Is an amendment to correct for a failure under 410b required to amend the plan for the plan year in which the plan failed or can it extend to future years? The failure in the instant case was with respect to excluded classes and hour requirements. Thanks.

Calendar year 401k/profit sharing plan is sponsored by a corporation which files an extension for its tax return; so Sep 15 is the tax return due date. But the company files its tax return on Jul 31. Does it still have until Sep 15 to make a deductible contribution for the prior year?

IRC 404a6 and Rev Rul 66-144 suggest yes. But several CPAs have told me no.

I am in the early stages of taking over the TPA work for a SH 401(k) plan with cross-tested PS contribution. The plan includes the owner and his son. There are no other employees. They only want to max out the father. They don't need the SH with 2 HCE's but I guess they are covered in the event they hire anyone else.

I am concerned about the new comparability formula creating a CODA. Is this only a problem if the owner is a sole proprietor? Or is it irrelevant since all are HCE's?

401(k) Platform, so individual accounts. Doc has each person in own group. And all correspondence said "yes, you can pick and choose as long as no HCE receives anything".

But here is what they have done. They decided bonuses based on profitability of that department. 2 of 5 HCE's received a contribution and 31 of 70 NHCE's received a contribution.

This was paid in February and the controller did not deduct it in 2014. He plans to deduct it this year. This is going to fail testing using full years comp and one of these 2 HCE's has left. So we will fail by quite a bit. Is the correction simply to withdraw enough from the HCE's to pass 401(a) testing? Any penalties?

First please overlook how stupid these questions may sound. Not very familiar with Simple plan operation.

We have a client(Dentist Schedule C) that has a Simple Plan. The employer just sold his practice to another dentist. The employees with go with the new dentist as of 04/01/2015. The client wants to know if he can continue deferring up to the maximum on the receivables he will be collecting for the remainder of the plan year. We are assuming the employees would only receive employer match for the three months of employment.

What if a recent hire achieved the 5000 dollar threshold prior to sell of business in the first three months of the year.

The definition of compensation under the plan document is W-2 however there is self employed income language in it. We use Relius IDP V.S. (See definition of comp below).

1.22 "Basic Compensation" means the Participant's wages as defined in Code §3401(a) and all other payments of compensation by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Participant a written statement under Code §§6041(d), 6051(a)(3) and 6052 (Form W 2 wages), as well as amounts that would have been received and includible in taxable compensation but for an election under Code §125(a), Code §132(f)(4), Code §402(e)(3), Code §402(h)(1)(B), Code §402(k), or Code §457(b), plus, effective for Compensation Computation Periods beginning on or after January 1, 2009, Military Differential Pay. Compensation must be determined without regard to any rules under Code §3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code §3401(a)(2)).

Basic Compensation for any Self Employed Individual (with respect to the Employer maintaining the Plan) shall be equal to such individual's Earned Income.

Basic Compensation shall not include amounts paid as Compensation to a nonresident alien, as defined in Code §7701(b)(1)(B), who is not a Participant in the Plan to the extent the compensation is excludable from gross income and is not effectively connected with the conduct of a trade or business within the United States.

The partner is part of an adopting employer of the plan. Would his 1099 income be eligible? He does not receive K-1 only 1099.

We are a TPA firm that administers Cafeteria Plans for public employees that are exempt from ERISA requirements. Currently, our clients hold their own checking accounts with which the funds are held. We are looking to offer a funding method where we, as the TPA, have a checking account that the client's funds are held in.

What are our funding options that will keep us compliant with IRC and California banking laws?

Because our clients are exempt from ERISA, but our TPA firm isn't, do we have to comply with ERISA requirements if we decide to hold the funds for them?

We are considering opening one business checking account to hold all of our client's funds with the idea that we would not dip into one client's funds if another falls short, but I am concerned with the commingling of funds and think it would be cleaner (and maybe the only compliant option) if we held separate checking accounts for each client.

If we were to open a Trust, could we commingle different Plan assets then?

Any help would be very much appreciated.

Anything legally (forget morally) wrong with this 401k plan design:

Automatic deferral contribution rate of 10% with enhanced QACA safe harbor match of 100% on first 3.5%.

Expectation is that 10% will be unacceptable to most NHCEs and they'll waive.

Colleague is arguing that the minimum deferral rate has to be "reasonable under the circumstances" but I can't find any such subjective requirement.

I know the answer, but I am hoping I'm missing something.

Jim contribuites $24,000 in January to ABC, Inc. 401(k) plan.

In March, XYZ, Inc. purchases ABC, Inc. in an asset acquisiiton. ABC, Inc. plan termninated immediately prior to the acquisition. Jim gets a $12,000 refund for the 2015 short plan year.

Jim wants to contibute to the XYZ, Inc. plan. I don't see that he can for 2015. Even though he received a refund from the ABC, Inc. plan for 2015, he still hit the 402(g) limit. I don't see that the refund changes that.

