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.

I've applied for several EIN's for client plans that don't have one, in anticipation of it being required on a future year's 5500.

In all cases, except for one, the standard nine digit number has been issued by the IRS.

I have one plan, that received a letter from the IRS stating that an EIN was already issued. The letter reiterates the number, and it happens to be the number of the plan sponsor, w/ a "P" on the end.

Has anyone seen this?

I've been told:

1) The IRS won't accept the employer's ID# in the plan EIN# spec on the Form 5500

2) The software vendor I use has told me that they won't accept 10 digit ID#'s

What would you do? Write back to the IRS and ask them for a nine digit number? That seems like a rabbit hole.

If anyone has experienced this same thing I would be interested in hearing your concerns and / or what you did about it. Am I worrying over nothing?

I'm trying to be proactive and not find myself next year without the necessary information to file the 5500.

Thanks for any help.

If the employer decided to return the deferrals for ineligible participants and a match amount (SH Match) is involved, would it be permissible to use those match amounts to fund either future SH match or any receivable still due for SH Match?

I know that forfeitures may not be used to fund SH match, but these aren't true forfeitures in the sense that a participant was never vested in the amounts.

thank you

"Synthetic equity" for purposes of 409(p) testing includes equity compensation in a "related entity." The regs define "related entity" as:

"any entity in which the S corporation holds an interest and which is a partnership, a trust, an eligible entity that is disregarded as an entity that is separate from its owner under § 301.7701-3 of this chapter, or a qualified subchapter S subsidiary under section 1361(b)(3)."

Is a once-remove subsidiary considered a "related entity"? For example, the S Corporation owns Subsidiary A and Subsidiary A owns Subsidiary B. Is Sub B a related entity to the S Corporation?

Second question -- the synthetic equity in a subsidiary is taken into account, "to the extent of the S Corporation's ownership."

So if S Corporation is 70% owner of Sub A and Sub A is 70% owner of Sub B, then would we take into account 49% (70% of 70%) of the synthetic equity granted at the Sub B level?

A participant signed up to make catch-up contributions to the 401(k) but did not sign up to make any other (non-catch-up) contributions. Catch-up contributions are not matched under the Plan. Is the employer required to re-classify the catch-up contributions as regular (non-catch-up) contributions to make sure the participant receives matching contributions? Can that be done at the end of the year (the plan doesn't have a true-up), or must that be done as contributions are made?

Suppose a DB plan only offers an annuity form of benefit. However, under some sort of "de-risking" strategy, they decide to offer a lump-sum distribution option for a limited period. This is available to anyone who has not started receiving benefits yet, regardless of when they terminated employment.

You DB'ers probably know this like the back of your hand - for someone less than NRA, when calculating the current lump sum benefit, do they have to take the lump sum at NRA, then discount it back to whatever current age might be using the interest rate that would produce the higher lump sum (plan rates or 417(e), or only do that for the lump sum at NRA, but then discount it back using current rates (and not 417(e) if higher) or something else altogether?

Thanks.

P.S. when valuing the present value of the future expected annuity, for someone who is less than NRA, then is it going to be a blend of the applicable "segment rates" or just the segment rate at the time of NRA? Somehow seems like it may be the former rather than the latter. I appreciate any responses. Also, if it matters, let's assume this would be an ERISA plan.

If an investment adviser suggests to change a non-performing fund and the employer agrees would that action violate the DOL non-ERISA safe harbor? I don't think so; the plan can continue to be non-ERISA. Can you please confirm. Thanks!

A governmental employer has a 457(b) plan that permits unforeseeable emergency withdrawals. They also have a 401(a) plan that matches deferrals from the 457(b) plan. The 401(a) plan wants to allow for unforeseeable emergency withdrawals. Is this permitted? I have only seen hardship withdrawals permitted in these plans. Thanks,

If a plan has never been updated to allow catch up contributions, can you still reclassify a possible ADP refund as catch up for participants in that plan?

We took over a plan with only 26 participants. The former TPA filed the Full Form 5500 for 2014 (with only 26 participants) They did complete the schedule A, I and R.

What would be the reasoning for using the 5500 instead of the 5500-SF in this case?. They have never been a large plan. Could I switch to the SF for 2015 without causing an issue with the DOL/IRS?

An employer exceeded the 100 employee count for their Simple IRA in 2013. 2014 and 2015 they operated under the grace period, but continued to operate the plan in 2016.

They ceased contributions in May, 2016 and started a 401(k) plan in June 2016.

They are going to correct the "Employer Eligibility Failure" through VCP, completing Section A of the 14568-D for both the 100 count exception and the exclusive plan rule.

Would anyone mind confirming that neither of these failures would result in the need to request a relief of an excise tax.

Thank you.

During a recent audit, it was found that one of the randomly selected participants was only having 2% deferred from their pay when they had indicated in their enrollment forms that they wanted to contribute 4%. This form was filled out in 2005 so it has been quite some time that the participant was not getting the correct amount taken from his pay. Obviously the employer is going to have to correct this mess.

Some questions:

1. I know the correction method is 1/2 of missed deferrals, 100% of missed match, plus any gains. Is there an easy (or easier) way of calculating this other than going back and looking at when each additional amount would have been invested?

2. Is there any sort of onus on the participant to bring it to the employers attention? It is hard to believe that 10 years went by and the participant never said anything.

3. Any statute of limitations, etc?

Thanks

do you think it would be ok to have a standing election stating that each VEC deposited to the Plan is to be converted to a Roth account?

Or do you think individual elections are needed.

(Chasing these guys for a written election each time is rough. And sometimes they make the contribution without telling me.)

Thanks

I have a 401k plan. The owners do not contribute. Is their profit sharing amount for the owners who are 50 and over limited to $53,000 or can they add the catch up amount to that?