We set up a cash balance plan for a client for 2013. The client uses a bundled provider for their 401k, and we only administer the cash balance plan. Their 401k is a safe harbor 401k.

The client was supposed to have amended their document to allow for employer contributions (back in 2012, there were no employer contributions permitted). We now get to the end of 2013, and calculate their profit sharing contribution only to find out that they never amended the plan.

We're combo testing the cash balance with the profit sharing, but if the 401k doesn't allow for profit sharing, how can we make the contribution?

The bundled provider on the 401k is saying that since the plan is safe harbor, it cannot be amended to allow the contribution, and in fact it still can't be amended until 2015 because mid year amendments are not allowed for safe harbor plans.

What would anyone think about an 11g amendment to a safe harbor 401k that allocates a profit sharing contribution so that we can pass a failed discrimination test?

Client has opted for Safe Harbor match in his plan... client also prefers that match be calculated on a per pay basis - each pay date a self contained calculation period... Is this possible?

Does anyone know if there are special rollover rules for employee contributions that are distributed in a lump sum from a defined benefit plan (non-cash balance DB)?

I know that they are considered after-tax contributions for tax purposes (are not tax deductible when contributed)...I believe they are compared to the total value of the benefit (in whatever form paid) and that ratio is applied to each payment, or lump sum amount...and that portion is not taxable until the participant has, in effect, received a full return of all employee contributions.

Just not sure if this has any bearing on the rollover rules affecting these amounts.

Is there any special ADP testing required in a SAR SEP IRA plan when the owners wife becomes eligible and wants to participate ?

How about the owners son ?

THank you

When our client has an employee separate from service, they process a separate check to payout their accrued vacation. Historically they have not taken a 403b deferral or match on this payout. Is there an issue with this? Their document seems to be silent on this subject. We have some confusion around whether or not deferrals MAY or MUST be made on the accrued vacation pay.

HCE elects a lump sum option, but plan fails 110% test, participant receives monthly draw down of LS amount. Is the monthly benefit eligible for rollover? Thanks.

We have a safe harbor plan which provides both a non-elective contribution of 3% and a matching contribution which matches up to 6% of salary and provides 100% on the first 3% of salary deferred and 50% on the next 3% of salary deferred for a total match of 4.5%. The non-elective contribution is fully vested immediately though the matching contribution vests over 5 years. There is also a true-up at the end of the year on the matching contribution so that if an employee contributes over 6% for any period but not for the entire year, the true-up match will equal 4.5% of compensation contributed. This year, we are going to add an amendment requiring employees to be employed on the last day of the year to be eligible for the true-up, except in the case of death or disability. Does adding the last day rule, have an affect either on the plans qualification as a safe harbor plan or on whether the plan is required to perform the top heavy test?

Employer maintains a nonqualified defined benefit SERP for its employee. SERP provides that "EE is entitled to 100k payment upon retirement after, on, or before reaching 65." EE has reached 65 and employer has not withheld any FICA tax in the past on the SERP. EE is still employed. Is it feasible to assert that the commencement date of payments is not reasonably ascertainable until actual retirement since benefit is contingent on termination date (despite the fact that the benefit (PV of 100k) certainly is ascertainable by assuming he'll retire at a certain date)? Thus, no FICA wages taken into account until termination (unless early inclusion rule is opted).

If not, can employer take into account the PV of entire 100k benefit now (despite EE still being employed)?

Does anyone know if it is even appropriate for a US citizen working in a foreign country (in this case a small island nation) to receive US wages (i.e., reportable on a w-2?).

My question of course is can the employee participate in the mainland 401k plan?

Hello,

What constitutes 'primary care' of a child? Most older children (9-12) are not placed in day care facilities; they go to some sort of camp.

I've seen claims denied because soccer camp isn't 'primary care.' Does that definition turn on the mission of the organization hosting the camp? Or the parent's intention in placing them there?

What does the IRS use to determine eligibility? Pub. 503 says:

Have a situation where I need to determine common ownership and if I need to include the employees of company "B" into the parent 401(k) Plan: Here is the layout.

Company A: John Smith owns 51%

Mary Smith (John's daughter) owns 19%

and the remaining 30% is owned by Mary's Trust

Company B: John Smith owns 51%

Mary Smith owns 1%

Bob Smith (John's son) owns 48%

is there a common ownership that we need to include the employees of company B into the the 401(k) set up for Company A?

typically a tpa will charge a flat fee and a per participant charge for 401(k) administrative services.

I am wondering if firms define a participant differently in their pricing...for example would you

ony include people with account balances at year end? what about people that were paid out during the year? what about people with no balance at year end but in the plan eligibility wise? what about people in the plan during the year eligibiity wise but leave with no benefit?

any comments are appreciated...

The recordkeeper charges distribution fees to participants that is deducted before taxes are withheld. If the recordkeeper is charging an ACH or overnight delivery fee, shouldn't that fee also be deducted before taxes are withheld? Is there a citing I can refer to?

