I have seen a number of slides of talks on plan terminations and pension briefs that address the location of missing participants. Each one contains language such as:

"Use Free Electronic Search Tools. A fiduciary must make reasonable use of Internet search tools that do not charge a fee to search for a missing participant. Such online services include Internet search engines, public record databases (such as those for licenses, mortgages and real estate taxes), obituaries and social media."

Not one -- and I mean not one -- ever gives any examples, websites, etc. They either hold this information to themselves as top-secret information they will gladly sell you, or they don't know of any -- they simply believe there's got to be some!

The IRS recently released the draft 2015 instructions for 1099-R and 5498. There are some oddities in the instructions for reporting on the alternative or non-publicly traded assets.

For Form 1099-R:

-The draft instructions state distribution code K can be combined with codes 1,2,4,7,8,G. None of the Roth codes are listed. The instructions state the reporting is for "IRAs". Based on these 2 notes, are we to assume the code K should be used for account types IRA, SEP and SIMPLE IRAs, but not for Roth IRAs or qualified plans?

-Code 8 was added to the draft, but not code P. In no other combination do I see the 8 without the P. Do we think that is intentional or an oversight?

-In my view, distribution code K should be used in conjunction with another code, it is not intended to be used alone, do others agree?

For Form 5498:

-What are the rules for reporting Form 5498 if box 15 a/b is populated for an IRA with FMV only (no contributions)? Must a 5498 be mailed in this case? I assumed yes, until I reviewed the draft instructions, which suggest only the IRS must received the 5498 and we can continue to use the alternative method for reporting FMVs to participants. Do you agree?

-How are other firms planning to handle the FMV reporting for alternative assets? Will you update your statement or January FMV mailing? Will you mail 5498s for these recipients? What is the impact to your firm?

I am interested in how others in the industry view these changes.

Hi All,

If anyone happens to have a moment to spare, I would really appreciate it if you could help fill out my survey for my MSc research project!

http://kwiksurveys.com/s.asp?sid=w04fu2isabdr4uz408422

Please help if you are employed and have worked overtime, and if possible please help share with anyone you know that works overtime!

Thanks so much!

Plan A has 53 HCE and 173 NHCE , they have EE Deferrals and ER Discretionary in the plan

Plan B has 0 HCE and 54 NHCE, they have EE Deferrals and ER matching

Can I test these plans together since they have different ER sources? (ratio pct?) What test would I have to run? Average Benefits?

And i've seen the 410b run two different ways by different people. For the 401K ratio pct would it be for plan b 54/227 or 23.78% for the non-highly compensated? or 227/227 = 100% since both plans have 401(k). (i'm ignoring the HCE for now)

I've been going round and round on this, just looking for someone's else's thoughts.

thanks

Employee has been fired mid July. Company is paying insurance premium through the end of August, and then the employee has the option of continuing coverage through a COBRA election.

Employees' spouse has insurance coverage, and since they have now incurred a Change in Family Status, the spouse was going to see if it would be less expensive to add spouse to her insurance policy instead of using COBRA to keep his policy.

Now the end of August is here, all questions have not been answered, and the employee would like to use COBRA until the end of September and then go on spouse's policy.

Is there a time limit to the Change in Family Status? If COBRA is chosen to begin 9/1, will that stop him from enrolling in spouses policy as of 10/1, so that they would have to then wait to add him until the next open enrollment period in December?

Thank you!

If a plan is going through a VCP filing, can the filing and/or legal expenses be paid from the Erisa Budget?
I'm having a hard time determining if this is considered a settlor's expense or not.

Not sure this is appropriate here, but I have to start somewhere to gain some knowledge quickly. Hope not breaking any customs of this forum, I have searched it by keywords and not found anything I understand.

How can I convince a judge in a Connecticut court settlement proposal for a Pre Trial Conference that my wife should have to compensate me something for a $30,000 lifetime annuity upon my death as a result of my choosing this optional retirement payout?

I retired in April 2009 and selected a retirement option which reduced my retirement income by ~ 10%, $5000 per year less than I would have gotten without this annuity option. I was 60 she was 54 at the time, the annuity is irrevocable.

The retirement pension is from the Massachusetts Teachers Retirement System and my lawyer, says that when he spoke to the judge in Connecticut where I now live and being divorced, during a session I was not able to be present for, the judge stated she did not know how to determine its value, or even if it had any value at all. Essentially saying that I gave her, my wife, a gift and I had to be crazy to have done it!

