I posted this question in the "plan termination" forum also. DB plan terminated in 2010 and distributions made to participants. Following PBGC audit, additional distributions required to be made to participants. Can we rely on election forms from 2010 or do we need to get new election forms for the additional distribution? Also, what if participant was married at time he received first distribution when plan terminated but now is divorced - does ex-spouse have to sign off on lump sum distribution of additional distribution? Any thoughts would be appreciated!

I've read many discussions about 1/1 entry and participant count.

Is there any reason why a plan could not use Jan 2nd (and 7/2 if no other entry dates) as an entry date and thereby perhaps delaying an audit requirement?

DB plan terminated in 2010 and distributions made to participants. Following PBGC audit, additional distributions required to be made to participants. Can we rely on election forms from 2010 or do we need to get new election forms for the additional distribution? Also, what if participant was married at time he received first distribution when plan terminated but now is divorced - does ex-spouse have to sign off on lump sum distribution of additional distribution? Any thoughts would be appreciated!

Husband

DOB - 11/28/1941

Terminated in 2007

Turned 70 1/2 in 2012

Spouse

DOB - 6/9/1950

Died 2/3/07

Would have turned 70 1/2 in 2020

Question regarding a participant for a plan we recently took over. The spouse died with a balance. The husband, as the beneficiary, rolled her balance in this his account. His entire balance is the death benefit rollover. Should the husband be taking RMD's at this time? Or, does he start taking RMD's in 2020 when his spouse would have turned 70 1/2? Based on what I could find: there are three options:

We had an employee who had elected $5000 in Dependent Care Benefits. All $5000 was paid out to the employee. The spouse started her own business and due to start-up costs and expenses only had earned income of $3500 at the end of the year. What needs to be done to correct this? Does the employee have to pay the $1500 back under the "use it or lose it" provision?

The IRS this afternoon issued IRS Notice 2014-19 (click): Application of the Windsor Decision and Rev. Rul. 2013-17 to Qualified Retirement Plans (PDF)

7 pages. Excerpt: "Whether a plan must be amended to reflect the outcome of Windsor and the guidance in Rev. Rul. 2013-17 and this notice depends on the terms of the specific plan ... If a plan's terms with respect to the requirements of section 401(a) define a marital relationship by reference to section 3 of DOMA or are otherwise inconsistent with the outcome of Windsor or the guidance in Rev. Rul. 2013-17 or this notice, then an amendment to the plan that reflects the outcome of Windsor and the guidance in Rev. Rul. 2013-17 and this notice is required by the date specified in Q&A-8 of this notice... If a plan's terms are not inconsistent with the outcome of Windsor and the guidance in Rev. Rul. 2013- 17 and this notice, an amendment generally would not be required. If no amendment to such a plan is made, the plan nonetheless must be operated in accordance with the provisions of Q&A-2 of this notice.... [if] a plan sponsor chooses to apply the rules in a manner that reflects the outcome of Windsor for a period before June 26, 2013, an amendment to the plan that specifies the date as of which, and the purposes for which, the rules are applied in this manner is required.... The deadline to adopt a plan amendment pursuant to this notice is the later of (i) the otherwise applicable deadline under section 5.05 of Rev. Proc. 2007-44, or its successor, or (ii) December 31, 2014."

I am trying to get a better handle on the contours of partial plan termination and required actions by the plan sponsor/administrator. I have read all the forum topics I could on this issue, but some of my issues seem to be unresolved. I greatly appreciate any answers any of you can provide.

1. What, if any, requirements are there for distributions upon partial plan termination? I have seen two people in these forums say that partial plan terminations are not distributable events. From my own research, however, I am little skeptical of this. Looking at Revenue Ruling 89-87, I think that a plan administrator must distribute assets as soon as is administratively feasible. Although this ruling is not directly on point as it deals with voluntary terminations, I don't see any reason why it shouldn't be applied to partial plan terminations. In its analysis, the ruling establishes: (a) a plan will only terminate at the selected date when all benefits under the plan are determined with respect to the termination date an all plan assets are distributed to satisfy said benefits as soon as is administratively feasible; (b) A plan is not considered terminated if the above requirements are not met “regardless of whether the plan is treated as terminated under other federal law ….”; © A plan which has not distributed its assets as soon as administratively feasible is considered an ongoing plan and must meet the requirements of § 401(a) in order to continue its qualified status. I can't identify language in the revenue ruling, or a policy reason, that would prevent these rules from applying to partial terminations. I also cannot find any contrary authority stating partial terminations do not require distributions (I understand that the only mentions of partial terminations in the IRC relates to vesting). Has anyone been able to test this issue or have any additional authority to answer the question?

