We are trying to determine the following:

A S-Corp owned by a family , Father, Mother, 2 sons, 2 daughters - they all work for the company

Father owns 10% of stock - controls 100% of voting stock

Family Trust A owns 22.5%

Family Trust B owns 22.5%

Family Trust C owns 22.5%

Family Trust D owns 22.5%

The beneficiaries of the trusts are the respective children.

Are the spouses of the beneficiary children Key EE's?

We have never seen this before.

I ran into an interesting problem today and was hoping for some guidance, as my research has come up a bit gray.

New safe harbor plan for 2015 with a former HCE/owner who switched to part-time, working under 500 hours the past 5+ years. The goal is the not have the former HCE eligible to participate without a direct exclusion.

I understand that for 5 breaks in service, they (seemingly) have to be a participant at some point. Would the one year rule negate the prior eligibility, or does he have to be a "participant" at some point for that, as well?

Thanks. If more info is needed just let me know.

I am wondering if it is known for certain whether all partnership interests(limited or general) are to be counted for scheduled I item 3(a) or perhaps just the non publicly traded partnership interests?

I do not think I have a good handle on EOY Valuations.

Facts:

CB plan established 1/ 1/2014

EOY Valn 12/31/2014 (also first plan year)

4 participants (2HCEs 2NHCEs)

1. Funding Target = $ 0
2. Target Normal Cost = $ 47,766 = MRC
3. Assets 1/ 1/2014 = $0; Assets 12/31/2014 = $55,000 (all receivable and for 2014 plan year) and at Market Value
4. Employer Contributions totaled $55,000 deposited in Jan and Feb 2015
5. Discounted Employer Contributions = $ 54,727
6. Increase in Prefunding Balance = $ 6,961 (i.e. $54,727-$47,766)

Q1. What is FTAP and AFTAP at 12/31/2014?

A1. 100.00% (which is $0 FT divided by $0 assets since contributions are all receivable)

A2. 114.57% (which is $ 54,727 discounted contributions divided by $ 47,766 TNC)

A3. 100.00% (which is ($ 54,727 - $6,961) divided by $47,766)

Is this the percentage that is entered in line 14 and 15 of 2014 Sch SB? My initial thought is 114.57%.

Q2. My reading of the 2014 Sch SB instructions lead me to believe that line 2a and 2b (Asset Values) are $0. Item 3 Funding Target is also $0. Is this correct?

Employer is a general partnership. There are four unrelated general partners, each holding 25% interest in the employer, so none of the general partners are members of the same controlled group as the employer.

If employer withdraws from a multiemployer pension plan, I understand that each general partner can be held jointly/severally liable for the entire withdrawal liability (as applied under state law). But, is the controlled group of a general partner also on the hook if the general partner can't pay? For example, assume general partner is corporation x, which is wholly owned by corporation y. Can the plan or the PBGC go after corporation y?

My gut sense is no, since neither corporation y nor the general partner are in the same controlled group as the employer. But, I haven't found any cases on point. I would appreciate any thoughts. Thanks!

Small defined benefit plan covering a business owner and 3 employees. The business owner has a higher benefit than employees in the DB and the employees get a 15% of salary contribution in the DC plan.

We don't have any other plans with life insurance but this one does have a policy on the business owner. The employees will need to have comparable policies (for example if the business owner has a policy of 50 times monthly benefit, employees need the same). The problem is the employees have smaller benefits in the DB. I think the employees will then need comparable coverage in the DC plan.

The insurance agent is telling me his home office legal department claims that employees can waive insurance in the DC plan. I know this is probably the case for a DC plan by itself but don't think it is possible in this case.

Any thoughts?

Thanks.

I've got a plan that erroneously excluded a total of three employees in 2014 and one in 2015. It looks like the employer can use the new corrections procedure in Rev. Proc. 2015-28 (requiring only a 25% QNEC instead of a 50% QNEC to make up for the lost deferral opportunity). For 2014, it's fairly clear how this is to be done. However, I've got questions with respect to 2015:

1. Is there a missed deferral opportunity at all for 2015? The Rev. Proc. says you've got to give the employee a notice saying that he or she can make up the missed deferrals, subject to the 402(g) limits. Since we're only halfway through the year, the employee should be able to defer the full 402(g) amount in the second half of the year. At the same time, the procedures are different if the error is discovered within 3 months than if it is discovered thereafter, so presumably some correction is required if the error goes on for more than 3 months but still within the same year?
2. If the employer has to make a QNEC for 2015, how is it calculated? The QNEC is based on the ADP of the HCE or NHCE group. But presumably, the ADP can't be calculated until after the end of 2015. Does the employer have to defer the contribution until after 2015 ends, or is there some way to determine the amount of the QNEC before that time?
3. The notice to the employee must include "A statement that appropriate amounts have begun to be deducted from compensation and contributed to the plan (or that appropriate deductions and contributions will begin shortly)." What does this mean in the context of employee elective deferrals? Presumably, no amounts should be deducted from compensation until and unless the employee makes a deferral election.

I've got a plan that erroneously excluded a total of three employees in 2014 and one in 2015. It looks like the employer can use the new corrections procedure in Rev. Proc. 2015-28 (requiring only a 25% QNEC instead of a 50% QNEC to make up for the lost deferral opportunity). For 2014, it's fairly clear how this is to be done. However, I've got questions with respect to 2015:

1. Is there a missed deferral opportunity at all for 2015? The Rev. Proc. says you've got to give the employee a notice saying that he or she can make up the missed deferrals, subject to the 402(g) limits. Since we're only halfway through the year, the employee should be able to defer the full 402(g) amount in the second half of the year. At the same time, the procedures are different if the error is discovered within 3 months than if it is discovered thereafter, so presumably some correction is required if the error goes on for more than 3 months but still within the same year?
2. If the employer has to make a QNEC for 2015, how is it calculated? The QNEC is based on the ADP of the HCE or NHCE group. But presumably, the ADP can't be calculated until after the end of 2015. Does the employer have to defer the contribution until after 2015 ends, or is there some way to determine the amount of the QNEC before that time?
3. The notice to the employee must include "A statement that appropriate amounts have begun to be deducted from compensation and contributed to the plan (or that appropriate deductions and contributions will begin shortly)." What does this mean in the context of employee elective deferrals? Presumably, no amounts should be deducted from compensation until and unless the employee makes a deferral election.

