Elective deferrals were made in the six month period following a hardship distribution. Where elective deferrals need to be returned to the participant by way of refund to the plan sponsor to go through payroll, how are the earnings of the disbursement reported and taxed to the participant? Thanks.

Ok, so I'm crying uncle in trying to find the correct way to do this. Any ESOP Experts out there???? Please chime in.

Cash Dividends were used to pay down a leveraged loan. The split between the two are approx 6% allocated and 94% unallocated. Using round numbers, the Employer made a $100,000 dividend payment. So naturally $6,000 would be for the allocated shares and $94,000 for the unallocated shares. Shewwww I can do math!

So doing the FMV calculation, we find that the shares value based on the day before the loan payment is greater than the FMV on the date the dividends were declared. So no adjustments necessary. Shewwww again!

So we move on to the share release. The loan payments paid with cash and unallocated dividends are released on proata compensation (according to the document). Easy Peasy....Shewww!

The allocated dividend shares are to be released on prorata shares. OHHH crap. So my question is this.....

Is the actual transaction a contribution or is it a dividend or just a transfer in? No where (that I can find) tells you exactly how the transaction should be structured from a recordkeeping endeavor. HELP!!!!

Plan has "Fixed" Contribution equal to 5.7% of compensation and 5.7% of excess Compensation - 100% vested

Plan Also has "Match" Contribution equal to 100% of elective contribution up to 5% of compensation - 2/20 Vesting

Plan Also has "Minimum" Contribution equal to 3% of compensation minus the fixed contribution for the year. If fixed exceeds 3%, then no minimum made

- 100% vested

Plan uses Prior Year Testing

Plan Document does not speak to a designated QNEC for correction of a failed ADP test

Question:

Should the plan fail the ADP test, can the Minimum contribution be re-characterized as a QNEC to pass the ADP test?

I have a document (not our design) that has some language I'm not used to seeing. The plan does not provide for PS contributions. The plan is TH and provides that any TH minimum contribution will be a QNEC. There is one HCE who is NOT a Key EE, so he is getting this QNEC. Is this QNEC required to be used the ADP test to determine his ADR? The plan already fails ADP, so adding this QNEC to this HCE will make things much worse.

Suppose "normal" plan entry date would occur on July 1. On June 21st, employee goes out on approved maternity leave, or short term disability. Returns to work July 15th. Is the entry date July 1st, or July 15th? Plan doesn't really address this - refers to if the individual is "employed" - so are they "employed" if they are on approved leave? Or are they considered "re-employed" when they return from leave?

My inclination is that they would enter the plan on July 15th.

If a plan fails both the ADP and ACP tests for their 2013 plan year and they are going to us the bottoms up QNEC method, can they give the lowest paid NHCE 5% to pass the ADP and then 5% to pass the ACP. The disproportionate rules apply to each test, correct?

Thanks for any insight!!!

I am currently considering a 401K loan. I'm not sure if it's a good idea. I've read mixed reviews.

I am paying a student loan of $18,000 at 8.5% interest. I have other loans as well, but they are at a more reasonable interest rate.

I can take a 401K loan out at 4.5% and use that money to pay off my student loan. It seems like I would be saving money each month by paying 4.5% interest instead of 8.5%, right? And I'd be paying the interest to myself, instead of my lender, correct? (Minus the $10 fee to my 401K company). I realize there's an opportunity cost to taking money out of my 401K, but I've heard other people say that they actually grew their 401K by doing this.

Any thoughts?

Form 5500 asks for participant counts as of the 'beginning of the plan year'.

I have seen two practices in how to report this as follows:

1. Bring forward end of year count from prior year 5500.

2. Actually calculate current participant count at the first day of the plan year, including new entries.

Which is really the more common practice?

Can 403b "orphan" plans in a merger of an organization only be rolled over into another 403b (participants cannot rollover funds into an IRA) and that the prior plan must be terminated to roll funds over to the new IRA.

JEK

To whom is the loan offset taxable? Deceased participant's estate or the beneficiary? And why can't I find any sites at all!

http://benefitslink.com/boards/index.php?/topic/51842-deceased-participant-questions/

I found this thread, but there was nothing conclusive... How could this not be well documented??

