My husband and I are retired and we both have been rolling over our 401Ks to Roth accounts. We are both over 70 years of age.

My husband must have some expensive dental work. Can we BORROW the money from our Roth and then pay it back?

Would there be any advantage to borrowing from the 401K (not rolled over yet) or from the Roth?

Since we are no longer employed, we cannot add to these accounts and we want to retain the earning power of the Roth tax free.

Hi all, I am hoping for some guidance in this situation. Our client (OC) wants to sell his business to another company (AC). AC is not yet ready to buy OC but wants to test the waters by working on some projects together. If all goes well, AC will buy OC in a year or two. OC has a safe harbor 401(k) plan, AC has no plan. As of now there is no common ownership. They expect that about 50% of OCs business will be for contracts generated by AC, but OC will have some contracts independent of AC. OC and AC want to split each employee so that they work half time for OC and half for AC. They would like to continue to cover the employees 100% under OC's 401(k) plan. I was looking at Affiliated Service Group rules but get stuck because there is no shared ownership. Does anyone have any suggestions? Help?

Thank you in advance for any suggestions.

A client was notified by IRS that no 2011 and 2012 Forms 5500 had been filed for their 401(k) Plan. Due to an employee change within the client's company, the 5500s were not filed, although they had been prepared. Upon receipt of the IRS notice, client filed the delinquent 5500s. Then client calls us asking what can be done about IRS penalties assessed. Is it too late to use the DFVC Program to avoid the IRS penalties? Will the program now only relieve them of DOL penalties?

I've never given a thought about crossing state lines with my ERPA designation because everybody I've done work for is in NY, as am I. However, I was just filling out a 2848 for a client in another state, and suddenly I started wondering if there might be a problem. Am I limited to working with clients only in my state?

Loans from the 401k plan must be permitted on a reasonably equivalent basis... can the loan provision be temporarily relaxed for perhaps a period of 30 days and then "changed back"

here's the story:

Valued NHCE needs to get a loan to make a car purchase

Plan only permits hardship loans

Sponsor wants to give the car loan to just this one NHCE

Based on reasonably equivalent rules - the plan could / would be amended to temporarily allow the loan for anyone who needs a 'car loan' for the 30 day period - then amended back to require hardship

Does that seem kosher? (not what I'd recommend but is it ok within the framework of the rules)

I have a client who owns all or part of three companies.

Company 1: Three owners, Person A 1/3, Person B 1/3 and Person C 1/3.

Company 2: One owner, Person C 100%.

Company 3: Three owners, Person B 1/3, Person C 1/3 and Person D 1/3 (B is mother of D).

Is this a Control Group ?

Looking for your input.

Thanks

As a member of a professional development round-table (including planners, attorney's, and other members engaged in the divorce profession), every so often a benefits-related question surfaces and no one knows the answer. Such is the case with the question below. So I thought I would post it here in the hopes someone can enlighten me and I can share it with the group:

The question is if dad has a plan through work that is available to cover the children, if we give mom the deductions for the kids, and she is the one mandated to provide the insurance[via the divorce decree], and the kids are covered under dad's [employers] plan, and could continue to be covered, does that mean they have to stay on his plan? If he has the deductions, he gets no subsidy due to his high income. If mom gets the deductions, it's free insurance for her and the kids based on her low income. But does the availability of the dad's plan trump everything and mean they have to go with his high cost, high deductible plan? If so does mom get big subsidies as a result?

It seems to me this is the default situation we will face - low income custodial mom, high income dad with benefits.

Thank you for any insights or thoughts,

My company considers participants on long-term disability to be active employees who continue to accrue service credit and receive employer contributions to the DC plan based on salary before disability commenced. If a participant applies for disability with our carrier and the claim is denied, the participant is terminated if he does not return to work.

This happened to one participant early last year, but he appealed his claim denial and won. So now he is being retroactively placed on LTD and his termination of employment is being retroactively cancelled--over a year after his termination. We are retroactively calculating the employer contributions he would have received had he not been terminated. But of course nothing is ever easy--when he terminated he requested and received a lump sum distribution.

Clearly this is not a sham termination, but are there any potential legal/tax ramifications to either the Plan or the participant? He was already vested regardless of his disability status and we do not require repayment to have service restored to him. I think we are all in the clear but can anyone see any issues that I should discuss with outside counsel?

