I had my doubts when I first heard about this as I was under the impression that when a participant is due their first RMD and they delay it until the 4/1 of the following year that they must take a 2nd RMD in that same year by 12/31. It seems that most others who monitor this kind of stuff also believe this to be the case.

However, it was recently pointed out that to me that 1.401(a)(9)-6©(1) says "Annuity payments must commence on or before the employee's required beginning date (within the meaning of A-2 of § 1.401(a)(9)-2). The first payment, which must be made on or before the employee's required beginning date, must be the payment which is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year."

So it appears that if a participant must take their 1st RMD no later than 4/1/15 (i.e., the RBD), the second one wouldn't have to be taken until 12/31/16. I'm wondering what others' take on this is since so many of my colleagues haven't been using this approach.

A client has a safe harbor plan. The current eligibilty is immedite but they would like to switch to 6 months. Can we amend the plan for 2015 and have it be effective 7/1/15 so it does not affect any current employees?

I know you "can't" amend a safe harbor plan, but since we are not reducing or suspending the contribution, I was thinking we could do it.

I am potentially in a big mess with my retirement accounts. I opened a 5305-sep ira in 2013 and put in $4k. I'm a sole proprieter with no employees. Before the year end in 2014 I opened a solo 401k. Then:

1. On 8 Jan 2015 or so mailed a check for $10k and contribution form for my SEP IRA to post as a 2014 contribution

2. on 12 Jan 2015 or so mailed a check for $8k and contribution form for my 401k employee deferral and marked it as a 2014 employee deferral contribution.

There is a big debate about 5305-sep IRAs and whether you can have them at the same time as a solo 401k. I'm not convinced I can't. In particular the wording is unclear whether the requirements to use the form are when the sep is set up or whether it is on going. Eg to adopt means to take on at a specific point in time. So I adopted the SEP IRA in 2013 when I didn't have a qualified retirement plan.

I was wondering what everyone thought about the situation and whether there are any easy fixes to just circumvent the issue entirely.

EG

Currently I have $18k deduction for sep/qualified plans in 2014. I have submitted my return for 2014.

I could take my sep ira deduction in 2015. Contribute $10k in my 401k for 2014 as an employer deduction (I believe I have until the 15 April). So the IRS will see

2014. $18k deduction for sep/qualified retirement plans

2015 $10k SEP deduction with a 2015 5498 showing $10k. I don't plan to contribute to the 401k for 2015 in this situation.

That way I didn't take a deduction for both for the same tax year.

Doing an SE calc for a Schedule C / 401k Plan, but they also sponsor a cash balance Plan. How are the contributions to the plan deducted? I assume they are NOT deducted the same way as the 401k employer contriubtions (i.e., on page 1 of 1040) but rather as a business expense to arrive at net income?

Can someone confirm?

Do you still have to compute allocable income on distributions of excess deferrals?

Does this QNEC contribution for the missed deferral opportunity of one nonekey remove the Top Heavy exemption for the plan?

An existing client roughly 2500 employees is adding auto enroll to the 401(k) plan. Plan entry dates are January 1 and July 1. The vendor recordkeeping the plan says that they need to have the upcoming eligible census data each year no later than May 31st for a July 1st entry due to timing issues and the auto enroll information they will be sending out to the newly eligibles.

The client has people hired in June of 2014 that are "borderline" as to whether or not they will make the 1000 hour requirement for eligibility by their anniversary date. We won't know until we have the census info for June, which of course is after the deadline of the vendor to set them up for July 1st entry.

Once we do know who met the eligibility the vendor still needs ~30 days to send out the notifications, which would put the new enrollees past the July 1st entry date.

I anticipate we're going to have this same issue each approaching future entry date due to the type of business this is and the employee demographics.

What's the best way for the client to handle this and have others seen this issue? Or am I missing something easy and obvious?

Employer has an existing severance pay plan covering all employees for both involuntary and voluntary separation from service. Plan does not qualify for 2 /2 separation pay plan exception because it pays on voluntary termination as well as involuntary.

Lump sum severance benefit is service-based and terms comply with 409A. Plan also provides that employer will pay COBRA premiums (again for ALL employees) for the period used to determine severance (and this is always shorter than COBRA continuation period).

They now want to eliminate the health coverage continuation premiums and instead pay an additional lump sum benefit at the same time as the existing lump sum benefit. Not trying to get out of paying employees, but want to make it easier to administer and they envision that the company may stop offering health insurance altogether as it winds down operations.

The medical coverage should be exempt from 409A - meaning it isn't deferred compensation because it is a nontaxable benefit (or in the alternative, qualifies under the Medical benefits exception for separation pay plans that limit reimbursements to the COBRA continuation period.

So I am thinking that eliminating this benefit and replacing it with a lump sum benefit would not be a substitution of deferred compensation that would result in an acceleration because it wasn't deferred compensation in the first place.

Any one see any problems with this approach?

We have a few plans that did not adopt the PPA lump sum rates and instead are on a GATT minus rate. For example if a plan values lump sum based on the 30 year treasury rate minus 2.75%. The February 30 year treasury rate is 2.57%. To value a benefit under this scenario would result in a negative interest rate. We are thinking this ok, but does anyone think there should be a 0.00% floor for this purpose? Thanks in advance for all responses.

I understand that self-directed brokerage accounts are not required to furnish a fund comparison chart for 404(a)5 because the universe is virtually unlimited.

However, what if the trustee is doing something prudent, and following DoL wishes and having a 'suggested" fund lineup along with the open architecture. Do they have to come up with that chart pertaining to only the suggested funds?

