Is it possible to have a tiered Safe Harbor Non-Elective Contribution based upon years of service. Client is proposing a 3% SHNEC for all employees, which would increase to 5% after 5 years of service. If the additional 2% was a Discretionary contribution after 5 years of service (a possible group allocation) what additional tested would be needed?

US citizen moving to UK. Will keep US citizenship. Will have Sch C type income in UK, subject to US income tax.

Can she have a qualified plan in the US for that income?

I'm a TPA with a one participant DB plan. The participant is the plan sponsor, trustee, and participant.

He is asking me if he could take part of his plan assets and purchase a property he owns as an individual.

On it's face it sounds like a prohibited transaction.

Can this be done?

We have a new client that currently has an owner only plan with a large vendor. He is the only participant. He uses the vendor's document. He is getting ready to hire an employee, so he retained us as his TPA. My initial thought is that I would restate the current plan onto our prototype. However, the vendor is taking the position that he has a brand new plan, and they are setting up a new account. I told the client that he should move money from the existing account into the new account and we will continue on with the same plan. But now I am second guessing myself. Can a plan transition from being a nonERISA owner only plan to an ERISA plan and be the same plan?

Just wondering about a couple aspects of this bill:

1. Apparently, plan sponsors and their actuaries are going to have to consider what to do about 2013 plan years. It will be possible to defer recognition to 2014 and let the existing 2013 valuations stand or (especially if there are good reasons) revise the 2013 valuation once all of the various rates etc. have been promulgated. Such revisions could possibly eliminate anticipated funding deficiencies or retroactively negate missed quarterly contributions, although the percentage impact on 2013 Funding Targets is fairly small. Many plans will not derive a sufficient benefit from HR 5021 for the 2013 plan year (especially if the minimum required contribution as originally calculated has been met) to make revising the 2013 valuation worth while.

2. Apparently, any valuations already issued for 2014 will have to be revised. One can only presume now that the IRS will find a way to keep that from causing any qualification issues (i.e., plans that have been operating as limited under Section 436 of the code will be able to stop operating as limited, with no consequences for having administered the plan by not permitting full lump sums). It was a bit easier when MAP-21 was enacted in mid-2012 because the sponsor could avoid some awkwardness by electing to defer recognition of MAP-21 for funding and/or benefit limitations to 2013. This law does not seem to permit any such flexibility for the current plan year (whether intentionally or not).

3. The law appears to provide that the newly increased discount rates cannot be used to permit plans sponsored by companies in bankruptcy to pay accelerated benefits (that is, the certification of an AFTAP of 100% or more for that purpose cannot take the boosted segment rates under HR 5021 into account), although it appears that the HR 5021 rates can be used for that purpose during the 2014 plan year. Do people agree? Is it agreed that the MAP-21 rates can continue to be used to exempt plans sponsored by companies in bankruptcy from the limitations even after the 2014 plan year?

4. Contributions for many 2013 plan years will have to have been paid as early as mid-September, and 5500s, even with extensions, will have to be filed as early as mid-October. Do you think the IRS will issue sufficient guidance in time or should people be handling HR 5021 on a reasonable basis and hoping for the best?

What do people think about these things?

FACTS: ESOP plan effective 01/01/2012, Cycle D (submission period ending 01/31/2015). This plan is not a "true" ESOP. It has no loans and no shares contributed. The Employer made a cash contribution in 2012 with the intention of buying stock, but never ended up doing so. The only accounts in the plan are cash accounts (profit sharing). The Employer was talked into this plan by their prior TPA and has since terminated their services and has hired us to takeover and terminate this ESOP. In addition, the client has a 401k plan that is effective 11/01/1984 that we are also taking over and this plan will be continuing. The Employer wishes to terminate the ESOP effective 08/01/2014.

Concern: I'm concerned that the ESOP document is not updated according to the current cumulative list (2013) since the plan is effective 01/01/2012 (adopted in December 2012). In addition, I do not believe the plan was submitted for Determination Letter off-cycle (new plan exemption). So no DL has ever been issued. My concern is what if the plan were to be audited?

Question: Rather than restating to another ESOP document for Cycle D, can we restate the plan to a "profit sharing" plan on a pre-approved PPA Document effective 01/01/2014 and then terminate the plan effective 08/14/2014?

Or should I not worry about restating the plan and just do a board resolution to terminate it and be done with it?

Any suggestions or thoughts are appreciated. We do not provide document services for ESOP so I am way out of comfort zone here.

Thank you!

