Is there any guidance (official or unofficial) in terms of how many lump sum window offerings a plan sponsor can offer (and in what amount of time) before the IRS would deem the cash option a permanent plan feature?

We currently use our normal DC document and it is silent as to the specific rules regarding a one-person 401(k) plan.

We have just discovered the owner's daughter works at the business on a part time basis but has never met the 1 year of service eligibility requirement.

Does this throw the plan out of "solo-k" status, causing a 5500 filing, testing, etc.? Or because she is part-time/seasonal and never works more than 1000 hours during the plan year, is that solo-k status retained?

Thanks!

Can a Form 5300 be filed for an affiliated service group determination if filed before the revised form comes out on January 1? It is a new 401(k) plan with an unmodified preapproved volume submitter document with an effective date of 1/1/17. If it can be filed, as a new plan does it qualify for the fee exemption?

A plan has been in existence for only one year.

Prior plan doc. calls for all years of service counted for vesting purposes as well as used elapsed time method.

We want to amend it so that for vesting purposes service crediting starts from date of participation and the service counting method will be hours of service method.

My research didn't result exact answer the things I need to be careful in doing so.

Is this permissible to start counting vesting service from the date of participation (at least for those who were hired in the amendment year)?

Background:

Have owned the same business since 1993. Have filed Schedule C until 2010, and formed/taxed as S corp since 2011.

Established DB in 2013 and had 401K as well. Terminated the 401K (and rolled over to Traditional IRA) earlier 2016. The DB is the only retirement arrangement I (S-corp) have. I am the only eligible participant in the DB and have taken no w-2 income for 2015. I will continue to take no w-2 income from the business.

I understand that I could set up a SEP (I had an old one that had been terminated several years back when I opened the 401K) using a prototype plan (from a mutual fund company) with ‘less restrictive’ rules (than 1000 hours of work per year), in addition to the DB I have since 2013.

Questions:

1. Would I be considered eligible participant to the SEP even though I have no W-2 income for the business. How does this new SEP affect my DB, if any?

2. I am the only participant in the DB (due to the 1000 hours worked). Can my employee continue NOT to be eligible for DB while they may become eligible for the SEP?

3. The SEP Contribution amount is calculated based on the W-2. I (S-corp) will need to contribute for all eligible participants based on their W-2s. Since I receive no W-2 income, regardless of whether or not I am eligible for the SEP, my business (S-corp) will not contribute for me. Am I correct? Or, would my W-2 income be ignored, and the contribution will be calculated based on the entire business profit?

4. How can I research if I want to learn more about the SEP/DB for S-corp?

Is this required to provide Annual Funding Notice for a new small DB plan (less than 100 participant beginning of year) with end of year (12/31) Valuation date?

It appears to me that that there is almost nothing (zero asset & zero Funding Target as of 12/31) to report.

Any help and explanation is highly appreciated.

Company A acquired a company B in 2016. They are now part of a controlled group. Plans will not merge in 2016 or 2017.

Company/Plan A uses top paid to determine HCEs and it applies.

Company/Plan B does not.

I believe all members of the "controlled group" must have the same election. So, what do you do if they do not? If possible, should Plan B be amended by 12/31/16 to "elect" top paid?

If both plans elected top paid, for 2016 a "reasonable approach" would be to calculated the top 20% separately. For 2017, they should be done in aggregate.

For 2016, how should HCEs be determined (if plan b is not amended)? Can Company/Plan A still continue to use top paid for 2016?

Thanks!

A 61 year old active participant that has a loan balance wants to rollover her balance to her IRA and continue to pay back on her loan. Is this permitted?

Hi All,

I want to know exactly what should the "compensation" amount be against which 25% limit of employer contribution is calculated . This is for a single owner/employee S Corp. eg. Let's say the employee has 100k as wages and FICA taxes are 8k (for the sake of simplicity). And the employee contribution is the maximum allowed 18k. Would the 25% be against 100k or 92k (100-8=92k after FICA taxes) or 80k (100-8-18=80k after FICA and employee contribution) ?

From the research on this forum and also from the IRS publication at https://www.irs.gov/pub/irs-pdf/p560.pdf , it appears that it should be 100k in the above example. But I haven't seen a clear answer anywhere yet. Can someone confirm this or shed some more light on this ?

Thanks in advance for all the inputs.

I haven't worked much in the DB area and have a question. I've read that the IRS requires a new DB plan to exist for 3 or 5 years before termination, depending on who I talk to. What are the IRS guidelines? Thanks.

Companies A, B, C and D are in the investment advisory/insurance business and are all LLC's. Company A has ownership in Company B, but C and D are unrelated. The four companies together formed company XYZ. A,B,C and D will continue to operate under their individual business names, but technically will no longer have employees as all will be paid by XYZ. Basically a D/B/A type situation. Due to the nature of their businesses, my conclusion is that they have formed an affiliated service group. Company A has an existing 401(k) plan and wants to change the plan sponsor to XYZ and cover all 4 entities. Do A,B,C and D need to adopt the plan as participating employers? They will still have separate EIN's but won't have any employees.