Having had a heart attack scare heart just prior to my retirement, I thought it was the right thing to do. My wife, and my daughter-(who would be going to college in 3 more years) would not have to worry if my income was lost for the family.

My attorney was proposing that I should be compensated the $5k per year, or anything for that matter, since it is she that wants the family broken up and me out. (FYI-Wife was inseminated, not married or in any relationship, because she wanted a child and insurance would pay for it. I married into the family when her daughter was 10 years old, and she was, and still is, ecstatic that she now has a dad. She actually has told me over and over again how she stopped having nightmares when I came into her life! How cool is that fellow dads!!!)

It would be great to get some kind of compensation for this now that my daughter is now a Junior and tuition is all covered for her senior year as well. Bitter sweet it would be to spend more on my daughter with this compensation from the annuity that is irrevocable.

Questions:

1- Does this annuity have any value today?

2- Does the fact that it is a State pension plan, with two different ages and death projections actually make this a problem?

3- How can I get a value, if there is any, and present it in a form a court would consider seriously?

4- The killer is that I only have a week or so to have this accomplished. (trial is Sept 9^th)

Hey folks, thanks for even reading this. Maybe someone else has already been down this road and may share that with others on this forum.

Hi,

I searched the net and this forum and couldn't find answers, so I'm posting here.

I realize this is a very long post. Any comments are very much appreciated.

Client, a physician under age 50, is a W-2 employee of a hospital and will contribute $17,500 to his 403(b) there in 2014. Assume he receives $2,500 of employer match, for a total of $20,000 in additions to the 403(b). This W-2 employment is ending ~ November 2014 and is being immediately replaced by new W-2 employment that offers a 401(k) plan with $4,500 match, assuming client makes max contribution which he will. Technically, the new employer’s match is discretionary, but it is reasonable to expect the full match each year. Client will not contribute to new 401(k) in 2014 because he will have maxed his 403(b).

Client also expects $45K of independent contractor income from moonlighting at another hospital (net of expenses) in 2014. He has received some of that income paid to him directly, and will receive the remainder in an LLC he just created. For simplicity, let's say he has $45K "net earnings from self-employment income." The hospital at which he moonlights is not affiliated with the hospital at which he is a W-2 employee. He has no employees in his independent contractor work. Client expects $70K net earnings from SE income in 2015 and beyond, all paid to his LLC.

Issue 1

I am trying to determine which retirement plan is best for his self-employment income. Options I see are SIMPLE IRA, SEP IRA, and solo 401(k). Analysis is below with questions in bold red. I would welcome comments.

Summary:

2014

SIMPLE SEP Solo 401(k)

Client Pre-Tax Contributions $30,350 $26,500 $26,500

Match from W-2 Employer $2,500 $2,500 $2,500

Total $33,350 $29,000 $29,000

2015 and Beyond

SIMPLE SEP Solo 401(k)

Client Pre-Tax Contributions $31,600 $31,500 $31,500

Match from W-2 Employer $4,500 $4,500 $4,500

Total $36,100 $36,000 $36,000

Note: “Client Pre-Tax Contributions” includes W-2 401(k) employee deferrals, SIMPLE/Solo 401(k) employee deferrals, and SIMPLE/SEP/Solo 401(k) employer contributions. It’s the sum of all the dollars the client avoids income tax on.

1. SIMPLE IRA. Can client do $12K employee deferrals even though he has maxed his W-2 403(b) in 2014 / would max his W-2 401(k) in 2015 and beyond? If yes, then:

a. For 2014, max employee deferral is $12K, plus an employer contribution of 3% x $45K = $1,350. Total $13,350. Plus $17,500 to W-2 403(b) = $30,850 total pre-tax contributions by client. Plus $2,500 assumed 403(b) match = $33,350 total retirement additions.

b. For 2015 and beyond, assume employee max still $12K, plus an employer contribution of 3% x $70K = $2,100. Total $14,100. Plus $17,500 to W-2 401(k) = $31,600 total pre-tax contributions by client. Plus $4,500 401(k) match = $36,100 total retirement additions.

