New plan for 2014. Effective date of plan per the adoption agreement is 1/1/14, however the plan was not adopted until 5/5/14 and deferrals started after this date.

Can we use compensation from 5/5 or must it be from 1/1 for the ADP test?

Here is the document language from the ADP testing section of the plan:

We are a New York company. An unmarried employee and participant in our 401(k) plan retired three years ago, and maintained his participation in the plan and his existing beneficiary designation after retirement. A year after his retirement, we merged our 401(k) plan into another independently administered plan, and the retiree's account was transferred. The retiree continued his participation in the new plan and made no change to his beneficiary designation at the time of the merger. His account with that plan never received salary deferrals from us due to his retired status.

Shortly before the retiree's death, someone claiming to be the retiree contacted our HR department and asked for a blank beneficiary form for the new plan, which we sent to the e-mail address that the person provided. The retiree never had an e-mail address of record in our files. The blank form we sent was used to submit an executed beneficiary form to the administrator of the new plan. Three months later the retiree died.

Now the formerly designated beneficiary who lost the benefits because of the new form is claiming that the person who contacted us was an imposter and the e-mail address did not belong to the retired employee, and that the executed form submitted to the new plan was fraudulent (including a forged signature, etc.). The former beneficiary says it was unlawful for us to issue a blank beneficiary form under these circumstances, or to issue a form at all because we never had a direct connection to the retiree's account with the new plan through salary deferrals.

Do we have legal exposure to claims by the former beneficiary under ERISA or otherwise? Or are the former beneficiary's claims limited to the new plan for recovery of the benefits?

Thank you for any thoughts.

I have a client who wants to increase normal retirement age from 55 to 60 in its 401(k) Plan. Does the anti-cutback rule apply? Can this change only apply to new hires?

I am a FA and I was referred to clients of a CPA. These individuals own multiple business entities, primarily in real estate. The only EEs of all companies are the owners (parents, 60's) and their two children (30's), also owners. Ignoring control group/affiliate service for the purpose of this thread, they are interested in starting a CB or Combo plan for the purpose of defraying taxes and purchasing Real Estate. They have no interest in investing in "traditional" securities or any other assets other than RE.

Aside from the the usual issues related to owning RE in a retirment plan (PTs related to income/expense flow, management, can't "contribute" RE assets, etc etc) I have a few concerns because I have never had a client with an interest in investing solely in RE in a QRP. First, I am concerned that it would, at a minimum, violate ERISA's "duty to diversify". Second, I am concerned that the IRS will view this unfavorably by default. Third, I believe that legal issues, valuation issues and related expenses may outweigh the benefits. Fourth, I am not aware of any trustees and/or custodians, apart from SD-IRA's and some uni-k's, that work with this.

Has anyone else had or heard of a situation like this? Is there something else that I should also be concerned with? I will undoubtedly be reaching out this week to local TPAs and ERISA attorneys I have worked with in the past, but I am interested in some feedback from the community.

Thank in advance for your responses.

If a 401(k) retirement plan allows a choice between Roth and non-Roth elective deferrals and provides an automatic-contribution arrangement, how often is the default Roth elective deferrals and how often is the default non-Roth elective deferrals?

Had an eagle-eyed client bring this to my attention, which was issued today.

http://www.irs.gov/pub/irs-drop/n-15-53.pdf

which IRS issued in IRS GuideWire dated today (inexplicably the 7/31/2015 IRS Employee Plan News doesn't have this in the issue).

Entered 417 rates for 2016 and just ran and looks like fairly trivial impact. From cursory reading of 2015-53, looks like punting the generational tables (and presumably big impact on liabilities) to 2017 (post-election).

Question,

Can a participant receive a hardship distribution ( safe harbor hardship used) to pay for a Special Education Certificate Program. This is an 18 CE course that will ultimately be applied towards a masters.

Thanks

401(k) Plan has elected Section 415 definition of Compensation for plan purposes. Definition (unlike others) expressly excludes "amounts realized from the exercise of a non-qualified stock option" and "amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option."

Company undergoes change in control and outstanding stock options (both NSOs and ISOs) are "cashed out" in the transaction. So technically there is no exercise of any NSOs and no stock ever acquired under an ISO. The cash is getting paid to optionees in two installments--the first at closing and will be a straight cash payment reflected in W-2 income and the second a year later pursuant to an escrow arrangement.

