I've seen some threads on this, but I can't seem to find any that directly answer my question. Assume that overpayments were made to 401(k) participants as a result of the application of an improper vesting schedule. The custodian issued 1099-Rs for the total distribution (including the overpayment). I am comfortable with the EPCRS correction procedure for this error (which includes the plan notifying the participant that the overpayment is not eligible for rollover and asking for the return of the overpayment [and if not returned, plan needs to be made whole]), but, I'm struggling with the tax reporting.

Assume for purposes of numbered paragraphs below that the distributions were not coded as direct rollovers:

1) Should the plan instruct the custodian to issue amended 1099-Rs to reflect the correct amount of the distribution and issue a 1099-MISC for the overpayment amount?

2) Alternatively, should the plan only issue amended 1099-Rs if the participant returns the overpayment? Under this approach, the plan would do nothing unless the overpayment is returned.

If the distributions were coded as "direct rollovers," I believe the plan would have to issue an amended 1099-R to reflect the amount eligible for direct rollover and the amount not (i.e., overpayment).

Any thoughts would be appreciated.

I have an orphan plan in which there is one participant account. The participant is the former sole shareholder of the plan sponsor which dissolved several years ago.

I have read about the orphan plan procedures under the DOL regs and under EPCRS.

The DOL rules seem to focus on insulating the custodian of the plan assets from liability while the EPCRS rules focus on ensuring the qualified nature of the plan assets.

My client is the plan participant. Since he is not the custodian, may he just correct under EPCRS or must he also convince the custodian to follow the DOL regs?

The EPCRS rules say they don't apply to a plan that has terminated pursuant to the DOL regs.

I am confused as to whether one or both procedures must be followed.

Any assistance is appreciated.

Is a RMD required to be processed before a rollover out of the plan is processed?

e.g.

Participant DOB is 11/1942

Retired on 04/2013

Sent in paperwork to roll to an IRA in 08/2013

I realize that the RMD can be delayed until April 1, 2014 to take the 2013 RMD and then the 2014 must be taken before 12/31/2014.

The question is do we have to process a mandatory RMD before the request for rollover is processed?

And does it matter if the plan is a 403b vs a 401k?

The plan doc does allow for the later of 70.5 or retirement.

Partners[who all get K-1's] want to amend Safe Harbor k-plan definition of w-2 to exclude bonuses. I was under the impression that a Safe Harbor plan had to use 415 comp definition.

I've now been told what I believe to be wrong information by 2 record keepers, causing me to question myself.

If a plan has used the 80/120 rule to delay audit requirements at some point in the past, must they continue to be audited until they fall below 80 participants or is it just below 100?

This Cash Balance Plan missed its 9/15/2013 funding of its plan. Froze benefits in 3/13. Paid a $40k excise tax on 9/15/2013 for missed 2012 contribution.

Is terminating today with 204h NOIT, so a 3/1/2014 term date.

Owners have 95% of all balances, and will waive benefits to be sufficient.

They will not pay 2012 funding 2013 funding, and will be a sufficient termination and do not want to fill w/IRS for a termination LOD.

If the Plan goes away on 6/1/2014 and is distributed, there will be no plan to make funding for the missed 2012 and 2013 funding.....I'm nervous about the excise tax issues here for 2012 and 2013...any thoughts????????????

A "senior" lawyer recently became employed by our firm on a full-time basis after leaving his prior firm due to its mandatory "retirement" policy (age 70). He reached age 70.5 in the second half of 2013. He will be rolling his 401(k) plan account from the prior firm into our 401(k) plan. He intends to work for several more years (believe it or not !). He will not be a 5% owner of our firm.

Although he has "retired" from his former firm, he has not "retired" from the practice of law. He would prefer to avoid receiving a RMD for 2013 (which, if required, would need to be received by April 1, 2014).

Sal Tripodi writes in his respected ERISA Outline Book that "Presumably, retirement means that the employer-employee relationship with the employer that maintains the plan has ceased." He also notes, however, that "Nowhere in §401(a)(9), nor in the legislative history or any of the regulations is retirement defined for §401(a)(9) purposes . . . ." See Chapter 6, Section VII, Part B.1.e.

We believe that a strong argument can be made that the policy behind the the SBJPA provision permitting RMDs to be delayed for those who are not 5% owners was to avoid forcing employees (other than 5% owners) to receive RMDs while they were still gainfully employed. Thus, we would assert, where the individual continues gainful employment with another employer (particularly in the same field) there should no "retirement" for RMD purposes.