Am I missing anything?

Thanks in advance for any guidance.

We have 2 plans that were previously part of a control group, but that have now been merged together. After doing some research, it appears that 1099-Rs are not required for plan that was merged into the other plan. Would you agree with that? Also, should the merged assets be listed as "benefits paid" on the final Form 5500?

Have a client that has Collateralized Securities in their 401k plan. Is this allowed? Thanks in advance.

Let's say a participant is 60 years old, but has the funds in the Roth account for only 2 years when he requests a distribution. Two questions:

1. The 10% penalty doesn't apply and the 1099-R code is simply "B", correct? The participant simply pays taxes on earnings because it's not a qualified Roth distribution...

2. Let's say the participant is actually 40 years old. In that case codes "B1" are used. However, does the 10% penalty apply to the WHOLE distribution amount or just the taxable (earnings) amount?

Probably a very simple question here, but I couldn't find too much guidance on the IRS site. If the plan was terminated in 2014 and all the distributions were done by, let's say September 10th, should the ending date on the Form 5500 be reported as 9/10/2014 or should it be the end of the month in which the distributions happened, so 9/30/2014? The end result is the same as the filing is due 7 months after the month of last distribution. Just wanted to see if there's a requirement to do it one way or the other.

Hi,

I terminated service in 2/2012 and I received notice that my previous 401(k) plan was merging with another company's 401(k) plan (Company B). When I left my pervious employer I was 75% vested.

After the transfer occurred, I received a distribution statement. I was informed that 25% of my account balance was forfeited upon the transfer.

Can the company take away my non-vested account balance prior to 5 years?

What happens if I join Company B tomorrow, wouldn't they have to count my service with my prior company since it hasn't been 5 years break in service?

Thanks

This is a new one on me. A state instrumentality ("Employer") sponsors Plan A, its own defined benefit plan (i.e., Plan A is not a state-wide, public plan). Participant X, who has a vested benefit under Plan A, has been arrested for embezzling a large amount of money from Employer. Employer would like to amend the plan prospectively to provide that any participant convicted of a felony against Employer forfeits all employer-provided benefits under the plan. Can it do so?

The plan is exempt from ERISA as a governmental plan, so the federal vesting and anti-alienation rules don't apply. Not surprisingly, the state's statutes don't deal directly with this question. (And the statutes governing the state's own pension plan don't apply.) Does this boil down to simple state contract law?

Cheers.

I found some prior threads but most were 7+ years old and dealing with non-spousal beneficiaries. I have a spousal beneficiary.

It appears that if he rolls over the balance of the account to a traditional IRA then he'll receive the 1099-R with a Code of 4G. If that happens this year (the year of death) then the 1099-R for the loan offset will go under the deceased participant's name/SSN and is part of her final personal income.

My question is...does the 10% "early distribution" penalty apply in this case to the loan offset? I'm assuming that the 1099-R won't be coded with a "4" because that portion is not a death benefit but rather a loan offset under the decedent.

Any thoughts appreciated!

I am preparing a Form 5500 filing for a wrap plan containing a self-insured health plan as well as several insured benefits (STD, LTD, life, AD&D). The client also has a stop-loss policy and a transplant policy. Do I need to complete a Schedule A for each of these? I understand if the stop-loss policy is owned by the employer and the premium is paid out of general assets, it is not reported on a Schedule A. Does the same principle apply to the transplant coverage as well? If I do need to report these on a Schedule A, how is the participant count determined - use the same number of participants in the group health plan or only those participants whose expenses triggered the stop-loss or transplant coverage for the plan year? Any advice would be greatly appreciated!

I was employed with TWA from 1977 -2003. My pension from 1977-1999, which was the date American Airlines aquired TWA, is held by the PBGC. They claim to not have any record of me in their data base. They requested TAX returns from 1999 and before. I have been on the IRS website and they only go back to 2005. How do I prove employment? I provided letters of my 10 and 20 year employment but they want IRS proof.

Was Fidelity the source of the IRS's newsletter regarding ensuring that plan sponsors keep hardship documentation?

http://dcda.fidelity.com/static/dcle/WPSFidelityPerspectives/documents/FF_YFC_42215_Hardship_withdrawal_721275_final_041715.pdf

It certainly seems that way. The largest 401k provider in the country says "ee's can self certify hardships" which as far as I know is quite contrary to everything I ever read on the topic. Just curious...

Any thoughts on whether or not Fidelity will win this fight? They certainly put together quite a defense...

Company A - is owned 50% by Mom and 50% by Dad.

Company B - is owned 25% each, by Mom, Dad, Son 1 and Son 2 . . . both sons are well over 21.

Is this a controlled group? It seems to me the answer is no since the parent is deemed to own the child's shares only if parents own over 50%. In company B the parents own exactly 50%.

However, it doesn't feel quite right as seems like a good plan design to get more contributions into the owners accounts.

Thanks for any input.