A participant says he needs $30,000 in order to "settle" his divorce. If he doesn't come up with the $30,000, he will lose his house. Could this be considered an eligible hardship to "purchase" a home --- in essence, he is purchasing his wife's interest in the home for $30,000.

Just trying to make sure we don't miss anything....

Below is the current client match scenario:

Deferral contributions are allowed first of the month following employment.

Match begins first of the month following six months of employment.

Match is 100% vested.

For anyone hired after January 1, 2017, the client would like to change to the following:

Deferral contributions are allowed first of the month following employment. (No Change)

Match begins first of the month following employment.

Match contributions become subject to 5 year graded schedule. (2-25%)

Anyone hired prior to January 1, 2017 would stay on the 6 month, 100% vested match.

I can't think of any pitfalls, but boss wants to use fine tooth comb on this one.

Thanks

Plan requires 1000 hours for vesting. Want to change effective 8/1/16 to only require 500 hours.

Would this mean that employees who have worked for 6 years but never had 1000 hours, but have had 500 each year, would now be fully vested?

Or would they still be zero, and in 2016 earn their first YOS, and be 20% vested?

Thank you!

I sent a 5500 to a client last month, and was told last week that I would not have it back by July 31 to electronically file for them. So, Form 5558 was mailed to the IRS to extend the deadline. And then, surprise, the signature page was in today's mail.

So before I electronically file the 5500, I have checked of the box to show that Form 5558 has been filed. But, the signature page that I have from the client which I need to attach to the filing does not have the 5558 box checked.

Does it matter if the attachment is different than the form electronically filed. I anticipate that the IRS will lose their collective minds when they don't match.

I don't want to have to send the client a new signature page with the box checked. Is it time for me to get out my scissors and tape?

Thank you!

I have a 401k plan that has 2 participants with account balances (owner & spouse). They have several other employees, but none met participation requirements. Total assets are less than $250,000. Are they exempt from filing a 5500??

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Have four 25% owners of a corporation. The corporation sponsors two 401(k) plans with no match that are cross-tested for profit sharing. Plan 1 covers all employees hired before 1/1/2007 and Plan 2 covers all employees hired after 12/31/2006.

1. Plan 1 provides profit sharing from 5% to 15% of salary.
2. Plan 2 provides profit sharing of 2% of salary to all eligibles.
3. The 4 owners (and the only key employees) participate only in plan 1.
4. No key employees participate in plan 2.
5. Each plan meets the reasonable classification test of 410(b).
6. Each plan passes the ratio percentage test of 410(b) considering only its own respective eligible employees.
7. Each plan passes non-discrimination (401(a)4) and ADP test considering only its own respective eligible employees.
8. Plan 1 would be top heavy by itself. Plan 2 would not be top heavy by itself but both plans together would be top heavy 67%.

Question:

1. My understanding is that if each plan can pass coverage and nondiscrimination on its own and only plan I has key employees, the top heavy minimum and gateway need not be provided in plan 2. Agree or Disagree?

Thanks a million!

Plan effective 1/1/14, only principals and wives, so no 5500 filing.

1/1/15, employee eligible and have to file 5500-SF. Box checked for first filing.

Q- Because plan effective the prior year and there is a participant count at 1/1/15, the IRS will probably send out a Notice, why are participants and money in the plan as of the beginning of the plan year?

And then do the merry-go-round explanations to/from IRS?

Suggestions, rather than submit and see what happens?

We have several employees with cash in our ESOP. Can we unilaterally move that cash from the ESOP to the 401(k), or do we have to get participants to elect to move the money?

Just to make sure I haven't gone nuts...

4 different companies, A, B, C, D. Let's say we are a TPA for company A.

Ownership is such that A, B, and C are part of the same controlled group. D is part of a controlled group with A, but not with B and C.

For purposes of administration on A, all three (B, C, and D) are considered part of the controlled group with A, right? This seems like a very basic question, but I'm suddenly doubting myself...

Suppose that a defined benefit plan says that a participant who becomes disabled while an active employee is entitled to monthly payments effective upon being found to be disabled by Social Security. Suppose further that the sponsor/plan administrator did not realize that when a given participant separated from service 12 years ago, it was due to an injury suffered at work which, a few months later, was determined by Social Security to entitle the individual to receipt of Social Security disability benefits.