2. How can a plan sponsor/administrator go about establishing the date of partial plan termination for purposes of vesting? Are there many dates based on the termination of each individual affected employee? Is it a single date at the beginning/end of the termination event? Is it dependent on the facts and circumstances?

3. Related to #2, can anyone clarify the determination letter process for me? By my reading, it seems that a plan administrator could filed a Form 5300 to get a determination letter regarding whether partial termination has occurred. The plan could rely upon the letter process and treat the plan as qualified until they receive a determination. The plan could then retroactively vest the affected employees with benefits as of the time of partial plan termination. My problem is I can't seem to find any express authority providing this safe harbor period. The closest I got was Internal Revenu Manual 7.12.1.14, which states: "Upon plan termination, all plan assets must be distributed as soon as administratively feasible (generally within one year following the date of plan termination). Generally, an outstanding determination letter will extend this date; however, an IRS EP Examination does not extend this date." Does this encompass 5300 letters or just 5301? If it does, is this the safest way to handle a plan termination? If a plan sponsor was fairly certain that a partial termination is occurring or had occurred, is amending the plan an even safer route?

Thank you in advance to any and all help.

Hi,

This may be a dumb question but here goes...

If a 401(k) participant takes out a loan, makes payments on schedule, the loan is in full compliance with all requirements (less than $50K and 50% of account balance, there is a promissory note, etc.), and there is no loan offset or default, then does a Form 1099-R need to be issued for the loan distribution?

For example: Participant balance is $50K, takes loan for $25K, makes all payments on time. Before loan, 401(k) balance is $50K all in mutual funds. After loan, 401(k) holds $25K in mutual funds and a note from participant for $25K.

I am thinking the answer is No, there is no 1099-R issued for the $25K loan distribution. Basing this on the following:

1. Can't find anything in the IRS 2014 Instructions for Forms 1099-R and 5498 saying that a 1099-R should be issued in this case. Instructions only refer to issuing 1099-R in case of deemed distribution due to loan offset or default.

2. TD Ameritrade's qualified retirement plan distribution form has no place to indicate that a participant is taking a loan.

Any thoughts are welcome, thank you so much!

Sole Proprietor MD with 4 regular employees all in a Profit Sharing Plan. Practice sold on 9/30/13 in an asset sale.

As of 12/31/13 none of those 4 employees are on his payroll. Is there anything precluding him from make a 2013 Profit Sharing contribution only for himself?

My father died recently leaving behind an IRA which according to Wells Fargo had no beneficiary designation. Therefore, the spouse is the default beneficiary. The spouse is his second wife who released her marital rights in a pre-nup. What do I do?

Question: Can an employer deduct contributions made to an employee's Roth IRA?

The employer has a 401k plan - nothing special to note about the 401k plan. Outside of that plan as a bonus the employer made contributions to one employee's Roth IRA account. They have been grossing up the employees wages for the Roth contribution made. (At least they did once upon a time - it doesn't look like it happened last year.)

To the employer this is basically wages (assuming they grossed up the wages, amend the W-2 from last year if necessary etc), is there any issue with the employer deducting this contribution (as wages I would think)?

The employee would pick up income for the wages (including the grossed up Roth contribution) as income and then not deduct the Roth Contribution.

Individual intended to invest money held in an IRA into a private fund.

Custodian sent check to private fund.

Individual always intended for IRA to hold the investment.

Custodian mistakenly believed the check was intended to be a distribution from the IRA (and that the individual, personally, would be the investor in the fund, and not the IRA).

Individual would like simply unwind the transaction and put the money back into the IRA (fund is willing to return the money).

Is returning the money into the IRA allowed? Assume it can be shown that custodian was at fault for not following individual's directions.

Thank you in advance.

