Regarding an ERISA-governed retirement plan, a person who wants to be recognized as an alternate payee submits a domestic-relations court's order to the plan's administrator. If such a person submits the order to the plan's recordkeeper, a typical recordkeeper will send the order to the plan's administrator, or do something to make clear that the recordkeeper is not the decision-maker.

What about a 403(b) plan for which the employer seeks (whether to avoid establishing or maintaining a plan within ERISA's meaning, or for other reasons) to not involve the employer in benefit claims decisions (except to furnish factual information that is specially known by the employer)?

In those circumstances, will a 403(b) insurer or custodian make QDRO decisions?

What restrictions or provisions (if any) does an insurer or custodian request?

Does willingness to handle QDRO matters vary between insurers and custodians?

Is there a difference between group and individual annuity contracts?

Is there a difference between group and individual custodial-account contracts?

If both the employer and the insurer or custodian refuse to decide whether an order is a QDRO, what happens?

For purposes of determining when the Participant's "earliest retirement date" is, one step in the process is to determine the later of (i) the date on which the Participant reaches age 50, and (ii) the date that is "the earliest date on which the Participant could begin receiving benefits under the plan if the Participant separated from service with the employer"?

Two questions: First, does (ii) mean the participant must actually separate from service for the ERD requirement to be satisfied? In other words, if the Participant separated from service the AP could get the money immediately, but does the participant actually have to separate for that provision to kick in? Is that logical?

Second, a QDRO contains the following language that appears to come from the regs:

In the event that... the AP account balance is less than $1,000…and the AP does not elect to…receive a distribution…, then such Account shall be distributed to the Alternate Payee upon the earlier of (i) the date that the Participant terminates from employment with the Plan sponsor or (ii) the date that the Participant attains age 50.

Is a QDRO required to contain that language, i.e. are we required to track the age of the participant and force a cashout of the AP account when the participant turns 50, or can we rescind that language in our model QDRO so that the AP can remain a deferred participant who can take them money at any time before/after the participant turns 50 (and before age 70½?

Thank you for your insight. May your journey today be free of incident.

S

Is there an issue here:

Plan eligibility is age 21, 6 months service, qtr. entry. Compensation is defined as the plan year, not from date of entry.

Plan document states a minimum deferral rate of 1% and max of 90%.

Participant was hired January 1, 2013, and entered the plan July 1, 2013, started deferring at a rate of 3%.

The question came up - this participant had 6 months worth of compensation prior to 7/1/2013, plan doc. states compensation is based on the plan year, and the plan has a minimum deferral rate of 1%.

Does some type of contribution need to be made to the participant for the 1% minimum deferral rate based on the compensation from Jan. 1, 2013 - June 30, 2013?

100% owner dies.

After death of owner, adult son is hired.

Owners trust still owns 100% of business.

Is son an owner by attribution?

I know this is the most basic of questions but I have been struggling today:

I have a non-calender Employer fiscal year that ends 09/30. The profit sharing plan is a calendar year plan.

For the plan year ending 12/31/2013, when does the Employer deduct the profit share contribution he makes for 2013 and when is it due to the Trust?

I remember way back when learning the basics and there was something on the off calendar fiscal clients about the "fiscal year ending within the plan year" or the "plan year ending within the fiscal year"?!?!?

any help appreciated....

Is there anything in the way a 1099-R for an RMD is completed that would clue the IRS and/or the participant that the distribution was in fact an RMD, and thus not eligible for rollover?

Any help appreciated.

401k plan has different entry dates for salary deferrals, matching and new comparability employer base allocation. Salary deferral is most liberal down to least liberal for employer base allocation. Compensation is defined as "date of entry" comp for all three sources. Our software (ASC) doesn't only seems to allow one definition of compensation for ABPT purposes. Would it comply with the X-testing rules to add the ebars of each source together to determine the ebar for the ABPT or should the ABPT use only one definition of comp to calculate a total ebar? And if so, would it be based on the most liberal (since the salary deferral is the first entry date) or other? Any input is appreciated. Thanks.

In case you missed the State of the Union:

http://blogs.wsj.com/washwire/2014/01/29/nine-things-to-know-about-obamas-myra-accounts/

I was a very mediocre Obama supporter and sort of scoffed mildly at people who suggested maybe Obama wanted to take over every aspect of our lives. I suppose I am beginning to see it more there way. What an exceedingly bad idea...

A medical practice is hiring a new physician. They have asked if it is ok for his employment date to be July 1, even though he may not start work until August. From a TPA standpoint, I'm going to use whatever date they put on the census. However, as far as telling them it is ok to do this, I'm not so sure. It seems a little fishy. If they have a contract with him that specifies his employment date as July 1st, are they in good shape?

