If a DB plan believed that all assets were paid out after termination and later discovered additional assets but had been operating as if terminated for a few years (no 5500 filings) are the eligible for a correction program or will they be subject to an excise tax? Any thoughts would be appreciated.

ACA Notice was not sent prior to the 1/1/15 plan year. What would be the corrective measures I should take?

My client has found several participants who were previously considered “lost”. Each of these participants is well past age 70 ½ and each has not taken an RMD. In accordance with the terms of the plan, some of these lost participants’ benefits were forfeited.

My client has asked whether this defined benefit plan must pay these newly found participants a benefit that is actuarially adjusted for the period beyond age 70 ½. In some cases the initial benefit was around $100/mo and now with the actuarial adjustments, the benefit will be a lump sum of over $500,000 (the plan is terminating). In some situations the participant is dead, and the surviving spouse or beneficiaries will receive the benefit. In each case, the participant was searched for and determined “lost” when the participant reached age 70 ½.

The client's actuary is suggesting that the benefit should only be adjusted to age 70 ½. Has anyone else encountered a similar situation?

It is my understanding that the participant must receive 100% of the actuarially adjusted benefit to the current date (not age 70 ½).

Has a Trust EIN, but used his SSN for TIN on plan document. Apply for EIN using SS-4 for 5500 purposes?

Participant borrows $30,000 of after-tax contributions only from DB plan. A month later, the participant elects to cancel the loan. Is this a deemed distribution? If yes, what are the tax consequences to the participant?

Husband/wife 401(k) exceeded $250000 in dec 2013. According to Section 4 of the pilot program, they are eligible for relief. They did not file a 2013 Form 5500-EZ timely.

Can someone confirm this. If you are not subject to Title 1 of ERISA, which you are not until your assets are over $250,000, but once you have reached that threshold you are subject to Title 1 of ERISA but you are not eligible for the program. Where am I confused?

We have a calendar year plan with 10 partners, and lets say all 10 have equal ownership in the business (10% each). The business entity is a partnership. A 3% safe harbor employer contribution exists; there is also an additional profit sharing contribution.

On February 1st, two of the partners leave and their ownership shares are divided equally among the remaining 8 owners, such that 8 owners now own 12.5% of the business.

At year end, for purposes of determining the total employer contribution, the self-employment calculation must be performed in order to determine the amount of contribution to the employees and the owners. The ownership percentage for each owner is a factor in this determination. How is this determined when the ownership changes in during the year?

Thanks

If the participant dies (has no spouse, kids, and the document states that the distribution to the participant's trust is the default distribution in such a case), which distribution code should be used in such a case? Code "4"? Does the mandatory federal (and state, if applicable) tax withholding apply?

I need explanation on the following;

If the calculation period is changed to plan year then you could prefund those contributions. If they did this then they would have to make sure those prefunded contributions matched up with that plan year match, essentially a true up match.

We have a subsidary that is holding some units of another company. We want to allow an executive of the parent to "purchase" those units with his nonqualified deferred compensation balance. When he retires, we plan to just have our sub give him the units.

If the NQDC obligation is satisfied this way, how does taxation work?

We would like the parent to still issue a W-2 and take a deduction upon payment. Is this an issue since the units are being provided to the executive through the subsidiary?

Unfortunately, we can't transfer the units to the parent and provide them to the executive through the parent because, in this case, the parent is prohibited from owing these particular units.

Plans going through a conversion to a new recordkeeper need to receive the 404(a)(5) within 30 days not more than 90 days prior to the effective date of the transition or date the first assets to be received?

That didn't change with the updated rules, did it?

Thanks!!

I haven't yet started looking into this, but wondered if anyone had any off-the-cuff opinions.

One business acquires another - buys their stock. two separate plans involved, two different plan years. Once the 410(b)(6)© transaction period ends, they want to know if they can continue to run the plans separately. Other than the usual testing issues for coverage/nondiscrimination, they also have separate safe harbor formulas - one is the SH match, and one is the SH nonelective. Neither plan excludes HC's.

Again, without having delved into this, I don't see how this would work as is by maintaining separate plans. Any general thoughts?

Posted this in other sections. Wasn't sure which to put in! A doc has joined a gastroenterology practice. the plan doc allows for investments in real estate. More specifically the do wants to invest in the shares of the endoscopy center part of the gastroenterology practice. This leads to a couple questions.

- Since the plan is a small plan (SF), does the 5500 require an appraisal?

- If yes can the appraisal be done by the accountant?

- If an appraisal is needed, is it every year?

- If the practice does not have a formal appraisal done every year would a CPA or managing partner letter work?