Is an Early Retirement Date a protected benefit or can it be deleted without any concern?

Does it matter if the ERD is effectively "meaningless" in that it requires 6 years of service (full vesting) and doesn't provide any distribution option not otherwise avaialble in the absence of the ERD?

What date should be used as effective date of PPA restatements?

Plan allows participants to take a hardship and the participant's deferrals are suspended for 6 months.

At the end of the six months, doesn't the employer begin the salary deferral withholding at the amount it was prior to the suspension?

The hardship form does not indicate the participant will be required to complete a new election form at the end of the suspension.

The employer makes the participant wait until the next entry date following the 6 month suspension and tells the employee to complete a new election form.

If deferrals show resume at the end of the 6 months, is there an issue missed deferrals?

Thanks

A client is past retirement age, under age 70 1/2 and still working. He's the only employee and participant in his profit-sharing plan. He's dithering about whether to make a contribution or use the money "to cut some trees".

I was thinking, why not make a contribution and get the deduction (he has the cash and a tax liability), then take an in-service distribution? The plan allows in-service after reaching retirement age.

Have a small 401(k) plan that will fail 401(a)4 test.

They can pass by providing a profit sharing contribution of 7% of salary to an employee who terminated employment during the year. The plan does have a last day requirement.

This employee would not be vested. Can the 11g amendment make the participant vested.

The ERISA Outline book points to an example of where this was done and not challenged by IRS.

An individual is a less than 5% owner when he turned 70 ½. As such, under the terms of the plan the participant does not have to commence required minimum distributions. The regulations under 1.401(a)(9)-2 provides that for purposes of Section 401(a)(9), a 5% owner is an employee who is a 5% owner (as defined in Section 416) with respect to the plan year ending in the calendar year in which the employee attains 70 ½. The individual continues to work for the Company and has not taken any distributions. Due to a reorganization of the Company stock, he becomes a 5% owner at age 74. The question is, since he was not a 5% percent owner when he turned 70.5 is he still exempt from taking required minimum distributions now at age 74 while he continues to work or must he commence taking minimum distributions.

Form 5310, Line 21 requires a statement of net assets to pay benefits "as of the proposed date of plan termination or latest valuation date."

Does "latest valuation date" mean the latest valuation date that was performed, or does it mean latest date that will be performed? For example, could the Plan's last Form 5500 valuation by the latest valuation date, since it was the latest valuation date as of the filing? The Form 5310 Instructions do not provide clarification.

Thanks for any help.

On the Notice to Interested Parties, if the last date for comments to the IRS falls on a weekend or holiday, what date is the actual due date for the comments? Please also provide a source for that information.

If the correct answer is that the due date is the next business day, does it suffice to display the weekend or holiday date as the due date on the Notice, and then put a sentence at the end of that paragraph to the effect “If any of the due dates for receiving comments falls on a Saturday, Sunday or legal holiday, comments shall be considered timely if they are received on the next business day”?

Thanks.

Other than qualified replacement plan to reduce reversion penalty are there other creative techniques to reduce/eliminate reversion for a terminating 1 man plan?

I've heard mention of a technique to purchase and distribute a J&S annuity which soaks up more assets than a lump sum cash distribution?

Thanks

I have a client with an NQDC plan funded by an irrevocable Rabbi Trust. The sponsor did not draft the trust to include reversion of excess funds back to sponsor. Can they amend the plan to add the clause?

Can a small business owner offer both a SIMPLE IRA ad a SEP IRA to his employees?

Can the business contribute the maximum amount o each plan?

Has anyone had one of their health fund clients do a HIPPA self-audit?

The attorney for one of my clients is recommending they retain a firm to perform a HIPPA audit. The idea is to do self audit in order to minimize fines/penalties if the IRS/DOL came in for a real audit. This is a self funded fund with around a $5 million in assets and 300 members.

It all sound reasonable except the only people they have found who will do the audits are the big national firms and they want $50K to do the audit.

It all seems like overkill to me, but I am in no position to question the attorney.

Has anyone else gone through the process? Are there cheaper alternatives? Are these worthwhile for a fund this size?

Two Questions :

(1) Can a small employer , assume a C-corp , have a fiscal year = tax year = plan year for a new SEP run from 9/1/2014 to 8/31/2015 ?

(2) If the answer to (1) is "yes" , are employees who terminated prior to 9/1/2014 entitled to a contribution ?

I have a basic question. I am setting up a 401k plan for a nonprofit company. The president of the company makes approx. $80k a year. Would he be considered an HCE?