Participant has a life insurance policy as an asset in her 401(k) account. (Plan is the owner.)

It is my understanding that the ownership of this policy can be changed from the plan to the participant/individual. The participant would be taxed on the cash surrender value. Is this correct?

If this is correct, can the cash surrender value be “counted” as part of her RMD due for the year?

Example: Participant’s RMD for 2016 is $10,000. Cash surrender value of life insurance policy is $2,000. The plan would issue a distribution check in the amount $8,000 to the participant. Is this permitted?

Thank you.

What charges, if any, do you put in the SAR for copies of the paper 5500 for the per page and full copy items?

I usually put $0.25/page and $0.75/$3.00 for full copies of SF/5500, respectively.

What you you put in your SARs?

I just read an email where the person was telling a client that fiduciary relief under 404© is fiction (no plans comply), and that benchmarking is required by law. To be clear, the email did not say 404© Protection is hard to get. It does not exist? Also, while benchmarking makes sense for reviewing your Plan, required by law? Where is that cite?

Client is looking at changing cafeteria plan (currently part of a wrap document) to a POP (premium only plan) as they no longer have a Flexible spending account. They currently file 1 tax return with all the wrap benefits.

They've been advised no need to restate and amend the cafeteria plan but just to terminate the plan and adopt a new plan. Is it a simple resolution to make the change or is there a need to send out notices to the participants? Plan is funded by general assets of the employer and insurance, over 500+ employees.

In addition, do the form 5500 filing requirements follow the wrap plan and not the cafeteria plan....so that in this instance no final form 5500 would be filed as the wrap plan itself is still the same.

Thanks for any help!

Sorry if this is a newb question, but any help would be appreciated- given the new overtime rules going into effect I am concerned about some clients increased responsibilities if they don't exclude overtime

my question is - If you only exclude overtime for matching contributions, do you still run compensation test? If so- assuming you pass - do you use that for ACP? or is there flexibility? I really want to make sure of what happens if we are only making a compensation adjustment to matching contributions.

Thanks

looks like the IRS has decided we don't have to answer all those extra questions in 2016.guess they still haven't gotten approval for them yet!
from their website:
https://www.irs.gov/retirement-plans/irs-compliance-questions-on-the-2015-and-2016-form-5500-series-returns


IRS Compliance Questions on the 2015 and 2016 Form 5500-Series Returns

The IRS added compliance questions to Forms 5500, 5500-SF, 5500-EZ and Schedules H, I and R. The IRS has decided that filers should not answer these questions for the 2015 and the 2016 plan years when completing the forms:
•Form 5500
Preparer Information (page 1 bottom)


•Schedule H ◦2015 plan year: Lines 4o-p, 6a-d
◦2016 plan year: Lines 4o, 6a-d



•Schedule I ◦2015 plan year: Lines 4o-p, 6a-d
◦2016 plan year: Lines 4o, 6a-d



•Schedule R ◦2015 plan year: New Part VII (Lines 20a-c, 21a-b, 22a-d, and 23)
◦2016 plan year: Part VII (Lines 20a-b, 21a-b, and 22a-b)



•Form 5500-SF ◦2015 plan year: Preparer Information (page 1 bottom), Lines 10j, 14a-d, and New Part IX (Lines 15a-c, 16a-b, 17a-d, 18, 19, and 20)
◦2016 plan year: Preparer Information (page 1 bottom), Lines 14a-d, and Part IX
(Lines 15a-b, 16a-b, 17a-b, 18, and 19)


•Form 5500-EZ
◦2015 plan year: Preparer Information (page 2 bottom), Lines 4a-d, 13a-d, 14, 15, and 16
◦2016 plan year: Preparer Information (page 2 bottom), Lines 4a-d, 13a-b, 14, and 15

Page Last Reviewed or Updated: 05-Oct-2016

..................................

good grief, I can hear you crying and moaning way down here in Florida, and I've hardly even posted this. Get over it and deal with it already!

Participant completed and timely turned in the enrollment form. Deferral election was properly entered into payroll however enrollment form was not forwarded to vendor for investment election set up. Consequently participant was default enrolled for investment when deposits arrived. Contributions have been made timely since June to the participant account in the default investment.

Any one know if there is a stated correction or example correction for this error? Since it isn't a missed deferral opportunity I couldn't find anything on point. Is there even a required correction? It seems there would have to be because the Client made the error.

Client would like to compare earnings from default investment with the earnings from the participant investment choices and make a corrective contribution for the difference, if applicable, which sounds reasonable. That will "put the participant in the position he/she would have been in had the error not occured".

thoughts?

Participant A passed away. His beneficiary is nephew B, who happens to be 8 years old. Father C is the father of participant A and has custody of nephew B.

I would expect that the distribution form would be send to Father C who would take the distribution on behalf of nephew B. Is that correct?

Also what documentation would you recommend that we get to prove Father C has custody of nephew B?

Does Elective Deferrals under Sec. 408(k)(6) (SARSAP) added back to the elective deferral under Sec. 401(k) Plan when performing the ADP test?

