We have a profit sharing plan for a physician who is now a W-2 employee for a medical group.

The plan has 2 employees who can not be found.

The "investment advisor" has "advised" the client that as a sole proprietor, whether she has any Schedule C or not, she can keep the plan open; but if she were a corp the plan had to be terminated.

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1.72(p)-1, Q&A #9 outlines the requirements to avoid a deemed distribution when a participant returns from a non-military leave of absence. There are two options (#1) re-amortize the loan (possibly with higher payments, but never with lower payments) in order to payoff the loan before the 5-year term, or (#2) re-start repayment at the old payment amount AND a "balloon-payment" (my terminology) of the full balance on or before the end of the 5-year term.

My question is on option #2. What if the Pan Administrator allows option #2, and the participant gets to the end of the 5-year term and cannot make the final balloon payment? Obviously, a deemed distribution has occurred. But, WHEN did it occur and WHAT is the taxable amount?

My reading is that option #2 requires TWO things to occur to avoid a deemed distribution: re-start payments and make a balloon payment. Without both, I think the default date and amount goes all the way back to the "cure period", last day of the quarter following the quarter in which the first payment was missed. (The other possibility would be the value of the loan at the end of the 5-year term, because we were attempting to comply with Q&A #9, meaning basically that the balloon payment itself becomes the default amount). Of course, if the default goes back to the end of the cure period, we have a big mess on our hands and EPCRS kicks in. I guess I'm not sure how much good-faith can be used to assume that a participant will actually make a balloon payment?

Plan document states that profit sharing formula is cross -tested. However, in fact employer can't pass cross testing so employer is allocating contribution pro-rata compensation - not cross tested. Employer also allocates a safe harbor nonelective contribution. Typically, the gateway requirement would kick in. However, must I give the gateway in this case since the plan didn't actually use cross testing, even though the document shows cross-tested allocation? Thanks!

Small non-profit has all its money at Vanguard. Previously took the position that it was non-ERISA b/c deferral only. But because the additional cost is minimal and because there are limited investment options, we are suggesting just to do the 5500's and treat as an ERISA plan. I think this is consistent with the DOL's analysis which takes into account the participants ability to choose from multiple vendors.

So let's say we decide to change the status. Effective date of plan is 1/1/2000, and 2015 is the first year we will file (forget about 2014 and the extension, it would just be a distraction).

We check the first report box. Then what happens? Anyone done this? It seems like the DOL should be sympathetic here...

Anyone have any cites for how to determine if two mutual insurance companies would be part of the same controlled group? Do the non-profit controlled group rules come into play (same board, etc)?

a participant took a small loan for a period of 18 months. weekly payments are $20. However, the participant has been working very little due to various health issues. Her checks are spotty and have been minimal. Can the plan sponsor take out multiple payments on a single payroll to make up for weeks when she did not earn a check?

A plan went through a partial plan termination where several participants had their partially-vested amounts become 100% vested. Some of these individuals have recently been rehired and the question is how to show their vesting - continue with their actual partially vested percentages using the plan's 2/20 vesting schedule, or must you maintain their vesting at 100% due to the partial termination? The doc has the standard rule of parity language regarding exclusion of certain vesting YOS for rehires but does not address this situation. Thanks in advance for all help.

US citizen lives in the UK and has earned income there. We know that her income is also taxed in the US, with a credit for the UK taxes.

If she has a UK pension (or profit sharing) plan, is that deductible in the US? I guess the question is when completing the Sch C in the US is the pension contribution in the UK deductible in the US calculation/Sch C?

For deceased participant who died before receiving benefits, if a plan has a default beneficiary for an unmarried participant for children under 21, am I correct in thinking that this refers to the age of the child at the time of the participant's death?

If so, where is the support for that?

Fact pattern: involves an Irrevocable Trust that was named the beneficiary of an IRA. The Trust does not hold other assets. The IRA owner died in 2004 prior to the attainment of age 50 and the sole beneficiary of the Trust is the decedents child age 23 in 2005. The child was to receive benefits received by the Trust from the IRA during their lifetime. The child had the right upon death by will or general testamentary power of appointment to designate someone other than an individual to receive any amount remaining in the IRA upon death. Thus there is a question of whether the child qualifies as a “Designated Beneficiary.”

In sum, the questions;

1. Because the child, as beneficiary of the trust, has/had general testamentary power of appointment to designate someone other than an individual/person to receive any amount from the IRA in the event of their death does this disqualify them as a “Designated Beneficiary” and therefore the 5 year payout rule would apply?

1. Are there any circumstances under which a primary designated beneficiary has the right to name a secondary beneficiary who is not an individual and still be considered a “Designated Beneficiary?”