Company is assessed by recordkeeper a flat fee per participant for administration of 401k plan. Company in turn wants to charge this back to the plan as a flat fee per participant rather than proportionate to account balance. %age-wise, this can be significant (not reasonable) for a new participant who defers minimally based on NHCE wages to the plan. How is this generally approached?

I'm 100% vested in a Defined Benefits Plan at a former employer (big US defense firm). I'm a month away from 65 and must decide whether or not to defer taking benefits. Some facts:

I don't need the income now (I expect to keep working at least to 70.5). The plan will only pay about $500/mo even if I start taking 100% Life Only payments now. There is no cost of living adjustment.

My first choice would be to take this old pension as a lump sum, since I can roll that into a current 401(k). However...

The plan is now in restriction. So I cannot get a full lump sum now; only half. If I take that, I have to take the balance as a standard annuity, starting immediately. Once I begin that it's irreversible.

The plan probably will go out of restriction, but that is probably a year and may be several years away. I figure a 50% chance it will still be in restriction two years from now; maybe a 30% chance at three years - all guesswork. And it may or may not even allow lumps when and if it comes out.

The plan has told me that I defer now and start a full annuity at 70.5 (or probably at any time before) the plan will pay me the same amount monthly then as now, and they will also retroactively pay for the months in between.

They also told me that if I defer now and am later able to take a full lump sum they will simply recalculate it then based on interest rates at the time - there will be no retroactive payments.

So - I would like to defer hoping for a full lump sum "soon", and avoiding the tax bite of annuity payments that I don't even need now. But it seems to me that any recalculation of the lump sum in the future will (if interest rates remain the same) have to be lower, simply because I will be older. That seems like a guaranteed loss.

Plus, being in restrictions makes me wonder if the plan is more than usually shaky. Maybe I should get my 50% lump now while I can and let the residual payments start.

I can juggle the info I have, but I will certainly miss something that I don't know or understand right, Any advice will be appreciated. I need to decide in a day or so.

Thanks

Plan sponsor is part of a controlled group, the SH 401(k) currently covers just one entity, the other 3 entities do not have a plan at all. The current plan passes the 410(b) ratio test.

Can the existing 401(k) be amended to extend the coverage to the other entities mid year? I know some interpret IRS guidance on this to permit no amendments except that which they have specifically authorized, while others interpret this to mean SH provisions and perhaps other provisions in the SH notice cannot be changed.

If they don't want to amend the existing plan, can the other related entities adopt a separate SH plan for 2014? Or are they precluded because the "Employer" (as defined in 414(b) and ©) already sponsors a SH plan?

If they cannot adopt a new, separate SH plan for 2014, can the entities without a plan adopt a non-SH 401(k) or does the mere presence of the SH in the related entity somehow interfere with this as well?

The plan year requirement in the (k) regs allow a new SH plan less than 12 months unless it is a successor plan under 1.401(k)-2©(2)(iii). This section defines Successor Plans to be plans where 50% or more of the eligible employees were covered by a CODA of the employer in the prior year. In this case none of the newly eligible ees has previously been covered by a CODA maintained by this employer, so any new plan would not be a successor plan.

I hope that BenefitsLinks smart practitioners will help me think through some practical questions.

A few States have issued some guidance about tax-reporting for same-sex spouses.

Nebraska

http://www.revenue.nebraska.gov/question/same-sex_FAQ.html

North Carolina

http://www.dornc.com/faq/ssmarriage_faq.html

Ohio

http://www.tax.ohio.gov/Portals/0/communications/information_releases/DOMA_EWH_InforRelease11142013.pdf

Wisconsin

http://www.revenue.wi.gov/faqs/ise/samesex.html#samesex1

Some of these documents suggest that the amount an employer reports as its employees wages for State income tax purposes must add the amount that is the fair-market value of health coverage provided to the employees spouse if the spouse, even if recognized as a spouse for Federal taxes, is not recognized as a spouse under the States constitution or statute.

If followed, this would result in different wage amounts for Federal and State (and locality) tax purposes. (As a Pennsylvania and Philadelphia resident, I know that there can be other kinds of differences between Federal, State, and locality wages.) And it asks an employer to estimate a fair-market value for something that has no market.