2. SEP IRA. No employee deferrals. Max employer contribution is 20% of net earnings from self-employment income. Can client max this employer contribution even though he has maxed his W-2 403(b) in 2014 / would max his W-2 401(k) in 2015 and beyond? If yes, then:

a. For 2014, 20% x $45K = $9K. Plus $17,500 to W-2 403(b) = $26,500 total pre-tax contributions by client. Plus $2,500 assumed 403(b) match = $29K total retirement additions.

b. For 2015 and beyond, 20% x $70K = $14K. Plus $17,500 to W-2 401(k) = $31,500 total pre-tax contributions by client. Plus $4,500 401(k) match = $36K total retirement additions.

3. Solo 401(k).

a. For 2014, no employee deferral because client has maxed 403(b) at W-2 employer. Max employer contribution is 20% of net earnings from self-employment income. Same question as above: Can client max this employer contribution even though he has maxed his W-2 403(b) in 2014 / would max his W-2 401(k) in 2015 and beyond? If yes, then 20% x $45K = $9K. Plus $17,500 to W-2 403(b) = $26,500 total pre-tax contributions by client. Plus $2,500 assumed 403(b) match = $29K total retirement additions.

b. For 2015:

i. Client should max his W-2 401(k) to capture the $4,500 match. Then I doubt a solo 401(k) would make sense because he couldn’t make employee deferrals if maxing W-2 401(k), and a solo 401(k) carries administration and expense that a SIMPLE or SEP doesn’t.

ii. Just to work through the scenarios though:

1. If he can still make the max employer contribution to a solo 401(k) when he is maxing a W-2 401(k), then 20% x $70K = $14K. Plus $17,500 to W-2 401(k) = $31,500 total pre-tax contributions by client. Plus $4,500 401(k) match = $36K total retirement additions.

2. If client makes employee deferrals to a solo 401(k) instead of his W-2 401(k) – which wouldn’t make sense due to the W-2 401(k) match, but just to work through this - then assume employee max still $17,500, plus employer contribution of 20% x $70K = $14K. (I believe you can do 20% x $70K, not 20% of [$70K - $17,500 employee deferral], but tell me if I’m off base.) Total $31,500 pre-tax contributions by client, and $31,500 total retirement additions (no W-2 employer match).

Issue 2

In 2014, he will receive some SE income paid directly to him, and some paid directly to his LLC. Say it is $22,500 each, total $45K. Will he create only one plan (SIMPLE, SEP, solo K) and use $45K net SE earnings to determine his contribution? And, will he report the entire $45K on one Schedule C? I am guessing the answer to both questions is Yes, because for federal tax purposes, single-member LLCs are disregarded (they are created under state law, not federal).

Again, thank you very, very much for your time!

VS Defined benefit plan requires 1,000 hrs for a year of credited service.

Several employees terminated employment with less than 1,000 (but more than 500) hrs in 2013 and the actuary did not include them in any of the required tests.

Since they are not members of a statutory excludable class, shouldn't they be included as non benefiting participants?

Thanks for your help .

All:

Participant previously maintained a segregated account in employer's PSP and retired in 2007 at which time distribution of account taken. Participant died earlier in 2014 and Plan has received a check for life insurance proceeds on life of former participant. Prior third party administrator says it has no records from 2007. Employer has scant records as well. Do have statements from participant's segregated account in PSP where premiums were paid on policy. Current third party administrator is saying it will pay out proceeds to former participant's beneficiary named on PSP beneficiary designation if it can be shown with objective facts that life insurance proceeds belong to deceased participant/deceased participant's named beneficiary and not to PSP. Trying to determine places from which can glean information to back up how insurance may have been handled/mishandled at time former participant took distribution of account. Would obtaining copy of Form 5500 help? Considering obtaining participant's income tax return for year in question to see what was reported. Considering leaning on prior third party administrator as well for whatever records they might have "in storage". Insurance policy appears to have been left out altogether at time of distribution as insurance company never received any change of ownership/change of beneficiary form. Again, looking for ways to objectively show how policy was handled/not handled at time of distribution. Any help/advice appreciated.

We are terminating a defined benefit plan which has been submitted to the PBGC and the the 60 day period has expired. We are not submitting plan to IRS. Client has determined that cost of providing annuities is too expensive and now wants to amend the plan to allow lump sums elections. Pursuant to PBGC instructions, as long as we are not taking anything away, a post termination amendment is ok. However, my understanding is that the IRS has taken the position that once the termination date is past, the plan cannot be amended other than to implement required interim amendments. Can anyone comment on whether or not this is the case and possibly provide a citation?

