In the past I have routinely provided a list of 3 - 4 advisors, ones that I work w/, and know to have their clients' best interests at heart, when asked for a referral. I always provide a list, because ultimately it is my client's decision (not mine) as to they work with. I don't receive any compensation for the referral, I do it simply to help out people who ask.

I am a CPA, that worked for a retirement consulting firm for many years, and I currently have my own practice which consists of small tax clients, and a block of small 401k retirement plans for which I provide traditional TPA consulting services. I do not sell or recommend any product, I am strictly fee based for consulting and tax preparation services.

Probably more info than what was needed - but here are my questions / comments. I've done quite a bit of reading on the new fiduciary rules, and my understanding is I do not become a fiduciary by pointing a plan to say, American Funds, or Voya, etc. Usually I'm referred by the advisor, but that is not always the case, and I do have investment companies I prefer administratively, and would recommend (not necessarily the ones mentioned here).

However it's unclear to me if I become a fiduciary by continuing to provide referral sources for advisors. I continue to read however, that if I recommend an advisor (or group of advisors) under these new rules, that will possibly make me a fiduciary, something I absolutely want to avoid.

Does anyone have any thoughts on this latter point? Appreciate any help.

We used the 436 IRS model amendment for a client. That client filed a determination letter upon terminating the plan. The IRS sent an inquiry asking for the amendment that was adopted to be amended to remove the incorporation by reference to the definitions in Sections 1.436-1(j)(1-9). I looked at that section and there is no explained definition. Where can I find that?

All I can find is that they should "meet on a regular basis, keep minutes and document the basis for all decisions.

What constitutes a "regular basis"? Any sites?

Thanks!

Was it pushed back to 4/18/2016 like the 1040's?

Plan is not Top Heavy and probably never will be.

401(k) w/ Safe Harbor Match - immediate eligibility

Cross Tested Profit Sharing - 1 YOS, 1,000 hours, Last Day rule, everyone in their own group. Business owners use the Profit Sharing to maximize their benefit at the end of the year. Employer wants to keep Profit Sharing contributions to an absolute minimum, excluding as many employees as possible.

Prevailing Wage - may be used to offset any required SH Match, if applicable.

Who gets the Gateway?

Employee 1: Made no 401(k) deferrals. Got no Prevailing Wage. Met 1 YOS requirement in a prior year. Worked 1,000 hours and was employed on the last day of current year.

Employee 2: Deferred 5%. Got a Prevailing Wage contribution that represented 4% of compensation.

Employee 3: Made no 401(k) deferrals. Got a Prevailing Wage contribution that represented 1% of compensation.

Employee 4: Terminated prior to the end of the year. Didn't defer. Got a Prevailing Wage contribution representing 4% of compensation.

Where the Gateway is concerned, do I only care about employees who received the Prevailing Wage contribution, or does an employee qualify for the Gateway simply by virtue of having provided one year of service and being employed on the last day?

Thanks!

Are federal tax withholding amounts reported separately from distributions on Form 5500 Schedule H?

Large insurance company pays compensation to both the agent directly and to an S-Corp. owned by the agent.

Agent partiicpates in the insurance companies plan based on the wages paid direclty to him by the insurance company

Agent wants the S-Corp. to adopt a SEP and receive a SEP contribution based on his W-2 wages that he pays himself from the SEP.

Any reason he can't do that? I don't see an issue right off, but that pay scenario confuses me.

Thanks in advance for any guidance

Classic CB/DC for a law firm:

DC1 - Partner and Staff

DC2 - Associates (no keys)

CB - Everyone (but Associates at $0 pay credit)

We took over the plan so not involved when the design was implemented.

I don't know why the Associates were allowed to participate in the CB plan with a $0 benefit rather than just excluding them as a class.

I can't come up with a reason but I have to ask if I am missing something? Coverage related?

Company was bought out and the Plan is terminating. All checks have been issued. Some participants elected to transfer money to their new ER's plan. New ER HR department has been sitting on some checks since February waiting for the participant to complete an election form for the Rollover money. The Checks are only good for 90 days.

After 90 days the checks would need to be reissued and incur a fee for reissue that would be charged to the plan participant and the Cycle would repeat.

If they don't get this resolved can we just send the participants to a Rollover IRA or are we stuck in this loop until they complete the form the new ER says they are missing?

We just asked about a default fund or maybe the participants already filled election forms for their deferrals, but in any case they aren't accepting the checks.

The HR person seems not too concerned that they have held the checks for two months.

Any suggestions on what to do to get the money out of the plan.

The board of a small NFP with a 401k/SHM plan terminated the contracts of the executive director and his assistant. They were the only two employees - and participants - of the plan. The board is currently looking for replacements.

They were both fully vested, so I don't have an issue there. The plan allows immediate distributions, so both of the terminees are looking for their money. Once they get paid out... is this still a plan? The sponsoring entity still exists (well, it still has a board), though it would be hard to say that it is actually performing any service for anyone. The plan has a one-year eligibility; even if they hire someone now that employee won't meet eligibility until 2017, so the 2016 Form 5500 is going to show that it ends at zero participants. Is there going to be a problem with a plan that has zero participants, no money, and not marked as "final"?

Thanks.

On the Schedule H of the Form 5500 should the value of funds held in the insurance company general account be shown at fair value or contract value?

