Is the Plan Sponsor of a Defined Benefit Plan required to notify participants when they've reached or surpassed Normal Retirement age (i.e. a letter reminding the Participant he/she is now eligible and should consider applying)? What about having reached/surpassed age 70 1/2? I'm looking for language regarding whether these notices are REQUIRED by any entity or if it is merely good practice. Thanks.

Company long-term disability plan has two components:

1) company provided 50% of pay

2) voluntary employee buy up to 60%

There is no insurance, plan is self funded. There is no cost to the employee for the 50% base benefit (and no income is imputed) so any benefits received are subject to income tax. Employees pay for the buy up with after-tax payroll deductions so the incremental 10% benefits are received tax free.

The question is: can the employer impute income for the cost of the 50% base benefit so that all disability benefits received would be tax free? If so, since there is no insurance, and the plan is self funded, how would the company determine the amount to impute? Could they engage an actuary to set "rates" for the base plan? Would a composite rate suffice, or would they need to develop age based rates and impute accordingly?

Two employers in a controlled group both sponsor separate profit sharing plans. One employer in the controlled group wants to add a 401(k) feature to their plan, the other one does not. Assuming they pass the Rights, Benefits and Features requirements, can one employer have a 401(k) feature while the other does not? Both plans pass coverage testing separately. Thanks in advance.

I have come across various references to a practitioner who obtained favorable technical advice from the IRS National Office on a retroactive corrective amendment under Treasury Regulation Section 1.401(a)(4)-11(g), where the amendment named specific NHCEs and the amount of the additional contribution they would receive in order to correct a failure under IRC 401(a)(4). Apparently, the reasoning by the IRS was that there is nothing in the regulation that prevents the amendment from specifically naming the employees. One of the references I came across indicated that the TAM had not yet been published, and I cannot find an official TAM number. Does anyone know whether this TAM was published? If so, could you post the TAM number?

Thanks!

Current loan balance appx $25K

Current account balance appx $25K

Current total account balance appx $50K

This participant can not have a in service dist since he needs his account balance to secure the loan, correct?

the plan document and form shows the plan as a single employer. The Plan Sponsor is ABC, LLC

However, all the employees are in DEF, LLC which is owned 100% by ABC,LLC. Based on my research this is a parent-subsidiary relationship.

Doesn't the plan sponsor need to have a participation agreement with DEF, LLC?

If yes, and no agreement was signed, isn't there a document issue, causing the client to file under VCP?

the plan document states, If the employer is a member of a related employer group ( includes all members of a controlled group) Employees of each related group may participate under the plan provided the related employer executes a Participating Employer Agreement. If a related employer does not execute a Participating Employer Agreement, employees of such related employer are not eligible to participate in the plan

Guess I found my answer......

Need to file under VCP to correct?? Do you agree

We have a 401(k) plan that begin the 2013 plan year with 226 participants. The plan terminated during 2013 and the plan sponsor has disolved the business. The plan assets were distributed in late November 2013. The plan sponsor does not want to have the independent auditor performed, bascially doesn't want to pay for it. Anyone know of any consequences of filing the final form 5500 without an accountant's opinion?

I read a couple of articles that state matching contributions are not allowed in a Roth solo(k). Is this an accurate statement? I had the understanding that a solo(k) was simply a 401(k) with a few less reporting requirements (no Form 5500 for less than 250k in assets, for example). I can't find anything in an IRS publication that supports this statement.

I know that it isn't necessary to match as you could use the profit sharing contribution to contribute to maximum if you have a solo(k), but I am looking down the road in case employees are hired in the future.

Thanks!

F5500SF Part V line 10(f) --- Has the plan failed to provide any benefit when due under the plan?

does this include missed RMD payments?

A traditional DB plan has a special 415(b) provision that limits it to the pre-EGTRRA $140k. Would amending this be considered discriminatory? No participant was ever affected by this lower limit. The owner of the business reached NRA 65 and accrued his full benefit two years ago. His benefit has been adjusted for post-NRA increases. This year, his adjustment will be affected by the lower limit.

In this case, increasing the 415 limit will only serve to allow him his age 65 accrued benefit equivalent. Would amending the 415 limit be considered discriminatory?

Also, they would like to amend actuarial equivalent interest rates from 6.5% pre and post to 5.5% pre and post. I know this is a 411(d)6 protected benefit, but in this case all current participants will have higher lump sums not lower. The participants who received lump sums in the past all received lump sums that were based on 417(e) rates that were lower that what the new 5.5% actuarial equivalent rates. Would this change be considered discriminatory?

Thanks.

What is the latest date repayments can start?

I thought there was something that required payments at least quarterly (due to the cure period rules). But I don't see anything that says when the first payment actually has to start by.

I don't see anything in IRC §72(p) or Treas. Reg. §1.72(p) that actually address this.

Plan document (VS) language mirrors the regs - Cure period is ends at the end of the calendar quarter in which the installment payment was due, after which the loan is in default.

The loan policy/plan document do not provide any restrictions on how far out loan repayments can begin.

If there is no installment payment due that quarter, then the cure period doesn't start?

Example:

Loan taken 2/15/2014

First payment due (according to level amortization schedule) 6/15/2014

According to the default/cure period rules, a plain reading would seem that the loan is in default as of 9/30/2014, not 6/30/2014 as I would have thought.

Could the participant have put off the first payment even longer? As long as payments are level, and the loan is repaid in five years of the loan start date, I don't see any reason why the first payment can't be really far out. In the example, could the first scheduled payment have been 9/15/14? with quarterly level payments thereafter? Then if the first payment was missed, the loan would be default as of 12/31/2014?