Posted in other forums here as I wasn't sure where to put it. Sorry. A doc has joined a gastroenterology practice. the plan doc allows for investments in real estate. More specifically the do wants to invest in the shares of the endoscopy center part of the gastroenterology practice. This leads to a couple questions.

- Since the plan is a small plan (SF), does the 5500 require an appraisal?

- If yes can the appraisal be done by the accountant?

- If an appraisal is needed, is it every year?

- If the practice does not have a formal appraisal done every year would a CPA or managing partner letter work?

Posted in two other forums here. Wasn't sure best place to put it. Sorry. A doc has joined a gastroenterology practice. the plan doc allows for investments in real estate. More specifically the do wants to invest in the shares of the endoscopy center part of the gastroenterology practice. This leads to a couple questions.

- Since the plan is a small plan (SF), does the 5500 require an appraisal?

- If yes can the appraisal be done by the accountant?

- If an appraisal is needed, is it every year?

- If the practice does not have a formal appraisal done every year would a CPA or managing partner letter work?

I'm with a TPA firm. I know at least one of our clients had to submit the restated plan document we prepared providing for prevailing wage contributions to the agencies awarding the contract. Our other prevailing wage clients are new and haven't previously done plan contributions, so may not be familiar with the process with the agencies. I'm trying to get a feel for what they should expect.

Is it typical that each agency reviews the plan document before a contractor is allowed to pay fringe benefits as pensions contributions? If so, would something like excluding HCEs (e.g. children of owners) present a problem?

Related to this issue -- if an agency hasn't reviewed the document or isn't aware that HCEs are excluded under its terms, and then an HCE doesn't receive a prevailing wage contribution under the terms of the plan, is it possible an agency might take issue with that (if they don't understand that it's common due to nondiscrimination issues, or they simply require uniformity)?

Thanks.

Preparing a submission for a loan problem that proposes to acrue int and reamortize the balance.

How/When do you implement it?

Do you just assume they will approve and start making the new payments?

Employer A has a 401(k) Plan that Employer B adopted as a Participating Employer (controlled group). In January 2013, ownership of ER B changed and there was no longer a controlled group. (Two of the owners retained some ownership but not enough to keep it as a CG.) This, of course, was not communicated to us until now. The name and EIN of ER B remained the same. ER B had five eligible employees during 2013 and 2014. Only one was an HCE and he made deferrals along with one NHCE. All nondiscrimination testing was passed combining both ERs for those two years. For 2015, only one employee of ER B, the HCE, made deferrals. Therefore, having to test separately, would not allow the ADP test to pass. Plan uses current year testing.

Questions:

1. Referencing "Who's the Employer", it appears that the plan may be eligible for the grace period (allowing the plan to operate the same), which would have ended December 31, 2014. Is that correct? Then, as of January 1, 2015, the plan then becomes a multiple employer plan and testing would be done separately?

2. If the participation agreement is terminated as of the current date, are the participants of ER B eligible to get a distribution of their accounts? If so, I would assume the HCE of ER B would not be eligible to get a distribution since the ADP test would fail and corrective distribution would be required. Would the test be performed at the end of the plan year or at the end of the termination of the agreement?

Thanks in advance for any advice on this situation.

I know there have been quite a few discussions in this forum about the extent to which mid-year amendments can be made to safe harbor plans and "maybe safe harbor" plans, but my question has to do with the end result if the IRS were to view any such amendment as outside the scope of what's considered "acceptable."

Is the effect merely loss of the safe harbor, or could it also affect the plan's qualification?

I'm dealing with a maybe safe harbor plan that will not be using the safe harbor in 2015, so if adopting a particular amendment results in a worst case scenario, what exactly is that worst case scenario?

Loss of ability to be a safe harbor plan in 2015? (And in this circumstance, where it's a maybe safe harbor that wouldn't be utilized, should I care on any level?)

Plan disqualification? (In which case I obviously do care!)

Anything else?

Thanks!

Hi, all. I am new to the forum, and am hoping someone can help with a question. In advance, I apologize if this issue has already been addressed elsewhere. I didn't see it. So here's my question:

I am a part owner of small business. A friend, who owns a separate small business, has told me that (i) his company eliminated its group health plan, (ii) his company now provides each employee a pay increase of $400 per month, and (iii) employees buy their own health insurance on the private market. Importantly, he also informed me that his employees set up FSAs, into which they deposit pre-tax dollars, and that employees simply reimburse themselves from the FSA, on a pre-tax basis, for their healthcare premiums.

Is this permitted? If it is, I think my business wants to move in this direction, as it would likely be a win-win for both the company (as employer) and the employees.

Any help would be GREATLY appreciated. Thank you.