I am working on a plan that failed the ADP test for 2014. 2 HCEs need refunds. They terminated in October and took their assets out in December 2014. Both rolled their assets over to IRAs.

So what do we do to "correct" the test failure? let these former participants know that they need to take $x out of their IRA as an ADP refund?

Are multiemployer retirement plans subject to non-discrimination testing and if so who does it and don't they need census data from contributing employers?

My client is contributing to a union plan on behalf of an HCE and has never been asked for census data and they're wondering if they should have any concerns.

Thanks

One of our clients is asking questions about FICA for a SERP she will be receiving a benefit from. The SERP benefit is the difference between what her benefit would be in the DB plan if no limits applied and what she has accrued in the DB. The SERP document does not have any references to vesting or forfeiture of benefits. She is approaching retirement and has been told that FICA applies at retirement to the present value of her plan benefit. The amount of the FICA amounts to about 15 months of payments. She is being told the plan will offset her monthly benefits by the amount of FICA paid until the entire FICA amount has been recouped. Then, she will start receiving monthly payments in about 16 months. Does this information sound correct?

Hi there,

I contributed to my Roth IRA last year without knowing exactly what my AGI would be. As it turned out, my income surpassed the allowable threshold to contribute to a Roth. I understand that I will need to recharacterize this contribution into a Traditional IRA to avoid a 6% penalty. Once in the Traditional IRA, I would ideally convert this back into my Roth. What is the process for completing these steps? What does my timeline need to be for reacharacterizing, paying taxes, April 15th (and any other pertinent dates), and transferring back into my Roth?

On a related note, I have the same question for a normal backdoor process into a Roth. When do I need to contribute to my Traditional IRA, pay my taxes, and recharacterize to my Roth IRA? Is there a specific amount of time that the contribution needs to stay in the Traditional IRA before converting to the Roth, and do either of these contributions need to happen before or after a certain date?

Thanks for your help!

Cooper

A plan participant is 82 years old and recently retired. She has been very sharp as the office controller for many years. She elected to take her entire $500k distribution as a lump sum.

We followed up with a phone call to ask her if she had really thought this through. She replied that she did and wanted to take the lump sum rather than doing a direct rollover. She seemed to be of sound mind when speaking with her.

So we processed the distribution as a lump sum just like the benefit elections indicated.

Today (30 days after the actual distribution took place) her financial advisor called and mentioned that she is not well and should have rolled over the entire amount.

She has another 30 days to roll over the entire amount (including the taxes withheld) to keep it all tax deferred. However, it appears she does not have the liquid assets to do this. She does have non-liquid assets (Real Estate etc).

I don't think there is any way around coming up with the withheld taxes in the remaining 30 days.

Any ideas?

Thanks.

402(f) Notices are for eligible rollover distributions only, right?

So I would not have to send one with RMD paperwork?

We are relatively new to Roth 401K and in fact do not have any at this point.

Client wants to amend their profit sharing plan to a safe harbor 401(k) non-elective 3%.

All participants were given the safe harbor notices for 2015 in a timely fashion, and were given the option to do Roth or regular 401K contributions,

The two principals only want to deferral, and only have Roth deferrals, the other employees will not be deferring.

Can you have a 401(k) that only has Roth deferrals?

What is the citation?

Years ago I seem to remember university professors being able to max out both their 457b and 403b plans. Is this still the case? Can someone like a university professor contribute 18K to a 457b and 18k to a 403b? If so, what about catch-up contributions too? Thanks!

Hi does anyone see a drawback to naming your revocable trust as the beneficiary or your IRA or retirement plan? I seem to recall hearing negative things about doing so, but if the trust is the beneficiary, the trust will then direct the distributions. Unless the drawback here is that you're paying a trustee potentially to do the distribution for you instead of e.g. naming both kids as the beneficiaries.

Hi can someone clarify this for me please...if I roll an IRA into a 401K, does the administrator account for those rollover dollars separately in case I want to roll those IRA dollars (and accumulated earnings) back out to an IRA?

1.410(b)-7©(3) (on testing otherwise excludables separately)

If an employer applies section 410(b) separately to the portion of a plan that benefits only employees who satisfy age and service conditions under the plan that are lower than the greatest minimum age and service conditions permissible under section 410(a),

I have a client who has no good way of knowing how many hours someone worked. Everything is done using elapsed time. Therefore, they have no idea who has and who has no satisfied the "greatest minimum age and service conditions permissible under 410(a). Therefore, if I simply assume everyone is full-time, it is possible that I will be including OE's in my "main test."

