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?

I have a client that has a cash balance plan. In May of 2013, he froze his benefit because he did not think he would be able to afford it. After year-end. he realized he could afford it. If we amend the plan to unfreeze his benefit and reinstate the benefit he was getting in prior years, is that considered discriminitory since we are not increasing the NHCE benefits in the amendment (the NHCE beneft was NOT frozen in May)?

If tested with the plan, it passes, but if just the amendment was tested, it clearly would not pass since we are giving an HCE an allocation with no NHCE allocation.

Are all amendments after year-end considered corrective amendments?

I have a client that has a safe harbor match with profit sharing. For 2013, the profit sharing allocation is pro-rata.

Is it possible to amend the 2013 plan to make each participant that own group? Will this cause the plan to lose it's safe harbor status and possibly effect the ADP test?

Are all amendments after year end considered corrective amendments?

I know I could set up a seperate profit sharing plan and just merge the two plans next year, but this is a last resort option.

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.

Are 409a employee contributions exempt from New Jersey State tax at the time of the deduction from employees check?

Rules seem to be very vague or unclear at this point

So, the tax department where I work recently questioned whether a leveraged ESOP that we represent is required to issue a Form 1099-INT to the former shareholders who are carrying the financing for the ESOP's purchase of stock. This is the first time I have encountered this issue and cannot find any guidance out there. Has anyone dealt with this? Does anyone know of any guidance that would dictate whether the ESOP is responsible for issuing Form 1099-INTs?

IRC 6041 says that persons (including qualified retirement plans - Treasury Regulations) engaged in trade or business need to report payments that are greater than $600 to the IRS, but does not state what activities rise to the level of "engaged in a trade or buiness". Alternatively, IRC 6041 excludes interest governed by IRC 6049, which says that every person (including qualified retirement plans) who pays interest in excess of $10 needs to report this to the IRS. I cannot find an exception that applies to relieve the ESOP of this obligation, but I have never known of a leveraged ESOP that issues Form 1099-INTs.

Please help.

Hi,

Plan is top heavy for 2013, safe harbor 3% and employee deferrals are the only contributions for the year. Compensation is considered from date of entry (7/1 in this case), a participant enters on 7/1/13 and is employed on last day. Would the new participant's 3% safe harbor contribution be based on compensation from his entry date of 7/1 or their full plan year compensation?

I believe that since only safe harbor contributions & deferrals are funded for the year they are considered not to be top heavy and can use the compensation from 7/1 on for the 3% allocation, am I off the mark? I know any PS allocation would be full year compensation just fuzzy at the moment on the safe harbor..

Thanks.

Plan year runs 2/1 - 1/31. Participant terminated in August with a year of service. Resolution to terminate was executed in January. Would participant fully vest despite terminating 4 or so months prior to formal termination? If not, a portion of her forfeitures will be reallocated to her.

It is my understanding that the quarterly participant statement falls under both the IRS and DOL electronic disclosure requirements. Is there any way under either set of rules that a participant could NOT be allowed to request a paper copy in lieu of the electronic version?