One of my plan sponsor's has informed me that they accepted an invalid rollover of funds. We have informed them that, based on IRS Notice 2014-9,the funds need to be refunded to the participant (with any applicalbe earngings). The question that is now coming up is what code should be used on the Form 1099R. The Notice does not detail what code should be used.

1) Does anyone know what code should be used on the Form 1099R?

2) Since it is an invlaid rollover, my assumption would be that 10% should be withheld. Does anyone agree?

Any help would be greatly appreciated.

The LLC is being taxed as a partnership. The majority owner's son is also an employee. Is the son allowed to participate in the cafeteria plan?

From what I have read the LLC would need to be taxed as a C-Corp in order for owners to participate. Since this one is being taxed as a partnership the owner cannot participate. But do the code 318 owner attribution rules apply in this case and disallow the son from participating? Or would the son be allowed to participate and just be counted as a key employee?

I'm curious about what other TPAs are doing about the recent hype about after-tax contributions. We have received so many phone calls in the past month asking us to amend client's plans to add after tax contributions because of notice 2014-54.

We do not want to add them to our plans for many reasons but the main being the ACP testing and of course top heavy problems.

Is there anyone that is adding after tax contributions to their plan? If so, what are you doing to remedy issues with ACP testing and top heavy issue.

I understand this can work for owner only plans but we are getting requests from small plans where the HCEs and Owners want to put in the after tax contributions and take an in-service to roll it in to a Roth IRA!

Corporation maintains a 401(k) Plan.

The Plan Sponsor called and stated they were going to terminate the 401(k) Plan..

They set up an LLC and this new company would sponsor a plan.

Plan Sponsor is fixed on terminating the plan and setting up a new plan. Not sure why they will not have the LLC adotp the plan, but that is not an option.

Terminating the plan and then starting up a new plan under the LLC just seems "fishy" and screams something is wrong with this picture.

Are there any issues here???

Beyond a little monetary relief, the proposed settlement with Nationwide would include a little extra disclosure.

Would this disclosure do anything to help your clients?

Can I amend the PS source plan entry dates today if the plan has a last day rule? Plan has entry dates retro to 1/1 in year eligibility was met and we want to make it 1/1 and 7/1 following. So some people who would have been eligible will not be.

I say this is ok because they have not accrued a benefit yet due to last day rule.

[i am aware that I need to watch out for any retirees, etc, if allocation conditions are waived].

for the SF they have added lines

5d(1) active begin of year

5d(2) active end of year

5e term < 100% vested

Active Participant Information. Filers are now required to provide the total number of active

participants at the beginning of the plan year and at the end of the plan year on both forms.

•Terminated Participant Vesting Information. Form 5500-SF filers now must provide the number of

participants that terminated employment during the plan year with accrued benefits that were not fully

vested.

for MEPs you will have to attach a schedule listing each company in the MEP as well as % of contribution.

(well, for Relius I was able to create a Crystal report to generate that attachment)

Consider 2 small LLC employers. They both have common ownership, but the majority owners are retiring due to emergency on Dec 31, and a younger minority owner is starting a new LLC that will take over both companies on Jan 1. The previous 2 LLCs/companies will no longer exist on Jan 1. Both original companies have safe harbor 401(k) plans in place. No participant notices have been sent yet and the plan year ends on Dec 31. Can they terminate both 401(k) plans on Dec 31 this year, finalize 2014 testing and SH matching, and then give the employees the ability to roll into the new plan once it is up and operational around March 1? Assume the new 401(k) will also be a safe harbor plan. Any gotchas when doing this? Any better solutions?

I realize the timing here is bad, but I I can't control that, due to the emergency situation with the owners and the fact that the termination of the companies is already in motion.

This may have been covered previously. If so, sorry.

How would you handle the following situation.

An employee changes their deferral election from a high percent to a low percent.(e.g. 10% to 3%)

For some reason the employer fails to update the payroll system and the participant never complains. None of the regulatory limits are breached (no ADP, 415, 402(g) etc. failures)

This situation endures for several years, Mistake of Fact wouldn't apply.

Assuming there really is an operational failure, what action if any, would you take given the IRS guidance that assets should remain in the plan?

Can a small business have one SEP for the owner at, say 20%, and another SEP for the employees, at say 10%? Either way, yes or no, can anyone provide a link to a document from an authoritative source? (I can just see myself in an IRS audit - "Well someone on the internet told me...")