If you can point me to where that says that either way, I'd be appreciative.

(I do know that even with an open architecture some sort of Notice is required, albeit somewhat abbreviated.)

Can someone please provide me with the regulations/site that states that safe harbor matching contributions must match catch up contributions.

Thanks,

3/31 Fiscal year end with a 12/31 plan year end.

Client has lots of extra income for the 3/31/2015 plan year and is looking for lots of deductions. What they want to do is max out heir 12/31/2014 contributions, and then contribute/deduct the 2015 maximum in the first quarter of 2015.

I know that one of the requirements for deducting contributions made AFTER the end of the year is that it must be allocated as of a date within the fiscal year. Is the same true for contributions made/deductible before the end of the year?

Safe Harbor 3%, funded each pay-period. I don't think anyone would have a problem deducting this on the 3/31/2015 return.

Full profit sharing. There are 3 other employees. The client essentially wants to fund 100% of the projected 12/31/2015 contributions in the first quarter. There are NO Allocation conditions.

Any way to make that work?

Is there a resource somewhere on precisely how the MPA would be calculated for a large DB plan? We need to get our arms around the potential exposure. Rev. Proc. 2013-12 lays out the basics, but if you try to drill down there are many ambiguities. E.g., the MPA includes the additional tax if the employer deduction is disallowed for contributions--does that include vested contributions (which are deductible even for a nonqualified plan). How is participant income-inclusion calculated for a plan with hundreds of participants? And does the IRS calculate the MPA, or does it merely review the employer's own calculation? Is the MPA estimated based on the Form 5500 alone, or is there a massive review of other documents? Etc.

Thanks for any info.

Interesting question here. Suppose you have a Schedule C filer, single, who is independently wealthy, so works a little but has very little earned income - only, say, $10,000 net Schedule C after deductions and SS tax reduction.

So, defers the whole $10,000 to Roth 401(k). Can he ALSO contribute to a Roth IRA? Although it is counterintuitive, I'm having trouble finding anything that prohibits it. In spite of the Roth 401(k) deferrals, he still has earned income to report on his 1040, right? And if so, I think he can technically contribute to a Roth IRA. But it doesn't feel right! What am I missing?

Edit: I suppose, as I think about it, that this is consistent with a W-2 employee - say that an employee has $10,000 of W-2 income, and defers it all to a Roth 401(k) - the W-2 is still going to show $10,000 as taxable income, on which you could presumably contribute to a Roth IRA? I still have a feeling I'm missing something, but I can't find anything proving it is wrong.

Employer deposited amounts that were "deferrals" for the partners. After year end the K1s report a loss. The "deferral" amounts have to be returned to partners as there is no compensation. The Partners' CPA says that no 1099R should be issued and this is not a taxable distribution. I can see the argument that since the partners received no tax deferred "benefit" from these distribuitons. Money is going to come out of the trust. How is the 1099R supposed to be handled? Thanks.

3% Safe Harbor Nonelective excludes HCE's. Need I concern myself with the definition of compensation/414s? So for example, may I exclude bonuses and overtime from the calculation of the Safe Harbor? I will be doing some profit sharing for the HCE's, but all of the nondiscrimination testing would of course be done using a 414s definition of comp.

I have a money purchase plan with an attorney drafted plan document. The employer wants to amend the plan to not permit buy backs and not to permit forfeiture to be restored, even if the participant is rehired before not incurring 5 one-year breaks in service. I think I am OK with the plan not permitting buy backs, but I believe that they must restore forfeitures if the participant is rehired before incurring 5 one-year breaks in service.

Any 411 experts out there? Thanks

Hi Guys,

Please help in sticky situation.

The plan is frozen since 2003. The plans NRA is 62. The DOPT isin 2014. Expected payout date is in 2015. The owner currently is67. Each year he is over NRA he got an AI of his frozen benefit. However the AI was capped at his 415 comp limt. Suspension of benefit notice not given.

My first question is that is his comp limt also gets frozen at the plan freeze date? The guy has 10 YOS at the time of freeze, however is comp increase after the freeze date.

Is there a violation of 411 here? Should he have been given a forced suspension of benefits notice at the time the AI first hits the comp limit?

What if in between the comp drops and now he can get the full AI? I guess first it has to be clear if his 415 comp limit can change or not?

If there has been a violation of 411 what are the corrective measures?

A participant has after tax moneys (non-Roth) in a 401k of $10,000. 401k portion is $90k. The employee is over 59 1/2. Can the employee take a $10k distribution from after tax portion and roll over to a Roth IRA? If yes does it matter if the person is under 59 1/2 and the plan allows after tax distributions? Finally, if yes, can the person do it every year?

Does anyone know if there's an office of the IRS that entertains requests to allow late starting payouts over the life of the death beneficiary of a nonqualified annuity?

Section 72(s) has rules similar, but not the same as the RMD rules under 401(a)(9). If the annuity payout had begun before the contract holder died, then those payouts must continue as rapidly as if the contract holder had not died--unless payouts of the remaining value as an annuity over the life of the beneficiary begin within 1 year of contract holder's death. (Only if the annuity payout had not begun by the time of the contract holder's death must the entire contract value be paid out within 5 years of that death.)

I was contacted today by a beneficiary of a contract holder who died in 2013. The 1 year mark passed in 2014, without payout beginning on the life of the beneficiary. If you know of an office of the IRS with authority to waive that, it would be greatly appreciated if you would send information about that office to me at jsimmons@ida.net. Thank you.