The idea for this one came as a response to all the article about how the pension system is broken, 4019k) don't work, etc.

we all know it's is never the participant's fault, as Harry Belefonte clearly explains in Jamaica Farewell

Along the way I will squander my pay

For that fun that comes daily on the mountain top

I'll take expensive trips on sailing ships

and I'll keep spendin' and spendin' and never stop

Now its sad to say

I'm in a four-oh-one K

I'm not deferring or puttin' away

My heart will be down

When 65 comes around

Because I'll have so little cash left to spend in town

Sounds of laughter there everywhere

And the dancing girls oh they sway to and fro

I must declare that my heart is there

Though my retirement savings they are real low

Now its sad to say

I'm in a four-oh-one K

I'm not deferring or puttin' away

My heart will be down

When 65 comes around

Because I'll have so little cash left to spend in town

An S-U-V and theres plenty of beer

And the poor gas mileage I dont really fear

I spend a lot on the things that are nice

And my promise is that I will save next year

Now its sad to say

I'm in a four-oh-one K

I'm not deferring or puttin' away

My heart will be down

When 65 comes around

because I'll have so little cash left to spend in town

My heart will be down

When 65 comes around

because I'll have so little cash left to spend in town

jamica.mid

A sole-proprietor write various checks from the profit sharing plan to various companies throughout the year for personal expenses. The sole-proprietor indicates it is an in-service distribution. Form 1099-R was filed and distribution was included in income on the Form 1040. Is this correct?

Or would it be a prohibited transaction since the sole-proprietor is a disqualified person?

Would this be considered an in-direct loan to the disqualified person?

Thank you.

I have a participant who is still employed by a us company but is in India (no longer on us payroll system). they are looking to take a withdrawal from their 401K & I can not find any options available other than a roll over (but that would need to be only their roll over contribution portion if applicable). They can not apply for a loan as they are no longer on the us payroll system and they can not defer in India so will this participant need to wait until retirement age or termination to receive his US 401K?

thanks for any insight in this situation.

I have a situation where the employer was contributing double the amount they withheld on two employee's simple IRA due to an error on the payroll companies report totals. Now the kicker is the employee's W-2 and pay-stubs read the correct amount the Employee's for a total of 4 years this went on. The employee's do not have the money in their simple IRA anymore for us to do any type of return of funds so the only other option if any is to let the employee's keep it and then they will have to claim it as income, get corrected W-2's and amend their taxes for all 4 years? Does anyone have any advice

We have a participant who exceeded the 402(g) limit with Roth deferrals. He also had losses on the contributions. How should this distribution be reported on 1099-R? As I understand it, code "PB" must be used, but how do the losses come into play?

Let's say the participant made $50,000 for the 2015 calendar year. He contributed $19,000 in Roth Deferrals. $1,000 of that must be refunded back to him and there were losses of $100 on that amount.

So, he'll receive a check for $900 in this year (2016) coded as "PB". The way I see it is that he'll pay taxes on the entire $50,000 for this year and the losses are irrelevant (they would be relevant had it been excess of normal pre-tax deferrals).

Am I looking at this the correct way?

Any suggestions on an employee who walks in with a statement from a pooled account from 1993 and says "I never got my money!"

Are there any options? Is it ok to just say "we don't have it."

Situation: husband and wife are co-owners of an LLC taxed as a partnership. They take draws, not W2s, and there are no other employees. LLC Operating Agreement splits income 10/90 between the two. They set up solo401k.

Question: if the partnership contributes 20% of its profits to 401k, does it split up the contribution between the partners 50/50 (if that's what in operating agreement) or 10/90 according to the partnership share?

Is there a problem if income is shared 10/90 but partnership contribution to 401k is split 50/50?

Would compensation from Canada be counted for HCE determination?

If an eligible NHCE in a non-top heavy plan receives a 0% allocation for the year (the participant is not excluded, just receives 0%), is that person still included in the Gateway Minimum testing, which would therefore cause plan to fail test?

We use Datair, and when I give such a person 0%, the Gateway test still passes because the lowest allocation (to anyone receiving $) is 5%.

I know that profit sharing contributions deposited after the end of the year but before the due date of the tax return can be deducted in the year of allocation. I think I also remember that they could be deducted in the year of deposit. If you choose to deduct them in the year they are deposited, do you use the allocation year or deposit year to calculate the 25% of pay limit?

Multiemployer health plan is terminating. Plan has already notified participants and Plan amendment has been approved terminating the Plan. Plan's Trust Document gives Trustees authority to terminate.

Does anyone have any experience with this, specifically as to what governmental filings are required? Are there government agencies that must be notified? I know the Plan will need to file a proper tax return (Plan's auditor taking care of that).

