We are adding a Roth provision effective 1/1/17. We currently offer a brokerage window in addition to a broad lineup of mutual funds and we are debating internally about whether we should allow Roth funds to be invested in brokerage. The issue involves the ability to account separately for the Roth contributions and associated investment earnings/losses. Does anyone have experience with this?

received an interesting note from FT William

what date should be put down on the form for the extension date if for example the date falls on a Sat or Sun and so is extended to the following Monday?

well, apparently they talked with the IRS, and you put down the 'technical' extension date of the 15th, even though the 'actual' extension might be the 17th.

gotta love stuff like that like.

reminds me of a line from a W. C. Fields movie

After hitting a golf ball in the water he complains to the caddy "Why are you standing there? You should be over here"

The caddy replied "But you told me stand here"

and WC Fields responds

"Don't stand where I tell you to stand, stand where I tell you stand."

well, ok maybe only a few out there even remember WC Fields, oh well.

There doesn't seem to be a definition of what constitutes "retirement" for purposes of the 401(a)(9)© delay in RMDs until the April 1st of the calendar year following the calendar year in which the employee retires.

Would working (and being paid) for 1 or 2 hours a week be sufficient to support a delay in RMDs?

Would seem to be an area ripe for creative tax planning (almost said abuse).

I'm aware the delay does not apply to 5% owners.

Thanks

I am looking for a template for the notice discussed in Appendix A of Rev Proc 2015-28.

I see in Appendix A the requirements for the notice, but was not wanting to re-invent the wheel, if there was a simple example of that notice.

Does anybody have one they will share - or can you point me to a site that has a notice.

A large plan client is being audited by their CPAs, and they need to provide this notice to the affected participants as well as making the corrections to deferrals, match and lost earnings.

http://www.asppa-net.org/Portals/2/PDFs/GAC/Comment%20Letter/IRS_Compliance_Questions_Comment_Letter5.31.16.pdf

Especially read the piece about trust EIN's. It sounds almost rude and snarky, but then it is so true which makes it very reasonable to say...

Participant in DB plan earns 5 years of service between 1980 and 1985, and leaves service. Plan at that time provides for a 10 year vesting schedule. After 5 years you are 50% vested, after 6 years 60%, etc. Plan is amended in 1995 to provide for 5-year cliff vesting. Participant returns to covered service in 2005 and earns 10 additional years of service.

How do we treat the benefit accrued between 1980 and 1985 under the 10-year schedule? Does he get 50% of the accrued benefit under that schedule? Or, because of amendment to vesting schedule in 1995, does he now get 100% of that accrued benefit?

The language of the vesting amendment is not clear. It just changes the schedule effective 1995. Does not explicitly say that it was meant to be retroactive. Any help would be appreciated.

Maybe I am overthinking this but I am stuck.

I have a dentist, A, who owned half of the AB practice on 12/31/15. The plan is top heavy. He bought the other half as of 1/1/16 (stock sale).

He owned all of the A practice on 12/31/15, and still owns it. That plan is not top heavy.

The plans are maintained separately, at least through the end of 2016.

If he makes deferral contributions to the A plan, does that trigger top heavy to AB?

I'm involved in a PBGC plan termination. A terminated participant would like to receive a lump sum, which is allowed under the plan. However, the participant notices have been distributed and the Form 500 was recently submitted. The participant would like, if possible, not to have to wait until the end of the 60-day review period. My reading of the Form 500 instructions is that this is fine since it is a terminated participant. Am I reading this correctly?

Thanks for any responses!

Client has an employee for whom they did not withhold 401(k) from a bonus check at year-end. Client is going to fund the missed deferral, plus match, plus earnings, for the employee. However, how does this impact ADP/ACP testing? The missed deferral is going to be funded as a QNEC.

IRS site generally states: "..the plan must evaluate whether, in the event that the employee had made the missed deferral, it would still pass the applicable ADP test. The ADP test should be corrected according to the plan's terms before implementing any corrective contribution on behalf of the employee. In addition the missed deferral amount should be reduced to ensure the employees elective deferrals (the sum of deferrals made and the missed deferrals) comply with all plan and legal limits."

So I think this is saying that we must rerun the ADP test assuming the deferral is in it, and then determine the amount of the QNEC? I guess I don't understand why the IRS has the employer deposit it as a QNEC if it is going to go into test?

Thanks!

Has anyone encountered unusual results when using this calculator for multiple missed contributions?

We have a doctor client who went from practicing as a sole proprietor to becoming an employee of a larger medical practice effective June 1.

His net earned income through May 31 is estimated at 171,000.

So for 2016 - I am pretty sure he can only defer the $24000 (over age 50) between the two employers" since that is an individual calendar year limit.

