Have a small partnership that is cross tested. We were giving two sets of numbers from client and wanted to verify which we should use to calculate the plan wage for testing purposes. One was the k1 report itself (self employment earnings in box 14a). The second number received before the k1 was a "net number".

To go from K1 earnings to the testing wage you do the following:

Step 1 - Take self employment earnings (box 14a)

Step 2 - Subtract out "?"

Step 3 - Back out partner's share of the non key employer profit sharing

Step 4 - Back out 1/2 SE Tax

Step 5 - Back out partner's own profit sharing

Result - Testing wage

When I was reconciling from the self employment earnings to the "net number" they initially provided. I found they did the following: Took earnings in box 14a and then subtracted out Sec 179 (box 12), Other deductions (box 13), non-deductibles (box 18) and then added investment income (box 19).

Wanted to double check on should be backed out in Step 2. For example I know you would back out Section 179. Should I back out the other items mentioned above (including adding back the inv income)? Or just some of the items, like Sec 179?

Corporation sponsors a 401(k) plan w/ fye 3/31. Eligibiity is age 21 and 1 yos w/ semi-annual entry dates.

They utilize the services of an individual through a temp agency beginning 6/25/13. This individual has worked more than 1500 hours to date. Assuming she is still performing services for the Corporation on 6/25/14, we determine that she is a leased employee.

The plan excludes leased employees from participation. Should she be included in coverage for the plan year ended 3/31/15?

If the plan does not exclude leased ees from participation, would she enter the plan on 10/1/14?

Thanks.

Leaving aside issues about the wisdom, legality, or tax effect of an IRA that is "self-directed" to invest in real property or other unusual investments, which trust companies would you suggest (or avoid mentioning) to someone who has decided on this form and kind of investment?

I divorced in 2011 after 24 years of marriage. The divorce order indicates my ex-spouse is entitled to half my pension when she initiates a QDRO. I began receiving benefits at the end of 2011 but as of yet, she has not entered or initiated the QDRO. Does she have a time frame to enter or initiate the QDRO before she loses the entitlement? I am planning on remarrying soon and need to discuss this with my future spouse.

Thanks for any assistance.

Is the termination of Marketplace coverage (due to nonpayment of premiums because of a loss of subsidy) a qualifying change in status event permitting an election change (i.e., adding medical coverage under an employer plan) under the cafeteria plan rules?

We took over a 457b for not for profit. The normal retirement age is specified as age 59.5 the same NRA as in the 403b plan.

The plan also allows the special 3-year catchup. I am reading the regulations and have found that NRA cannot be earlier than age 65 or the NRA under the DBPP or MPPP. Is there something that allows the NRA to mirror the 403b plan and still be OK for the 3-year catchup?

Any help is greatly appreciated.

lori

If the IRS disqualifies a prviously qualified plan:

1. If a participant was an NHCE then bcame and HCE only in the last year, is his full benefit taxable?

2. Of the taxable distribution, is he required to pay a 10% penalty is he is under age 50?

a few days late, but April 20 was the 19th anniversary for Benefits Link. at least, according to the coffee mug I received a few years ago.

Thanks to all who have shared info. I certainly have learned a lot, not just from the answers, but from the questions themselves. Many force me to use that thing that is rusting away between my ears.

I especially appreciate a numbers of friends, even if distant, who I have made through the site.

by coincidence, my 5500th posting. That seems rather appropriate.

Thanks again Dave!

Looking for the DOL reg that indicates that Value for Guaranteed Interest Accounts = Contract Value where fully benefits responsive.

In this document, http://www.dol.gov/ebsa/publications/2009ACreport3.html

which is an ERISA Advisory Council report regarding valuation of assets, it says:

"For example, for Form 5500 purposes, current value reporting is required. Current value is deemed to be contract value for fully benefit responsive funds."

Where is this rule? I cannot find it anywhere... I know the ERISA section is 3(26), which is found in 29 U.S. Code § 1002, paragraph 26, but I cannot find any related regulations.

"(26) The term “current value” means fair market value where available and otherwise the fair value as determined in good faith by a trustee or a named fiduciary (as defined in section 1102 (a)(2) of this title) pursuant to the terms of the plan and in accordance with regulations of the Secretary, assuming an orderly liquidation at the time of such determination."

And is there a web-site where I can type in the us code (e.g. title 29, Code 1002) and find any related regulations?

The plan has to distribute the excess deferrals made during the 6 month hardship suspension. Under ERISA Outline Book, federal tax withholding under 3405 applies, but not the 20% mandatory withholding. So the 10% withholding would apply. My question is do we need to give the notice and election to the participant to elect our of 10% since this is not really a non-periodic payment, it is a corrective distribution.

Thanks!

