Employer has two DB plans--a Union Plan and a Non-Union Plan. For employees who transfer out of the union, and therefore accrue benefits under both plans, the Non-Union Plan benefit is calculated by counting all the employee's service as if it were non-union service and then reducing the Non-Union Plan accrued benefit by the benefit the employee accrued under the Union Plan. Because the plans have slightly different ERFs, this offset arrangement can cause the benefit actually payable from the Non-Union Plan (i.e., after the offset) to be lower at NRD than it was at some early retirement dates.

Does paying the lower Non-Union Plan benefit at NRD violate the requirement in § 411(a)(9) and Regs. § 1.411(a)-7©(6) that the normal retirement benefit be the greater of the benefit payable at (i) NRD or (ii) any early retirement date? If you consider the aggregate benefit payable from both Plans, the benefit doesn't decrease; nor does it decrease if you look at the Non-Union Plan's formula standing alone. It's just the offset arrangement that causes the Non-Union Plan benefit to decrease.

Any thoughts appreciated. Cheers.

In the middle of 2013 we were notified by a client that they had moved the plan assets out of the current investment platform into the investment platform of a MEP. We have seen nothing in the way of documentation for this transfer. Other than a final 5500 for 2013 and "our plan" for this client, how is the testing done on this? is anything done on a partial year basis or is it all now simply done for the full 2013 by the MEP? The plan is a SH match. Would mid year calculation of match and an adp test be required? I

Has anyone ever seen guidance as to what the meaning of "substantially all" under IRC 409(h)(2)(B)(ii)(I) is? The Code permits an ESOP to require cash distributions (and not permit in-kind distributions) where the corporations charter or bylaws restrict "substantially all" of the employer securities to employees or a qualified plan. Does anyone have any idea what "substantially all" means?

I ran into a friend of mine recently who was frustrated with her ER over the 401(k). Apparently the ER customarily announces a discretionary match to the 401(k) - (no P/S component) - at the beginning of the year, and discloses it to the EEs in writing. However she was just informed here in April of 2014 by the HR manager that the company has decided not to make the previous year's match already declared (2013) due to profitability issues.

I understand that there can be a lot of leeway with what an ER can do if it is in the plan docs and doesn't violate ERISA, so I asked her to get a copy of her SPD/SMM, which will give me a starting point. I'm an Investment Adviser and not entirely familiar with plan design issues, but I would think that if they are disclosing in writing the the EEs at the beginning of the plan year what the matching contribution is, they couldn't rescind that declaration after the plan's year end.

Does anyone have any thought on this?

FYI - I prospected this ER last year and spoke with one of the execs, who in conversation told me he had heard of 408(b)2 but they didn't have to comply with it...so obviously this is a plan with suspect management to begin with.

We have a 401(k) plan client that had been a 9/30 C-corporation.

In late February they filed to be an S-corporation. As such, their accountant is filing a tax return for the period 10/1/2013 - 12/31/2013.

Their 401(k) plan currently has a 9/30 year end.

Question: can the plan be amended now (April 8, 2014) to change to a short plan year for the period 10/1/13-12/31/13 or must the amendment be prospective?

Thanks

In a typical mirrored loan, the company will get a loan from the bank and then loan the money to the ESOP pursuant to identical terms.

We have a company that would like to get a loan from a bank and then loan the money to the ESOP with more favorable terms. Does this work? Does this provide greater protection, since they are charging the ESOP less? (then again, the ESOP owns 100% of the Company, so maybe it doesn't matter.

My understanding of the final regulations is that after giving the automatic enrollment notice, the employee must have a reasonable period of time to elect not to participate (ie opt out) or to elect to participate at a different %. I have a client that wants to enforce automatic enrollment immediately, but then offer the 90 day permissible withdrawal option where they can ask for an undo so to speak of the amount.

Is this permissible? I feel that it may violate wage withholding rules since you do not give them an opportunity to opt out.

Thoughts?

401(k) Plan provides for safe harbor contributions and profit-sharing contributions. There is no last day rule or Year of service requirement. Employee is fired mid-year. He signs a severance agreement with a general yet broad release of all claims. Employer believes this means it doesn't have to make contributions to ex-employee under plan.

Thoughts?

Taxpayer is MFJ and is going on extension to October 15, 2014. Current AGI allows a Roth IRA contribution for both H&W. However, what are the ramifications if the taxpayer's AGI goes up over the limits between now and October 15? Can the Roth be converted to a traditional IRA without penalty?

Any answers would be helpful, thanks!

Hello

My wife and I are both US residents but non US citizens. I'm thinking of opening an IRA and Spousal IRA (both non Roth) and wanted to check if there are any ramifications of non being a US citizen?

I just read something that said US Citizens must cash in a Roth IRA if they retire abroad, so I was wondering if there are other rules US Citzenship versus non Citizenship

- Firstly, can we, as US Residents but non US Citizens, open and contribute to an IRA?

- If we create an IRA then later move abroad to work can we still continue to contribute to the IRAs?

- If we retire abroad and have a non Roth IRA what is the situation?

THanks

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?