But is there anything more? I just want to make sure the Plan isn't missing anything.

Thanks.

New plan put into place late in 2015 (november) with 401k provisions effective starting 1/1/2016. The owners deferred in 2015. is there a way to return the deferrals since that provision was not yet effective? I don't like simply doing that since it involves HCEs.

We are still trying to determine if any of the NHCEs were given an opportunity to defer during the last month of 2015, but declined.

NQDC Plan states that a change in control is a distribution event.

Employer is 100% owned by X.

X dies and all the stock in employer passes to X's Estate, then to his Revocable Trust and then to Marital Trust for X's spouse.

318(a)(2)(A) attributes stock owned by an estate to its beneficiaries and 318(a)(3)(A) attributes stock owned by a beneficiary to an estate.

However, I do not see a way to attribute X's stock from X to his estate.

So, did a change in control occur upon X's death?

Any thoughts?

I think I know the answer to these questions, but I'm having a hard time finding specific citations.

Facts: Employer has a defined benefit plan. It has a number of people whom it has classified as independent contractors, and thus has not included in the plan. A judgment is entered against it saying that these people are employees, and thus need to be retroactively included in the plan. (The plan specifically states that individuals who are employees but have been characterized as independent contractors by the employer are not to be included, but the judgment just blew by that argument.)

Question 1: In calculating the 415(b) limit, should an individual's years of participation in the plan include the years the individual should have been included under the court's theory, or only those years in which the individual participated after the court's judgment? For example, suppose that the individual worked for 10 years before the judgment, but terminates employment a year after the judgment. Is the 415(b) limit $210,000 (reflecting the years worked for which s/he receives credit), or $21,000 (reflecting only the year following the time the individual began participation in the plan)?

Common sense would appear to say that all years should be counted. This would reflect the rule for annual additions, which are counted for the year for which they are made rather than the year in which they are made. Treas. Reg. § 1.415©-1(b)(6)(ii)(A). It would also reflect the rule for back pay, that:

Back pay is treated as compensation for the limitation year to which the back pay relates to the extent the back pay represents wages and other compensation that would be includible in compensation for purposes of § 415.

Publication 7001, page 3. And it would be consistent with the rule of ERISA Reg. § 2530.200b-2, which treats back pay as giving rise to hours of service for the year to which it relates, not the year in which it is paid.

However, I have been unable to find any direct authority dealing with the calculation of the 415(b) limit in our situation, which does not involve back pay.

Question 2: Is there any obligation to go in under VCP in this situation? I can think of two arguments that VCP might be necessary: either that the plan is now being operated in a way inconsistent with its terms (because the plan terms say that the plan is not to include people characterized by the employer as independent contractors, even if they are later found to be employees) or that these individuals were erroneously excluded from the plan in prior years. However, this seems unnecessarily harsh if the failure to abide by the plan terms comes due to a judgment, and if the employer corrects the exclusion for prior years promptly after issuance of the judgment.

Key employee has accrual and account addition in both plans.

New employee is eligible for DC Plan only.

Does he get 3% or 5% of pay TH Min?

Thank you

Have a small defined benefit plan and 401(k) plan covering only the owner.

He started as a sole proprietor and adopted both plans as such effective 1/1/2014. Without any communication, he incorporated effective 1/1/2015. We just found out about it now.

Would it be possible to have the corporation adopt both plans as a successor employer and plan sponsor effective for the 2015 year now in late February 2016?

I wonder what happens as he would have no sole proprietor income in 2015 but has W-2 salary.

Corporation sponsors a DB and PSP that are aggregated for testing purposes. Plan was effective 01/01/12 . The DB accrual formula was 5% per year of service for owners and 0.5% per year of service for all other eligible participants

• ​Plan is to be terminated in 2016 and was frozen effective 1/1/15 with no further accruals
• For 2015 the owners made a substantial contribution in order to bring plan assets as close as possible to the 417 termination liability.

Is there any problem with the above?

Can the IRS challenge if the average annual accrual rate in the DB is not at least 0.5% per year of service: in our case it is a little bit lower if no accrual are allowed for 2015.

Thank you for your help

When are the employer match contributions subject to FICA taxes? Is it when distributed or when contributed to the plan? This plan has a 2/20 vesting schedule.

Thank you!

A profit sharing plan currently being restated for PPA has "participant directed investments" language in the plan document. However, none of the participants have elected to direct their own accounts, so the funds are all in a pooled investment account, presumably managed by the trustee.

Can this feature be removed from the plan with the PPA restatement?

If so, does the effective date of the restatement need a prospective date? Or can it still be the first day of this plan year (1/1/16)?