Owner of the company is well beyond 70½. Each year he makes a large Roth deferral into 401k plan and immediately rolls the full Roth balance to his Roth IRA. He has a small pretax balance that remains in the plan from year to year; his RMD is based on that alone, since each January 1 it is the only balance in his account.

When the rollover is processed, most of the Roth balance does go the Roth IRA, but the RMD for the year is deducted (from the Roth balance) and a check sent to him. The pretax balance that remains would have been much more than enough from which to take RMD later in the year.

Do regs require that his first distribution(s) in a year be treated as RMD, until RMD is satisfied?

Thanks

We have client that is an S-corp with 2 owners and a profit sharing plan requiring 2 years service for participation. Although she was never formally terminated, in past years Owner #1 has not worked or had any hours been drawing any W-2 income for several years (about 10), while Owner #2 has. Now the roles are reversed and effective with the (fiscal) plan year starting 02/01/13 Owner #1 is collecting W-2 income while Owner #2 is not. Owner #1 wants to participate in the Profit Sharing, but we initially thought a 5 year + break in service would exclude her for 2 years, and so were prepared to establish a second Profit Sharing plan with special first year eligibility.

The Client's accountant has done some research and believes that an owner of an S-corp is always considered a statutory employee of the corporation.

1) Is the accountant correct, and should we have been treating Owner #1 as a non-benefitting HCE all these years?

2) If the answer to 1) above is yes, do we always treat an S-corp owner as having worked over 1,000 hours, even if census data shows less? (she has had a couple years of under 500)

3) If Owner #1 has had many years without any income, and a couple with minimal income and under 500 hours, does she have a break in service or not?

4) It seems that if we consider her to have no break in service, she can participate in the existing plan (no second plan is needed), but if she does have a 5 year + break in service, then we need the new plan in order to allow special first year eligibility - is that correct?

Any insight we can get into this subject is greatly appreciated.

Have a series of clients that are receiving CP 220 notices stating some variation of "Changes to your December 30, 2012 Form 5500 Amount Due $401.00". It goes on to state "we made changes to your December 31, 2012 Form 5500. As a result, your amount due is 401.00. This wasn't an audit. Your return may be examined in the future." If goes on to explain interest charges and the like.

First Question, how can any change be made to a 5500 that results in a tax due?

Second Question, is anyone else getting these?

Third Question, if someone else has received one of these, what did you do and what was the result.

Thanks in advance.

We have a new prospect that was part of a big PEO's Plan. The PEO is a public company. The PEO files one 5500 for everyone or at least they did in 2012. It appears to us that anyone that is part of the PEO can be in the Plan. There is no link such as control group, ASG, affliated employer, union, etc... Since the DOL said open MEPs need to file a 5500 for each employer, we are wondering how they get away with it? Is there something that a PEO is using to link the companies??

can i use the DOL VFC program for this type of plan?

Owner of IRA dies. He was over 70.5 and had started RMDs. His IRA is going to adult niece (age e55).

Can she put the IRA into a trust?

If she does, is the IRA still called an inherited IRA?

Are the RMDs still calculated based on the niece’s age?

Can a trust be the trustee of an IRA?

Thanks!

I have seen terminating plans allow participanis in pay status to change their benefit election and elect a lump sum cashout. Can a plan that is not terminating allow this? If so, is there any reason that lump sum would not be eiligible for rollover to an IRA?

Are monthly installments payments over a period of 10 years or more paid to the participant from a 401(k) plan's trust considered an annuity? A question came up that if a participant is under age 59-1/2 (under 55 if separated from service) s/he should get a Code 2 on Form 1099-R as this type of installment payment is an annuity. Many recordkeepers tax report these as Code 1.

If you consider these annuities, please provide the applicable cites. Thank you.

A company offers a DB plan with that currently has an unfunded liability. The company may be sold - asset sale only to an unrelated party. There is no controlled group issue or any relationship between the potential buyer and seller.

I am told that even though this is an asset only sale, the new buyer would have to take on the unfunded liability.

Is this correct? Why would the new owner have to take on this expense??

thanks

Should an employee who has not met the eligibility requirements who is allowed to defer be included on line 5c?

I have a potential client that has a 401k profit sharing plan (Company A). The owner’s wife owned her own company (Company B) with a Simple plan (no kids so no controlled group issues). The wife died and now the husband owns Company B and so now they are part of a controlled group. The husband merged the plans and the money from the Simple plan was rolled into the 401k plan of Company A.

Here are my questions:

1. What is the way to correct the rollover – simply distribute the funds out back to the participants?
2. What if the Simple is disqualified?
3. Does this “taint” the 401k profit sharing plan and cause it to be disqualified?
4. How can you correct Simple money that are rolled into a 401k plan?
5. Can Simple money ever be rolled into a 401k?