I am working on a DB plan for a self-employed individual. Assuming that he doesn't go on corporate extension, we can still extend his 5500 deadline, which will enable him to make his 2014 contribution until 9/15/2015 - it will just need to be deducted for 2015. Is this correct?

Thanks!

I think I'm just having a "moment", but here's the situation:

Employer Funded an $80,000 Contribution

$79,000 Receivable

$1,000 used from Forfeiture

In theory that $1,000 is already in the Plan, but what do we show as the contribution amount on the Schedule I?

A CBP has invested the plan assets in 3 different accounts.

One is a variable annuity owned by the business owner.

The 2nd is a variable annuity owned by the other business owner (they are spouses).

The 3rd is a generic mutual fund (not important for these purposes).

I do not think these are appropriate investments for a CBP. Annuity investments must be owned by the Plan, they cannot be assigned to an individual annuitant. I fail to see how these are appropriate investments in a CBP.

They are contributing the CB credits to the two annuities, as if the assets in that annuity are solely for the purpose of the named individual on the annuity.

Could anyone recommend any specific IRS and/or DOL regulations that would back up the position that these are not appropriate investments for a CBP?

I'm a little uncertain about the fee exception in Rev Proc 2013-12 (as updated by Rev Proc 2015-27) Section 12.02(2). Does the reduced fee apply whether or not the plan sponsor requests a waiver of the 4974 excise tax?

The language states that the reduction applies only if "...the failure would result in the impostiion of the excise tax". So I can read this to mean that if there's a waiver request and the IRS won't go after the participant to impose the fee then the reduction doesn't apply, and if there's no waiver request so the IRS can go after the participant to impose the fee then the reduction does apply.

Am I reading this too narrowly?

Thanks to all.

When future cash balance plan employer credits are frozen does the plan still make future interest credits on the frozen hypothetical account balance?

I have a question about determination of 5% owners for purposes of RMD rules.

Law firm partnership has a 401(k) profit sharing plan. Several partners have P.C.s that have adopted the plan as participating employers. The owner of one of these P.C.s has just attained age 70 1/2 in 2015. He owns less than 5% of the partnership by capital interest or profits, but of course own 100% of his P.C.

For testing purposes, all of the employers of the plan are aggregated under 414(m). Does aggregation apply for determining 5% owners for 401(a)(9) purposes? 5% owners are defined as under the top heavy rules, and aggregation applies for top heavy, but does that mean aggregation applies and only those who own 5% of the partnership are treated as 5% owners for RMD purposes?

Put another way, is this partner's first distribution calendar year 2015 or will it be deferred until the calendar year in which he retires?

The intructions for amounts to be reported in Box 1a are confusing to me. Does anyone know what the IRS is looking for? Do we report the present value of the entire QLAC contract, the amount of annual payments from the contract or are they looking for just the amount of the first periodic payment that will be made from the contract ? thanks for your thoughts

2 employees are W-2 wages.

Each contribute $15,500 to their company's 401(k) plan.

Accountant urges them to form a partnership with one other individual. No control issues, no affiliated service issues.

Assuming they have the income, I do not believe they can contribute the full $53,000 each to the partnership plan as long as each has made the $17,500 contribution in the same year.

Doesn't the $53,000 maximum contribution include the individual's 401(k) contribution regardless of the employer?

Accountant says they can contribute the full $53,000 to partnership plan.

I could be wrong, but I do not believe so.

I currently work for my father in-laws company and we use an Investment Company to handle all of our 401K needs/accounts/investments.

Currently the company is made up of 40+ employees because there are 2 companies.

I am planning on purchasing the smaller side of the business and there will only be maybe 10 employees.

I still want to continue the employer matching program, and at the same time reduce our annual costs associated with using our current Investment Consulting Company and costs associated with the Investment Bank we use.

What is the easiest and least expensive way to do this...should I just have everyone sign up for their own account at one place like say Charles Schwab and setup a direct deposit?

My goal is to still provide this benefit to the employees, save money and eliminate any liability that may come with the us suggesting a place for them to use (Charles Schwab).

Any advice would be greatly appreciated.

Thank you!

Mitch

Company A acquired Company B on 3/27. Company A does not have a plan and Co B is terminating the plan and employees will receive a distribution payout. Co A wants to establish a Safe harbor 401k plan and allow all of company B employees to immediately contribute. Any reason that Co B had a plan would prohibit the safe harbor status? Also can employees that are in Co B that have a loan roll those loans to new plan. Thanks so much.

Employer A sponsors Plan B. Mrs. X is a participant in Plan B. Mr. X works for an unrelated employer, and will be terminating, and wants to roll his money into his wife's (Mrs. X) account in Plan B.

