I am in the process of terminating a non-PBGC defined benefit plan in which the assets are less the present value of the accrued benefits.

Since the plan is not PBGC covered, I want to pay out benefits "to the extent funded"; that is, to have all participants share in the asset shortfall rather than having the owners waive/forego receipt of benefits.

Mike Preston has been telling us for years that this is acceptable in a non-PBGC plan but I have questions about the logistics:

Does the plan sponsor have to make some election/statement re this methodology?

What do I put on the participant benefit statements since participants are 100% vested in the full AB by formula but will only receive some % of that benefit (for sake of argument we can call it 90%)?

Anything else I need to consider?

FYI - client is not going to file for an IRS determination letter.

We don't have many clients where tips are an issue, so this hasn't come up.

So, plan defines comp as W-2. It does not exclude tips - which would likely be discriminatory anyway. The safe harbor match is an enhanced 100% up to 4%. It is calculated on a per payroll basis.

I'm fine with understanding that you can't defer on tips, (these aren't pooled tips) cause the employee has already received them. But the employees have to report their tips to the employer, who will then include them on the W-2 as taxable, etc., at the end of the year.

How does this mesh, in real life, with the safe harbor requirement? Is there a citation for not including the tip income in this situation when calculating the match?

It would seem like if the tip income is reported to the employer regularly, then a match would be based upon the total income, including tips, for that payroll?

Example - employee has a 10% deferral election. For a given paycheck, EMPLOYER compensation is $500, and there is $500 of tip income, for a total reportable amount of $1,000. So employee deferral for that payroll is ($500 x 10% = $50). Is the safe harbor match on that payroll ($500 x 4% = $20) or is it ($1,000 x 4% = $40?) I lean toward the $40 since I don't see a legitimate basis for excluding it, yet it seems like an absurd result.

For an employer Profit Sharing contribution, it seems like it would be based upon total compensation, so it would be based upon the $1,000 when it is eventually made - agree? Disagree?

We are having a "discussion" about the wording of the Normal Retirement age in a couple of new documents I have been asked to review. Do you think the following choices are the same or different - and why do you think that?

Choice #1: Attainment of Age 65 and 5 Years of Participation.

Choice #2: The participant's 65th birthday or the 1st day of the plan year containing the participant's 5th anniversary of joining the plan, if later.

Applicability dates. The multiple-employer plan reporting requirements under the CSEC Act apply to plan years beginning after December 31, 2013, which created an immediate need for changes to the Form 5500 and Form 5500-SF. Accordingly, the CSEC Act form changes in this document will be applicable beginning with the 2014 Form 5500 Annual Returns/Reports filed for plan years beginning after December 31, 2013.



the Annual Return/Report filed for a multiple-employer plan must include an attachment that identifies the participating employers in the plan by name and employer identification number (EIN) and includes for each participating employer an estimate of the percentage of the contributions made by each employer (including employer and participant contributions) relative to the total contributions made by all participating employers during the plan year. This attachment, entitled “Multiple-Employer Plan Participating Employer Information,” supplements and does not replace other Form 5500 filing requirements that apply to multiple-employer plans.

the complete article is found here

http://www.businessofbenefits.com/wp-content/uploads/sites/83/2014/11/Interim-Final-Rule.pdf\


ha ha ha - in the instructions is the following comment: (they always list the number of hours they estimate to complete the filing, so they say...


Based on data from the 2012 Form 5500 filings (the latest year for which complete data
are available), the Department estimates that 5,527 multiple-employer plans are subject to the requirements of the CSEC Act amendment (280 defined benefit plan, 4,739 defined contribution plans, and 508 welfare plans). The Department assumes that plan administrators will comply with the new requirements; therefore, the entire burden is hour burden.

ha - sound more to me like the entire burden is 'our' burden.

Which States have a State income tax treatment for Roth 403(b) amounts that differs from the Federal income tax treatment?

Which States have a State income tax treatment for Roth 401(k) amounts that differs from the Federal income tax treatment?

For an incorporated self-employed over 50 individual with no employees, am I correct that in terms of maximum deduction :

(1) 6% of Comp into the SEP + the full DB maximum

or (2) 6% PS , 23K ( deferrals + catch-up) , & the full DB max.

and of course limited by the 415 rules , e.g. part < 10 years , $limit, etc.

Here is the situation:

An employee met the 6 month eligibility requirement and entered the safe harbor 401(k) on 6/1/13.

He terminated employment on 3/31/14 and rolled his balance out of the Plan to an IRA.

He will be re-hired on 11/14/14.

Will he need to meet eligibility requirements again to defer or since he already did and it's less than one year, can he start deferring upon hire date?

Thank you.

