Remaining owner wants to do things right.  Any suggestions/insights? 

A profit sharing plan currently requires 2 years of service for eligibility for an employee to become a participant. Thus, the plan has 100% immediate vesting. The plan only covers non-highly compensated employees.

The plan sponsor wants to lower the eligibility to 1 year of service and introduce a 6-year graded vesting schedule. All existing Participants will remain 100% vested. How will this be handled for existing employees?

Some employees have been held out already over 1 year (some almost 2 years). However, they have not yet entered the plan and thus have no rights as a participant. Must they be 100% vested when the plan is amended to lower the eligibility, or can they be placed onto the 6-year schedule? How about those with under a year, would they be treated any differently?

What is the obligation of an employer to notify an employee who is collecting workers' compensation benefits that they may be eligible/should consider filing a claim under the employer sponsored/paid LTD plan?

Does anyone have a sense for what a normal number of days would be not for the blackout itself, but to be out of the market in cash.  I know plans typically go into blackout before the liquidation date to ensure everything has a chance to settle, and on the other end it often stays in blackout until everything is completely up and running which at times is after the repurchase.  I'm looking for a typical amount of time to be sitting in cash.  Are there any statistics?  I have some participants in a blackout complaining it was too long, and I don't have any way to evaluate whether or not this particular conversion was atypical or what.

I should note that blackout did not extend beyond the window disclosed in the blackout notice.  Obviously the market is either up  or it is down in these things, and as "luck" would have it, the market was up in this particular time frame.  I did not think it was appropriate or advisable for me to mention any specifics here so I won't.

do you think it is a plan sponsors responsibility or duty as fiduciary to monitor the reasonableness of fees and services for a brokerage window provider? 

now take it one step further, accounting and administrative issues aside, lets say the sponsor allows participants to do business with whatever broker they want to. do they still have the fiduciary duty to monitor the reasonableness of each broker chosen by participants and does it matter that it is the participants making the choice?