We have a Safe Harbor plan that does not currently allow for In-Service distributions. The owner needs to take money out of his plan in order to help his business and be able to maintain the 401k plan. If he won't amend the document, he will have to terminate the plan.

I've read a lot about amending the Safe Harbor plan mid-year and because in-service distribution amendment was not on the list of allowable amendments, which leads me to believe that this amendment is not allowed. However, I've also heard people on here comment that amendments like that should be allowed for a Safe Harbor plan and the whole restriction was not meant to be an exhaustive list of all possible amendments.

What is your opinion? Do you think the owner should be able to amend the plan mid-year?

Situation involves a plan with 2 loan failures.

Failue 1 can be corrected through reamortization because the 5 year term has not already expired.

Failure 2 cannot be corrected within the 5 year term and we are requesting that the deemed distribution be reported in the year of Correction as opposed to the year of the Failure.

The problem is Schedule 5 (Form 14568-E) does not accomodate both corrections on a single form.

I was thinking of either doing 2 separate schedule 5s for a single VCP filing, or not using schedule 5 at all and just drafting something individualized for this situation. At this point I am leaning to doing two separate schedule 5s, it just strikes me as a little counter intuitive.

Any thoughts on this would be appreciated.

We have a small employer with less than 15 employees, they offer a group health plan to employees with ER paying 25% of premium and EE's paying remaining 75% of premium. ER also pays 100% of 1 Key EE's insurance outside of the Cafeteria Plan as a general business expense.

When running the necessary non-discrimination tests for the Cafeteria Plan we are including both the ER Paid and the EE Paid premiums for the Health insurance.

(1) Is it proper or is ER permitted to exclude the Key EE premiums paid as these were paid outside of the Cafeteria Plan as a general business expense? or does this ER paid premium amount need to be factored in for our Non-Discrimination testing?

(2) If the above is not permitted, can we elect to run our Non-Discrimination testing only looking at the EE's portion of the Health Insurance premiums being paid? Thus the ER paid premiums would not be included in the Non-Discrimination testing.

Problem is that with the Key EE's ER paid insurance premiums factored in the Cafeteria Plan fails the 25% concentration test.

Thank you for any assistance with this question - Nathan

A 401(k) plan has a recordkeeper platform offering a significant number of mutual funds as its only current investment option. The recordkeeper charge is 50 basis points. The plan is considering adding a managed brokerage account where a participant would be subject to a minimum annual advisory fee of $5,000. Would this managed account option be considered discriminatory because of its relatively high fee?

We have a situation where a company with a 6/30 PYE 401(k) started up a separate 401(k) plan with a 12/31 PYE for a company they own.

If they can separately pass coverage, then ADP/ACP could be run separately. However, if coverage fails, then wouldn't they have to be tested together? If that's the case, we couldn't know the results until after 12/31, which would be well after the 2.5 month correction period for the 6/30 plan.

What are you thoughts on this? I was under the impression that they couldn't be permissively aggregated because of the different PYE but what if they have to?

Thanks!

Former owner of my client terminated with said client and took another job at an unrelated company. He had some nontraditional assets in his account and I believe instead of rolling to an IRA he decided to set up a 401k plan for the sole purpose of accepting rollovers. I am suspicious that there is no business tied to this 401k plan, he just preferred this to the IRA platform because he would have more flexibility. So I am concerned that the plan is not qualified.

Now I could be ALL wrong about this. Remember, these are only suspicions. The amount involved happens to be quite substantial. What obligation does the plan sponsor have to vet this out? The sponsor "should know" enough to be suspicious because based on the Plan name on the rollover request it is clear that it is being sponsored by this individual and they do know he has not gone into business for himself. And he has been employed by them for "several years" so the existence of an old plan seems remote.

Newbie here looking for advice.

We have a client who has had an established loan policy for the last several years. Within the loan policy it states that the loan rate will be prime plus 2%. However, the trustee/custodian only charged prime plus 1% for all loans through the time it was recently discovered. This was an administrative error on the trustee/custodian side. Upon discovering the error, all new loans were issued with the correct rate. The client would like to retroactively amend the loan policy to reflect the loan rate actually used during that erroneous time period.

Questions:

1. Would self-correction as described above be sufficient in this case?

2. Would VCP filing be a better option?

3. If VCP, we are having trouble determining where it fits under Form 14568-E - Appendix C Part II Schedule 5. There is no clearly defined option, as the loans were not in default and did not violate the terms of 72(p).

Any advice would be greatly appreciated.

I haven't been doing FSA plans for quite a while. I think that unspent FSA deductions used to revert to the employer, who had a couple options of returning it to the plan, but didn't have to.

Can employers now "keep" unspent FSA funds?

Company B did an asset purchase for Company A and acquired Company A's employees under "same desk rule". What should the board of resolution language be for this amendment?