Probably a mistake to even think about this on a Friday afternoon, but I'll give it a shot.

Takeover plan, general tested allocation formula with 3 groups. Group 1, owner. Group 2, Head Honcho - (non-owner). Group 3, everyone else. Group 3 includes the owner's early 20's daughter. There are 7 total HC. There are 50 NHC, who are all in group 3.

The daughter in group 3 is blowing the tests, 'cause this plan has very few young people. Group 3 is currently slated for an allocation of, let's just say, 4%. Proposed allocations are such that Gateway will be passed regardless.

So, I wanted to see how far off base I am, because I'm sure I'm missing something.

If you separated this into component plans, where the HC daughter is the only HC in component plan 1, and you put, say, 10 of the NHC with the lowest ebars into component plan one, and test it on an allocations basis, everyone in component plan 1 would be under a safe harbor allocation method with the same 4%. Coverage for the component plan would be NHC - 10/50 = 20%, and for HC, 1/7 = (rounding up) 15%, so component plan 1 passes 410(b).

Then for component plan 2, you use the rest of the HC's (who have fairly low ebars) and use the rest of the NHC, and test component plan 2 on a benefits basis. Assuming it passes, then you just have 410(b), which gives you 40/50 = 80% for the NHC, and 6/7 = (rounding up) 86% for the HC, so you pass 410(b) as well for component plan 2.

Have I got this all wrong? No need to be gentle - I left any ego back in the 90's with my lost youth...

Thanks in advance.

If an employee is on a leave of absence (medical or personal) during the Open Enrollment period, is there an IRS regulation that says that they cannot enroll in HCFSA and/or DCFSA for the upcoming benefit plan year until they return from leave?

Suppose an owner of a company sets up a individual 401(k) plan in December 2015 after getting married in November 2015. The soon-to-be wife has worked with the company for a few years. Can he still make the effective date of the plan 1/1/2015 and meet the eligibility requirements of an individual 401(k)? Obviously his significant other would not have been his spouse on 1/1/2015.

For the FAS 87/132/158 ASC Topic 715 disclosure, specifically the 10 year estimated expected emerging liabilities, other than the retirement benefit, should other decrements be included when valuing benefits. For actuarial valuation purposes, we only use the retirement benefit. Sorry if i'm not phrasing this question ideally, but all responses are greatly appreciated. Thanks.

A S-corp started a 401k plan in 2010. The owner is the only eligible particpant and has put ER contributions into the plan every year. He is currently age 52. The plan allows for inservice withdrawals after 5 years of service, which he now has.

He wants to take an ISW of all his money in the plan (all ER dollars) and roll it into an IRA. He wants to maintain the 401k plan, make a nice deposit each year (around $20,000) and then each year take that as an ISW.

It seems that this can take place per the document, Is there anything that would prevent him from continuing the plan in this manner?

Thanks

I have a not-for-profit corporation sponsoring a PSP. The "president" will turn 70 1/2 on 10/3/2015. He's planning on working well into his 70's and since he's not a 5% owner, he doesn't have to take RMD's from the plan. Can he roll assets from his IRA into the PSP and avoid having to take the RMD from the IRA too? Or, would he be required to take the RMD from the IRA for calendar year 2015 but avoid it going forward once the assets are part of the PSP?

Can a 401k plan not allow you to withdrawal your roth funds even though you are 59 1/2 and have been an active participant for 5 years?

We have a qualified profit sharing plan which is solely company funded. Contributions are discretionary. Two companies have adopted the plan agreement. When the plan was initially adopted the companies were a controlled group but are currently NOT a controlled group. If necessary we can make the companies a controlled group.

Can one company still contribute to the plan that benefits ALL participating employees in the plan (who are from both companies) and the company who makes the contribution take a tax deduction for the COMPLETE contribution? i.e. we have basically been picking and choosing which company needs the tax deduction and making the contribution from that company. Can we keep doing this? Our TPA says no.

I am trying to figure out the limig of Employer Securities is a 401(k) Plan.

Participant Directed Accounts

Participant may elect Employer Stock in Self Directed Account

Can transfer anytime.

Many other investment options are available.

non-public company

I see that the 10% limit of plan assets does apply

But I see something that limits the amount of stock held by the plan to 25% of the stock issued.

ER wants to add, I want to make sure we cover all the potential problems.

Employees are well educated, so ER does not worry about communicating to the employees the risk of putting retirement money and their job all in one.

Ideas?

Thanks

P

I just had a client email me with this question:

"I am trying to find out if Catch-Up contributions can be changed anytime during a plan year. I found where we elected to have Catch-Up contributions, but find nowhere that states a specific date if someone should want to increase or decrease their Catch-Up contribution. Is it correct to say that a Catch-Up contribution amount can be changed at anytime through a plan year?"

