I'm trying to assist an alternate payee on a QDRO who had distribution check made out to her current employer plan and now needs the money and wants the check reissued to her. She wants to avoid the 10% penalty and can't roll it in and out of her employer retirement plan without incurring the penalty. Fidelity refuses to reissue her check stating that the distribution has already been reported to the IRS. I think that's a bunch of BS. Fidelity hasn't issued 1099Rs yet so participants should have the ability to change their mind on a distribution, don't you think?

I'm trying to lodge a complaint with the IRS but don't have any good contacts there or phone numbers and have been sitting on hold for 20 minutes.

Any suggestions?

Advisor says I will open an individual brokerage account for those participants who have at least $500,000 if they choose to do so. What are the implications of including accounts outside of the plan in that determination? So let's say the Participant has $100,000 in the plan and $450,000 in an IRA? the total relationship exceeds $500,000. The criteria was established by a party independent of the Plan so it shouldn't be discriminatory.

It doesn't seem at all like the self dealing issues where the financial institution throws in free banking services for the sponsor.

The brokerage account would hold only stocks, bonds and mutual funds, so I think it is ok to assume that the participants (who can invest in all of these things through mutual funds) have substantially the same opportunities.

We are working on a "spin-out" of assets from a multiemployer defined contribution plan. The assets from certain union members' accounts will be transfered to a new multiemployer defined contribution plan.

The existing plan is in the process of adopting a trust agreement amendment authorizing the transfer, but they are insisting on sending the amendment to the IRS for approval prior to actually sending the assets to the new plan.

Has anyone ever heard of sumitting such an amendment to the IRS for approval? Will the IRS approve such an amendment? Is there a process for seeking IRS approval for a trust agreement amendment?

Any help would be appreciated.

A Plan Sponsor is starting a new Plan effective 1/1/2015, but does not want to start the EACA Auto enrollment feature in the Plan until 3/1/2015.

Does this affect if refunds could be processed for participants who are automatically enrolled after 3/1/2015 and want their money back within the 90 day window?

Plan allows for 1 year, age 21 with dual entry dates 1/1 and 7/1.

Client has had a July 31 C-corporation and a July 31 401(k) year end for many years. They switched to an S-corporation with a December 31 year as of December 31, 2013. We just heard about this for the first time now.

We are trying to determine what to do now that the plan year runs 8/1/13 - 7/31/14 but the tax year is now 1/1/14 - 12/31/14.

We are thinking about the following sequence:

1. Base the profit sharing contribution and allocation on salary from 8/1/13-7/31/14 and take the deduction on the 1/1/14-12/31/14 S-corp tax return as long as it does not exceed 25% of eligible plan salary for the period 1/1/14-12/31/14.

2. Next Amend the plan to have a December year end. This would then create a short year from 8/1/14 - 12/31/14. They would again make a profit sharing contribution for the short year and deduct it on the 1/1/14-12/31/14 S-corp tax return as long as both the contribution in #1 above and the contribution for the short year do not exceed 25% of eligible plan salary for the tax year 1/1/14-12/31/14.

Does anyone agree or disagree with this?

Thanks

Ex-client sponsors a 401(k) that is now being TPA'd by one of the payroll companies, and the broker wants our input on the issue of starting a new plan:

" A Qualified Retirement Plan may not be established until 12 months after all the assets have been distributed from the current plan."

As far as we know, the 12 months refers to the timing the IRS gives to liquidate the plan assets in order to qualify as a valid termination; but nothing about establishing a new plan during the time thst another plan exists.

Souns to me to be a lame reason for the TPA scare the client into keeping the plan, or possibly this is a part of the Serving Agreement that TPA is reminding client that he signed upon takeover.

Any validity, or is TPA attempting to keep the case??

Employer has a perfectly 409A-compliant phantom stock agreement with an Employee that provides for payment at Separation from Service or Change in Control, whichever occurs first. Employee now wants to receive some sort of interim payment, and Employer is willing to pay it, but only if it would serve as an offset to any future payment at Separation from Service or Change in Control. If this is done clearly it is an impermissible acceleration and not only is the interim payment subject to the additional 20% tax but the entire agreement blows up and is subject to the additional adverse tax consequences under 409A on vested amounts under the agreement.

Can we handle it differently?

1. Terminate the existing agreement and pay the Employee $X.

2. Simultaneously, and as part of the negotiated package, the Employer and Employee enter into a new and identical agreement that by its terms is 409A-compliant, but the amount payable at Separation from Service of Change in Control under the new Agreement is reduced by the amount paid per #1 above.

3. It is aknowledged that the payment of $X is an impermissible termination/acceleration and the $X will be subject to the additional 20% tax. But, is the new agreement also in violation of 409A from the get-go because of the substitution principle?

Plan is failing ADP test. One participant has 27,096 in deferrals.

