A defined benefit plan that was frozen in 2001 currently doesn't have a lump sum feature. The AFTAP is 63%. I seem to recall that there is an exception to the restriction on paying out lump sums under 436 if the plan was frozen before 2005.

If that's true, can this plan be amended to add a lump sum optional form, and then start paying out lump sums?

Or would that somehow be considered an amendment increasing benefits and therefore not permitted?

Any other ways something like this could blow up?

Thanks!

I've got an old 401k plan with a paid up Life insurance policy in the plan. The plan itself doesn't allow loans but the insurance policy does. Can particpant take a loan out of the inurance policy? Will this loan need reported on the 5500 as a plan loan? Is there a limit what they can borrow.

I'll be honest I'm lost when it comes to Insurance policies in general in qualified plans and if anyone has a link that explains how this stuff works it would be greatly appreciated.

Sorry, this was originally posted to the wrong category.

A calendar year 6 participant cross tested 401(k) plan fails 401(a)4. The plan has a 1 year eligibility requirement.

To make the plan pass, an ineligible employee was brought in, given a contribution and made 100% vested through a corrective amendment. Once he is made eligible through the corrective amendment, is he then eligible for all other plan purposes or does he need to wait until when he would have entered?

Normally he would not enter until 1/1/16.

Thanks

A calendar year 6 participant cross tested 401(k) plan fails 401(a)4. The plan has a 1 year eligibility requirement.

To make the plan pass, an ineligible employee was brought in, given a contribution and made 100% vested through a corrective amendment. Once he is made eligible through the corrective amendment, is he then eligible for all other plan purposes or does he need to wait until when he would have entered?

Normally he would not enter until 1/1/16.

Thanks.

I am having trouble with item 3g column (ix) for the current IRS Form 5307.

What is "The Required Practioner Statement" that should be attached?

1. Is this refering to amendments where the Prototype Sponsor adopted the amendment on behalf of all adopting employers, and states somethin to the effect of:

"Except with response to any election made by the Employer in____, the protoype sponsor, on behalf of all adopting employers, hereby adopts this Amendment on ________"?

2. How do we judge the adequacy of these statements?

I have one that just says:

"Except with respect to amendments made by the Employer to this adoption agreement, this amendment is hereby adopted by the prototype sponsoring organization on behalf of all adopting employers on.

[sponsor's signature and Adoption Date are on file with Sponsor]

3. If any amendment was signed by the employer and not the prototype Plan sponsor, do we indicate "NO" or "NA" in item 3g of column (ix)?

There are no instructions for the current Form 5307 that indicate how 3g(ix) should be answered.

Thanks

If you have a Wrap document for a Company of over 100 employees and offers multiple benefits that includes a health spending account (FSA ) plan, the benefits can be filed on 1 5500, correct? Also, there will be no specific info on the FSA and no schedules.

Suppose a DRO that was signed by the judge and the person who is to be the alternate payee, but not by the participant, is being submitted to the plan administrator. It is not clear whether the participant is willing to sign the order.

Would the fact that the participant has not signed off prevent the order from being properly recognized as a QDRO? If it makes a difference, presume that the order relates to a defined benefit pension plan.

Plan allows loans from Roth Account.

Participant terminates employment before the loan is paid in full.

Participant is 591/2 and 5 years since first participated in Roth.

The Roth loan balance is $10,000.

Am I correct in saying the defaulted loan (now a deemed distribution) is not a "qualified distribution" therefore, the portion of the loan balance attributable to earnings is taxable income.

For example:

Loan Balance $10,000

Portion attributable to deferrals $8,000

Portion attributable to income $2,000 - taxable income

Thanks

How to rollover inherited401k. Is it true the partner get special benefits from internal revenue services while they inherit retirement account including 401K plans.

I have a 403(b) prospect. 6 operating divisions, same Board of Directors (controlled group). There is one plan document. All divisions can make deferrals (whew!). However, only 3 divisions get a Safe Harbor Match (the other 3 are excluded in the document).

I've never thought about doing this, so I don't know the answer....can a plan exclude employees from a Safe Harbor contribution? Let's assume that the plan would PASS coverage for the employees who are eligible for the SHM (assuming that matters).

I had always thought that a plan had to make SHM contributions to ANY employee eligible to make deferrals, or to those employees who had attained the statutory 21/1 YOS.

If you have cites, that would be great. Thank you.

I have a sponsor that wishes to merge their money purchase plan into their 401k plan as of 8/31. There is time for the 204(h) notice to get distributed. However the money purchase plan has a 1000 hour allocation requirement which most participants will likely meet by the merger. So when the plans merge, will the 8/31 balance be subject to QJSA and other money purchase plan protections but the future contributions (which will be identical but as profit sharing contributions in the 401k) will not be subject to the money purchase requirements?

