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

I have a client with several seasonal pilots. The client tracks 'pilot days'.

"Their daily wage is based on a 14 hour duty day as that is the maximum number of hours they can be on site. If they work 4 hours and we cancel flights due to weather, they are paid a full days wage. Sometimes, they will be here 8-10 hours and other times 14 hours."

What would you use to estimate hours? My client was thinking that 10 hours per pilot day sounds fair but I was wondering if there was some guidance I could follow.

Thank you!

quite a big jump from last month (Feb) to this month (Mar) released figure, from 234.781 to 236.293.

If that figure holds through Sept then everything jumps to the next level (including catch up contributions)

Can a DRO that says a participant's spouse will receive no benefits (and will not be considered a former spouse or surviving spouse) be a QDRO, assuming all the other requirements are met (e.g., name of alternate payee, address, name of plan, etc.)? The idea is to allow the participant to name a different beneficiary before the divorce is final.

I think I know the answer to this but I wanted to see if anyone had any other input. Defined benefit plan with 5 year cliff vesting. The Plan is in some trouble financially, mostly due to the fact that retirees currently receiving benefits are receiving very high monthly payments. This is due to a high accrual rate in the 90s and early 2000s.

I have had a number of people ask me if we can ask the retirees to voluntarily reduce their benefits in order to stave off PBGC involvement (which will be happening within the next 10-15 years if things stay the way they are).

26 CFR 1.411(d)-4 Q&A # 2 states "A plan is not permitted to be amended to eliminate or reduce a section 411(d)(6) protected benefit that has already accrued, except as provided in 1.411(d)-3 or this section. This is generally the case even if such elimination or reduction is contingent upon the employee's consent."

Seems to me that it's clear that we cannot ask the retirees (or anyone with an accrued benefit) to voluntarily reduce their benefits. But, when I've said this to other professionals, I sometimes get a look like I'm crazy.

Thoughts? Thanks.

I have always been of the opinion that the IRS's approach to this has been (to their credit), if you have the wherewithal to come in and admit you have sinned and are willing to pay the fees, that they will more or less "rubber stamp" your correction methods, especially if they are the sanctioned correction methods.

So I have a client (business owner) who during a transition from one vendor to another did not re-establish her loan payments. We just took over as TPA and discovered the error. Obviously, one of the principals for correction is that it has to be Employer Error. Have people had good luck with submitting these corrections? I know the hurdle is higher than it is with respect to employees. Again I come back to the fact that my employer just wants to do the right thing. Would you do an anonymous VCP in this scenario considering the tax implications if it is denied?

I will begin by saying, I have NEVER worked with a Top Hat Plan, so a little patience please...

my client called and stated they had a Top Hat Plan for one employee ( we never new about this) who is currently receiving payment from the plan.

the CEO stated they were suppose to file Form 5500 and never did.

My research shows, if they filed a simple statement with the DOL within 120 days after the adoption of the plan, disclosing specific information, no 5500 is filed EVER on the Plan.

However, if they did not file the notice with the DOL, they are required to file the 5500 each plan year.

Is this correct?

If in fact they never filed the notice with the DOL, can I use the Delinquent Filer Program to correct the past 5500 filings?

Thanks for our help...

An employer owns company A and B (they consist a controlled group). Each company has its own 401(k) plan. Both plans have the same plan year end (1/1-12/31), same testing method, and same provisions.

Company B was sold (asset sale) to a unrelated company, which resulted the employment termination for all employees as of May 1, 2013. Company B's Plan Year for 2013 would still be 1/1/2013-12/31/2013 as the assets were not distributed during 2013 (no short plan year for 2013).

Can company A and B be permissively aggregated for the ADP and ACT test for the 2013 Plan Year end?

I have no issue passing the coverage testing with/without the permissive aggregation for both plans, however, I would like to permissively aggregate for the ADP and ACP purpose. I am concerned that company B was only active for 4 months of the year (even though the Plan Year for the Form 5500 would still say 1/1/2013-12/31/2013).

Thank you.

A 5% owner sponsoring a one person defined benefit plan began taking required minimum distributions upon attaining 70 1/2 in 2011. The participant elected to receive the RMD in annual intervals. As such, the annual RMD was always taken in March of the subsequent year. For example, the 2011 RMD was taken in March 2012, the 2012 RMD was taken in March 2013 and the 2013 RMD was taken in March 2014. Let's assume the participant's monthly accrued benefit is $5,000 and furthermore assume the participant's high 3-year average annual salary is $60,000. The annual RMD paid for each year in March 2012, March 2013 and March 2014 equaled $60,000.

The plan is terminated effective 4/30/2014 with an assumed distribution date of 6/30/2014. The 5% owner will elect to take the remaining benefit in a single lump sum and rollover the distribution into an IRA. What is the RMD for 2014 that is not eligible for rollover? Note that the plan is slightly overfunded so the goal is to avoid use of the account balance method. The objective is to distribute the greatest amount possible to the participant.

Can $60,000 be paid to the participant in order to satisfy the 2014 RMD? If so, will the payment of $60,000 reduce the remaining lump sum as of 6/30/2014 or can the remaining lump sum as of 6/30/2014 be calculated as the PVAB of the unreduced $5,000 monthly accrued benefit using the 2014 applicable mortality table at 5.5%?

Please also suggest any other methods that would be deemed reasonable. Thank you.

ok - I KNOW this is very basic, but I'm old and tired....

Son owns 60% of Company

Dad owns 40% of Company

Mom works there as well. Does Mom have attribution from both husband and son for a total of 100%?

It is not impacting anything with the Plan; just want to have them all coded correctly.

Thanks in advance.

So I'm having a hard time finding anything that allows (or disallows) a plan to not allocate any interest to employee contributions if the participant terms before becoming vested? Would this be discriminatory?

Interesting question from a college. They have some employees who might take one or two classes a semester. Our Corbel 403b document says:

© Student Employees. If the Employer elects in its Adoption

Agreement to exclude Student Employees, the exclusion applies

to students performing services described in Code §3121(b)(10).

§3121(b)(10) says:

(10) service performed in the employ of—

(A) a school, college, or university, or

(B) doesn’t apply

if such service is performed by a student who is enrolled and regularly attending classes at such school, college, or university;

Would it be unreasonable to have a policy that those taking one or two classes a semester do not regularly attend? It just seems like such a common situation that someone must have come up with a workaround!