I understand from Notice 2008-30 that a QOSA is not required for a QPSA, i.e., if your QPSA is a 50% survivor annuity, you don't need to offer a separate 75% QPSA survivor annuity.

I'm looking at an SPD that says, in a pre-retirement death situation, the spouse may be allowed to elect a 75% annuity if the default form of QPSA that otherwise applies is the plan's default 50% QPSA.

This language is separate from the provision regarding a participant's election of a higher survivor annuity percentage shortly before the participant's death.

Setting aside the plan document, would this election be required by law under any circumstances?

I have a plan that will be just over 120 at boy 2015 and goes back under 100 at eoy 2015 and will remain there for some time in the future. Over half the count is due to

people eligible to defer(so we must count them as benefiting yes?)who do not and have no money in the plan. there is a pooled account and also individual brokerage accounts for the deferral money. My question is regarding the change in the value

on the brokerage accounts. Can I lump the change due to investments(divs,int,cap gains etc.)onto one line on the schedule H? Surely one is not expected to break out the performance on these individual accounts? This could require scouring multiple individual statements..Your thoughts are appreciated.. THank you..

How aggressive is it if I set forward the testing table (software allows up to 9 years) for my combined plan testing? Without a set forward, the gateway requirement jumps to 7%. With a five year set forward, I'm back to 6%.

A medical practice invested plan funds in a real estate investment partnership which owns the property that the practice utilizes for office space. Would this be allowed? I've been searching and I really can't find anything that says either way.

The property is not valued every year, it was valued last year for the first time in 16 years when one of the Drs. sold their shares. The plan owns 6.67% of the real estate investment partnership, it invested about $79,000 in the investment.

I'm leaning towards it is allowed, but feel it should be appraised every year. Agreed?

Thanks for you time.

So how is the 95% threshold calculated? So lets say that an employer fails to offer coverage to an employee for one month... i.e. they forget to offer coverage to a part time employee who becomes full time (due to an accident like scheduling too much overtime)... for a month. But only one month, because that employee was an "accidental full timer" in that they were a part time employee who worked more than 30 hours a week for one month due to too that employee being scheduled a bit too much overtime (or they stay late to do extra work when it was busy). Then a few months later, that employee becomes full time officially and enrolls in benefits.

For this employee, was there a "offer of coverage"? Or is there NOT an offer of coverage because one month was missed?

New client. To discourage participants from taking loans, they charge an interest rate of 12%. Why they did not remove the loan provision if they wanted to discourage loans is unclear.

There are several loans outstanding at 12%. No way the Plan Sponsor can support this rate based on the local lending institutions.

To complicate matters, our client has acquired this company under a stock purchase and effective 3/1 our client will be the new Plan Sponsor.

Does the current employer need to redo the loans at an interest commensurate with the lending institutions.

After the stock purchase does our client become responsible for the interest set by the prior Plan Sponsor.

Any guidance would be appreciated.

Happy Friday to all.

I remember that after PPA, the plan termination date was to be treated as a plan year end and certain items had to be pro-rated (compensation, deferrals and such).

Now I cannot find ANYTHING that backs up my memory! Not only that, I am being challenged by an attorney.

HELP!!!! Thanks all.

We have a PS/401(k) plan that only had deferrals and SH match prior to 2015. Starting in 2015, the plan was amended and excluded classes were added to the adoption agreement. So now, we have existing participants who are already in the 401(k). The plan is top heavy.

Q1 - if we exclude people from only the PS portion, do we still have to give those 401(k) participants a top heavy minimum?

Q1.1 - If yes, one of them deferred and so received 4% SH match. Will that not satisfy the TH minimum for that person?

Q2 - If we exclude people from the entire plan - both PS and 401(k) components - what do we do about top heavy with respect to those people who are already plan participants (entered plan prior to adoption of exclusions) but who now are in the excluded class?

I am CPA and want to get into the TPA business. Can anyone please provide me with a list of items or resources that i could use or refer to to get started with the TPA business.