Thoughts?

I have a client that is considering purchasing a business which currently offers a SIMPLE IRA to their employees. Our client would like to offer the new business' employees the match they are currently receiving in the SIMPLE IRA which is different than what their current plan offers. Is it possible to have employees receiving two different matching formulas? If the new business is bought in the middle of the plan year, does the SIMPLE IRA immediately terminate? Anything else I need to consider?

Thanks

A veterinary practice was a sole proprietorship. The retiring veterinarian sold the practice to a young veterinarian. The retiring veterinarian's 401(k) plan was terminated, and participants were given distribution paperwork when it was time to wind down the plan.

The practice has continued under new ownership (sole proprietor), with a new EIN, etc. From an employee perspective, all employees have remained and continued their service as if nothing had changed.

The new veterinarian started a new 401(k) plan immediately, so there was no gap in providing a retirement plan benefit for the employees. Some employees had elected to roll their funds from the prior practice's plan into the new plan, and others did not.

For those employees who did elect to roll their funds from the prior practice's plan into the new practice's plan . . . is that considered related rollover money or unrelated rollover money?

I know this question is beyond basic, but I can't find any information that points directly to this kind of situation.

Thanks!

Plan B is merging into Plan A. The legal documents say merger is as of 12/31/2014. The assets do not move until 1/15/2015. We're reporting the transfer in on the 2014 income statement in the appropriate section, but where do we put it on the 2014 balance sheet? Other receivable?

[We did this effective 12/31 to avoid a 1 day audit for Plan B].

Hello -

I've just found this forum and did some searching to see if there was already an answer to my question but it does not appear there is...

This is regarding my personal situation.

I am a US citizen working as an expat residing in Singapore working for the Singapore division of a Swedish company. I am on a local Singapore employment contract to the Singapore company.

The only retirement scheme available is the Singaporean CPF scheme which is only available to Singapore PR (permanent residents) - I do not have PR status.

This company DOES have US subsidiaries, but I am not employed by that company.

My question is about Solo 401K plans.

From what I have read the Solo 401K plans are focused only towards self-employed expats and is not available to individual employees of foreign companies overseas. Is that correct?

I'm beyond the FEIE, and am looking for another vehicle to save and invest for retirement - hoping to find a way to take advantage of a pre-tax 401K type plan if possible.

Looking forward to any suggestions.

Thanks in advance

lfb

Prior to 1986, there was an after-tax contribution formula that allowed a participant to make a contribution over an above what he might receive in the way of a P/S. At the time, an ER could only contribute 15% of eligible payroll and didn't get the owner to the maximum annual contribution (also needed a MPPP to reach the maximum) so there was a provision where they could make an after-tax contribution. It somehow incorporated the annual addition and the ability to make a 6% contribution. Any help would be much appreciated. Steve

I posted this issue in EPCRS and didn't get a response so I'm trying again here.

Governmental employer with a defined benefit plan that includes mandatory employee contributions picked up by the employer.

Handful of employees in an excluded class have been erroneously treated as eligible and pick-up contributions have been made for them for many years. How can we correct?

(The employer will need to pay social security taxes for these employees, so we don't want to do a retro amendment to include them in the plan. This would also require a VCP since this isn't early inclusion of otherwise eligible employees)

Thanks!

An internal email I just sent that I decided to share with my BL Buddies!

When you are processing lost interest for a lot of people, the hard way is to calculate the total interest and then use a somewhat complicated formula to prorate based on total interest and total 401k.

Here is an easier way. Enter the loss amount as $100,000. Whatever the interest is can easily be converted to a percent. So if the interest comes out to be 6,472.32, the interest rate (or "factor" to be more precise) is 6.47232% which ought to be precise enough to get us within a penny or two of what interest ought to be. So just multiply each person’s 401k by 6.47232%. No calculator required for that conversion, just pretend the comma is the decimal point.

If you are using this technique, I would still calculate what the total interest is supposed to be (i.e., enter the actual loss amount with the same dates) so you can prove you did it correctly.

I guess it will only work with one loss date at a time.

I hope you like it...

I know for the ERPA exam you must get a "105" or higher. I was curious if anyone had an idea of approximately how many questions you need to get right. Granted there are multiple sections which makes it a little difficult but based on their failed test examples I get the impression you have a quite a bit of cushion...

How does the non-owner exception work for RMDs? I have these questions that I wasn't able to find any answers for (assuming the plan document allows the non-owner to delay the RMD)...

1) If the non-owner took his first RMD at, let's say, the age of 75, is he required to keep taking them or is it on a year by year basis, until he retires?

2) If the participant takes above the RMD amount, can the 20% federal withholding apply only to the portion above the RMD amount (since the RMD is not rollover eligible)?