We have an employee who has a current QMCSO stating that their children are required to be covered under their medical plan for a certian period of time. When the perios of time ends would that be considered a qualified change in status where we would allow the employee to drop the children mid plan year? Any guidance would be helpful.

A plan went through DOL investigation and found that the plan allowed loans up through 1/1/2000. A participant was issued a loan as of 2/2/2000. Loans were not allowed at that time, therefore, creating a prohibited transaction. During the audit (2013) a 1099R form was issued in order for the participant to tax report on the outstanding loan amount. Furthermore, the IRS will be notified of this matter and a Form 5330 should be filed to also correct this.

The instructions for the Form 5330 are a nighmare and when I called the IRS on their helpline they told me no one there is trained to give any feedback on preparing the form.. . . . that's very frustrating. So Im hoping someone has a little advice or direction in this matter.

What is considered the amount involved? Is it the outstanding loan value or the interest that would have accrued if the dollars were part of the plan? Also, file a Form for every year 00-13? Any help would be appreciated.

Plan has integrated profit sharing, first time they have decided to fund a PS contribution.

The Plan Year 1/1/2014-12/31/2014 (calendar) but the company's fiscal year ends 6/30/14. Is it ok for the employer to pre-fund the profit sharing contribution now (before 6/30/14) to receive a deduction and have it sit in a fake/forf account and allocate it to the participants at the end of the year 2014.

I need help deciding if the plan below is a straddle plan/carried by the employer, and therefore company should be imputing income and withholding payroll taxes.

Facts:

Assume there is no company paid basic life benefit. Company offers voluntary life insurance to all F/T employees. Employees pay the same rate per $1,000 of coverage, regardless of age. The company rate is $.25 / 1,000. When compare to Table 1 rates I see that the company rate is less than Table 1 rate for employees ages 55+.

Based on these facts, may I conclude that for employees ages 55+ with more than $50,000 of coverage, the company should be imputing income and withholding FICA? And the imputed income/fica would be on only coverage in excess of $50,000 and calculated as the difference between what the cost would have been under Table one and the actual employee contributions?

Thanks

We currently administer a combination 401(K)/safe harbor non-elective/profit sharing plan, the eligibility is the same for each plan component; age 21 with 12 months of service.

Client is thinking of amending the plan to allow for more rapid entry into the elective deferral portion only.

If my memory serves me correctly, we have to test each component separately as to participation and BRfs;

as well, wouldn't anyone who comes in to the 401K) portion have to get the 3% nonelective SH contribution?

I am working with a client on an inheritance from a 401K/ESOP plan and have run into a bit of a problem. The clients mother who is the original owner of the account died about ten years ago. Client's father was primary beneficiary with the client and client's sister as contingent. Father never took ownership of the account and it sat for the last ten years registered to her deceased mother. Client's father passed away last year and we are trying to get the assets to the sisters, preferably in an inherited IRA. I am pretty sure the plan sponsor will issue a check made out to whomever we request, but I'm not sure if we would be exposing ourselves to taxes and penalties if we took that route. Here is my thought process on it:

It seems that the correct path might be to assume that the assets belong to the father in an IRA even though he never changed the registration on the account. There would be no named beneficiaries on the fathers "account" so the assets would now pass to his estate. In that case they would need to go through probate to determine who they will ultimately go to - which I am sure would be the daughters. If that is the case the IRA would have to be distributed over a maximum of five years, though I think they would probably just take the cash and pay the taxes. This seems like quite a hassle considering the account value is around $30K.

The other possibility is to say that the father waived his right to benefits at the time of the mother's death. In this situation the daughters would have inherited the funds ten years ago and either would have had to pay taxes on them at that time if they took a distribution, or rolled them into an inherited IRA where they should have been taking distributions from the account over the last ten years. In the latter assumption there would conceivably be taxes and penalties due for not taking the required distributions on time.

The final scenario that I could consider is that the account constructively went to the father at the time of the mothers death, even though the registration was never changed. At that time the daughters essentially became the primary beneficiaries since the original primary beneficiary now owns the account and there were no other changes made. Obviously this would be the best scenario and I would argue that this is basically what would have happened had they gone through the proper procedures when the mother died ten years ago.

Anyone care to chime in with what our options are? I am hoping that an inherited IRA can be set up for each daughter and we can call it good. However, I don't want them to get into trouble if that is not the correct course of action.

Thanks!

Mom & Dad divorce after having one child, now 3 years old. Dad dies after naming his 3 year old as his beneficiary.

Obviously, the 3 year old is not going to open a checking account, etc. nor decide between an IRA rollover and a cash distribution. Someone mentioned that perhaps the mother would need a financial guardian before the custodian should be allowed to make the checks payable to the mother. But perhaps the birth certificate would suffice??

Any thoughts on what to do here? Perhaps someone has read a good article?