We all know you can't do this, but it is difficult to provide citations. All I could think of was the exclusive benefit rule under 401(a)(2) and ERISA 401(a)(1)(A), as well as the regulation under 1.401(a)(31)-1, Q&A 3 that specifies clearly specifies that a direct rollover that satisfies 401(a)(31) is “…an eligible rollover distribution that is paid directly to an eligible retirement plan for the benefit of the distributee.” Clearly the spouse is not the distribute.

Not to mention, of course, the plan document, which naturally wouldn't allow this.

Any other easy pertinent citations that I'm missing? I'm sure I've seen something on this before, but couldn't find the thread.

A client currently has a 412(e) plan in place - can they also sponsor a 401(k) plan? Are there any restrictions/limitations they should be aware of?

When is code 3C (Plan not intended to be qualified--A plan not intended to be qualified under Code sections 401, 403, or 408) supposed to be used? The IRS refers to this code in Rev. Ruling 204-19 when it provided guidance for plans accepting rollover contributions.

I did some brief research on the code and only found reference to Plans from Puerto Rico.

Is this a code that should be used if the plan has known qualification issues that have not been corrected?

Thank you

In late 2014 a 401(k) plan incorrectly allowed a new hire to immediately start deferring to the plan. Unfortunately the plan has a 1-YOS eligibility requirement. The sponsor's new payroll company made the mistake (not knowingly done by sponsor). The employee is not a 5% owner and did not earn enough to be deemed an HCE for 2015. However, based on their current rate of pay they will be an HCE for 2016 (will most likely earn more than $120K in ’15).

Would a corrective amendment under SCP be allowable since the only affected employee may become an HCE?

I believe an amendment under SCP is only allowable if it affects “mainly” NHCEs. The participant was definitely an NHCE for '14 and '15.

Any thoughts are appreciated.

two person db plan(h&w) that is underfunded..plan is invested in cash so funding is deteriorating. Suppose the plan is terminated 4/30/2015. There is no accrual for

2015 so the 2015 min is just a prorata amortization of the unfunded(using ppa mechanics of course), 1/3 if i understand it correct. Val date could logically be 4/30, date of asset distribution or 12/31. No more auto switch to term date so I think it is the later of the date of asset distribution and 12/31? If the val date is the date of distribution is the unfunded determined on that date prior to distribution?

If this is this case then client should distribute assets asap so that the prorata amortization is minimized due to deteriorating funding? If the assets have not been distributed by eoy, then the final minimum due is the prorata charge based on the eoy asset and liability amounts. Sound correct? Thanks for any thoughts..

A participant in a 401(k) Plan is requesting a hardship withdrawal under natural disaster due to normal rain causing roof failure from rain but not as part of a natural disaster.

Would this qualify? My thought is no.

Thanks!

I have a client that has self directed brokerage accounts. The accounts have both Roth and Safe Harbor contributions mixed together in each individual account. We track the Roth earnings separately but it is not as precise as it would be if the contributions were in two brokerage accounts. Is this permitted?

I'm taking over a Plan where they amended the eligibility for 401(k) Contributions to 21 + 1 month of service, but the eligibility for Safe Harbor Contributions still reads 21 + 1 year (it wasn't amended).

Does anyone see a problem with that? A SH Participant just says that they satisfied eligibility as per the Addendum and were eligible to make a 401(k) Contribution at any time during the year.

Thanks in advance!

A business owner owns 100% of his business. No employees.

This business also owns 40% of another business. This other business has employees. Neither business has a DB plan.

Questions:

1. Do these businesses form a controlled group?

2. Can the business owner set up an individual DB plan through his 100%-owned business?

My thoughts are that, no, these businesses do not form a controlled group. The ownership % would have to be at least 80% for that to be the case, but it's only 40%. And as a result, he can set up his own individual DB plan through his 100%-owned business.

Thoughts? Thanks in advance.

Just soliciting general discussion. Please ignore plan design issues, it has all been hashed over with the client before!

We have a plan that fails ADP every year, and refunds are made, and of course properly reported. There is one active employee/participant who refuses to cash the refund checks.

Why is an unknown, but I have a personal suspicion that in his pea-sized brain, he thinks that by not cashing them they aren't really taxable, so he doesn't include them when he files his taxes. Just speculating...

So, this has gone on for 3 years now. The Plan has done everything appropriately. What other steps are available? (this isn't someone the employer will fire)

One solution is to keep reissuing checks, (but no reporting or withholding necessary, as it has already been done) as the plan has an obligation to distribute the money. And since there is a distribution fee that is appropriately charged to the participant's account, perhaps when it is pointed out to him that he will get charged $100.00 per check, maybe it will sink into his thick skull.

Any other general thoughts? Does it raise any fiduciary issues - charging him for reissuing checks? It seems to me that it shouldn't. Any limit on the number of times checks can be reissued? Etc.? Just wondering about what real-life solutions you might use in this rather unusual situation.