And it raised a question for me on 403b's. 414h seems to indicate that mandatory employee contributions can only be pre-tax for governmental agencies that sponsor these pick up plans and meet a whole slew of requirements.

So, now I look at the TIAA 403b document and it allows for mandatory employee contributions. Yet the plans are sponsored by 501c3's. Are these supposed to be after-tax? Is there another exception out there for 403b plans?

Hi. I have a question regarding responsibility for adding dependent coverage. Here is the scenario. It is fuzzy at best, but this is what I understand happened:

Employer hired employee that was pregnant. Employee enrolled in employer's health plan. Employee had baby. Employer continued paying Employee's health insurance premiums (even Employee's portion). Eventually, Employee notified Employer that she is not returning to work. One year later, Employee receives invoices from the hospital related to the care of her baby (as there was no dependent coverage elected). Employee blames Employer for not informing her of the need to add her baby as a dependent.

The part I don't understand is when a mother has a baby, at what point do the hospital charges relate to the mother (and get covered by employee-only coverage) versus when do certain hospital charges get attributed to the child (and get covered under dependent coverage).

What responsibilities does Employer have to inform Employee of rights related to dependent coverage? Employee never formally notified Employer of Employee's desire to add a dependent; but all parties knew that Employee was on the company health plan, and was about to have a baby.

Hello Everyone!

We have a new comparability plan with 1 YOS and monthly entry for 401(k) and SHNEC(3%) and 2 YOS and monthly entry for the PS. The plan is also top heavy. We separated out all the otherwise excludible employees and are left with non-excludible employees. Can I get someone’s opinion on the correct compensation to use for each of the 2 example employees below for these test calculations?

Gateway
GND 401(a)(4)
ABPT 410(b)

Participant A: eligible for 401(k) and SHNEC only 7/1. Annual comp is $20k, mid-year comp is $10k. They will need to get a THM of 3% on full year compensation. I'm fairly certain that this is $10k compensation used for all 3 tests.

Participant B: eligible for 401(k) and SHNEC for the full year. Eligible for the PS 7/1. Annual comp is $20k, mid-year comp is $10k. The THM will be satisfied from the 3% SHNEC allocation.

Thank!

OK, so if I missed that stupid 120 day window, what do I do? Plan is effective 1/1/2013, calendar year plan. Can I just file the 2013 5500 and then file the top-hat filing?

Our client has 10/1 - 09/30 fiscal year. Their insurance policies renew 10/1, but they want to operate the FSA on a calendar year. Can we write the plan so that the coverage period for pre-tax health insurance will be 10/1 - 09/30 but the coverage period for the FSA will be the calendar year?

I'm frankly a little confused on this. Per IRS Notice 2013-54, it appears to be the $2,500 salary reduction cap plus 500 (for the rollover, I presume.)

My question is: does this limit include employer contributions or not? And if not, then is there any limit on employer contributions and or benefit payouts?

Assume two participants: one key and one non-key. The non-key however is an HCE so ADP testing is not an issue.

The plan went top-heavy for 2014 and the key employee wants to terminate the plan effective 4/30/14

No safe-harbor provision and the key employee has already made $5,000 in 401(k) deferrals on a salary of $50,000 for 2014.

Questions:

1) Assuming the non-key employee will still be employed as of 4/30/14 is a top-heavy minimum of 3% of their 1/1/14 - 4/30/14 salary due to them?

2) If so, to avoid paying any top-heavy minimum is there any way the key employee can take back his $5,000 401(k) deferral for 2014?

I have a question

1) I have an IRA what I rolled over from an old 1990 employeers 401k and haven't touch it since.

2) I contribute the max to my employeer matching 401k plan for CY 2013 and 2014

3) My wife no longer works but we have an IRA for her also

4) I've opened a seperate IRA (makes for two in my name)

QUESTION:

I know the max I can contribute to any one IRA per CY is $5,500.

The question is, since I have a total of three IRA (2 mine) (1 spouse), can I contrbute

$5,000 to each of my IRA in the same CY???

* $5,500 to my IRA #1 for CY 2014

* $5,500 to my IRA #2 for CY 2014

Of course, I know that I can contribute $5,500 to the spouses IRA for 2014.

Thanks,