Plan says that the late retirement benefit is the greater of the actuarial equivalent of the normal retirement benefit or the accrued benefit based upon comp and service through the distribution date.

Interest credit is 5%. Actuarial equivalency is defined as the applicable mortality table for 417(e) purposes and 7% interest.

The death benefit is defined as the present value of the accrued benefit.

Participant retires at age 65 with cash balance of $100,000 but does not start payment until age 66, at which time he selects a lump sum.

Is his lump sum:

A. $105,000

B. The present value of a monthly benefit increased from age 65 to age 66 calculated based upon interest and decrease in life expectancy (or $105,000 if greater), or

C. The present value of a monthly benefit increased from age 65 to age 66 calculated using interest and mortality and decrease in life expectancy (or $105,000 if greater).

Opinions please.

The employer terminated a calendar year 401(k) plan, effective 12/31/14. They signed plan termination amendments, distributed plan termination notices to employees and stopped all EE and ER contributions so that no new contributions were made to the plan in 2015. No one has been paid out yet due to the plan termination.

Over the past few months, the participants complained and now the employer is reconsideriong the plan termination and may want to restart the plan and forget about all that plan termination "stuff".

Can the plan be restarted and if so, what issues are involved? It does not seem too difficult to restate the plan document to remove the plan termination amendment and its impact. And no one has been paid out which is good. But is a do-over really acceptable for this? How would we prepare year-end 2015 ADP testing if the participant did not have the opportunity to make contributions for 4-5 months out of the year (use only 7-8 months worth of compensation)?

The plan is neiither top heavy nor a safe harbor and the ER does not want to put any ER dollars into the plan, so ER allocations basis is not an issue.

Any thoughts, comments or ideas are appreciated.

A one participant DB terminates.

The one participant has been taking RMDs for 5 years, every year on December 15.

If all assets are distributed by May 15, 2015, is he required to take an RMD for 2015 even though he would not have made it to December 15 (the annual annuity date)?

Thanks.

What is the notification time table to participants? 60 days before the freeze

I have a client who purchased stock in a C Corp; 80% so he now has controlling interest. Is this a prohibited transaction?

Thanks!

If an ERISA-governed retirement plan with a calendar plan year extends from the July date and does not file the Form 5500 annual report until mid-October, what is the due date for furnishing to participants a summary annual report?

May an employer impose a minimum balance requirement on the amount that an employee/participant may carryover from year to year in an FSA?

For example, can an employer require that to carryover a remaining balance at the end of year 1 into year 2 the employee must have a minimum carryover balance of $10?

I have reviewed Notice 2013-71 and other guidance- there appears not to be a direct answer on this. Any thoughts would be appreciated.

Our 403(b) plan allows for loans (any time) and in-service withdrawals at age 59 1/2. A participant that is age 62 was told by our retirement admin company that they could stop paying on their loan and have the outstanding balance (essentially) converted into an in-service withdrawal. The payments were stopped and then the retirement admin company changed their stance and said that she could not stop the repayments.

I know attainment of age 59 1/2 is a distributable event, but is this an allowable reason to just stop loan repayments and deem the outstanding balance as an in-service withdrawal as they originally stated? Thank you.

FYI, if anyone is attending this conference for ERPA credit, a) you need to make sure ASPPA has your PTIN (it is not requested on the form); b) apparently after the conference is over you need to request ASPPA to report the credits for you to the IRS.

Sounds crazy for such a distinguished presentation that I'm sure will draw in hundreds of ERPA's. Anyway, beware.

Perhaps someone from ASPPA can comment and clarify if I have misstated the inefficiencies of the process, or perhaps someone has some additional input. I certainly hope I am missing something...

a small 10 participant new comparability psp issued a hardship in calendar year 2014 to a rank n file employee, yet the plan does not have a hardship provision. Furthermore, the distribution ($8900) was in excess of her vested account balance ($5550). Is this a SCP filing?

One-participant plan with principal now at age 70.

Plan Normal Retirement Age: 62

High-consecutive 3-year average-pay at $150,000 and was accrued at NRA

Contributions were being made after NRA due to PPA higher limits on deductions and now the plan is overfunded by about 50% when valuing an annual benefit of $150,000.

Assuming an annuity factor of 10 at age 70 is the maximum lump sum that can be paid:

a) $1.5 million = $150,000 x 10

b) $2.7 million = $150,000 x 10 + $150,000 x 8 (8 years of missed payouts); or

c) around $2 million with the $150,000 annual benefit at NRA actuarially adjusted up though not above the 415(b) dollar limit

Thanks in advance for any responses and if answering either (b) or © can you provide a cite?

I have a Fidelity Solo 401k and a Schwab Prototype SEP IRA (so not using the IRS 5305-SEP agreement).