Thanks

http://www.ferenczylaw.com/Documents/FlashPoint/2_2_16_FlashPoint_The_IRS_Giveth_Yay_and_the_IRS_Taketh_Away_Boo.pdf

Just wanted to make sure everyone saw this, in particular what the IRS is trying to taketh away...

Here's a lulu.

Corporation A restated their Plan last January 2015. Included a Participation Agreement for Corporation B, part of a controlled group.

Corporation A sold Corporation B last July. (at this point, I believe a stock sale rather than an asset sale) Didn’t tell us. We therefore did not have the plan/participation agreement changed.

One Corporation B employee signed up for the Plan in December. They have had $7500+ withheld from their pay. This was also unknown as the contributions have not been remitted to the fund/platform because Corporation B now uses a different payroll company than Corporation A, and they don’t know how to get the funds from Corporation B checking account to current funding company. Apparently. This is third-hand...

We have also been informed that since Corporation B was sold, Corporation A does not want any of Corporation B's employees participating in the Plan.

Best way to correct? Obviously get the participating employer agreement removed, but I don't see how they can just refund the money and issue a corrected W-2. Seems like this employee's funds will have to remain in the plan. I don't see a "distributable event" here, so money can't simply be rolled out, unless Corporation B establishes a plan of their own?

Maybe there's an easy solution I'm missing.

A surviving spouse receives a pension as part of a joint-and-survivor pension set up for her deceased husband by his employer. The distributions are reported on a 1099-MISC in Box 7, labeled "Nonemployee Compensation." The IRS says that the amount reported in said box is subject to "self-employment tax." Can you figure why the pension distributions are being labeled as nonemployee compensation?

The 401k Plan became effective 9/1/2014; it is a calendar year plan so a SPY for 2014. Nobody deferred anything until February 2015. During 2014 there was only rollover money put into the plan.

Plan eligibility: waived for anyone there on 9/1/2014

Normal eligibility: 6 mos svc and age 21 - monthly entry

Plan using prior year testing method for ADP; there is no match to consider...

815 employees worked in 2015 with lots of turnover - not the best plan design ever.

There is NO 2014 ADP rate because nobody deferred during the Short plan year. (9/1 - 12/31).

So for 2015 - anybody employed on 9/1/2014 is in the test - anybody who meets the 6 months hired after 9/1/2014 is in the test.

we know to use the statutory exclusion provision to test those who had worked less than a year. HERE is the Question:

**** Could we assume the 3% ADP rate for all of the NHCE's in 2015? (test based on prior year)

I hope this makes enough sense that somebody can give me an opinion....Help!

one of the possible changes:

Under the current regulations a cross-tested plan can pass nondiscrimination testing using either the ratio percentage test or the average benefit test without requiring that each rate group be considered a “reasonable classification”. Under the proposed regulations, this will still apply to the ratio percentage test. However, in order to use the average benefit test, the rate groups will need to satisfy the reasonable classification test. Of greatest concern are plans where one or more of their rate groups are set by naming the individuals as traditionally this has not been considered a reasonable classification. If these proposed regulations become final, new comparability or cross tested DB/DC plans will need to review their plans to determine if (1) they can pass testing using the ratio percentage test or (2) their rate groups meet the requirements to be a reasonable classification so that the average benefit test can be used. Plans that cannot would need t o be amended to ensure that nondiscrimination testing could be passed.

..............

so while the reasonable classification test used to only apply to coverage, it would now apply to nondiscrim testing as well if the proposed regs go through.

I did submit a comment for clarification if 'one group per participant' is considered reasonable or interpreted as being 'by name'

proposed reg.doc

ok so a plan has the auto enroll feature with the 90 day opt out.

Those participants who opted out within 90 days were given a return of deferrals and the match was forfeited. The contributions will show on the employees' W-2 forms and they received a refund of contributions and a 1099-R form.

