1065 was filed without deducting anything for profit sharing last week. Can an amended be filed "today" (before 9/15) to take an additional deduction? Or has the ship sailed?

May a 401(k)/PSP force participants to self-direct the investment of their account? The plan currently has a menu/platform but the sponsor wants to get rid of that and have each participant get their own broker and direct their own investments. I'm concerned about participants who either are not that savvy or do not want to self-direct.

If it is permissible, is it correct to say that a blackout notice be required when eliminating the menu?

Thanks.

I know I'm very late to the party, but I've been doing some reading on the not-so-new changes regarding the inability of small employers to reimburse their employees for health insurance premiums. The topic just came up at work, so I started looking into it for the boss. I got excited when I read that a cafeteria plan would do the trick, but then that's been ruled out, too?! Since this all started a couple of years ago, it seems no one has figured out a sure-fire way for a small employer to help out his employees aside from adding more taxable money to their income and saying "use it for health care if that's what you want." I feel like I must be missing something. Perhaps I'm not reading the right articles?

A DB plan currently passes 401(a)(26) easily (they're not top-heavy). The plan just now was frozen to new entrants and will freeze accruals for HCEs only. Thus it will only continue accruals only for the NHCEs that entered before the close date. It intends to stay closed and to not allow accruals for HCEs (including stopping accruals when a NHCE becomes an HCE later on). In many years, the number of non-excludable employees will dip below the 40%/50 EE threshold under 401(a)(26). The plan is not aggregated with any other plan for any purpose.

Under the current rules, is there an exception for passing 401(a)(26) if the plan only has benefit accruals for NHCEs? What about the proposed rules?

401(a)(26)(B)(ii) has this:

If employees described in section 410(b)(4)(B) are covered under a plan which meets the requirements of subparagraph (A) separately with respect to such employees, such employees may be excluded from consideration in determining whether any plan of the employer meets such requirements if

(I) the benefits for such employees are provided under the same plan as benefits for other employees,

(II) the benefits provided to such employees are not greater than comparable benefits provided to other employees under the plan, and

(III) no highly compensated employee (within the meaning of section 414(q)) is included in the group of such employees for more than 1 year.

and 1.401(a)(26)-1(b) has:

(1) Plans that do not benefit any highly compensated employees. A plan, other than a frozen defined benefit plan as defined in § 1.401(a)(26)-2(b), satisfies section 401(a)(26) for a plan year if the plan is not a top-heavy plan under section 416 and the plan meets the following requirements:

(i) The plan benefits no highly compensated employee or highly compensated former employee of the employer; and

(ii) The plan is not aggregated with any other plan of the employer to enable the other plan to satisfy section 401(a)(4) or 410(b). The plan may, however, be aggregated with the employer's other plans for purposes of the average benefit percentage test in section 410(b)(2)(A)(ii).

Holding company owns 100% of Employer A (our client).

We find out that Holding Company also owns 60% of an International Company (I will call them Employer I) and 40% of another US Company - Employer B. No issues so far. Do you agree?

We now find out that Employer I owns the other 60% of Employer B. I think I now have a control group with another US Company - Employer B. Do you agree?

I'm told I should include a cover letter with the QDRO when I file it with the court for the judges signature/approval. Any advice on what should be in the cover letter would be greatly appreciated. Thanks in advance!

Plan effective date: 1/1/2008.

Type of plan: Applicable defined benefit plan (cash balance).

Vesting service: Plan years in which the employee works at least 1,000 hours.

Normal retirement age: 62.

The plan has the most restrictive method allowed under IRC section 411 for determining vesting.

The employees shown below were originally hired on 1/1/2011.

No employee has left service under the terms recognized under the special rule for paternity and maternity absences.

Employee 1 Employee 2 Employee 3 Employee 4

Age at hire 18 25 16 60

2011 hours 1,901 1,956 1,325 1,254

2012 hours 1,850 0 700 565

2013 hours 1,251 1,210 1,743 779

2014 hours 1,801 355 943 1,645

2015 hours 1,583 1,479 1,100 560

How many of the employees listed above are vested by 1/1/2016?

(A) 0

(B) 1

(c ) 2

(D) 3

(E) 4

According of SOA answer key, D is the correct answer.

