There is some rule affecting RIA's which was in response to Bernie Madoff that increased an RIA's responsibility when they have "custody" of client assets.

I understand the point of the rules with respect to RIA's who have access to their client's money. I have a client who is an RIA who is suggesting that they are subject to these rules with respect to the Trustee of the plan covering the RIA's employees. I tried to explain that in this situation, invoking this rule would involve protecting the Trustee (who happens to be the sole owner) from himself.

The requirements that one must deal with in this situation are quite onerous - either appointing a corporate trustee or engaging an audit firm to conduct "surprise audits."

Can someone point to something where it has been documented that this does NOT apply to RIA firms where the owners of the firm serve as Trustees?

A plan has a calendar plan year. The employer is moved from an individually designed plan (timely signed an 8905) and is using a pre-approved document. The PPA restated document is effective 1/1/2016.

When the employer got their PPA restatement they notified the document provider that they made a change in operation mid-2015 plan year but failed to request an amendment to the plan document.

Did the employer need to sign an amendment by 12/31/15 for the change or can the change be incorporated into the PPA document and signed by 4/30/16 (i.e., under PPA remedial amendment period). If it can be incorporated into the PPA document would is be under varying effective dates or would the PPA restatement date need to be the effective date of the change in operation (e.g., 10/1/15).

Thank you.

Our ESOP has hired a number of attorneys to assist in resolving legal issues with some of our ESOP plan participants.

Does this legal cost have to be paid by the ESOP or can the company (who sponsoring the ESOP) pay for these legal costs?

If the ESOP must pay – Then, would these legal costs need to be reported in the 5500 form?

Thank you.

For 402(g) excesses taken BEFORE April 15 after year in question:

Gross amount: taxed for year in question. If distributed before Dec 31, 1099-R code is 8. Between 1/1 and 4/15, it's P.

Earnings: taxed in year of distribution. Code 8.

For 402(g) excesses taken AFTER April 15 after year in question:

Gross amount: Taxed in year in question AND year of distribution. 1099-R codes P and 8.

Earnings: taxable in year of distribution. Code 8.

Does this also apply to impermissible deferrals (eg before becoming eligible) or if going over a plan limit (eg deferring 11% when plan limit is 10%)

An employer has 5 employees, all of whom are officers earning over the 416 compensation requirement and none of whom are owners. Therefore, only 3 of them would be key employees due to the limit on number of officers that are treated as key employees (greater of 10% of employees or 3). Those 3 would be determined by ranking them by compensation for the determination year in question and selected the highest paid.

These employees are all equal in decision making & responsibilities regarding the operation of the business. Also, all of them are highly compensated employees.

They have a safe harbor 401k and are exempt from the top heavy requirements. However, if they wanted to allow after-tax employee contributions, the would lose that exemption. If any of the employees made such a contribution, it appears the two non-key employees would be required to receive a top heavy minimum.

Unless my analysis is wrong, this is a crazy result that would preclude the employees from making such after-tax contributions without requiring a top heavy minimum for the two non-key employees.

Anyone disagree or have any comments?

Thanks.

I am never sure when trying to determine who is an HCE - for 5% owners - do we count people who own exactly 5% or people who own more than 5%. I seem to see it described loosely in my reference material. I think it is the latter. (more than 5%).

In an ADP test I am running. I have an employee who owns exactly 5% and earned 124,000 in 2015. She is an officer and earned 180,000 in 2014. She is in the process of retiring and socked away the maximum...which if she is still an HCE makes them fail big-time. I think she still belongs in the HCE group for 2015, but am hoping I am wrong.....

Any thoughts/guidance/what am I missing here comments would be welcome.

NQDC plan benefit is a percentage of the employee's annual compensation. In 2015, as a result of a 27th pay period, Employer ended up paying him more than it has in 2014 and prior years. In 2016, they will adjust what they plan on paying him, in order to account for the extra payment in 2015. In 2017, they will be back on schedule to pay 26 pay periods for the same total as he was given in 2014 and prior years.

Is this an impermissible acceleration in 2015 and potential under payment in 2016? If so, is there an exception under 409A that the company can use? Do you have any other suggestions for how the company could handle the extra payroll/payment and subsequent adjustment?

We submitted a form 5308 to the address provided on the instructions included below and it has been returned twice. Does anyone have the proper address? Thanks!

Internal Revenue Service, Commissioner, TE/GE, Attention: SE:T:EP:RA, P.O. Box 27063, McPherson Station, Washington, DC 20038,

P.S. - this is a SIMPLE-IRA.

You wouldn't think there is room for any interpretation here, but...

The model salary reduction election provides for a flat dollar amount or a percentage to be withheld "...from my pay for each pay period..."

Suppose you have someone who has elected a flat dollar amount - say $50.00. Once a year, they are paid a bonus, which is paid in a separate paycheck.

Clearly the bonus must be considered when determining total compensation for purposes of calculating the 3% matching contribution and limit. But is (A) withholding $50.00 required, or (B) is it not required since the bonus was paid during a "pay period" when $50.00 was already withheld from "regular" pay?

