For those of us still working, I have a question,

a recent article in the Wall Street Journal talked about "pumping up your IRA".

While I can follow all the data and logic presented in the article, I have a question.

Client has a 401(k) Plan - participants can defer pre or Roth. There is a match of 100% up to 6% of compensation.

According to the article, participants who defer the max ( $18,000/$24,000) could make an after tax contribution (assuming plan allows for voluntary contributions) and as long as the total allocation does not exceed $52,000/$57,000) they are all set.

The article is addressing the ability to roll the voluntary account over to a Roth IRA and all the tax savings afforded to the Roth IRA.

Here is my question- most plans removed the voluntary contributions since they needed to satisfy the ACP test. Is this condition still applicable??

While the article made it sound great to add voluntary contributions, and my client is ready to jump all over this, I think, the crucial issue of ACP testing was eliminated from the article.

thanks and happy new year.

ERISA RIP?

http://www.erisalawgroup.com/documents/2014-December-Flash.pdf

Consider a final average pay, defined benefit plan. Assume the benefit formula is 1% of 5-year average compensation, times years of credited service. A client wishes to freeze the average compensation portion of the formula (say as of March 31, 2015), but still allow participants to earn credited service. Is this permissible? The future formula would then be 1% of 5-year average compensation as of March 31, 2015, times years of credited service at subsequent termination of employment. Are there any other considerations? Thank you in advance for your help.

When is an in-plan roth conversion taxable? All the IRS Notice says (2010-84) is "it is generally taxable when the distribution occurs" which I think is ridiculous because there is no distribution.

Obviously I have an 11th hour request from a client. Any value in having them make the election effective as of today? What if the plan was in a pooled account (this one is daily val anyway, but the point is that an entry on a computer should not have any affect on when it is taxable).

Have a new client who has over contributed to their profit sharing plan in 2013. They are now out of business and will not have any compensation (starting in 2014). What can I do about the excess contribution? They cannot use 2013 compensation as after the 12 month period. All guidance refers to using the excess amount in the following years but they will not have any compensation.

One partner wants to make his elective deferral deposit by transferring title of assets in his brokerage account to the 401k plan. I understand about required contributions having to be made in cash. Seems to me that a deferral is a required contribution in one respect. Would this be permissable? Thanks.

Does anyone know of any articles that describes how the individual groups should be chosen. I'm searching for an article to share with a client.

The document states "the amount allocated to one group need not bear any relationship to amounts allocated to any other group."

I was always told that even when the document was written for individual groups, that the participants should still be "grouped", Ie: secretaries, clerks, accounting and so on.

Is there anything written anywhere that I can share. I tried the treas. regs, but I really couldn't find anything pertaining to the grouping the employees.

Is it possible to suspend a non-safe harbor fixed tear match mid-year where the compensation determined for the match is annual?

Example is 50% of the first 6% of compensation where the compensation determination is period is annual?

Again this is a non-safe harbor match. I just want to know how/when this can be suspended midyear.

Thanks

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.