Are these cash payments in or out of the 415 definition of Compensation. While the cash payments do not arise from an actual exercise of any options, they are all related to the disposition (without exercise) of the options. Does the 415 definition distinguish between these situaitons?

Thanks

We are using Corbel's VS.. The document currently gives total flexibility on match.

They want to do what was promised through August 31, 25 cents on 2% of match. On Deferrals starting September 1, they want to match 50 cents up to 5% of comp?

Is this legal or are there problems with this?

I have a participant directed 401(k) plan.

I plan to have money transferred into my account after the close of the market today so it will sit in my 401(k) plan account until Monday uninvested.

If I change my investment election of future money on Monday morning, will the investment of the money received on Friday night be invested in accordance with my new investment elections that I made on Monday morning or will it be done using my investment election at the time the money was received on Friday night?

Does anyone know what the rules are with this?

Thank you!!

Plan is changing to 501©(3) in October. What should I be thinking in regards to the plan or plan document based on the structural change?

here's the data:

Company #1:

Individual A owns 51%

Individual B owns 49%

Company #2:

Company #1 owns 75%

Individual C owns 25%

Is this a controlled group?

I was charting this and looking at the brother-sister rules and do 5 or fewer own 80% or more, effective control, controlling interest and my head began spinning. I know this should be easy but seems like I overthink or something and end up confused.

Any help appreciated!

Client changed payroll companies midyear. In the transition, their excluded compensation did not get communicated correctly to the new payroll provider. As a result, the year end census (used to calculate the match) overstated compensation for a number of people. This was not discovered until after the match was deposited.

Because of the impact that a correction will have on morale, the client is hoping to only correct those people who received more than $50 more than they should have received. However, 4 members of the plan's advisory committee who are involved in making this decision have asked that their accounts be corrected even though it would be less than $50. Two of them are HCEs, two are NHCEs.

Some of the people with really small amounts, end up with significantly higher match percentages. There are HCEs and NHCEs in both the group that they propose to correct and the group the propose to not correct.

I see lots of possible issues here. ACP passes with or without correction. I'm thinking of telling them the must correct for all the HCEs, regardless of amount, and for NHCEs whose percentage is more than some (as yet undetermined) amount higher than it should be.

What is a reasonable de minimus amount for a situation like this, given that the error is in the participants' favor?

Can this plan file the 2014 5500-SF?

Participant count:

1/1/2012 - 99 Filed 2012 SF

1/1/2013 - 117 Filed 2013 SF

1/1/2014 -- 108 ?

I believe they can keep filing the SF until they get over 120 participants.

1. The plan (a) covered fewer than 100 participants at the beginning of the plan year 2014, or (b) under 29 CFR 2520.103-1(d) was eligible to and filed as a small plan for plan year 2013 and did not cover more than 120 participants at the beginning of plan year 2014 (see instructions for line 5 on counting the number of participants);

Owners work their you-know-what's off but had no income to show for their hard work.

What do people think? In the testing as a zero, or not? I know it is a gray area.

Participant has comp of $10,000 and defers 100% (call it $9,235 after PR taxes). I believe we can give that employee a $2,000 profit sharing contribution if they are over the age of 50, because some of their deferrals will be reclassed as catch-ups, even though total exceeds 100% of pay. That's because 100% of pay is a 415 limit and contributions over the 415 limits are reclassed as cactch-ups.

Do I have it right?

Can a private school allow the 15 year catch-up provision in a 403(b) document? I have seen information that says only public schools can use the 15 year catch up, but other sources say both private and public schools can allow this provision. Does anyone know for sure?

Thanks.

Maybe some do this as a practice - file 5558's as insurance, even if return may be posted on time. Thinking it may be a wise thing to do in case there are system problems, etc.

So, suppose you have a bona fide "multiple employer plan" that decides to terminate. Do you see any "successor plan" problem if one or more of the individual employers then set up their own plans immediately? I'd think that there shouldn't be a problem because it isn't the "same" employer? I haven't yet done any research on this, just wondered if anyone had an opinion?

I have a situation where there are two components of a company. Lets call them component A and component B. Component A is the main company and component B is an operating arm of the company. The 401k plan is under component B's name. What are the pros/cons of having the 401k plan in one or the other?