Example: Susan works "about" 10 hours a week and contributes her entire paycheck to the Plan. She should not be in the main test. In other words, one cannot assume that the testing would always be hurt by this assumption. We're talking about hundreds of employees, so please don't say "I thought they didn't track hours"

Is there anything that says I can use some alternative method of determining who has not met "the maximum age and service conditions under section 410(a)?"

If a client has a SEP, or a SIMPLE-IRA, and they freeze/"terminate" it and set up a new 401(k). do you:

a. Assign plan #001 to the 401(k), or

b. Consider the prior SEP or SIMPLE-IRA as plan #001, and assign the 401(k) plan #002?

I do actually have a reason for asking this: in the VCP procedure for correcting a SIMPLE-IRA, the Appendix asks for the plan #, and I would normally have used option #1 above.

Rather than having client adopt late PPA, HEART and WRERA interim amendments I decided to have them adopt their PPA restatement which incorporates the interims.

VCP application appears to require that I identify where in the PPA restated document the "interims" are reflected which I suspect will be a royal pain.

Anybody know if I can get away with just submitting the PPA restated document since IRS "knows" the interims are incorporated (at least through the 2010 Cumulative List)?

To what extent would you want to caveat the MEP2014 requirement, "Actuarial Certification – The plan actuary certifies that the plan is projected to avoid insolvency indefinitely if the suspension of benefits occurs."

Hello All,

I have a question regarding a Safe Harbor Plan that also happens to have a last day requirment.

The plan also has crosstesting thus everyone is in their own rate group.

I have a participant that has termed before the year end, and was a participant in the plan throughout the year entitling him to SH.

The plan is also maximizing the owners and needs to satisfy gateway requirement. Since the participant is technically not eleigible for the additional 2 % that he needs to satisfy gateway (because he was not employed on the last day), do we have to amend the plan so that he is eligible for PS for the year or is it understood that a participant that has recieved SH can also receive profit sharing to recieve gateway?

Please advise.

I have a governmental entity (housing authority) with a pre-ERISA money purchase plan - established in 1968. The plan has Mandatory contributions, employer contributions, and provisions for matching and voluntary contributions.

The client would like to add elective (401(k)) deferrals to the plan. I see two options for them:

1. add elective deferrals to the plan since it is a pre-ERISA plan; or

2. Convert to a profit sharing plan and then add the 401(k).

Any thoughts or preferences?

Are we all in agreement that it is a prohibited transaction for a disqualified person to purchase, for cash, real estate held by the company's profit sharing plan (the real estate is not qualifying employer real property)? Seems clear that ERISA's basic prohibited transaction provisions control here (i.e., Section 406(a)(1)(A)).

Is the result any different if the disqualified person, instead of paying cash, exchanges his company stock for the real estate (assuming meticulous valuations of both the company stock and the real estate and assuming no commission is charged)? Or does the exemption under ERISA Section 408(e) trump the underlying prohibited transaction. The exemption under Section 408(e) provides that Section 406 does not apply where the plan's acquisition is for adequate consideration and no commission is charged.

If the exemption (Section 408(e)) trumps the underlying prohibited transaction (Section 406(a)), what is the policy that would allow a disqualified person to buy, for stock, something that he/she could not buy for cash?

We are looking for a plan to help our pastor with deductibles, copays, and other out-of-pocket medical, dental, and vision costs that are not covered under a group plan (family coverage) that his wife has with her employer. We need to do this on a tax-free basis. He is the only employee of the church. We are a very small congregation and money is very tight.

The Health FSA limit of $2500 would probably be sufficient, but the main problem is having to make a dollar commitment each year in advance and not knowing how much will really be needed.The HRA would be more flexible, but the real problem with either plan is admin cost if we go through a TPA. Is there an inexpensive option for us?

Art

I received an executed DRO that assigns a flat $ amount (I will just say for sake of discussion $15,000) of a participant's Roth basis to the alternate payee. It gave me pause as to whether a DRO can award basis only to the AP?

My first thought was from an award perspective it might be fine, but from the ultimate distribution perspective to the AP would it violate 1.402A-1 QA-9 (b) as that regulation clearly calls for a pro rata distribution of basis and earnings for a nonqualified distribution? [This would be a non qualified distribution as both participant and AP are not 59 1/2]

How do these two rules play together, ie ERISA vs the tax code? or maybe I am just overthinking.....

thanks for any suggestions.

Can a person sell their Whole Life Policy, and avoid immediate taxable event by 1035, and purchase an immediate annuity?