Due to an over site one of our locations of 122 employees should have had a deposit made on 11/15/2016. It did not get posted to employees 401k accounts until 12/13. Can anyone tell me if I have any next steps to take.

I'm looking at an amendment to a 403(b) plan - not our document - and I'm finding the wording puzzling. Or maybe I'm just reading it wrong. It says:

"Notwithstanding the provisions of this Section (I've deleted the section numbers to preserve some semblance of anonymity to the document provider)..., pursuant to the direction of the Employer, as Plan Administrator, if the value of the terminated Participant's accounts that is attributable to non-Roth contributions (including his Rollover Account, if any) is not greater than $5,000, the terminated Participant shall receive a distribution of the value of the entire vested portion of such Accounts attributable to non-Roth contributions and the non-vested portion shall be treated as a forfeiture."

Now, what this is supposed to mean may not necessarily be what it says, or what I read it to say. But to me, it seems to be saying that you are completely excluding Roth accounts when determining the $5,000 threshold. I don't think this is correct or allowable under 411(a)(11). For example, if you have $4,000 pre-tax and $4,000 Roth, you can't force out the $4,000 pre-tax. (and what good would that do anyway???)

I wonder if perhaps, instead, this is really meant to encompass the guidance in 401(a)(31)(B), and 1.401(k)-1(f)(4)(ii) where the $1,000 threshold is applied separately to Roth and non-Roth?

Maybe I'm just tired, but this one has me scratching my head.

Thoughts? Thanks!

Putting in my first plan for a financial advisory firm, and the owner (which is a registered financal advisor) wants to be the trustee and have self-directed brokerage accounts for each of the participants (at least one NHCE). He is OK with giving advice to his participants since that is literally his specialty.

All the bells for self-dealing and the sponsor giving participants advice started going off, but there has to be a way this is OK. It doesn't seem reasonable for this employer to have to call a competitor to have them be the advisor on this plan. But the PTEs don't seem to be specific to this situation. Any thoughts? Thanks.

I posted this in another thread and thought this is probably the correct placement for this topic.

A small SH401 is currently in arbitration. A former HR employee who had access to the plan was found to be an embezzler. Apparently this employee was setting up double accounts for a few participants in order to access them at a later time. One of these participants put in a distribution request in August and the distribution was never issued as the plan sponsor is of the opinion the participant may not be entitled to all the funds. The participant was never issued a written notice why the distribution was not processed. The claims procedure in the plan document addresses a plan administrator's decision to not provide participant claims. My question is what exposure, if any, does the administrator have for not providing written notification.

We administered a plan in 2011. Went to another vendor. We just got the plan back with a new investment advisor. The plan investments will be different as well as the models. How is the best way to set up in Relius?

As a new Plan under the ER or should I roll forward the old plan six years? About 25 participants. Since investments have changed, would it be cleaner to set up as new plan? Daily Valued plan.

I have a client who set up a ROBS (don't worry, I have disclaimers all over the place in my engagement letter, and lengthy emails each year about how risky it is) and I need to know the easiest way to get a cheap valuation to enable them to check the box that all assets were determined by an independent third-party appraiser.

I know there are internet services out there for a few hundred dollars. Anyone had any direct experiences on this?

Who are the top non-qualified plan Deferred Comp plan recordkeepers (with funding thru a COLI)? i.e. I don't think a mutual fund company (like Fidelity or T Rowe Price) can offer this type of plan due to the funding arrangement.

I have a bit of a quirky one that should be a lot simpler.

I have a controlled group with two entities, both with eligibility less than a year. NHCE "A" hired and gets in around November of 2015, gets a huge bonus 12/31/15, quits in March of 2016. A is an NHCE for 2015, but bonus comp pushes him to be an HCE for 2016 due to 2015 comp being around $150K.

The whole period, A is excludible. Obviously for 2015, A would be an NHCE in the otherwise excludible group for testing. For 2016, is there anything that would allow A to still be an NHCE for testing?

I can't fathom there is, but there's some internal debate. I've combed through the 410(b) regs, as well as 414, but can't find anything supporting that he'd be an excludible NHCE for 2016.

Thanks!

A plan sponsor had a former employee embezzle funds. It appears as if phony accounts MAY have been set up in their 401(k) to allow this employee to have access to additional money. One of the participants(not the embezzler) with an account in question is requesting his money and submitted distribution paperwork in August 16. The plan sponsor ignored the request and the distribution request expired in November. The plan sponsor did not provide the former employee written notice regarding the plan going into arbitration and the fact that his account is under scrutiny. The former employee has since submitted another request for distribution. Should the Plan Sponsor provide written notification now or should alternative action be taken (EPCRS)?