I would be most interested in any thoughts on this question.

P.S. Incidentally, it appears that even if an RMD is required for 2013, none would be required for subsequent years until the year of "retirement" from our firm (assuming such retirement also encompassed retirement from the practice of law). Rev. Rul. 2004-12 (once rollover funds hit the recipient plan they take on the character of the recipient plan).

A participant completed a form mid October requesting to suspend his 401k contributions. The employer received the form and "entered it into their system" so he is shown as 0% in their records. Yet on payroll he is still deferring. They have successfully shut him off for the first pay in January. Even though there is one more December payroll, it is too late to turn off the 401k so he'll have one more payroll deduction.

Is the stopping in January enough or should a refund be issued for the payrolls back to when he signed the suspension form? Since we do not know the final December payroll amount, I presume the refund would be processed in January (and count for 2013 income). All of the excess payroll withholding will still be counted in 2012 testing. Correct?

Facts: Plan document allows for hardship distributions from the deferral source only. A participant (NHCE) received more than the basis in his account at the fault of the TPA. The distribution happened in 2013.

Question: If the participant repays the overpayment, is the repayment credited back to his account OR put into an "unallocated" account to be used to reduce future employer contributions?

I read Section 6.06(3) of Rev. Proc 2013-12 (EPCRS) where it states that the repayment be placed in an unallocated account which is a separate account that is not allocated on behalf of any participant or beneficiary established for the purpose of holding the Overpayment, again adjusted for Earnings, to be used to reduce employer contributions (other than elective deferrals) in the current year or succeeding year. It is not clear to me whether the repayment by the PARTICIPANT rather than the actual employer or another person would affect the method of repayment (restore to participant's account or put in unallocated account).

Any opinions on the interpretation of Rev. Proc 2013-12 or maybe some practical experience with this type of failure to share?

Thanks,

QNPG

PEO takes on a new payroll client who will be signing on as a participating employer in the PEO 401(k) Plan. The client has an existing 401(k) plan with another vendor & payroll company.

Does the client transfer or terminate the other 401(k) plan? I'm thinking specifically of the successor plan rules. Do those apply in this instance?

Thanks in advance.

401k plan permits SDBA for ALL employee, but most people (including all NHCE's) leave their money in the regular mutual fund only platform. The recordkeeper will allow in-kind transfers on the SDBA's but of course not on the regular platform.

I am assuming that even though only owners/HCE's have their money in SDBA's that it would not be discriminatory to amend the plan to provide that "in-kind transfers of securities is permitted for the Self Directed Brokerage Accounts.

I work for a TPA firm who administers a 401(k) Plan whose sponsor was sold September 20, 2013, the terms of which are unknown to us. During the process, the plan trustee elected to terminate the plan. Plan termination became effective October 1, 2013. Plan participants were paid out, with most of them receiving cash distributions.

We are now being contacted by the purchasing company's TPA, They are stating that the purchase involved a stock split and that the plan should not have been terminated. They are requesting information about participant distributions and stating that the plan may need to be "made whole."

The only information I can find concerning a stock split describes company stock and has nothing to do with assets in a 401(k) plan. The 401(k) plan contains no company stock.

I would appreciate any insight anyone can offer.

Participants in the plan are eligible upon hire.

An individual's start date is 12/30/2013.

The participant will have no W-2 wages for 2013 since the hours worked were after the employer submitted his last hourly payroll for 2013 to the payroll provider. The hours worked will fall into the first pay in 2014.

So despite the entry date, would the person receive TH minimum for pay earned on 12/30 and 12/31? My thought is no since the document states that compensation is defined as compensation for a Plan Year for which the Employer is required to furnish the Participant ... Form W-2 - I'll have no 2013 W-2 for this individual, therefore no pay.

Any others have different thoughts?

Just looking for thoughts, opinions? New clients' prior 5500s seemed to use Schedule A Part IV item 11 liberally and check off Yes with ease when that was not the case. Think it should be amended and if so all the way back to 2009? To what extent is the IRS following up on this question? if they do, to what extent do they identify to insurance companies those plan sponsors who checked off Yes?

