Client first institutes a DB plan after attaining age 70-1/2. Has a 3-year cliff vesting schedule (to delay RMD's). Suppose the end of the 3rd year is 12/31/2017.

Must the first annuity payment commence by 4/1/2018, or 12/31/2018? My reading is that he has until 12/31/2018, but I can see an argument for 4/1. Particularly if taking an annual annuity payment, it is hard to see how it really matters, since he would receive it all in the 2018 tax year anyway, but that's a separate issue. The later date seems a bit easier administratively, since the vested accrued benefit as of 12/31 often isn't known until later in the following year anyway...

does anyone think or know whether the fiduciary rule includes a duty to monitor IRA service providers that might take rollovers from plan participants?  I am having a disagreement with a colleague. i say there is no duty to monitor IRA advisors who deal with participants.   

ok so the client isn't going to make any profit share for the plan year.  there are forfeitures to be reallocated.  Most vendors (even some of the largest in the 401k arena) don't have an easy mechanism for the forfeiture reallocation process.  Yes - they allow a "contribution" and then fund it with forfetiures but then it shows on the annual reports as a contribution and not as a forfeiture reallocation.  Why does this seem to be so difficult...?!  I understand that the forfeiture reallocation is a contribution of sorts, but since it isn't deductible again I would like it to show as a forfeiture reallocation and NOT as a contribution.

mostly just venting but was wondering what others thoughts are on this.

Client is a local government entity that has a FICA replacement plan, so employees who participate in the plan don't pay into Social Security OASDI or receive those benefits.  

My question is - the requirements for replacement plans are framed in terms of what the employee must receive.  Is there any requirement that a replacement plan provide spousal benefits?    

Thanks - 

Mom dies at 99.

Son inherits her IRA.

Can it be rolled to son's 401k plan?

I think...(a lot of possibilities but I can't find anything that says yes or no, explicitly.)

Thank you

An employer has over 100 participants and has a stop loss policy for it's health insurance benefit.  They received a Schedule C from the insurance carrier.  It's my understanding they don't have to complete the Schedule C if there isn't a trust because there aren't any plan assets.  Can someone please confirm?

I have a question about bottom up QNECs. Let's say the employer wants to give a 5% QNEC to his employees because of the failed ADP test. Does the employer have to give the first contribution to the lowest paid employee and then give it to 2nd lowest paid employee, etc. until the test is passed, OR is the employer permitted to give the QNEC to anyone?

Every example I've seen has the employer giving the QNEC to the lowest paid employee first, but I was wondering if that's a requirement.

Thanks.

Just musing before going in to a meeting.

Under the new DoL Fiduciary rules, wouldn't a promoter of a ROBS plan become a fiduciary under the new rules?  They are being paid a fee and recommending the client move funds from and IRA to a qualified plan for the purpose of purchasing employer stock.

I got to go.

2016 RMD missed for an owner :(.  ERISA counsel suggested reporting the income on 2016 1040.  Do you guys think a code P on the 1099-R would do the trick?  Not sure if it is 100% the right code, but man it seems like operationally the easiest thing to do...

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!