Thanks in advance

Where does it state in black and white that a plan only has to provide an annual valuation to participants with pooled accounts and distributions can occur based on that valuation even if the market has increased considerably since the plan year end?

Thanks

I have a client that would like to restrict the availability to loans for one of two reasons:

1. Purchase of a home
2. College tuition

Has anyone had a client restrict loans to this degree? Is it allowed?

Thanks in advance for your help!

On or about November 24,2014, the IRS published, via Notice 2014-74, two (2) updated versions of the eligible rollover distribution notice, aka "IRC section 402(f) notices".

One of these notices was for Non Roth, and the other was Roth accounts.

Question:

Does anyone know where we can get a Spanish version of these two notices?

I quickly surveyed the major investment providers and some, eventually, produced a Spanish version of the (now) obsolete Notice 2009-68 notices, but I am looking for a Spanish version of the updated IRS Notice 2014-74 notices (402(f) notices), to complete my update of my distribution paperwork.

Thanks for any ideas!

The last paragraph of the article below states that the IRS has informally mentioned that the amount of cash opt-out payment under a cafeteria plan must be added to the monthly premium for single coverage to determine if the coverage is affordable. Has anyone else heard similar comments?

The Nov. 6, 2014 DOL Q & A's include an example which concludes that an employer's offer of cash or coverage to high risk employees did not comply with the market reforms. It included a discussion about how a high-risk individual must effectively contribute more to obtain coverage, since the employee is waiving the annual $10,000 opt-out payment and must pay $2,500 for coverage. But nowhere did the guidance suggest that the opt-out payment under a broad based cafeteria plan must be included for affordability purposes under 4980H.

http://www.healthcarereformdigest.com/new-aca-affordability-rules-impact-cafeteria-plan-flex-credits

I'm trying to determine if this scenario is a problem for a section 125 cafeteria plan.

Entity A (the larger employer and a state governmental entity) has a written section 125 cafeteria plan which includes a self-insured medical plan as one of its benefit options.

Entity B (the much smaller employer and a 501©(3) entity) is unrelated to A and has its own employees. The entities are not part of a controlled group, and would not be considered the same taxpayer under IRC section 125(g)(4). Entity B is not controlled by Entity A and has its own independent board of directors, which are not employees of Entity A.

A service contract exists between the entities. As long as Entity B continues to provide services to Entity A, Entity B's employees will be included as participants within Entity A's self-insured medical plan. Entity B has its own written section 125 cafeteria plan and its employees receive pre-tax benefits as a result. Entity A is effectively acting as Entity B's health insurance company and assumes risk in excess of the premium payments charged to Entity B.

Under these facts, are both entities' section 125 cafeteria plans at risk of failure from the IRS since Entity A is allowing coverage for participants other than its own employees? Or is the problem only an insurance company issue unrelated to the section 125 cafeteria plan? Thanks for any input.

We have a new client that adopted a 401k plan for 1/1/14. Due to the time it took for everything to get set up with the 401k investment provider, contributions didn't start until around 2/1/14.

Problem is that we just discovered for the month of January they continued to make contributions to their old SIMPLE IRA.

Can the client just do a corrective distribution from the SIMPLE IRA or pay an excise tax on a non-deductible contribution or do they have to go through VCP to get the matter resolved? It's not a lot of money.

I have a plan with a group of "traders" who are partners in a business. Their K-1 show a net employment income of, say, $10,000 (14 A).

There is investment income of over $1,000,000. I have read that income could be considered as earned income for plan purposes, even though it is not subject to SE tax.

Any thoughts and/or cites? The EOB search doesn't even register a hit with "trader".

Can a qualified plan document include an excess benefit plan formula/other language but there also be an accompanying separate excess benefit plan?

Assume that benefits will be paid properly with qualfied benefits paid from trust and excess benefits paid from general assets.

I've just never heard of this before! Thanks in advance.

We have a change in control plan where if there is a change in control followed by termination, the executives get a separation payment.

For 280G reasons, we want to reduce the separation payment and give the participants a bonus equal to the reduction in the separation payment. We anticipate a change in control next year. Is this OK, or does it constitute an impermissable acceleration?

Are there any 280G issues I"m missing?

I understand about forfeitures not being available to be used to fund QNEC or SH contributions. If an employer makes an overdeposit into a participant's account in error, I'm thinking those monies could be used to fund a QNEC or SH since they are not true forfeitures. Am I way off base?

Thanks