I have a client setting up an HRA plan who wants to exclude those under age 25. It looks like this is OK under 105(h). However, she has somebody else saying the limit is 21 because of ERISA. I think she is looking at retirement plan not health plan so the 21 does not apply. Is there a link to the age 21 for an ERISA HRA?

Question...

If we have a safe harbor 401k plan that is satisfied using the 3% non-elective contribution for NHCE, regardless of participation, how much are the HCE's able to receive for the non-elective contribution? Do they cap out at 3% as well?

Thanks!

A client where the corporation was named for the two partners changed its name last week because one of the partners retired earlier this year. I have a copy of the amendment to the Certificate of Incorporation, and it is still the same entity (same EIN), just a new name effective sometime mid-December. Of course, they told me after the fact.

Now they want to change the plan name, too. Since it is an official amendment to the corporate charter, I don't think I have a problem that the plan is now not sponsored by the same entity that is on all the paperwork and forms (especially since it is the same EIN). And it's a safe harbor plan as well, with all the extra complications that may or may not entail.

My initial reaction is to change the name of the plan and sponsor as of 1/1/15, which seems reasonable. But then I started thinking about what if this had happened in April? Would you really wait nine months to make this fix in that case?

I guess that's appropriate for us in the business.

how many clients wait til the last moment and give us upset stomachs.

Working way through restatements, as I am sure many of you are doing.

Can anyone think of a good reason for a (Safe harbor!) plan to limit deferrals to 85% of compensation (rather than just no plan imposed limit)?

I am having trouble coming up with a scenario where this will come into play.

thanks

The participant is over 59 1/2, but has not met the 5 year rule for Roth distributions. So, earnings are taxable. Should code "B" alone be used or are codes "B" and "7" used together for this distribution?

Employer merged a plan acquired through a stock acquisition. Employer should have known better, but merged the acquired plan into its own (much larger) plan before it realized it didn't have a signed plan document. To add insult to injury, the entire plan was submitted for a determination letter before the issue was discovered. So the question is...what can we expect for Audit CAP penalities? Anyone have any experiences with this that they want to share?

Will the High Court's decision apply to governmental plans?

Hello and thanks in advance.

In 2009 my Grandfather purchased a home and then transferred it to me as a gift. I never lived in it but used it as a rental which it continues to be to this day. I am now getting married and need to purchase my first home. I have 32k in my 401k that I would like to use.

What are the ramifications of using it? Can I use it since I technically already own a home. I do not want to pay any penalties.

Client terminated its union contract because it was no longer performing covered work. However, it may have continued covered work through the use of subcontractors without making trust contributions. Now, it is asking whether it can avoid liability by rejoining the union. I assume the employer would still owe contributions for covered work when it was not a party to the CBA, but I'm having trouble finding the right statutory/regulatory source to explain this and show how the calculation would work, and my search terms are not giving me good case law results. Does anyone have any thoughts for where I should be looking?

Say you have a plan where the owner's benefit is currently not very close to the 415 limit. However, the owner wants to significantly increase the benefit formula.

What's the maximum benefit that can be accrued/funded for the current year? Is it based on an accrual of $1750/month ($210k * 1/10 / 12)? Or can it be based on an accrual in excess of $1750/month, as long as the total accrued benefit does not exceed the total benefit allowed by 415?

Need citation for new plan effective prior to date of incorporation.

Hello all,

I'm back in the defined benefit arena after an extended time period.

I have a client who says their actuarial equivalence definition is based on 417(e) segment rates with a 3-month look back, so October, 2014 segment rates are used for benefit commencement dates in 2015.

Is it permissible to apply an actuarial increase using 417(e) segment rates at the time of commencement? For example, they have a vested term who reached NRA in 2008 and wants a BCD of 1/1/2015. they want to use the October, 2014 segment rates for the whole increase.

I'm seeing some unusual changes in the late retirement benefit at 12/1/2014 vs. 1/1/2015. Because of the change in segment rates from October 2013 to October 2014, the late retirement increase at 1/1/2015 is less than the late retirement increase at 12/1/2014. So the resulting benefit at 1/1/2015 is less than what the benefit would have been at 12/1/2014. Does anyone know if this is permissible under the most recent IRS Regs?

Any guidance would be much appreciated.

Happy Holidays everyone and a prosperous New Year!

Employer is suffering real financial hardship. They cannot fund the 2013 3% safe harbor contribution. What do we do here? My thinking is that this is an Operational Failure and the Plan should file under EPCRS. Proposed correction would be to retoractively amend the Plan to remove Safe Harbor provisions. I'm questioning whether IRS would approve this proposed correction because this would clearly not put participants "back where they would have been had the operational failure not occurred".

Is there any solution here?

Thanks.

For 2014, my wife and kids were able to be on a health plan not compliant with the ACA (which saved us a lot of money). I was on a separate, ACA-compliant plan. Both plans were HSA compliant. Starting in 2015, we will all be on the same plan again.

Previously, we were all on the same plan and we had an HSA in my name.

The question is: In order to be able to make the full family contribution for 2014, must we open a separate HSA for my wife? Am I limited to the individual contribution?

We will file together. We are a family. We just have this one flaky year.

Thanks!

Gary

Anyone have any advice? Custodian will not open IRA unless participant signs the forms. Is there a custodian that will allow the employer to open the account without the employees signature, etc.?

What code should be used for a distribution from a 401k plan into a Roth IRA with the participant requesting 20% federal tax withholding?

I realize that if the participant does not request any withholdings, we use code G and indicate that the distribution amount is taxable. However, the issue that I have is that when a participant requests a 20% withholding, shouldn't that 20% amount be considered a distribution (early or otherwise, depending on age)? And if so, it does not seem like it would be possible to send only one 1099-R request with those instructions since code G cannot be used with code 1 (or 7, again depending on age). Should there be two 1099-R requests filed?

When I became an ERPA in 2010, I got a PTIN. Notice 2011-91 states that Section 10.4b of Circular 230 requires individuals who want to become an ERPA to have a valid PTIN and Section 10.6d3 requires ERPA to have a valid PTIN to be eligible to renew their status as an ERPA.

someone told me yesterday that it isn't mandatory. have "the rules" changed since this Notice was issued?

From the payee's side, a 401(k) participant's non-spouse beneficiary failed to take a full RMD after five years. The plan document required a five-year full distribution. Year 5 ended several years back. No RMDs have been taken, and the entire original balance is still in the plan.

Not concerned about the plan sponsor's side, except to the extent their submission through VCP would help avoid payee's excise taxes.

I'm reading 54.4974-2, Q&A 5 to say that the RMD for each year after Year 5 represents a separate RMD failure for each subsequent year based on the entire remaining balance in each subsequent year.

Say Year 5 end-of-year balance is $100,000. Failure to remove everything results in a $50,000 excise tax in Year 5.

Year 6 end-of-year balance is $110,000. Failure to remove everything during Year 6 (the required RMD for Year 6 per Q&A 5 is the entire remaining balance) results in an additional $55,000 excise tax for Year 6.

Year 7 end-of year balance is $120,000. Failure to remove everything results in an additional $60,000 excise tax for Year 7.

And so on. After three years, the excise tax would be greater than the original plan balance,

I don't see any relief except potentially the IRS's consideration of waiving the excise tax for "reasonable error."

Would someone point out what I'm missing?