I have difficulty to understand because if I exclude service prior to attaining age 18 under IRC section 411(a)(4)(A) then I will end up 2 employees by applying the 3 year cliff vesting for cash balance plan.

Am I missing something hear?

Please help.

A participant terminates in one plan year and receives a distribution of their account balance early in the subsequent year. After the valuation is completed for year of termination an additional contribution is deposited for that participant. What is the rule for determining if this additional contribution can be cashed out or must be combined with the original amount distributed to determine if the $1,000 has been exceeded?

I have a take over plan that is a single member LLC that is taxed as a sole prop. The owner pays himself W2 wages in payroll throughout the year and then also files a Schedule C reporting his net income. For plan purposes, is his compensation W2 or Schedule C or a combination of both? Everything I have found states you cannot pay yourself W2 wages when you are a Schedule C filer, however this is how the CPA is doing it.

We have a difference of opinion on how the plan should operate. Plan requires 2 years of service and then enter on 1/1 Coincided with or immediately preceding.

The question is, how are the 2 years counted. Is it 2 years from date of hire, or is the first year, from date of hire to 1 year anniversary and then switch to plan year. Below is wording from the document. I think the SPD is confusing.

"Eligibility Computation Period" means a 12-consecutive month period beginning with an Employee's Employment Commencement Date; provided however, his succeeding Eligibility Computation Period for such purpose will switch to the Plan Year, beginning with the Plan Year that includes the first anniversary of his Employment Commencement Date. An Employee who is credited with a Year of Eligibility Service in both the initial Eligibility Computation Period and the first Plan Year which commences prior to the first anniversary of the Employee's initial Eligibility Computation Period will be credited with two Years of Eligibility Service.

"Year of Eligibility Service" means the following:

With respect to eligibility to receive Profit Sharing Contributions, Year of Eligibility Service means an Eligibility Computation Period during which an Employee completes at least 1,000 Hours of Service.

If the Plan provides for fractional Years of Eligibility Service, an Employee shall be deemed to earn 1/2 Year of Eligibility Service on the date that is six months after the end of the Eligibility Computation Period during which he earns his first Year of Eligibility Service; provided that the individual is an Eligible Employee on the applicable entry date.

Section 3.01 PROFIT SHARING CONTRIBUTIONS

Each Eligible Employee as of the Effective Date who was eligible to participate in the Plan with respect to Profit Sharing Contributions on or before the Effective Date shall be a Participant eligible to receive Profit Sharing Contributions pursuant to Article 4 on the Effective Date. Each other Eligible Employee who was not a Participant in the Plan with respect to Profit Sharing Contributions on the Effective Date, shall become a Participant eligible to receive Profit Sharing Contributions on the first day of the Plan Year coincident with or immediately preceding the date he attains age 21 and he completes two (2) Years of Eligibility Service; provided that he is an Eligible Employee on such date.

The SPD says:

ELIGIBILITY FOR PARTICIPATION

Eligible Employee

You are an "Eligible Employee" if you are employed by Company or any affiliate who has adopted the Plan.

Profit Sharing Contributions

You will become a Participant with respect to Profit Sharing Contributions on the first day of the Plan Year coincident with or immediately preceding the date you attain age 21 and you complete two (2) Years of Eligibility Service, provided that you are an Eligible Employee on that date.

Computing Service

With respect to eligibility to receive Profit Sharing Contributions, "Year of Eligibility Service" means an Eligibility Computation Period during which you complete at least 1,000 hours of service.

"Eligibility Computation Period" means a 12-consecutive month period beginning with your first day of employment. Any succeeding Eligibility Computation Period will then switch to the Plan Year, beginning with the Plan Year that includes your first anniversary of employment. You will generally earn an hour of service for each hour you are paid for the performance of duties for the Company (however, numerous exceptions and special rules apply).

I have a sole prop with common law employees. The Schedule C is done on a cash basis method of accounting. The 2015 Schedule C includes the 2014 deduction of the employer cost of the retirement contribution for common law employees. Do I use this net schedule C as the basis to calculate the self employment tax to determine the owners plan compensation? Or, do I add back the 2014 deduction, deduct the 2015 employer cost for the common law employee and then calculate the self employment tax?