I'm inclined to think this could reasonably be argued either way. It matters in this situation because the employer botched the SIMPLE for years for a whole bunch of employees, and needs to file a VCP correction. So I can submit using interpretation (B) to see if the IRS approves, and fall back to (A) if they don't, but I don't want to bother with attempting (B) if I know it is a losing proposition. So, I just wondered if anyone has encountered this before, and if so, with what interpretation/results?

Thanks.

In a controlled group of corporations, Company A is the current plan sponsor and Company B is a participating employer. We are restating the document for PPA and they want to make Company B the sponsor and Company A a participating employer. I thought this would be fine as long as the change was on the 5500. Their attorney says that if we change the sponsor, it is not considered a restatement. Is that right?

Simple terminated in 15 and converted to a 401k in 16. Two questions, can the 2015 employer contribution for simple be funded in 2016? If it is a partnership (k1's for partners - not w2) can the employee deferrals be deposited for the partners in 16 for 2015?

Hi Everyone. New to BenefitsLink.

Where and how do I post a topic? I have question on funding of Simple IRA Plans.

Thanks very much!

Owner of company is deceased; wife wants to rollover his money to her IRA. This is permissible, is it not? (Just double checking)

Employer X maintains group health plans for its employees. For 2015, it chose to offer affordable coverage providing minimum value to 70% of its otherwise eligible full-time employees, choosing reasonable classifications to exclude as part of the 30%. X applies the look-back measurement method for purposes of determining the amount of any penalties under Code Section 4980H. For 2016, X is extending coverage to the other 30% due to its awareness that the rule requires it to offer coverage to 95% of its otherwise full-time employees. For purposes of applying 4980H to 2016, would the newly eligible ongoing full-time employees, how would Employer X treat them? Are they treated as newly eligible full-time employees, even though they are in fact ongoing employees? Or would it not be able to do anything but treat them as ongoing full-time employees since 4980H is applied on an ALEM by ALEM basis?

I would be most interested in getting your thoughts on this. Thank you.

The Plan was amended in mid-2015 to allow one employee to enter the Plan early. The employee was described as a newly employed employee and not a Highly -Compensated Employee. Now in 2016 it is discovered the new employee is a spouse of a Key Employee (they have different last names).. We need to correct as the new employee made 401k and received matching contributions during 2015. I believe this is a Demographic Failure requiring VCP, not SCP. Has anyone had a similar problem?

We have a plan that improperly calculated participant entry dates for a small subset of employees. The miscalculation essentially pushed back each participant's entry date from the correct date until the next entry date six months later. For example, participants eligible on January 1, 2014, were not enrolled until July 1, 2014. The error was just recently discovered.

I'd like to use the reduced 25% QNEC under Rev. Proc. 2015-28 because we're still within the "greater than three months but less than two years" period for many of the affected employees. However, the safe harbor requirements include notifying the affected participants "not later than 45 days after the date on which correct deferrals begin."

Read literally, if the normal plan entry process started "correct deferrals" on, say, July 1, 2014, we would have had to notify the participant within 45 days after their plan entry date, which we obviously cannot do (and couldn't have done).

Interested to hear thoughts on whether we should still aim for a 25% QNEC and give notice within 45 days of discovering/correcting the error? I get that the reduced QNEC is supposed to provide an incentive to self-correct errors early, but we're still within the eligibility window, we just didn't realize at the time of plan entry it was a "correction."

A participant took a partial distribution from a Roth 401(k) account in 2015 and it was a qualified distribution. The 1099r instructions state that box 5 can exceed box 1. If box 5 included all contributions (less any basis previously distributed) and the participant took another distribution in 2016, what would be in box 5 for the 2016 Form 1099r?

Does anyone have a good earning calculation worksheet? The one I'm using if definitely faulty, as it is showing me a greater loss than what the account earned over the year. For example, I have 100 loss in the account, but the spreadsheet is using 106 loss overall.

I used to have a good one in a previous job, that that has been lost to posterity.

I was approached by a business owner (no other EEs) with a solo-k plan that he started about a year ago. The plan doc was setup by a plan administrator "specializing" in self-directed IRAs/solo-ks. The business owner was instructed by the admin official to go to his bank (he recommended a specific, large bank that I won't mention), and open up a checking account under the business's EIN, and make contributions, rollovers, and transactions through that account. He did as instructed, made an indirect rollover contribution via check, made a contribution for the year, and started purchasing non traditional assets (real estate to be specific).

Am I mistaken in that this MUST be a trust account with a separate TIN? I have consulted many other experts and other banks, and the general concensus (with a couple exceptions, particularly the admin who told him to setup the account in this way) is that this cannot be a qualified account. Is there such a thing as a "custodial" account setup through a bank that can serve in this manner? I'm getting some contradictory information from different sources that this MAY be considered proper by the IRS.

Any insight would be GREATLY appreciated.

I was wondering if anyone has a sample RFP for Cash Balance Plan vendors which would include questions regarding establishing the plan (design, education) and ongoing administration (fiduciary responsibility, testing, actuarial, reporting, record keeping, and money management).

Who are the larger vendors in this field besides Kravitz?

Thanks!