This plan is a 401k (not a safe harbor). The plan document is being restated in July 2015 and the plan sponsor wants to change from an Integrated profit sharing contribution to a New Comparability contribution effective 1/1/2015. Would this cut back the participant's benefits and rights? I read that the new formula needs to be equal to or better than the original allocation when amending back to the first of the current year. The plan sponsor did not make an employer contribution in the prior year. Would the employees need to receive at least 5.7% since that was the integrated formula?

So the former owner of the company sold all shares to the ESOP. So he got paid for those shares in that transaction. However, now he is also a Plan participant. He would then arguably also get those shares (well at least some) allocated to his Plan account. Shares are allocated based on compensation, and since he's paid the highest, he gets the biggest peice of the shares released each year. Is this allowed? Somehow this seems wrong....

Company neglected to take loan repayments from participant's paycheck. Loan taken in 2013. Investment house defaulted loan in 2014 and a 1099-R was issued in 2015 for 2014 for the loan amount. Is there any way to have the 1099-R reversed and the loan paid back now? Participant is still employed. Can this be corrected through the self-correction program?

If an employer submits a negative contribution in 2014, can they resubmit 2014 deferrals to be reapplied back into the participant's account? can you do this as a QNEC?

Employer sponsors a generous DB plan. Terminated employee received the lump sum actuarial benefit. It amounted at about 2 years of salary and happily informed her former coworkers about the Employer generosity.

Guess what happened next?

Several other employees promptly submitted their resignation!

Employer would like to amend the plan and remove the optional lump sum form of distribution.

QUESTION: If such amendment is effective - let's say- January 01, 2016, would it apply for all employees that terminate employment after that date? Or only for those hired after the effective date of the amendment? ( like in the case of vesting schedule amendment)

Thank you for your help.

We are the new TPA for a 401(k) safe harbor plan for 2014. During 2014 (prior to our taking the plan over) a participant took an in-service from her account from all sources. Plan allows for in-service at age 59.5 (she is 69 and still employed) but from only the pre-tax and rollover sources.

Can I do a corrective changing the sources of in-service for 2014? I know this is a safe harbor plan.....

Let's ignore that for now, under EPCRS we can do a corrective amendment for loans and hardships. Do you conclude you can do the same for in-service?

A SIMPLE plan has to do a VCP correction for improperly excluding employees for many years. Many of these former employees won't respond to employer letter asking them to set up a SIMPLE-IRA to receive a contribution. (amazing, isn't it?)

Their current SIMPLE-IRA investment provider won't allow the employer to set up a SIMPLE-IRA for a former employee - they say the EMPLOYEE must set it up.

Do you know of any vendors who will allow the employer to set up a SIMPLE-IRA on behalf of a non-responsive former employee?

This really should be the broker's job, but the broker isn't doing it...

A plan covers 3 partners of a company. No other employees. We will be filing Form 5500-SF for 2014. In prior years, the TPA did not check on the Form 5500-SF 'one participant plan'.

Question is: Should this box be checked in this instance? I say yes. Is there a problem with now marking the SF as a one participant plan this year when it was not marked in previous years.

This question has come up because there is no bond for the plan and there does not need to be one but if the one-participant box is not checked, and the plan has no bond reported on the Form 5500-SF, I have concern the client will be contacted by DOL for lack of bond.

I have a plan that will be officially terminated by 7/31/15 (all plan documents updated for current legislation and all plan assets distributed). Of course, this will require a short plan year 2015 Form 5500 that will be due by February 28, 2016 (without extension).

Am I reading the 2015 Form 5500 and 5500-SUP instructions correctly in that I CANNOT file the short plan year 2015 Form 5500 on the 2014 Form 5500 because the Form 5500 is not due until after December 31, 2015 (February 28, 2016)? I must wait for the 2015 Form 5500 and Form 5500-SUP to be released?

My client is in a huge hurry to be "completely done" with this retirement plan and will not want to hear that they must wait until early 2016 to file the final Form 5500. Is there not a way around this?

Have a small 401(k) plan sponsored by an accounting firm. They were bought by another firm and decided to terminate the plan.

We explained that we would obtain benefit elections then prepare an instruction letter for distribution all at one time after all elections were received and verified as properly executed.

One of the two partners of the firm (and also a plan trustee) received her benefit elections, signed them and then immediately called the brokerage firm to transfer her benefits to an IRA.

This plan has self-directed brokerage accounts.

Is it a problem that the key employee and HCE was paid her benefits weeks before any other employees received their distribution?

Thanks.

Under Revenue Procedure 2013-12, in Appendix B, Section 2.01(1)(b)(iv)(B)(1), it states "the contribution ... is allocated to the account balances of ..."

Later in that same paragraph, three more times it states "to the account balance(s)"

Under this One-to-One correction method, could a plan sponsor allocate the QNEC only to eligible NHCEs that have account balances (meaning the Eligible NHCEs with a zero account are excluded)?

If an employer amends a SH Match mid-year to exclude contributions to HCE’s – leaving it in effect for Non-HCE’s however – is it still subject to ADP/ACP testing for the year of the change?