The plan document says " Participants may modify deferral elections on 1st day of PY and 1st day of 7th month of PY" -

What I am not sure of is how they would specifically modify the catch up amount - just reduce their percentage or dollar amount for all deferrals? What am I missing here?

A 401k Safe Harbor Plan has the following provisions:

- 6 mos elig for 401k deferral contributions (no min age)

- 12 mos/1000 hrs (no min age) for employer SH (3%), discretionary PS (cross tested)

- dual entry dates, 1/1 and 7/1

2015 Plan Year, there are 2 employees newly eligible as of 7/1:

- 1 HCE (spouse of owner)

- 1 NHCE

Question 1

Assuming the Plan is NOT TH for the 2015 plan year, the 2 newly eligible participants will not receive SHNEC or PS but if their deferral %s pass the ADP test (testing only them), is it correct that the Plan will not fail any other testing (e.g. Gateway mins)?

If this is incorrect, can the Plan be amended to correct via accelerating eligibility for SH and PS to same 6 mos requirement and not lose its Safe Harbor status for the year?

Question 2

Assuming the Plan IS TH for the 2015 plan year and all other statements above apply... Assuming ADP test for 2 newly eligible passes, can the employer contribute 3% TH for these 2 newly eligible (assuming they are still employed on the last day of PY) without tripping the Gateway testing (assuming the GW minimum is at least 5%)?

If this is incorrect, can the Plan be amended to correct via accelerating eligibility for SH and PS to same 6 mos requirement and not lose its Safe Harbor status for the year?

Thank you for your assistance.

How do I complete 8951 to pay the reduced loan fee that came out in 2015-27?

Do the family attribution rules (for controlled group purposes) apply between a family member residing outisde the United States who is not an American citizen and a family member residing in the United States?

An owner exceeded the 402(g) limits in 2014 by 496....he also had to take an RMD of over $4000 - which he did in December 2014. I want to make sure that since you can't use a corrective distribution to satisfy a RMD - that he can't use part of the $4000 to say that the excess was distributed. I can't find exact back-up, so would like to be sure before I advise them to distribute the excess of 496 plus earnings (I know he missed the April 15 deadline)....thanks.

Independent Contractors can participate in a 457b. I thought I would find 100 articles about why it is great to have a 457b for Board Members paid as independent contractors but I found none. Am I missing something? It seems like an obvious use of this feature.

Are people doing this?

A plan outsources hardship withdrawal administration to their recordkeeper. The recordkeeper requests and reviews participant documentation and provides approvals. Can this be considered sufficient for the plan sponsor retaining the necessary records? The records are available for them, they are just retained with their recordkeeper.

A DB plan is terminating and there will be between 7-12 participants who purchase annuities. The broker assisting with the annuity solicitation commented:

As we got further into our discussions with each carrier and realized that we did not have many participants that were interested in the annuity option, our choices narrowed further as group policy providers became disinterested. Lincoln National would not allow their products to be used with a terminating pension plan. Principal Financial could only work with us on a group platform, which would require more participants to choice the annuity option. MetLife and Prudential also declined to open their annuity products in this instance due to the size of the quote. Since American General is willing to offer individual annuities, they became the leading option.

Are these comments consistent with what others are finding?

Plan year end is 9-30-14. With the audit just about done, it's a good time to do the 401(k) test, right? (Shh!)

Plan fails. Three HCEs, all over 59½, would be in line to get refunds of about $1,000 each. But, they hadn't used any of their 2014 catchup amounts yet, and so those amounts are supposed to be recharacterized as 2014 catchups. (Calendar year in which the plan year ends.) None of them actually got to 17,500 by Sept. 30, though.

The problem is, at least one, if not all of them, probably got to 23,000 total when you throw on their 4th Q 2014 amounts. That's clearly a problem - they will have done too much in catchups, since their catchup limit for 2014 should then have been 5,500 MINUS that thousand dollars to be recharacterized.

And so amounts over the catchup limit are deemed to be excess deferrals. So that's why I'm glad they're over 59½ - I can't refund the amounts as excess contributions from the test.

It's after April 15, so at least their age provides a distributable event to get the money out. So typically you'd say the amounts are subject to double taxation. But their W-2s will not have shown an excess deferral, as back in January before the tests were run it certainly didn't SEEM like a problem to have $23,000 on the W-2.

Are they going to beat the double taxation, or should tax forms and returns be amended?

Thanks...

--bri

Participant was out on disability and hi loan payments were suspended for a year. The year was up 3/15/2015. Does the loan become incurable on 3/15/2015, or 6/30/2015 (i.e., the last day of the quarter following the quarter)?

We have one client who is an owner of a small company. He wants to take all of his money out. He cannot take his money out as an in-service (he's under 59 1/2 and his account consists mostly of Deferrals and Safe Match contributions). What he wants to do is "terminate" himself for one day, take a distribution out for all his funds (approve the distribution as the trustee), and then become "re-hired" the next day. This seems pretty sketchy to me personally. Is this allowed?