Sole proprietor wants to file for an extension on his 1040, giving him until 10/15 to make his SEP contribution, but wants to actually file his 1040 before the extension is up and before he funds the SEP.

I believe this is ok in the case of a qualified plan.

OK in a SEP too?

How do you correct a merger of a 403(b) plan with a 401(a) plan?

Client mistakenly merged a 403(b) plan with a 401(a) plan last year. This year, the client moved the 401(a) plan assets out of the 403(b) plan and merged the 401(a) assets with another 401(a) plan.

Do you need to file a correction with the IRS for the 403(b) plan?

Thanks for any suggestions.

A sole proprietor established a safe harbor 401(k) plan for 2015 and employees made deferrals. The sole proprietor did not make deferrals during 2015.

If the sole proprietor wishes to make an IRA contribution for 2015 are they considered covered by the 401(k) plan, even though they made no deferrals?

A plan is sponsored by a partnership of 75 partners. It is a safe harbor nonelective (3%) 401(k) with profit sharing.

A handful of partners are leaving the organization over the next few months. If their earned income is all deemed to be paid on the last day of the taxable year (12/31/16), then they would have no earned income while still "employed" by the partnership, and thus no safe harbor nonelective contribution for the year. Is that treatment correct, provided no plan provisions to the contrary?

I know this has been discussed previously, but I don't think I will be able to find it until BL offers a "Remedial Search 101" webinar.

Did you hear about the guy whose wife threw a bottle of omega-3 pills at his head?

He's been hospitalized with super fish oil injuries.

Did you hear about the scientists who turned a dolphin invisible?

It took a lot of work, but nobody could see the porpoise.

Figured we could all use a little 'bad' humor getting close to tax day <G>

An employee has a self-directed account (SDA) as part of his company's 401k plan. In March of 2015, the employer changes 401k plan providers (moving to a PEO) and the employee is supposed to transfer the assets out of the SDA account into the new plan. The employee fails to transfer the assets into the new plan for over a year, but never takes any distributions from the SDA account during that time.

What are the consequences, if any, of leaving those funds in the orphaned SDA account for so long? Can he still transfer the assets into the new plan after over a year without penalty?

OK, I had a call from an accountant and my first response was "well, if a client asked me I would tell them to ask their accountant." That being said, here is the scenario/question:

A partnership sponsors a SH 401k. It is a pooled plan. Contributions made by 4/15 are greater than the employer contributions for employees. They need to go on extension to fund the remaining contributions. No problem for the federal return, but it would take "2 hours" to prepare the state extension(s) - multiple states I guess? Wants to know if it is ok to not extend the state returns.

I said that I thought the deduction would tie to the timing - if the deduction is taken on the K-1, then the K-1 might have to be extended, and if the deduction is taken on the 1040(s), then the 1040(s) would have to be extended. Of course deductions are taken on both. An argument could be made that the first contributions were for the employees, and were funded by 4/15 so the partnership return wouldn't have to be extended. But to be safe, it should be. I thought the 1040s would definitely need to be extended. (She said that she never thought of it that way and typically would NOT extend the 1040...but then I think she was actually talking about an S corp so that makes sense.)

Sorry for the long post - any thoughts?

I'm coming across a weird situation I have not seen before and wonder how to handle. I feel I should know this so if it's basic my apologies,

CB credits are roughly $250K

Due to mandated interest rates my valuation results are coming up with a minimum contribution of roughly $190K and maximum of roughly $220K.

There is no current Funding Target as this is first year with no past service so I don't seem to be able to take advantage of the cushion amount.

The plan results have the $250K credits as the amount payable under the plan and these are below the 415 payout limit for all participants but my max deductible results fall $30K short of the the CB credits?

Can the client fund and deduct the full $250K in year one?

Plan is PBGC if that makes a difference.

Am I missing something obvious here that will allow me to make the full $250K contrib?

We have a DC plan that has about 80 employees, 6 of which are HCEs, of which 5 are key. Two of the key employees are owners and they are trying to receive the maximum possible contribution. The idea is to create a DB/DC plan combo that will allow the two owners to receive large contributions on the DB side. Since only 40% of all eligible employees are required to benefit on the DB side, the DB plan will only be benefiting the two owners and 30 NHCEs. So, the DB plan will include only the 2 owners and the 30 NHCEs.

The plan is not top heavy for 2016, but will become top heavy in 2017.

For 2016, we're planning to do the following:

1) Give a 7.5% gateway to the 30 NHCEs in the DB plan.

2) Give the maximum possible contribution to the two owners in both the DC and DB plan.

For 2017, we're planning to do the same. However, I'm wondering how the top heavy status will affect the plan and I have these questions:

1) Will the non-keys have to receive a 3% contribution or a 5% contribution. I've read that when there is a DB/DC combo, a 5% contribution (or a 2% EBAR) has to be made for non-keys. Is that correct?

2) Since all non-keys (and not just those benefiting in the DB plan) will have to receive the top heavy minimum, what will be the effect on the gateway contribution? Will the non-keys who are not benefiting in the DB plan have to be bumped up to 7.5%, since they are now benefiting? So basically, will all the non-keys have to receive 7.5% in 2017 or just the 30 that are in the DB plan (and the rest receive the top heavy minimum)?

Thanks for your help in advance.