Suppose that the sponsor/plan administrator has only recently become aware of this, having believed all of this time that the participant had merely terminated with full vesting, and that benefit payments were not going to be due for years.

Assume that, relative to the plan as a whole, the additional value of the unreduced disability benefits is not material (i.e., less than $50,000 out of $100 million), and that past actuarial valuations will not be revised, but that it is now believed that the participant should have been receiving disability payments from the plan for 10+ years.

Now suppose that the plan's AFTAP is currently under 80% and the plan is therefore subject to partial restriction under IRC Section 436.

How does one go about making that participant whole? Assume that the size of the back payments with interest (if payable) would exceed 50% of the current value of the participant's entire benefit.

Participant makes both pre tax and Roth 401k contributions. The participant took a Hardship Distribution ( from pre tax account). Payroll Company stopped the pre tax deferral, but continued to withhold the Roth Deferral.

to me a deferral is a derferral is a deferral. Therefore if a participant takes a hardship all deferrals ( pre and Roth) stop for the 6 month suspension.

do you agree??

Plan sponsor sells its business via an asset sale. All employees terminate and are hired by the purchasing company. Plan sponsor files bankruptcy. During this process trustees signed plan termination amendments and all benefits were paid to participants. The plan has $0 assets remaining. Plan is a large filer. The plan sponsor has no assets to pay for the audit nor do they have anyone left behind that will work with auditors. Therefore, the final 5500 will not be filed.

When the DOL realizes this, they will send letters. When the DOL receives no response, what is going to happen? Do we go into the abandoned plan rules even with no assets in the plan?

Thank you

Getting a good question from an auditor about our loan provisions. Admittedly they don't fit well with the TIAA-CREF bazaaro loan policies. Anyone have any thoughts on how to handle? "Participant directed" election includes a statement in the loan program that all loan payments will be applied to participant accounts. If I don't check that box it says loan payments will be applied as earnings to the general trust fund.

Maybe I just edit that and say it's applied to the TIAA TRaditional Account. Anyone run into this before?

Example. Client took a taxable distribution in 2015 from a brokerage account which we did not know about until recently. What is our responsibility to provide a 2015 1099-R? Assume they have already filed their taxes and assume the amount is "significant." And assume we prepare their 5500.

Does the answer change if the participant took 2 taxable distributions, and we reported one but not the other (and therefore a corrected 1099-R would be required). I think it is perhaps different if we learn that the form we actually filed is not accurate).

Obviously the practical answer is simple: Do the corrected 1099 and do the amended 1040. That is NOT my question. My question is directed at understanding what our legal requirements are under the paid preparer rules.

HCE participant with a Self Directed 401k account took money out of the plan and then put it back in two months later. Not 59 1/2.

Is this correctable through VFCP? He needs to put back the money plus interest.

Anything I am missing?

Pat

The Plan has a 3.5% Safe Harbor Non-elective feature. Even if a Discretionary Match qualifies for Safe Harbor ACP, can we elect to use it in the ACP Test?

The document is silent on this and I would like to include as the Voluntary After-Tax contributions, alone, will cause the ACP to fail.

the new mid year amendment guidance does not address merger and aquisitions.

my questions relates to a spin off plan.

Can a SH Plan spin off to to another existing SH Plan mid year? The SH contribution in both plans is the same. Employees in the plan spinning out will be immediately eligilbe to participate in the new plan.

What would happen if the SH contribution was different in both plans, going from a SH Match to 3% Non Elective or from a 3% Non Elective to SH Basic match.

Thanks

I got this annual statement for an insurance policy in a plan of mine, but I'm not sure how to value it.

Open Value: 625,000

YTD Policy Change: -20,000

Total Policy Value: 605,000

Loan Principal: 570,000

Loan Interest: 14,000

Total Indebtedness: 584,000

Surrender Charge: 110,000

Net Surrender Value: -89,000

I would think the net surrender value is my number. But it is negative because of the loan. Do I ignore that in the calculation? That is just use Policy Value - Surrender?

And what really has me concerned is the half million dollar "loan"

Any thoughts or suggestions?

I have a 401k plan with a 12/31/15 year end, where the owner did not defer in 2015. He has just now (July of 2016) decided that he should have done so. His CPA is asking me if they can amend his 2015 W-2 to show the deferral and deposit it now. My immediate reaction is "NO". Has anyone else had a client in this situation? I would appreciate any and all input! Thanks.