I initially had the SEP for a couple of years but then my income jumped and was expected to continue indefinitely so I opened up the solo 401k. Unfortunately my income has reverted back to what it was before I set up the solo 401k (after just 2 years).

I came to the conclusion that I would prefer to maintain the SEP IRA and terminate the 401k. I don't need to the higher contribution amount and appreciate the simplicity, ease of funding and accessibility of funds for the SEP.

So how do I go about terminating the solo 401k and are my circumstances a good enough reason to do so?

From what I have read I would:

1. Contact fidelity and amend the plan to add the termination to the plan document.

2. File a 5500EZ within 7 months

3. Rollover the 401k to the SEP IRA.

Anything else? Anything to watch out for?

401(k) Plan that has a conditional 3% safe harbor language in the plan document. The employer had the 2015 plan year notice prepared in November, 2014, stating that the employer WOULD make the 3% safe harbor for the 2015 plan year.

But, the employer never distributed the notice. Now, in April, 2015, the employer would like to not make the 3% safe harbor fr 2015.

Since the notice was never distributed, and the plan document allows for a conditional safe harbor, is the employer still on the hook for the 3% safe harbor for 2015?

Thanks

Hello,

I am looking into a client who has a loan in a 401(k) retirement plan but they are about to terminate the plan because of an asset sale that happened. The company who acquired didnt take the retirement plan so the plan was being termed.

The question being: Can the retirement plan at the new company assume the loan for this participant?

Let me know if more information is required. I'm only asking is because the client will be on thin ice if they have that tax consequence...

DG

Seems like I remember something about distribution fees are not allowed to be charged to participants for ADP refunds and similar transactions. However, I can't find this anywhere. Can one of you point me in the right direction?

A Plan had a PPT in 2014. Per IRS, all affected participants became 100% vested,

I have read several articles that speak of "red-flags" with the 5500 - one of them being if there were a lot of terminees.

Question: I don't see anything on the 5500-SF to indicate a PPT. If so, and the IRS sees decreased participants, where do they also see that it was a PPT and everyone became 100% vested?

I just acquired a calendar year 401(k) Plan whose Plan Sponsor is an LLC electing to be taxed as a partnership. During 2014, there were two partners, along with staff, in the plan, one of whom (a long time participant in the plan) terminated his employment and partnership interests in June, 2014.

For 2014 and before, there were losses in the partnership. It is my understanding that when the earned income of a partner, which is composed of the partnership distributive share of earnings plus guaranteed payments, is negative, the partners cannot defer any amount into the plan nor receive any employer contributions. In this plan, only salary deferrals and a Safe Harbor match have ever been made.

Here's the problem: it appears that for years, the income being used for the partners was only their guaranteed payments which was given to them on W-2's. At this point, I don't know if the guaranteed payments were included on their K-1's.

For the plan point of view:

1. If the net partnership income is negative, the partners should not have deferred anything and, in turn, should not have received an employer match.

2. If this is the case, the company over-contributed and over-deducted these contributions to the plan. I believe, that this should require a resubmission of the partnership returns for the affected years as well as the personal tax returns for the partners involved. Am I correct on this?

3. To make matters worse, the partner that left in 2014 had most likely made his salary deferral and received matches for some time incorrectly and received his account balance from the plan during 2014.

This is obviously a mess. I will be meeting with the CPA and the client next week. The CPA has already dismissed these problems as minor and as "no big deal." As I see it, the plan has operational and/or qualification problems, over-deduction problems, distribution problems, etc., etc. and etc.

I am looking for some insights into:

1. Whether or not there might be other concerns that I haven't touched on and

2. how to go about repairing these problems, i.e., EPCRS.

Thanks, in advance, for any help.

We have a plan (non leveraged) that allowed some participants to diversify beyond the statutory six years. We use the Corbel plan document. Are there any pitfalls or any considerations that we need to consider?

I know an individual partner would not be considered an employer for plan sponsorship purposes. But what about a corporate partner? Can an individual partner establish an S-corp & transfer his partnership interest to the S-corp & then establish a qualified plan?

Oddball question - a 403(b) plan proposes to use the 20-hour exclusion. It is a 501©(3) plan subject to ERISA, and the plan has the appropriate "fail-safe" language if they ever go over 1,000 hours.

Now, they have a small collective bargaining unit agreement in place for a few employees, where the collective bargaining unit employees can participate regardless of hours.

1.403(b)-5((b)(4)(i) generally provides that if any employee in (4)(E) is included, then NO employee under (4)(E) may be excluded.

Does this preclude allowing the part-time union employees to participate, or does the general "you can do pretty much anything you want with unions where the agreement is subject to good-faith collective bargaining) override this?

I'm inclined toward saying it is ok, but I'm not sure I'm specifically getting there based upon the regs. I don't really read 410(b)(4) as specifically supporting where the client wants to be.

Any thoughts?