End of the year arrives and ADP/ACP testing performed. Do the contributions for the auto enroll opt outs need to be excluded from the testing?

ok - found my own answer...just tired I guess!!

The contributions are excluded from the testing. The participant IS included at a 0% rate, however.

Can IRA owner rollover error be repaired during current tax year cycle?

In February, 60 year old IRA owner takes $8,000 distribution.

In March, replaces funds as a “Rollover Contribution”.

In December, changes IRA custodians,

UNFORTUNATELY,

Original custodian sends check made out to IRA owner’s name (e.g. a rollover) instead of new Custodian’s name (e.g. a custodian-to-custodian transfer).

IRA owner deposits check in new IRA with Custodian B.

Since IRA owner has not completed tax forms for the year, can he remedy through re-characterization?

For example:

Re-characterize $6,500 of the $8,000 March Rollover Contribution as a Regular Contribution,

Withdraw the extra $1,500 as an excess contribution,

Deposit the extra $1,500 as a regular contribution to spouse IRA to mitigate the income tax?

Or are other remedies available, given that this is within the current tax year cycle?

A participant lives with his brother who is the property owner. The brother is facing foreclosure. Can the participant take a hardship withdrawal to help his brother under the reason "payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage of that residence". I think no because he is not the legal owner. Would like another opinion.

I am having a difficult time decoding how to distribute a loss.

We have an employee who deferred $1,000 into his 457 plan. The plan allows $18K in contributions for the year, which can be a combination of employee and employer monies.

In December we forecast that the employer contribution for the year would $18K. Our practice is to maximize the employer contribution first, thus we wanted to return to him his deferral amount. The $1,000 was returned to him via a negative contribution in December on his payroll. We did this in order for the w-2 to show that he did not contribute the $1,000.

After the return we calculated the gain/loss, and found that the $1,000 deferral he put into his account had shrunk to $900. This $900 was moved out of his account into what we call the negative account at the recordkeeper.

I understand that the excess deferral instructions state that the excess deferral plus any income allocable must be distributed out. We've taken a conservative view and determined that "income" includes losses as well as gains.

In order to distribute the loss to the participant, my thought is that we now instruct the recordkeeper to move an extra $100 out of the account. This would in effect make the loss realized in his account, and thus would mean the loss was allocated (I think).

Not sure if this is the best way, or only way, to administer. Would appreciate any insights.

Thanks.

I am having a difficult time decoding how to distribute a loss.

We have an employee with a $1,000 excess deferral. (I am using round numbers for sake of ease). We need to return this deferral to him along with any allocable income. Our ERISA attorney states that 'income' means losses as well as gains.

The $1,000 excess was returned via a negative contribution on the payroll account. The rationale was that the w-2 needed to diminish his deferral by $1,000.

The $1,000 deferral he put into his account shrunk to $900 as of the date of return. This $900 was moved out of his account into what we call the negative account at the recordkeeper.

My thought is to now instruct the recordkeeper to move an extra $100 out of the account. This would in effect make the loss realized in his account, and thus would mean the loss was allocated (I think).

Does this approach make sense?

Looking for some opinions on the following unique situation...

Mark retired from Company A in 1998 and was receiving pension payments. In mid-2015, he was told he had a terminal illness and given only a few months. In his desire to assist his children/wife with dealing with his passing, he contacted Company A to learn what his wife needed to do after his death for her surviving spouse benefits. As a result of his call, Company A learned they had an administrative error and had been paying him as a single annuity since 1998, resulting in an over payment of $28K. He passed a few weeks after this call. Company A was notified of his passing and no future payments were made.

Now, Company A is requesting his wife repay the $28K overpayment in lump sum, or actuarialy offset her surviving spouse benefits to pay it back over time.

in my opinion, Company A should only be able to request repayment from the "estate of", and not from the surviving spouse. In the event there is no "estate", then Company A suffers a loss due to their administrative error.

Interested in hearing opinions and thoughts about related laws. Much thanks!