What options, if any, are there for a terminated defined benefit plan where I've got one participant left and she is not returning her distribution forms? On the DC side, we're forcing her to an automatic rollover account (pursuant to a bunch of notices), but I don't think that's an option on the DB side, is it? Her lump sum benefit is $6,000 (of course it is). Thanks.

Not sure where the right place to post this question is, so I figured I would start here.

Have a client that's looking for a new investment platform for their 401k plan. One of the trustees made it very clear that they want the platform to be able to handle an in plan Roth conversion. I'm finding that some platforms can handle this under the old rules where there had to be a distributable event, but are not quite capable of handling the new rules, where there's no distributable event required.

Anyone have any experience an investment platform that is set up to do this right?

The issue is that they have to be able to set up money type that is Roth that still maintains the same distribution restriction as the pre-conversion money type. So for example, if converting traditional 401k money to Roth 401k money, they still need to maintain the age 59 1/2 restriction. Under old rules, all the money was distributable anyway, so it could just be put in a Roth Rollover money type.

I have a defined benefit plan client that is an S Corp that includes only two owners (51%/49%). Can they file a 5500-SF One Participant?

Thanks!

I have a client that deposits their 3% safe harbor on each payroll each year, but there is a true-up at the end of the year. In 2013 (a calendar year plan), there were 2 issues:

1. They over-deposited on the safe harbor by $5,000 for a key employee (Employee #1) because they did not stop at the $255,000 compensation limit.

2. They re-hired an employee (Employee #2) and did not realize she was eligible for the plan again, so they did not deposit any safe harbor money for her.

They also made a profit sharing contribution for 2013, which was deposited in February 2014. The profit sharing contribution for Employee #1 was $7,000, so the client only deposited $2,000, and wants to transfer the $5,000 that went into the safe harbor bucket to the profit sharing bucket.

The custodian is arguing that there should be lost earnings on the profit sharing for all of the other employees since the Employee #1 got $5,000 of his deposited early, and that Employee #2 should receive lost earnings since her contribution was not deposited at the same time.

Both of these were mistakes by the employer, and the final contribution in both instances was made timely. Additionally, the document says that "Unless otherwise provided by contract or law, the Employer may make its contribution to the Plan for a particular Plan Year at such time as the Employer, in its sole discretion, determines."

I don't believe that any lost earnings should be made based on the language in the document, but I can't find any support one way or the other. Does anyone have sort of support one way or the other?

Thanks

This is a calendar year plan. For ADP/ACP testing can a plan use participation wages even though the plan document uses full year wages for everything. I know we can use different types of compensation for non disc but was not sure if this would be an option to use participation veres full year.

I have a client for whom we do limited scope 401k audit. Last year they closed the plan in Oct 2013 and moved to ADP total source (PEO service). They moved all the participants investments to the ADP total source (my client now lease their employees from ADP who performs 401k audits on the plan too).

My question is will i have to present the financials on Liquidation Basis of Accounting? What other disclosures would be required for the audit?

Thanks

Plan elects to use the top paid group to define HCEs. I am starting with 27 employees. I am rounding down to determine that we would count 5 employees in the top paid group.

Comp in descending order from look back year:

EE 1 $600,000 (also a more than 5% owner)

EE 2 $500,000 (also a more than 5% owner)

EE 3 $452,000 (also a more than 5% owner)

EE 4 $400,000 (not an owner)

EE 5 $350,000 (not an owner)

EE 26 $24,700 (more than 5% owner)

Many many HCEs do I have?

We are having a disagreement in our office. I think 6 (emloyees 1 thru 5) plus ee 26 since more than 5% owner. Collegue says 5 , including the lower paid more than 5% owner.

Are we confusing 5 in the top paid group with 5 HCEs?

Thank you!

If a health care provider (physician practice, hospital, etc.) agrees by contract to be a participating provider in a third party administrator's network, is the third party administrator a business associate of the provider thus requiring a business associate agreement between the provider and the TPA?

Can someone point me to the regulations which provides that there is a new five year holding period for each new conversion if the participant is under 59 1/2. However, if the participant is over 59 1/2 the initial conversion date to begin the holding period will be used for each new conversion. Please note that this question is regarding In-Plan Roth Rollovers.