Just wondering if anyone has used a spreadsheet to work out the Min. Funding Contribution for a Sole-Prop with a DB plan ?

I recall trying to do it years ago & as I recall it required a lot of trial and error - just wondering if anyone has tried it and, if so, how they went about it in general ?

I had a solo plan (at first Keough and later on 401k) that ws started in 1981. Only filing was a 5500-R in 1985. Having a hard time finding out what the requirements were at that time. IRS has old forms but not old instructions. Even Google Books only goes back to 1987, although the description says it goes back to 1985, it lies.

Plan was terminated in 1997, so I am planning on filing a 5500-EZ final for that year under the current no-penalty late-filer program for solos, which will be open until June 2015.

Was the 5500-R all I needed at that time? Assets in plan were always small, well under $100,000 in 1990, but I don't know what the cutoff was prior to 1990.

Would be happy to read the instructions myself, but where to find them?

ABC Co. and DEF Co. constitute a controlled group. ABC sponsors a safe harbor 401(k) plan covering its employees. DEF sponsors a traditional 401(k) plan covering its employees who are not HCEs (i.e., HCEs are excluded from active participation in the DEF plan).

Since DEF's plan is deemed to satisfy 410(b) (by excluding all HCEs from active participation), so long as ABC's plan satisfies 410(b), all is good, right?

Thanks for any comments/thoughts!

Thanks

With prior year testing am I permitted to carve out NHCE's who do not meet statutory eligibility - I'm thinking that I don't but wanted to see what other think... Thanks

The payroll system we use is a monster Payroll accidently sent a 401(k) negative contribution for someone that has never even been a participant in the plan. In our group we consider that an invalid record and it is deleted from the 401(k) records. However, I am considered about a negative showing up on their W2. If they were to send a positive amount to correct it for that person, then that person would have funds sent over to the 401(k) plan. Anhyone ever seen this before?

If an employee initially elected to pay a loan over five years from their 401(k), goes on LTD (considered active under our plans) but did not pay anything for his loans during that time, would he owe everything from while he was out or could the length of the loan be extended for the period while on leave? Yikes (Also notice the employee didnt pay premiums on LTD for medical either, guessing the employee has to pay all that as well.......was out a long long time).

I understand that only income for partners of certain type of entities is eligible compensation for 401(k) purposes.

Can someone tell me if I can use the K-1 earned income for the partners in a S Corp, C Corp, or LLC?

Any guidance is greatly appreciated

Alex.

Dental practice with two dentist partnership and 401(k) safe harbor profit sharing plan. One dentist retires as of 09/30/2014 & receives a buyout from the practice. Plan will be terminating; I believe as of 12/31/2014. Younger Doc has renamed the practice effective 10/01/2014. Some staff members do make 401(k) contributions. Do those have to stop because the original partnership has ceased to exist? The staff people have remained on the same payroll with an entity name change.

I have a client who has a combined PS/DB plan. There are terminated participants who are getting a Gateway contribution. The client wants to pre-pay the Gateway contribution on the PS side using the forfeiture account every time someone terminates vs. waiting until the end of the plan year. Is this allowable? So for instance, someone terminates on 4/11/15. He wants to give them their 5% and then process their termination. Thank you-

Plan has a last day requirement to receive the employer allocation. They are going to experience a lay off. They want to remove the last day provision for those impacted by the lay off. Is this possible? Any testing concerns.

I have a sole proprietor profit sharing plan, with the husband and wife as the only participants. Accordingly, the plan is not subject to ERISA and it qualifies to file From 5500 SF

The following year the wife dies and leaves her plan benefit to her three children.

The plan now still has only a single participant but it is also paying out the wife's benefits to the children over five years.

This type of situation must be very common, obviously because sooner or later the proprietor may die and only beneficiaries will be left in the plan. Also, almost every plan participant designates a beneficiary for their benefit during their life time, and some day the plan will likely provide a benefit to that beneficiary.

Page 7 of the instructions to From 5500 SF provides one of the requirements to file the form is: " 2) The plan does not provide benefits for anyone except you, or your and your spouse..."

My question is: In a sole proprietor plan, where the owner as the only participant, and the plan is also paying out benefits to a nonparticipant beneficiary, is the plan still not subject to ERISA and can it continue to file Form 5500 SF?

It seems to me, that by the participant simply designating a beneficiary during her life time, the plan is providing a benefit to the beneficiary . However, I would not expect this designation during the participant's life time to preclude the filing of Form 5500 SF. So, if the participant dies and is replaced by three beneficiaries who had for a number of years already been entered in the plan, but now will actually receive benefits, the plan should be able to continue to file Form 5500 SF because beneficiaries are not participants.

What do you think? Does anyone have an authority for this issue?