I saw on a spreadsheet recently that you can rollover a SIMPLE IRA account into a qualified plan ( 401K , profit sharing, etc ) after the SIMPLE account has been in existence for two years. Is this correct ? Is it new ?

Thank you.

The plan uses W-2 Wages for its definition of compensation.

It excludes, however, bonuses.

The employer also pays leave cash outs for unused vacation.

My inclination is that these are a form of bonus and thus also excluded, but can see the opposite argument.

I can find no authority either way.

Federal Income Tax Withholding.

If you receive, rather than roll over, the distribution, you may elect whether to have federal income tax withholding apply to your death benefit distribution. If you do not wish to have any income taxes withheld on your distribution, or you wish to have an amount other than 10% withheld, you will need to sign and date IRS Form W-4P, checking the box opposite line 1. The Plan Administrator will provide you with Form W-4P. If you do not return the Form W-4P to the Plan Administrator prior to the distribution, the Plan Administrator will treat the failure to return the form as an affirmative election to have 10% withholding apply.

Special tax treatment if the deceased participant was born before 1936.

If your distribution is a "lump-sum distribution," and the deceased participant was born before 1936, you may elect special tax treatment. A lump-sum distribution is payment of your entire death benefit (including any nontaxable portion of your distribution) under the Plan (and certain similar plans maintained by the Employer) made within one calendar year.

Ten-year averaging

. If you receive a lump-sum distribution and the deceased participant was born before 1936, you can make a one-time election to figure the tax on the lump-sum distribution under "10-year averaging" using 1986 tax rates. Ten-year averaging often reduces the tax you owe.

The participant wad born in 1929, was receiving RMDs, and was not a participant in the plan until 1987. This IRS language doesn't specify that participant had to be a participant prior to 1986 though... What are your thought's on the non-spouse benficiary being able to use the 10 year averaging?

We're in the midst of helping an Employer make a correction to his Safe Harbor Plan for 2012 (he failed to make the required 3% Safe Harbor Contribution that year). He's making the corrective contribution this year. Will he be able to deduct the contribution this year?

We're in the midst of helping an Employer make a correction to his Safe Harbor Plan for 2012 (he failed to make the required 3% Safe Harbor Contribution that year). He's making the corrective contribution this year. Will he be able to deduct the contribution this year?

An employer's cafeteria plan and underlying benefit plans excludes same sex spouses. In June 2014, the employer amends the plan to make same sex spouses eligible for benefits. Can the employer permit employees (who married their same sex spouses in 2013 or earlier) change their elections mid-year to add their same sex spouses to the plan? If so, under what provision of the proposed cafeteria plan regulations?

It seems intuitive that these election changes should be permitted but I am not finding anything in the regulations to support this intuition. Does anyone have any thoughts?

There is an ESOP that contains pre-1986 stock so the rules in effect prior to 1986 Tax Reform Act regarding diversificaiton still apply to that stock. If the employer does a stock split with respect to the pre-1986 stock, are the pre-1986 rules applicable after the stock split or would the sotck issued as a result of the stock split be subject now to the post-1986 rules?

Suppose a defined benefit plan was hard-frozen several years ago. As no key employees are currently benefitting under the plan, it should be clear that no new service accrues for the top-heavy minimum benefit.

1. If the top-heavy percentage was below 60% when the plan was frozen, is there any reason to be concerned as to what it would be as of any subsequent date?

2. If the top-heavy percentage was above 60% when the plan was frozen, is there any reason to be concerned as to what it would be as of any subsequent date?

3. If the top-heavy percentage was above 60% when the plan was frozen and, if remeasured, would remain above 60%, would it be necessary to adjust the top-heavy minimum benefit (with respect to top-heavy years of service prior to the freeze) on account of compensation increases after the year of the accrual freeze?

I remember when conduit IRAs only could be rolled into another plan, and so an IRA created with a QDRO rollover could not again be rolled into a qualified plan. At least I think I remember that.

Now we have inherited IRA accounts and all kinds of new stuff. So my primary question is if there is a list of IRAs and where can the be rolled over (into) what?

That would answer the question if a QDRO IRA can be rolled into another qualified plan.

If that is so, then just maybe if both spouses work for the same company, can the spousal alternate payee roll the QDRO distribution directly into their account in the same plan?

Thanks to those who find the answer.