So my real question is:

If he maxes out the profit sharing contribution in his practice.(in effect through May 31) ...and contributes PS of $35000 for himself ( there is NO match)....does that have any bearing on what his new employer can contribute for him as far as any profit sharing they may put into their plan? They are giving him credit for prior service in his old plan.

Opinions?

Payroll company missed first 3 months of deferral deductions which equals $3,000. The participant received a 25% QNEC ( $750 EE) for the failed opportunity on the deferral + full match and gains for that period.

Participant continues on their own to contribute the full $18,000 pre-tax for the year plus the safe harbor match.

Did the participant exceed the 402g limit by contributing $18,000 + receiving a 25% QNEC on those missed deferrals? If so, how should this be remedied?

Thanks for your guidance on this matter.

Safe Harbor Notice states the SH Match will be made each payroll period. The plan sponsor wants to change this to year end. The SH Notice will be updated to reflect the SH Match will be made at year end. NOTE: the Adoption Agreement does not specify the timing of safe harbor match ( operational item) and therefore no amendment is needed.

Doesn't the employer have to make the payroll by payroll match through the end of the 30 day notice. For example if the notice is provided to participants today. doesn't the safe harbor match continue for each payroll period from today to June 30th ( end of 30 day notice period)?

OR can the employer stop the SH Match as of today and just provide the 30 day notice stating effective today the SH Match will be made at year end.

Thanks

Are employers allowed to change the wait period for new employees from 12 months to 90 days, under the new rules for mid year change, assuming proper notification to all plan participants?

We have an employer that wants to match on pretax deferrals only and not on Roth. I don't know how many participants would actually make Roth deferrals without a match, but if they did, how would this be tested? I know about document issues and the ADP/ACP test. My questions are coverage and BRF. Would this be considered a BRF to be tested separately as a separate rate of match? Since the participants have the ability to choose the Roth that isn't receiving a match, does that change the BRF issue?

Thank you

Client purchased all the assets of a company that had recently terminated its defined benefit pension plan. All benefits were funded and all participants received annuity contracts or lump sums. Several years after the termination, the buyer was contacted by insurance company which had funded the terminated plan, that it was holding demutualization shares distributable to the terminated plan. Buyer plans to claim the surplus assets pursuant to the purchase agreement. Will it be subject to the reversion excise tax if it was never the plan sponsor?

If Plan B is merging with Plan A due to a purchase and Plan B has loans, Plan A only needs to allow for rollovers and loans to accomplish this correct? Plan B, which is terminating, does not need to amend it's plan.

A plan excludes HCEs from contributing, however an HCE was accidentally allowed to contribute.

Mostly due to outside factors, we are changing the plan to a MEP effective July 1st, 2016. The plan currently is a calendar year plan.

In trying to find the best way to fix the HCE with this change, the numbers below apply:

1/1 to 6/30 comp = 100,000

7/1 to 12/31 comp = 100,000

1/1 to 5/20 401(k) contributed = 9,000

HCE intends to max out to 18,000 (under 50)

Our plan was to immediately stop contributions, refund the 9,000 so that the net 401k contribution for the first half of the year is 0. Then the first pay after 7/1 will have 9,000 withheld to make him whole. Then the remaining pays are held per the 9% deferral rate, giving him an additional 9,000 and getting him exactly to the limit of 18,000.

My question is how to treat the refund in regards to the 18,000 limit. Does the refund count towards reducing the contributions for the 402(g) limits? (as in the proposed situation above?) Or as of 7/1 would the HCE still have 9,000 contributed towards that limit? If this were the case, it would lead to meeting the 402(g) limit immediately after we did the 9,000 contribution on the first payroll after July 1st to make him whole. He then would be unable to contribute anything else after July 1st

Thank you

Thoughts would be appreciated

New client is doctor group (professional corporation). Group consists of 17 shareholder-employees and 3 non-shareholder employees. All employees receive W-2 compensation. Group's 401(k) Plan provides for deferrals and two match sources.

Each employee's annual compensation is "production-based" (i.e., collections - applicable overhead - direct expenses = employee's W-2 compensation). For this purpose, "overhead" includes all amounts the employee wants to contribute to the 401(k) Plan (deferrals and match), so if an employee wants to max out in 2016, $53,000 will be subtracted/withheld from what would otherwise constitute the employee's W-2 compensation - leaving the employee responsible for his or her "employer" matching contribution.

As I've not encountered a production-based compensation model in which a W-2 "employee" is responsible for all "employer" contributions to a 401(k) Plan, my questions are this:

1. Inasmuch as the Plan's matching contributions are simply subtracted from what would otherwise be paid as W-2 compensation, shouldn't all of the contributions be characterized as "elective deferrals" and otherwise subject to 402(g) limits?

2. If no issue with #1 - any issue the P.C. taking the deduction attributable to all matching contributions despite the employees actually funding the contributions?

3. To the extent all of the employees are HCEs, should I care?

Thanks in advance.