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?

if deferrals are returned, whether it be for 402(g) excess or to correct an

ADP failure, is the effect on the 5500 simply a matter of whether

cash or accrual accounting is used otherwise ..does the return impact the year

of contribution or the year of return.. also how do most peope handle participant statements

with returns...reflect the return in the year of return??

Does anyone know if the benefits records of an employee (health and welfare plans, retirement, etc.) can be merged into an employee's official personnel/employment file once the employee terminates? Or, should the benefits always be maintained separately for audit purposes?

The PBGC is trying to have the Schedule SB changed to require reporting the Funding Target for inactives broken down (as is done for actives) into vested and total amounts.

1. Is anyone out there including any non-vested benefits in the Funding Target for non-actives? If so, why? Most plans contain language that treats non-vested participants as forfeiting their benefits immediately upon separation from service (having been "paid" a lump sum of $0 for the "vested" portion of their accrued benefit), and such people are dropped from the Funding Target immediately, without having to wait for a full break in service to occur. True, if rehired the "forfeited" benefits are restored, but is anyone including anything in the Funding Target for people who have not actually been rehired?

2. If a participant terminates with partial vesting and, more than 5 years later, the plan terminates, does anybody think that the non-vested portion of the accrued benefit must be restored and paid out if the participant has not been rehired?

3. If a participant terminates with partial vesting and, after some years elapse without the participant having been rehired, the participant reaches normal retirement age, does anybody think that the non-vested portion of the accrued benefit must become vested and payable?

Some of us tried to put our heads together on this but we are having a great deal of difficulty imagining a situation where the Funding Target would include any non-vested benefits for inactives.

Are there many plans out there in which people who terminate prior to eligibility for a subsidized early retirement benefit (say unreduced benefits at age 60 with 30 years of service) are able to grow into the subsidy (the way ongoing employees can after a plan has terminated)? Since no further service would be accrued, the only way to grow into eligibility would be to already have enough service before termination of employment and then become old enough and actually claim it. In that case, wouldn't the right to the subsidy, contingent only on remaining alive until early retirement age and then claiming it, be considered vested?

What is the PBGC concerned about here?

Assuming the following:

1/1/13 trust statement asset - 100

1/1/14 trust statement asset - 200

7/1/13 contribution made for 2012 plan years – 100

2012 effective rate – 5%

What is the rate of return during the 2013 year for the purpose of the credit balances adjustment:

Option A: Since the contribution was made for the prior plan year, include it in the beginning of the year value discounted with the 2012 effective rate. Therefore the rate of return is

200 / (100 + 100 / (1.05^0.5)) = 1.22%

Option B: Account for the timing of the contribution disregarding the fact that it was made for the prior plan year as: 100 * (1+i) + 100 * (1+i)^0.5 = 200 . Which gives you 0%.

Other - ?

I know plan documents govern the beneficiary designation of a 401k, but is there any liability to an employer for not making sure all participants have a named beneficiary on file?

Participant, age 78, non-5% owner, not retired up and dies in October 2013. Spouse, only beneficiary, age 76 is about to receive the distribution from the Plan. Spouse intends to do a trustee to trustee transfer into an IRA.

First, assume that her RMD is withheld from the amount eligible for distribution and direct rollover, does she need to take a second RMD prior to December 31, 2014 from her IRA.

Second, does she not take an RMD out of the distributable amount and only take one RMD after the trustee to trustee transfer of the entire amount. (We think no, because 402© prevent a rollover if the RMD is due in the same year).

Any thoughts? Help? Much appreciated.

New plan for new company has 5 participants. Immediate eligibility for all. Profit sharing contribution is new comp, by group, each employee is a separate group.

At least 4 of 5 are participating in 401(k). Match discretionary to be determined at year end.

The first year all will be NHCE. Can a discretionary profit sharing contribution be made for only one NHCE?

The DB benefits election packages I prepare typically require the participant to check one of three boxes:

[ ] I am married

[ ] I am not married

[ ] I am married but cannot locate my spouse

Are practitioners modifying the election packages they prepare to request additional information? This seems like a damned-if-you-do and damned-if-you-don't proposition. On one hand, the Plan would endeavor to respect a participant's privacy. On the other hand, you'd hate for a legally married beneficiary to show up some day and demand a survivor benefit when benefits weren't reduced to cover the cost.

In absence of any convincing direction, I will not change the package understanding that married is married and you could have the same issue with a heterosexual estranged spouse if the participant checks the "I am not married" box.

Adding modifiers such as "legally" married can be problematic. For example, Texas recognizes common-law marriage in respect to the J&S stuff.

Thoughts?

does this constitute a BRF that would need to be tested (and will fail) since only the 3 owners are allowed to enter as of a date that is earlier than the 1 year of service requirement? This is a new plan and a new employer. No one was hired (or so they say anyhow) until a couple of weeks after the owners established the practice. The owners all have the same date of hire in the third quarter of 2012, so would not be eligible to enter using the standard 1 year of service. All other employees were hired after the owners and are not eligible because of the 1 year wait and they were not employed on the date being used for the "employed on date" waiver.

Company A acquires Company B through a stock purchase. Company A’s plan requires 1 year of service and as quarterly entry dates (1/1, 4/1, 7/1, 10/1). Company A acquired this company on May 1, 2014.

1. Am I correct in my thinking that the employees of Company B that have been there 1 year would all enter the plan on 7/1/2014?
2. What code section supports this conclusion? My guess it is somewhere in the controlled group regs.
3. Is there a private letter ruling possibly on the subject? I am trying to give the client an example to support my

Not sure if I'll even ask this right, but here goes. Aside from "what does the plan say" I'm more interested in legal/regulatory requirements that might prohibit this, or practical considerations.

Suppose you have a new ESOP. S-corp, leveraged ESOP, 100% of stock. Plan is effective for 2013. Loan doesn't take effect until 2014, with a 10-yer repayment schedule, at the end of each year. Shares will be released as usual, etc., for the second and subsequent plan years as the loan payments are made. (2014 onward)

The first year contribution is cash, and is allocated as such. What happens if they want to, say in June of 2014, take the cash that was contributed and allocated to participants for 2013, and purchase stock with it? Or perhaps to make it simpler - can the Plan Trustees/Administrator/Fiduciaries, at any time, purchase stock with the cash in the plan (assuming not messing with diversification rights or anything like that?)

I'm perhaps making this more difficult than it is, but maybe I'm missing something critical?