I feel like there is guidance I must be missing, that this is a loophole someone else figured out and the IRS would have address it either formally or informally.

Can anyone clarify?

A client was informed this morning by the company that performs its actuarial functions for benefit plans that the "enrolled actuary" that signed the client's 5500s for the last few years has been misrepresenting his professional credentials. In fact, this person is not an enrolled actuary.

Has anyone faced this situation before? Does the client need to amend its prior 5500 filings? Are there additional steps the client needs to take?

Thanks in advance

In what instance can the owner of an LLC participate in a 401(k) Plan?

LLC is a single member LLC 100% owned by the the owner. Can the owner participant in the 401(k) Plan he setup for the employees of the LLC.

It's been awhile since I tackled this so wanted to be sure I have it correct:

Sponsor has one participant deferring $100/check semi-monthly and CONSISTENTLY held checks and deposited them very late. Plan started in 2012 and we only discovered the extent of this recently as we tried to put together 2013 data, and everything still due, including lost earnings was paid last month.

Facts (I have used IRS calculator to determine lost earnings):

• For 2012, all deposits were delayed, for up to 217 days - total delayed deposits = $2,400, total lost earnings = $22.85
• For 2013, all but the first two deposits were delayed again for over 200 days - total delayed deposits = $2,200, total lost earnings = $44.39

The question is what figures to I put on the 2012 and 2013 Form 5330?

Situation:

Man lives with his aunt. At the end of the month he must get out. Reason: unknown.

Can he take a hardship for a down payment & 1 month's rent?

Safe Harbor reasons.

My employer sponsors a 403(b) plan with multiple vendors and no central recordkeeper, which sometimes causes issues for us.

While reviewing the asset transfers processed in 2013, one of our vendors discovered an account for a terminated participant that was transferred to another vendor and reported as an asset transfer within the same plan. However, the participant was moving money to a 403(b) plan of a new employer, and the receiving vendor accepted as an external rollover and deposited it to the new employer's plan.

Unfortunately, the paying vendor did not obtain spousal consent for the transfer/distribution.

What are our options? Attempt to reclaim the assets? Have the participant complete termination distribution forms which include spousal consent, and then adjust the transaction to a termination distribution and direct rollover instead of a transfer? Report the distribution as taxable and ineligible for ollover treatment? (That should get someone's attention.) We know we have a compliance problem on our end but is there any potential issue for the receiving employer? We have attempted to contact the participant several times without success.

An ESOP holds 30% of an S-Corp's stock and the owner holds the other 70%. I understand that distributions (not dividends since this is an S-Corp.) are often used to pay down the loan. One article I read says that distributions cannot easily pass through to ESOP participants. However, this client doesn't want to pay down the loan or allocate it to participants. Instead, the company would rather use the distribution for other plan obligations -- perhaps to liquidate the shares of retiring employees or for plan expenses, for example. I'm looking for something that definitively tells me that that would be okay to do. I've looked through the BNA ESOP portfolio, thinking that surely that there would be a discussion about the earnings distributions there, but I didn't see anything. Can somebody point me in the right direction? Before amending the plan, I want to make sure that what they want to do is permissible.

All of a company's employees (including the owner) are leased employees. During the first 10 months of the year, they are leased thru Company A. Company A pays the employees and submits taxes on their behalf. The employees participate in the Leased Company's MEP Plan. The employer funds the MEP with a 7.50% contribution. During the last 2 months of the year, the employees are leased thru a different leasing company that does not have a plan. If the employer also maintains a plan, can he offset any required and/or discretionary contributions that are due to his own plan by the contributions he made to the MEP?

Plan currently has a Safe Harbor Match - the employer would like to eliminate the SH Match in favor of a match subject to vesting - The plan year just started 6/1/2014 - so we're just two months in.... to elminate the SH match - need to give 30 day notice, amend plan before end of PY and then be subject to ADP testing and TH requirements (this is prior to PY's beginning after '14 after which midyear SH suspension is permitted only if you’re operating at an economic loss or had included a potential reduction/suspension statement in your annual safe harbor notice to participants.

Is it permissible for the employer to turn right around and implement the new match that will be subject to vesting. Say that the SH provision is eliminated effective 8/31/14 and the vested match starts 9/1/14. I don't see any reason why this wouldn't be permitted, but wanted to hear some thoughts.

A 401(k) plan payed out a distribution to an Alternate payee (ex-spouse) based upon a draft DRO. Two weeks later the DRO was entered into the court.

Assuming the DRO is reviewed and found to a QDRO, what corrective action is needed to make it so that the plan is in compliance?

The DRO specifically provides for the amount awarded to be eligible for distribution to the alt. payee after the date of the Order (if the Alt. Payee so elects).

Problems

The plan paid out a substantial amount before there was a DRO

If the DRO is followed today - the participant would get another substantial payment

Normally, I would say the plan needs to try to recover distribution #1, Review the DRO, if it is a QDRO, then segregate and make pmt #2 (alt payee wants the $).

I don't really see the point in putting the money back in just to take it out, so I think the only other option to avoid that is VCP asking the IRS if they will just call it good.

The other alternative is to get the DRO amended so that that payment #1 counts, but then the plan is still out of compliance since it made the distribution prior to the QDROs existence.

Any thoughts?

Any options other than VCP? I think even if the plan goes through VCP the DRO needs to be amended to account for the earlier payment, probably by taking out the language that the distribution be made after the DRO date.