tripped across the following in the 1099R instructions

I've seen this topic discussed before, but never the comment about putting something in the margin of the 1096. (Never had this situation before, not quite sure how you would do this if you file electronically)

If you make a total distribution in 2014 and file a Form
1099-R with the IRS and then discover in 2015 that the
plan failed either the section 401(k)(3) actual deferral
percentage (ADP) test for 2014 and you compute excess
contributions or the section 401(m)(2) actual contribution
percentage (ACP) test and you compute excess
aggregate contributions, you must recharacterize part of
the total distribution as excess contributions or excess
aggregate contributions. First, file a CORRECTED Form
1099-R for 2014 for the correct amount of the total
distribution (not including the amount recharacterized as
excess contributions or excess aggregate contributions).
Second, file a new Form 1099-R for 2014 for the excess
contributions or excess aggregate contributions and
allocable earnings.
To avoid a late filing penalty if the new Form 1099-R is
filed after the due date, enter in the bottom margin of Form
1096, Annual Summary and Transmittal of U.S.
Information Returns, the words “Filed To Correct Excess
Contributions.”
You must also issue copies of the Forms 1099-R to the
plan participant with an explanation of why these new
forms are being issued.

A plan has an employee on leave for uniformed service. The plan would like to make current contributions to her profit sharing account while she is gone and also include her for testing purposes (she was a critical cog to testing).

I can't find anything to preclude an employer from funding a person on leave's account currently and if they do so, is there any reason not to include that participant in 401(a)(4) testing.

Thanks

If a DBP is amended to provide for a benefit formula that would require the plan to pass nondiscrimination testing under IRC 401(a)(4), but that amendment is treated as if it were never adopted pursuant to Treasury Regulation Section 1.436-1(a)(4)(iv) because an AFTAP restriction under IRC 436© is in effect for the plan year that the amendment would have been effective, then is the DBP still subject to the nondiscrimination testing for the plan years that the restriction is in effect?

1. AFTAP for DBP not certified.
2. DBP treated as frozen due to presumption AFTAP less than 60%.

3. DBP amended to change benefit formula but cannot take effect during plan year because of IRC 436© restriction.

4. Plan amendment treated as never adopted.

Is the amendment treated as never adopted solely for purposes of benefit accruals, such that the DBP still must pass nondiscrimination testing as if the change in the benefit accruals had been made (but for the treatment of the plan amendment as never adopted), or is the amendment treated as never adopted for all compliance and nondiscrimination testing purposes? A citation to the official authority would be very much appreciated!

A foreign corporation has two U.S. subsidiaries. Corp A and Corp B which are treated as QSLOB's. Periodically an employee will terminate from one QSLOB and be hired by the other. Each Corp has its own management, payroll, benefit Plans etc.

The plans grant predecessor service for eligibility and vesting.

The questions:

If employee leaves Corp A and is immediately hired by Corp B should vesting service continue under the Corp A plan? Currently Corp A would treat the employee as terminated.

All the QSLOB rules I've read deal with testing but I find no exemptions for related companies as it relates to service and vesting credit. Should the "termination" even be treated as a distributable event?

EE named her estate as the death beneficiary of QRP benefits.

EE's will leaves her entire estate to one person.

Can the estate with one beneficiary qualify as a 1-person trust for purposes of paying out the death benefits over the life expectancy of that one estate beneficiary?

Can the benefits be rolled into an inherited IRA given that there is just 1 beneficiary of the estate?

The Plan Document specifies "as soon as administratively feasible". It is not uncommon for the annual valuation and participant statements to be prepared well into the 2nd quarter of the following year.

I am just curious in hearing what other people do with the timing of these distributions. Do you base it only on when you get the form or also on the date of termination? And do you have set deadlines to say that if you receive the form by _____, you will process based on the most recent valuation but after _____ they need to wait until the next val is done?

Thanks.

I have a client that currently operates a Simple IRA plan. he would like to terminate or freeze this plan and start up a Safe Harbor or Traditional 401(k) Plan.

Since he missed the November deadline to notify his employees, what are his options?

Can he start up a Safe Harbor (his target date is Feb 1, 2015)?

Does he have to start up a traditional 401k until Jan 1, 2016?

Is it possible to operate both plans at the same time throughout 2015?

there is also an issue that 3 of the 12 employees are HCE's and the non-discrim test might fail if not a safe harbor.

Please help advise... thanks

plan is 'merged' into a MEP during the plan year. all the assets are transferred.

if I file the 5500 as a plan termination with a short year then does that mean the data can't be aggregated for ADP testing (because you can't aggregate plans unless they have the same plan year) or is this simply one of those things the regs don't truly address ...e.g. nothing changes at the company, everyone is still in the same boat, etc. so treat it as if nothing else has really happened. The rule for looking at an HCE says you combine all plans for deferrals, but that is if they have the same plan year as well.

interestingly enough the old plan has not been 'terminated' yet by amendment, simply everything transferred an no more contributions...

Got into an interesting conversation with a small business (4 employees) owner who currently has a small group plan. The small group plan has raised their premiums to the point where the state exchange policies are MUCH cheaper. So the owner will drop the group health plan for all employees and give them all a raise from which the employees can pay for the state exchange policy and the taxes on the increased compensation and still come out ahead. Sounds like a win-win. The employees have the same insurance coverage and a few more bucks to spend. The employer's expense is dramatically reduced.

One glitch: the insurance for the owner herself. Before the ACA the employer *could* have provided employer paid health insurance just for herself (of course, she didn't *want* to restrict coverage in that way, but she could have, unless it was self-insured, of course). Now, with the ACA $100/day penalty for providing what the law apparently refers to as discriminatory coverage, she is a bit concerned about what her options are.

