ADP Safe Harbor Enhanced Match- $1 for $1 up to 6% of pay

Fixed Match-Based on Year of Service- $1 for $1 up to-

Years 1 and 2= 1% of pay

Year 3=2% of pay

Year 4=3% of pay

Year 5 and higher =4% of pay

Will the Fixed Match fit into ACP safe harbor? Since all employees have the ability to grow into years of service will this meet the nondiscrimination test IRC 401(m)(11)(B)(iii)?

A participant was paid out in 2012. It was a lump sum cash payment from a 401(k) plan. The taxes were withheld and a 1099R was completed. The check was not cashed. The participant passed away in 2013.

Are the funds technically in the participant's hands with the check and belong to his estate or should the funds go to the participant's beneficiaries from the plan?

SEP puts in 8% of comp and has eligibility of "having worked for employer one of the immediately preceding 5 years.

Employee starts 11-5-16

Should he receive a contribution for 2017? how about 2016?

Or does he have to work 12 months?

A spouse with a small Schedule C has been deducting a SEP contribution on the joint Form 1040 for many years; the deduction ranges between 2,000 and 3,000 each year. The taxpayer informed us today that this contribution has, for the past many years, been made to his instead of to her SEP account.

The taxpayer is a partner in a partnership, and has large amounts of SE income, so the deduction is allowable each year based on the SE income on the 1040. The question becomes what needs to be done to move the contributions from the husband to wife's SEP, and what tax ramifications are there. The taxpayer asked the SEP custodian what to do and they deferred to the accounting firm who does the individual return, who then asked me (I am the TPA of the husband's company's 401(k) plan) for my opinion. This is one I haven't heard before.....

Any replies would be helpful, thanks!

I have a client with a 401k - participants may modify deferrals on entry dates and stop altogether at any time. They can start again on an entry date (quarterly)...

they asked " if a participant does not want deferrals deducted from a certain check (ie vacation , bonus, final check) what do we need to do to accommodate them?"

It is my understanding that they cannot pick and choose a paycheck, and if they stop then they must wait til next entry date to begin again.

Any thoughts on this? They are on a prototype Sungard doc.

I have a plan that terminated and I need to file an 8955-SSA for 2015 and then the short plan year 2016. Can I just put all the D's on the 8955-SSA for 2015 and call it good? or do I have to file two forms. Will the IRS system except an 8955-SSA for 2016 on a 2015 form?

Thanks

P

Employer is opening up an early retirement incentive window. Eligible employees who elect to take advantage of the incentive get extra years of service factored into their qualified defined benefit pension plan benefit, whether they are retiring at, after or prior to the NRA, which is 65. All of this being done via an appropriate plan amendment; no EEOC, 401(a)(4) or other qualification concerns, except possibly one: Employer wants to condition the extra years of service on pre-age 65 employees taking an immediate pension rather than deferring until age 65, which they have the right to do, obviously. Is this a "significant detriment" that would make any consent to take a pre-65 distribution invalid under the 411 regulation?

When computing the maximum loan allowed for a participant loan the account balance to use for the 50%, is the loan balance included or not? Our document and loan policy don't specifically address this and I've looked at the regs, but maybe i'm missing it.

Thanks

Anyone see an issue using an individual annuity to fund a cash balance plan? The attractiveness of this option is that the paying rate on the annuity reasonably mirrors the crediting rate in the Plan.

But in reviewing the paperwork it appears that it is requesting an individual's name as the annuitant? I assume that would have to be the Trustee's name, but is that ok?? Can you use an individual annuity in this way? IS there a "Cash Balance" plan specific annuity provider?

A C-corp. is thinking about becoming an ESOP. The selling owner wants to take advantage of the 1042 election.

The company would then want to elect becoming an S-Corp. Would electing to do so retroactively within the 2.5 month period after the beginning of the fiscal year jeopardize the 1042 election?

Or do you just make sure the sale occurs, say, on the last day of the year when it's definitely a C-corp?

If a participants account balance in a money purchase pension plan is less than $5000.00 is spousal consent waived?

Employers C and K are a controlled group. Employer C sponsors a safe harbor 401(k) Plan. Employer K is NOT an adopting employer. Until 7/1/16, Employer K had no employees. 7 employees/participants will cease to work for Employer C, but become employed by Employer K. Employer K DOES NOT maintain a plan. Does it create a distribute event for the employees/participants "transferring" to Employer K? (The plan will pass coverage excluding the employees of Employer K)

I have a couple of questions regarding the filing of Form 5500 for one participant plans that I have not been able to find the answer to.