Hello,

Hoping someone can help me figure this out. In June 2014, the plan changed TPAs and there was an error in the transfer of loan balances from the old TPA to the new one, causing certain loan payment schedules and balances to be wrong. In July 2015, the new TPA corrected the payment schedules and the loan balances for the loans affected, however the way they did those adjustments have cause the 2015 loan report to be inaccurate.

1- the beginning loan balances per the 2015 loan report do not agree to the 2014 ending balances. The beginning balances actually seem to be exactly the balances as of the TPA transfer date in June 2014. These balances also appear in the participant's account in the annual activity report under a "converted value" column

2- there are two loans that were offset in 2014 and zeroed out in 2014 when they were deemed distributions. In 2015, because of the issue explained in #1 above, the loans appear to have a beginning balance and are then offset again, causing yet another deemed distribution. This distribution appears in the participant's account in the annual activity report and was therefore included in Form 5500 line 2e(1) when prepared.

This is merely a reporting issue since the taxable event occurred only once in 2014, when the 1099s were distributed.

In order to correct the 2015 form 5500, I would think distributions line 2e(1) needs to be reduced by the amount of the double counted deemed distributions.

Question is, what other line in Schedule H should be adjusted to make it balance? I would think Plan assets needs to be increased, but is that correct?

I asked the TPA, since I don't know their system, when the loans were put back on in 2015, what was the other side that was affected so I know how to correct the problem. However, they are not understanding what I mean. As an accountant, we tend to think in terms of debit and credits.

Thanks in advance!

We are the TPA for a large plan that has changed audit firms due to poor quality audits of the prior firm. The new firm is clearly performing a much more thorough audit, but they have asked for some information that seems both impossible to calculate and completely unnecessary (at least to me).

They have asked the plan sponsor to calculate the number of hours that each employee has devoted to working on the plan and then calculate the dollar value of that time including both salary and benefits for each person.

Is that a common or reasonable request?

Good morning. I work with a plan sponsor whose consultant has recommended merging a 403(b) Plan into a money purchase plan to save money on having two plans and also on audit costs. At first blush, I thought a 403(b) Plan could not be merged into a money purchase plan because it is a 401(a) Plan. In addition, I believe the 403(b) Plan is operating as non-ERISA plan not subject to audit or filing requirements, so I am not sure there is money to be saved on audit costs. The consultant said they have merged many 403(b) Plans into 401(a) Plans. Any thoughts would be greatly appreciated.

can anyone think of what type of notice, if any, would be required to give to participants.

I am trying to explain to a client how the change in control provision works in a 457(f) plan. can someone please explain how you apply the definition in the regs to corporations without owners or shareholders?

We have a deceased person whose assets are to be split between 5 beneficiaries at the investment house. The beneficiaries choose to leave the assets in the plan. These assets are all held in one plan with each person having their own account. When the deceased assets are switched to the beneficiaries accounts within the plan and staying in the plan, should the beneficiaries receive a 1099-r as a rollover coming into the plan for these amounts?

Person submitted an application and opened an account but never executed a Plan Document.

Do you think this is correctable under EPCRS?

If not, how would you correct this?

Account was established in 2015 so PPA would be the applicable Plan Document that does not exist.

(And for those of you wondering, Pioneer.)

Thank you

I probably don't even have enough information to properly ask this question, but I thought I'd give it a shot.

I don't know whether this relates specifically to a section 125 Cafeteria plan, or some other form of welfare benefit plan. I THINK the question revolved around whether the 1-person employer could be considered as having a "group" health insurance plan, in order to be eligible for some sort of welfare plan with dependent care benefits, etc...

Does anyone know, offhand, what the governing authority is for defining a "group" plan for such purposes? Or any other pertinent items? Thanks.

Plan Sponsor applied an incorrect match % to certain employees for a 3 year period (in addition to failing ADP/ACP). All employee defferrals were prcessed timely and properly. Correction for the incorrect matching % is being done via VCP.

Would this also require a VFCP filing?

My take would be yes, since a prohibited transaction occured as a result of the incorrect match (and not corrected with the year) and for the lost earnings.

However, I do not see any applicable boxes on the VFCP model application.

Any suggestions?