Background information:

Reviewing a copy of the 2015 Form W-3 totals (under the summary of W-2 Data) for a new prospect, I have learned that there are both Code D (with 35 employee count) and Code F (with 12 employee count) for box 12.

It appears that this new prospect established a new 401(k) plan in 2015 when the number of eligible employee goes over 25. For part of the 2015 plan year; however, this new prospect some employees deferred under the 408(k)(6).

From my reading of ERISA outline book Chapter 11 that goes over 401(k) vs. SARSEPs, the deferrals in both plan needs to be added to make sure the total doesn't go over the 402(g) limit. Also, ADP test for the two type of plan is very different.

But I’m still not 100% sure whether I should use the total of the two different plan deferrals for my ADP test as I should do for 402(g) limit test.

Situation is you send out the notices & get nothing back in 30 days. You review the terminated Participant account & it's under $1000. You can't send a check to nowhere & most providers won't build IRA's under $1k.

Does anybody have a go-to provider that CAN build an IRA under $1000 & get these people out of the Plan with a Trustee to Trustee rollover? Full disclosure--We have one such provider now, but I'd like options...

9/30 PYE

3% ER Safe Harbor

Cross Tested with two groups

There were two employees (NHCE) that received QNEC contributions due to a missed deferral opportunity.

Where do these QNEC contributions come into play when calculating the cross tested profit sharing allocation?

How does relius handle the QNEC contributions when calculating the cross tested profit sharing allocation?

What should I be looking/checking to make sure the calculation is being done correctly?

What are the ramifications of a company that has a SIMPLE 401k in place, and sets up a normal 401k plan in the same year. I know you cannot have any other plans if you have a SIMPLE 401k.

Would that disqualify the entire SIMPLE plan or just the current year contributions? Would it only affect Highly Compensated employees, or everyone?

thanks in advance

An employer sponsors a SEP IRA. An automatic draft had been set up to have funds moved from the employer business account into the SEP IRA. The employer advised the bank to stop the draft, but the bank did not do so timely. As soon as the employer noticed the transfer, the funds were requested to be returned to the employer from the SEP IRA. This was within one week's time. The SEP investment provider is issuing a Form 1099 with a premature distribution code. While I know the employer can look to the bank for redress, I am wondering if anyone has ideas on how to or experience with the Service to request a waiver of the distribution and/or penalty for this "mistaken" contribution which was returned. Is there a correction program which addresses this type of problem? This happened more than 60 days ago. Any help is appreciated.

Does anyone know if interest must be credited to DROP money? Or is based on the plan document/agreement?

now that 5500 is basically over I will stop and post my latest version of

a report writer version for minimum distributions

this can be run globally across the board on all plans.

it will produce a separate report for each plan that has a min distribution

haven't noticed any difference between the results and Relius standard report (except no 0 min distribution show)

but of course that doesn't mean an odd exception might pop up

Min Distributions Report.rpt

Hi Folks,

I've a couple of small business clients that need a TPA but not really a TPA fee. The Solo 401(k) balances are small, perhaps $10K-$20K or so.

I was wondering if we could handle the record keeping for these smaller cases in house, and if so if there we some guidelines with regard to 'how' records should be kept?

The only glaring thing I see is the split between EE/ER contributions when the custodian doesn't track that directly, are there other things that need to be recorded on smaller plans like this, and are there any rules on how things should be recorded?

For example, would a copy of payslips showing the contributions suffice?

Lastly, what qualification or course would prepare someone for scenarios like this if professional training is recommended?

Thanks!

Matt

https://hrlaws.services.xerox.com/2016/10/18/social-security-benefits-and-taxable-wage-base-to-increase-for-2017/

Anyone know why so much? After 117,000, 118,500, 118,500 in 2014, 2015 and 2016 respectively, it jumped to $127,200 in 2017.

There is a participant who took out two loans. Loan 1 was paid off in the spring of this year. The loan payments were never stopped, and thus applied to the second loan. The participant recently noticed and would like the months of extra payments returned. Would this fall under one of the acceptable categories to take money out of the plan and return to the participant?

We had what some would consider the perfect storm for a plan of ours.

Client is a large plan (over 120 participants.) Plan year ended 9/30/15.

An employee of our TPA firm had contacted the auditor regarding the audit for the plan on 4/5/16 to see how the audit was going and if it would be ready for 4/30/16. Auditors asked us to put the plan on extension to 7/15/16. Now, here is where the breakdown begins.

The auditor working on the plan was a newbie. She finished the audit and never provided it either to her supervisor or us, the TPA. The employee in our office responsible for the plan and Form 5500 filing terminates employment and has indicated that all plan work is current. Just last week, we are contacted by the client to see why the 9/30/15 Form 5500 was not filed.

So, we are now trying to decide to either:

1. File the PYE 9/30/15 Form 5500 under DFVC Program and pay the penalty; or

2. File the PYE 9/30/15 Form 5500 with a letter of reasonable cause and hope that the letter is accepted and no penalty is assessed.

Has anyone ever filed with a reasonable cause letter and had success since EFAST came along? And If we file late and it is not accepted, can we then amend and file under DFVC Program or is DFVC no longer on the table.

Any guidance you can provide or experiences you have encountered would be greatly appreciated.