Poking around on the internet I found a page or two referencing an announcement from the IRS that the penalties for providing discriminatory coverage will not be enforced until the IRS issues regulations in that area.

Have those regulations been published? Is there any chance that, if they haven't been published to date, they will be finalized in 2015 with a 1/1/2015 effective date, thereby ensnaring those that do so?

A $36,500 penalty is something that most small business owners would prefer to avoid, eh?

Assuming the penalty is off the table for 2015 and assuming all of the employees get individual coverage from the state, can the small business owner continue the coverage she has always enjoyed, have the company pay for it and have the company deduct the premiums?

For reasons I don't understand, the policies for everybody other than the owner are significantly less expensive through the exchange.

Thanks

mike

Talking to the attorney who preps our plan documents today and he's of a mind that any plan document fee including elective amendments and plan termination fees can be paid out of plan assets - I'm pretty sure I was at an ASPPA sponsored event where the speaker indicated that elective fees such as elective amendments and plan termination fees were considered settlor fees and therefore could not be paid out of plan assets - anyone care to chime in? Thanks

A new company has 20-30 office workers, and 700 or so "laborers" who are paid on an hourly basis and are "provided" to various other businesses for their use. The hourly employees are paid by the new company as W-2 wages.

The new company would like to establish a retirement plan for the office workers and exclude the hourly "laborers", as the owner feels that these employees would not want to take advantage of the plan. In addition, the owner does not want the expense of an audit that would come along with 700+ eligible employees.

Question is can these employees be specifically excluded? I am currently in the PPA restatement phase for current plans and see that the prototype document I am using allows an exclusion for "Employees that are paid on an hourly basis". If this is allowable, I might have to have a new conversation with our new company CFO...

Thanks for any replies.

Is the increase in the 401(a)(17) compensation limit considered to be a plan amendment increasing benefits as restricted by 436 for an underfunded DB plan and therefore cannot be used to calculate benefits, or is it only considered as such an amendment as applied to the 415 limit?

Trying to understand at what point a wrapped plan becomes a a 'group health plan' subject to hipaa privacy rules to the extent that the plan needs to adopt a formal privacy policy. If there is such a need to what extent do plan administrators develop such a policy and hand out notices (annually?) to employees?

Straight vanilla profit sharing plan - adoption agreement vesting section calls for "participant" to become fully vested upon death or total and permanent disability (no distinction for active or termed participants).

Participant left Company in 2009 and was 40% vested in the ER PS portion of his account at that time. Has not yet taken distribution. Participant passes away. Beneficiary is entitled to 40% portion or does participant account vest 100% now that he is deceased?

I have been asked to find out if there are companies that will be offering ACA compliance software in so far as completing the 1094,1095 forms, etc.

Does anyone if FT Williams is planning on coming out with anything?

Thank you.

So I am quite sure this probable isn't allowed but I'm not seeing it in the IRS individual 401k regulations themselves so I figured someone here would might know the answer. My plan documents (Vanguard) are also unclear on the issue.

As an s-corp owner, let's say I pay myself 50k in W2 wages. Out of that I am able to contribute $17.5k as an employee to my individual 401k and my company can also contribute 25% ($12.5k) as the employer portion. Now, I must have the company reimburse me for my health care premiums in order to be able to write them off so that also gets added to Box 1 (wages, tips, and other compensation) of my W2 on top of the 50k salary. It also gets added to line 7 (compensation of officers) of form 1120S. Therefore, as they are added as though they were wages, can I contribute 25% of that amount to my solo 401k as well? Let's say my health care premiums were $4000 for the year and therefore would increase my wages to $54,000. Can I then contribute $13,500 instead of $12,500 for the employer portion? Would the same also work for HSA contributions that were reimbursed in the same manner?

Thank you for your time!

Seminars?

Literature?

Books?

Thanks for any ideas.

Is there an exception to the recurring employer contribution rule when the plan is a 401(k) plan?

OK - so found my own answer - depends on plan design - whether or not employer contributions are allowed or not.

I have a question on gains with after-tax contributions to make sure that I understand this correctly. To keep things simple (especially for me!), let's use a situation where a person puts in a first time after tax contribution of $10,000 into their 401k, and makes $10,000 in earnings.

Let's also assume that this person starts the after tax contribution at age 55. Is it correct to say:

1) After making the contribution, if the person immediately executed a Roth conversion of the funds within the plan (provided the plan documents permit), are they NOW Roth funds with gains no longer to be taxed? (This would be assuming that the funds remain in the plan for 5 years and the individual is over the age of 59 1/2 before they take contributions)

2) Using this same example, assuming they kep the funds in the plan for 5 years and are over 59 1/2, can the individual rollover both the basis and gains to a Roth IRA? Is it then correct to say the individual could then take out distributions on basis and gains tax free?

I am getting confused with this, but I was believing that if the funds are converted to Roth and meet the Roth requirements (e.g, 5 years, 59 1/2), then contributions and gains will come out tax free. And, if it makes it easier for me to understand : ) I would be starting by: 1) making an after tax contribution, 2) converting to Roth immediately within the plan, and 3) wanting to take out distributions tax free (with the assumption that i have met the 5 year and 59 1/2 rules) And, for options, I could always rollover the funds to a Roth IRA and take distributions from the IRA, if I chose.

Thank you so much.

A husband has Family coverage HDHP through their employer. His wife waives coverage at her seperate employer, and receives a cash award per pay for waiving health coverage. The wife would like to take the cash award and contribute that amount to an HSA.

Would the HSA contribution be pretax, or should it be treated as a voluntary deduction, and they can claim that on their taxes?

-John