1) If a plan had more than one participant (besides the owner's spouse), in the prior years, what happens when the plan turns into a one participant plan in future years? For this example, let's assume that the plan assets are under the $250,000 Form 5500-EZ limit. Does the plan still have to file the Form 5500-EZ?

2) Assume the same scenario as Question 1, but the plan assets are over $250,000. Let's say the at the beginning of 2015, there were more than 1 participant, but at the end of 2015, there is only 1 participant. Can the plan file Form 5500-EQ for 2015 or do they have to wait until 2016 (when the beginning year participants number will be 1)?

Thank you.

Can a Plan Participant purchase real estate with personal and 401k money? Property would have co-owners, the individual and the plan. (I understand that the interest of either could not be sold to the other.) I thought I remembered reading about doing this and if all income and expenses are split proportionately it was ok but, now that I am being asked, I can't find anything specific on it.

And, as a related question caused by client's spending time at an SBA seminar, can that property be leased to the Plan Sponsor? Again I thought I read about leasing property to the plan sponsor but can't find anything. SBA apparently said he could do this. (This one I am sending him to an ERISA attorney to work through.)

Any thoughts would be appreciated.

Thank you

We have a SERP linked to our 401(k). Generally, there is no issue, because the participant is required to make any election under the SERP, so he doesn't have the ability to change things around during the year.

There is one exception. Under the plan, whatever the participant elects to defer under the SERP starts going into the 401(k) until he exceeds some limit and then it spills over into the SERP. If a participant is not eligible under the 401(k), the money just immediately begins accruing in the SERP. HOWEVER, if the participant becomes eligible for the 401(k) mid-year, contributions stop under the SERP and begin under the 401(k) until he hits any 401(k) contribution limits (if any).

I think this satisfies the linked plan rules, but just looking for someone to confirm.

Client has UBTI of a negative (loss) amount within his self directed brokerage account within the 401(k). He wants to claim that for potential tax deductions on the loss in future years so we are needing to complete a 990T.

I am not a tax accountant so this form is way over my head. Anyone ever had to complete one and know what sections to complete? I have been reading over the instructions from the IRS form and am still lost!

26 U.S. Code § 414 - Definitions and special rules:

(d) Governmental plan

For purposes of this part, the term governmental plan means a plan established and maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.

The term governmental plan also includes any plan to which the Railroad Retirement Act of 1935 or 1937 applies and which is financed by contributions required under that Act ***and*** (emphasis mine) any plan of an international organization which is exempt from taxation by reason of the International Organizations Immunities Act (59 Stat. 669).

The term governmental plan includes a plan which is established and maintained by an Indian tribal government (as defined in section 7701(a)(40)), a subdivision of an Indian tribal government (determined in accordance with section 7871(d)), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).

1) Sorry naive question....How can one determine whether their plan is a governmental plan? Is there some form to search to find out?

2) How does one determine if plan falls under the railroad act or international organizations act?

I am confused by the lack of punctuation in this statement. "and any plan of an international organization which is exempt from taxation by reason of the International Organizations Immunities Act (59 Stat. 669). "

3) Does this section intend that this alone (international organization immunities act) qualifies the plan as a governmental plan?

4)Or does it mean they have to be a plan which the railroad act of 1935/1937 applies AND any plan of an international organization. Not either or?

Employer paying into said plan is not governmental, under any of these provisions, does that affect anything? (Other than Collective bargaining agreement with union)

Pension is:

401(a) and 501(a) tax Taft Hartley qualified defined benefit pension plan (multiemployer)

"Trust Agreement is intended to be tax exempt under Sections 401(a) and 501(a) of the Internal revenue Code, and the contributions are intended to be tax deductible by the Employers under section 404(a) of the Internal Revenue Code."

We were just provided an actuarial report prepared by a decent sized actuarial group in California on a small CB plan, where the prior actuary calculated AVA and included substantial receivables....does anyone know of any circumstance under which that would be permissible.

Does anyone know of a stock valuation person or firm that would perform a valuation for a 250 employee company for a reasonable fee....they are looking for a long term relationship.

Does anyone have a nice template that they work with which you use to tell clients "Fund A is being replaced with Fund B and here is the explanation" or "Fund B is being eliminated because no money is the plan" or "Fund C is being added as a new option"

It seems to me I'm not the first person to realize that a template for this would be quite helpful, especially one that envisions all of the different scenarios, so you can just delete the sections that do not apply.