Plan A, an audited plan, invests all of it's money in the Fidelity ABC Fund. The Plan is a pooled account so there is no recordkeeper to provide the disclosures.

Fidelity ABC Fund in turn pays a management fee to FMR (Fidelity's investment management arm) of $15,000. Am I required to report FMR as a service provider on Schedule C and report the $15,000 of management expenses? Fidelity is not going to be sending a Schedule C report to the Plan - the investment is taking place through either a brokerage account or a custodial/trust account. As such I cannot imagine this would qualify as eligible indirect compensation.

OR would existing laws that talk about sending prospectuses automatically satisfy the Eligible Indirect Compensation disclosures?

IRA has investment in real estate resulting in UBTI. We understand the need for filing a Form 990-T to report the UBTI. But who pays the taxes? If the IRA pays the taxes wouldn't this be treated as a distribution? IRA owner would then need to pay tax on the IRA distribution? Can taxpayer pay the taxes with outside assets?

We have a client that for some unknown reason, stopped taking loan payments from paychecks for several participants.

The client wants to avoid defaulting the loans.

We understand the options would be to reamotize the loans if they are within the 5 year time period. However, one of the partiicpant's loans is outside the 5 year time period, so we believe it has to be defaulted???

In one of the IRS publications it indicated that if the error is due to employer error , the employer may be required to repay the interest on the unpaid amount. Does anyone know if this is required? I am concerned as it says "may" have to repay. It does not say it is "required".

I understand the rules concerning the date of determining the fair market value when a disqualified person in transacting with the ESOP; however, I am uncertain of the rules when you have a disqualified person transacting with the corporation partially owned by an ESOP.

Situation: 51% owned S Corp ESOP. Over 10% other shareholder and trustee of ESOP selling shares under Stock Restriction Agreement to the corporation (not the ESOP trust). On what date should fair market value be determined for this transaction? Date of close? Or closest Valuation? Any thoughts appreciated.

Thanks

A participant in a plan being terminated has traditional source money and some Roth 401k. For the Roth 401k can the participant elect to cash out just what they contributed and then rollover the earnings with the other traditional monies?

We recently took over a 401(k) plan that just received a “compliance check” notice from the IRS because the beginning of the year asset value on their 2012 form 5500 was different from the end of year asset value on the 2011 5500. Has the IRS always looked at this issue for 5500s, or is this a new IRS initiative?

Can someone provide me the reasons why a Gov't Hospital would not choose to file or act as a 501©(3) organization besides not having to comply with the new Community Health Needs Assessment (CHNA). What reasons prior to CHNA would they have had besides possible UBIT. And if they did choose to act as one, other than wanting to have a 403(b) plans, what requirements would be needed to continue to act as a 501©(3) organization.

We have a takeover plan that has maybe 15 participants that are older than 70.5 and no longer employed. The plan has never paid an RMD to anyone as far as I can tell. I'm reading Rev. Proc 2013-12 regarding the VCP program. It says that the plan sponsor should pay out the distributions that should have been made plus an additional interest payment based on the plan's actuarial equivalence factors.

A couple questions.....

Since they refer to an "interest payment", should there be any adjustment for post retirement mortality? The participant didn't die yet, so I suppose that could be a really dumb question.

Does the additional interest payment come from the plan, or does the employer pay that from outside of the plan (like they would an excise tax)?

If the plan goes through VCP, and they request relief with regard to the Excise tax, how does the participant prove to the IRS that the excise tax was waived? Should the plan give them a copy of the compliance letter they get as a result of the VCP filing?

Is it mandatory to have a 6 month suspension of deferrals after a hardship withdrawal? A university plan has a custom document that is silent on the subject.

To further complicate the question, some employees in the plan must make mandatory deferrals as a condition of employment. In that case, how can deferrals be suspended if they are deemed mandatory by the plan document?

My divorce from ex-wife was in June of 2012. The valuation date of 401/k was 9/28/2012. Because of my ex-wife and her attorney, the QDRO has not be settled yet. I got the most recent QDRO from them today. I need help understanding two items.

Line 8 of the order says that " The Alternate Payee's interest in the plan shall be $195,000.00 of the Participant's total vested account balance under the Plan as of Valuation Date. "

Then line 9 it says, " The Alternate Payee's award is entitled to earnings ( dividends, interests, gains and losses) from the Valuation date to the date the award is segregated from Participants account. "

Does this mean only the earnings of the $195,000.00 or all earnings of her part of my entire account to date. Since she has been delaying the QDRO it doesn't seem fair she should get anymore than what was in there at date of Valuation.

My attorney quit practicing to work for a charity organization so I'm flying alone on this.

I live in Houston, Texas and I appreciate any advice you can give to help me understand this better.

-J