I am working on a DB where the only participants are a doctor, his wife, and a terminated employee. The terminated employee completed a distribution form to have the lump sum value of her benefit rolled over into an IRA. I have contacted the financial institution that holds the plan assets and they said that they need a letter of instruction mailed to them that is signed by a trustee (either the doctor or his wife) and that has a medallion signature guarantee provided by a bank. I drafted the letter of instruction and provided it to the doctor's wife. However, she explained that she and her husband are currently preoccupied with an urgent family matter and she doubts that she will be able to get to a bank this week. If she doesn't get to a bank until Monday, the financial institution surely won't receive it until December 31, and the rollover won't occur until 2014. However, the terminated employee knows that, if delayed until 2014, the lump sum will probably go down, as the December 2013 417(e) segment rates will need to be used (instead of the December 2012 rates). Is there any way to use the assumptions prescribed for 2013 if the actual distribution doesn't occur until 2014?

Any thoughts would be appreciated!

Does anyone know of where we might find some sample notices we can provide our clients to notify employees of implications of Supreme Court's decision re DOMA and same sex marriage? We have prepared a notice for our clients, but some have asked for samples to provide the participants.

NHCE ADR is 5%, so HCE can defer 7% plus $5,500 catch-up.

HCE has already deferred $22,500. Let's call his compensation $150,000. So, he's only allowed deferrals of $16,000.

From what I read, I can not refund before year end.

So, the question is, does the 2013 W-2 show Box 1 wages of $127,500 and Box 12 deferrals of $22,500? And then, in 2014 there's a Form 1099-R with the refund (plus earnings) of $6,500?

Plan's original effective date is 1/1/2006. Plan is going to terminate 12/31/2013, and possibly be submitted sometime in 2014. Is it exempt from the IRS user fee? The instructions on the 5310 aren't exactly clear.

The exemption from the user fee applies to all eligible employers (defined below) who request a determination letter within the first 5 plan years or, if later, the end of any remedial amendment period with respect to the plan that begins within the first 5 plan years.

A determination letter application that is filed by an eligible employer meets the requirements for exemption if:

(1) the application is filed no later than the last day of the submission period for the plan's current remedial amendment cycle under Rev. Proc. 2007-44, and

(2) the plan was first in effect no earlier than January 1 of the tenth calendar year immediately before the year in which the submission period for the plan's current remedial amendment cycle begins. (If the plan was first in effect before this date, but the application is still filed within a remedial amendment period that began within the first 5 plan years and you are an eligible employer, complete only the

Certification and attach an explanation of how your application qualifies for exemption under section 7528(b)(2)(B).)

Example.

An employer maintains an individually designed plan first effective on July 1, 2001. Assume that the plan's 5 year remedial amendment cycle is Cycle A. Therefore, the submission period for the plan's current cycle ends on January 31, 2012. Assume that the employer files a determination letter application for the plan on January 31, 2012. If the employer is an eligible employer, the application is exempt from the user fee requirement because the application is filed by the last day of the submission period for the plan's current remedial amendment cycle and the date the plan was first in effect (July 1, 2001) is not before January 1, 2001 (i.e., January 1 of the tenth calendar year immediately before 2011, the year in which the submission period for the plan's current remedial amendment cycle begins).

Notice 2013-74

(In Plan Roth Rollover)

this recently released Notice contains guidance on whether you can change a safe harbor mid year. Interesting, yes you can change the safe harbor mid year to add a Roth rollover but only if adopted by the end of 2014. I'd note, this really has nothing at all to do with the safe harbor itself, yet they are saying this is only temporary. normally you wouldn't be able to change a safe harbor mid year. just when I thought they might be taking a softer approach to mid year changes.

Q 5 (b)

In accordance with § 1.401(k)-3(e)(1), this notice provides a temporary period during which sponsors of safe harbor plans are permitted to make a mid-year change to provide for in-plan Roth rollovers of otherwise nondistributable amounts. The period ends December 31, 2014. Thus, in the case of a § 401(k) safe harbor plan that has a calendar-year plan year, in order for the plan to permit an in-plan Roth rollover of an otherwise nondistributable amount during 2013 or 2014, a plan amendment providing for that option must be adopted by December 31, 2014.

Plan has quarterly entry dates and compensation prior to entry date is excluded. Plan is top heavy, so participant needed an additional top heavy minimum based on annual comp. Can I still use the 414s compensation for the average benefits and general test?

thanks