What proxy or method should an employer use to estimate the value of the coverage attributable to the spouse?

If an employer fails to do this reporting (and a States tax agency detects that the employer didnt do it), do you think that a State will be aggressive or lax in its enforcement efforts? Why?

If an employer cant settle (with little or no money, and a sin no more pledge) a States enforcement effort, will a State really take this to litigation?

Is an SAR required for a plan that has merged into another plan?

Thanks!

A financial advisor has indicated that a client of his through his CPA has set up a SEP plan that indicates an employee has to be employed as of the last day of the plan year to be eligible to enter the plan. The company has seasonal employees and doesn't want to cover them even though they have met the eligibility requirements.

From my research, there is no indication that entry dates apply to SEP plans and therefore once an employee has meet the eligibility requirements they would be in the plan even if they were seasonal employees who only worked during certain periods of the SEP plan year (12/31).

I would greatly appeciate it if someone can confirm that I'm on the correct path. There are examples of determining eligibility on the IRS/DOL website for SEP plan but thought I would pose the question on here as well.

Thank you in advance for your response.

Dianne

Just a repeat, but it is April 16th... to the tune of the Beatles' "Yesterday"

Yesterday...

Income tax was due, I had to pay...
All the funds I tried to hide away...
I don't believe, I'll eat 'till May.

Suddenly...

I'm not sure that I am fiscally...
Ready for responsibility...
Oh yesterday, came suddenly.

Why, I

Owed so much, I don't know, I couldn't say
May be
Forms were wrong, how I long, for yesterday.

Yesterday...

Seemed like prison time was on its way...
Now I need a place to hide away...
While keeping IRS at bay.

Why, I

Owed so much, I don't know, I couldn't say
May be
Forms were wrong, how I long, for yesterday.

Yesterday...

Taxes due, I filed come what may...
Losing all deductions that's my way...
Of giving IRS my pay.

mm - mm - mm - mm - mm - mm - mm.

I was curious as to opinions as to how on the income statement of the 5500 the lost earnings that an employer deposits to the plan due to late deposits of employee contributions and loan payments (or any type of restorative payment) should be shown? We have been showing as “other interest” or I suppose since we are now doing more calculations using highest performing fund and not DOL calculator maybe this should go under “other income” or possibly lumped in with earnings of the type of investment in the plan (e.g. mutual funds).

Perhaps this could be shown as an employer contributions? Does anyone do this? This is not an employer contribution from the corporate side of things as not part of the 404(a) limit and the IRS has said it is just a business expense. Thoughts and opinions?

I tried to find some formal clarification but could not find anything so if anyone has anything definitive that would be helpful too.

A plan failed its 2012 ADP test but the refunds were processed in 2014. Can EPCRS be used?

I have a client that allows loans for harships only. One of their employees (an NHCE) is in some financial trouble, but not for any of the hardship reasons (primary residence, medical, funeral etc.) The client would like to help out this employee but does not want to open the floodgates to the other employees, so I have a few questions:

1. What kind of evidence for the hardship is required by IRS/DOL (not by the plan)? Can we take the employee on their word only?

2. Can we amend the plan to allow for loans specifically naming this employee?

3. Can we amend the plan to allow for non-hardship loans for a specific period, say 5/1-5/31?

4. The loan is for a car - can we amend the plan to only allow loans for harship and transportation to and from work?

The bottom line is the client wants to help put their employee, but not does want all the other employees to start taking loans for "non-hardship" reasons.

Let me know what you think.

Thanks

A 5% owner turned 70 on 03/28/2013 and then was no longer a 5% owner on 04/01/2013. Was this participant required to satisfy their RMD require for 2013? (Knowing that they could push off the initial payment until April 1, 2014.)

Death distribution: minor beneficiary. We received the paperwork regarding the custodian and we know how the check needs to be made payable: Adult Name Custodian of Child Name Minor (they did not elect inherited IRA - they want lump sum distribution). We know it is subject to mandatory withholding as it is considered an eligible rollover distribution.

I'm sure this is an easy question but I can't find a concrete answer:how is the tax reporting done for the withholding? I've read that the beneficiary is liable for the income taxes of the distribution - does this mean the tax reporting is on the minor child, therefore we need her social security #? Or is the tax reporting on the adult custodian and we need his social security #?