6,616 is from 10/1/2013 to 12/31/2013 - he deferred a total of 23,000 for 2013.

20,480 is from 1/1/2014 to 9/30/2014

Can I use 8,480 as the catch up for the 9/30/2014 test? 5,500 from 2013 plus 2,980 for 2014?

Company A was a partnership (2 partners, Employee A and Employee B in 2014) which sponsors a SEP. Midway through 2014 the partnership dissolves. Employee B has started a new company, Company B, (100% ownership) after the dissolution of Company A.

Can Company B adopt a 401(k) Plan for 2014? If so, does the contribution made under Company A's SEP have any effect on what Employee B can receive under the new 401k plan?

Employer is comprised of two entities (A and B) in same controlled group. Both are contributing employers. Only entity A will be sold in a 4204 asset sale. When calculating the bond, should it be based on entire controlled group contributions to the plan or only the entity being sold?

It seems that since employer throughout Title IV includes 414 controlled group members, the entire controlled group contributions should be included.

Any guidance/thoughts on this would be welcome.

Thank you.

A nonqualified plan allows participants to elect to receive payment (1) at termination, or (2) at the later of termination or a specified date.

If (2) is elected, and the participant later wants to change the specified date, what is your view as to the date payment may be made under the subsequent deferral rules of 409A? Five years after the later of termination or the originally-specified date? Or the later of termination or 5 years after the specified date?

Would your answer change if the participant wanted to change the form of payment rather than simply change the specified date, given that a change to the form of payment would affect both what is payable at termination and what is payable at the specified date, regardless of which occurs last? Thoughts?

I have a plan that has defined imposed limits on elective deferrals. There are HCEs that went over the limit (and already used their catchup).

Question - would the amount over the plan imposed limit be included in the ADP test for the HCEs? For NHCEs it definitely would not be but for HCEs, it's unclear. I could only find reference to amounts over the 401(a)(30) limit being included in the test for HCEs.

Thanks!

DB illiterate here - so be kind!

If a fully-funded DB plan is terminating and uses a group annuity contract as a terminal funding vehicle, does the distribution of those assets into said vehicle then allow for plan termination? In other words, do those assets being held in the GA still constitute plan assets, thus a continuation of the plan? Who would be responsible for instigating payouts as participants separate from service - the (former) plan administrator? The GA vendor? The participant?

Any cites you may have on this would be appreciated!

Does anyone know who would need to file the 5500-SUP? Ascensus had something in today's BL email. Is it only for special circumstances? Why would it not be incorporated into the existing 5500?

http://www.irs.gov/pub/irs-dft/f5500sup--dft.pdf

Doctor client with 3 employees - fiscal year 5/1/13 to 4/30/14

In past had to file a 5500 instead of SF as multiple assets in real estate

The plan is terminated, employees paid out during the year. The doctors account balance has not been paid out in full so.... Beginning of year 4 participants and end of year 1 participant, doctor only.

Can I file an EZ (apparently cannot file 5500 with 1 participant, and cannot file SF due to assets in market value not readily available (ie real eastate)?

I have a profit sharing plan that terminated and paid a participant a lump sum, without allowing him to elect to roll over his account to an IRA. This would seem to be a very common issue, where a plan loses its tax qualified status and the participant's benefits are no longer tax deferred, but taxed immediately. Obviously the whole point of society spending trillions of dollars on qualified retirement plans is to defer taxes on the income. When that benefit is lost, the participant suffers substantial damages.

My question is: Is there any authority as to how the claim for damages would be calculated? Since the amount of damages is not fixed because the benefits will still be subject to tax at some later time, what variables and estimates are used to calculate the monetary damages resulting from immediate taxation of benefits, rather than deferral? Can someone provide an authority of this issue?

I have a corporation with a qualified profit sharing plan. The corporation is being liquidate by the sole shareholder, who will there after engage in business as a sole proprietor.

The corporate profit sharing plan's only asset is a deceased participant's benefit account of approximately $500,000, that is being paid out to his three beneficiaries (one of which is the sole shareholder) over the next 10 years.

My question is: Can the sole proprietor sponsor and adopt the corporate plan and continue it as a qualified plan and continue to pay out the account to the beneficiaries?

http://benefitslink.com/pr/detail.php?id=49237#.VE6HrU10yUk

Attaboy Dave!

And that picture is very recent.

My understanding has been that the plan termination resolution and plan termination amendment must be signed before (or same day of) the NOIT is distributed (60-90 days prior to plan's termination date).

Someone had mentioned to me the other day they thought that as long as the NOIT was distributed timely that the resolution and amendment could be signed all the way up until the plan's termination date.

I called the PBGC to ask them this and they said it was the first time they had ever been asked this question, but their opinion was it made sense for the resolution and amendment to be signed before (or day of) the NOIT was distributed.

Any thoughts or has anyone seen the various deadlines spelled out somewhere official? The standard termination instructions don't seem to specify.