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?

Code 2 (early distribution exception applies) says "A distribution from a qualified retirement plan after separation from service in or after the year the participant has reached age 55.".

Does a plan termination count as a "separation from service" for these purposes? Someone is age 56 and takes a cash distribution from a plan because the plan terminated. Would this be Code 1 or Code 2?

I have a client - controlled group. Each employer has their own plan, but for testing purposes, the plans are aggregated.

It appears during some prior plan years, the documents were not updated to add additional participating employers to each plan document.

The recordkeeper suggested filing under VCP to bring the participating employers into the plan - note, the employees in the participating companies have been participating in the 401(k) feature. The recordkeeper is filing a VCP for each plan.

Since they are a controlled group, can one VCP filing be done for the plans. This may reduce the over cost of the filing.

thanks for your assistance.

Not sure if I'm splitting hairs or not. Plan authorizes forfeiture to be "added to the Employer's contribution under the Plan." Other than a SH Nonelective, the employer contributes 5% PS during the plan year. At the end of the year, the employer missed allocating the 5% PS for bonuses.

Since the employer resolved to contribute 5% for the year, could I use some of the forfeiture for a true-up of the PS? In a strict sense of the plan language, it seems that the employer would have to contribute the amount for the true-up, then allocate the remaining forfeiture.

What do others think?

I know this has been discussed before, but sometimes viewpoints change, or sometimes the IRS says things from the podium that indicate a change in their approach.

So, for ADP testing and coverage testing, in the absence of known clear guidance, my own viewpoint is toss them out of the testing entirely. Should be the same for rate group testing as well. If you leave them in, it seems to unreasonably distort the results, either "for" the NHC or "against" them.

Same for participant count on 5500 forms? Seems like for consistency, you'd have to not count them here either.

Thoughts?

I'm looking at my first floor offset DB plan. This is a takeover. The company has 30 employees and the plan does not exclude anyone other than non-owner HCEs. Eligibility is 21 & 1.

Spreadsheets show offset calculations for the entire eligible group (all 30 eligible ee's), however only the 3 owners end up with a DB accrual after the DC offset.

The prior SB and PBGC filings have shown a participant count of "3". I would have thought that the others are participants, it's just that they get completely offset. What is the correct way to count participants in a floor offset plan?

Plan fiduciary of a $25m, individually designed money purchase plan does not want to seek an updated Determination Letter. Quoted cost to restate plan is only $5k plus the IRS User Fee, but client believes that cost is not justified because plan is regularly updated. He really thinks that he is doing right thing for participants by saving them money.

What arguments would you use to convince this client otherwise?

Does the Irs publish or, does anyone else publish a listing or summary of corrective actions that have been approved in the VCP program.

The EPCRS guidance is certainly helpful. However, there are many situations and fact patterns which just arent covered in there. It would be very helpful to have more examples of what would be appropriate correction methods.

I have a plan I took over that has over $7200 in forfeitures that needs to be used as an allocation/spread to the plan. the last year this profit sharing plan made an allocation was 2008. the principal owner is basically retired and his current Sch c gross is less than his expenses. His 2 sons terminated 12/31/2008 and operate as sole props. Owner pays the 2 employees of the office.

the bulk of these forfs occurred in 2006 plan year with more being added in 2008. the account has gained since 2006. How do you think we should allocate the forfs? This is a bit ugly....thanks for your thoughts

Corbel PT 401k. Participant is 80 and minimum distribution will be $50,000 for 2014. Can this participant take $6,000 per month until the account balance is depleted (i.e., more than the "minimum")? I say yes because the a) refers to the "minimum" required distribution, and b) we did elect that installments are allowed with respect to minimum distributions. So while we do not want installments available for anyone, if Grandpa wants them, we are ok with that. It is not eligible for rollover because it is substantially equal installments over more than 10 years (in this case, it is 20 years).

Top Heavy Test: I understand unrelated rollovers are excluded from the amount of the participant's account balance as of the determination date. But what about subsequent transactions (in-service withdrawals of rollover money) associated with those dollars? Do these transactions get added back? Plan Document allows for in-service withdraw of rollovers. Example:

PPT Jones deposits an unrelated rollover of $100,000 into Plan A on 7/1/2011. Jones takes an in-service withdrawal of rollover of $50,000 from the plan on 7/1/2012. Jones does not contribute deferrral and has received no employer contributions. As of the determination date of 12/31/2012, Jones has an account balance of $50,000.

Question:

1. Would Jones be reflected as having an account balance for the top heavy calculation of $50,000? (account balance as of 12/31/2012 $50,000 minus $50,000 unrelated rollover attributable to account balance + $50,000 five year inservice withdrawal rule ) OR

2. Would Jones be reflected as having an account balance for the top heavy calculation of $0.00? (account balance as of 12/31/2012 $50,000 minus $50,000 unrelated rollover attributable to account balance and no reflection of in-service as it was part of an unrelated rollover)

Thank you in advance for your opinions.

I apologize if this has been asked, couldn't find it by searching...

Auto enroll plan participant opts out within the 90 day window and is refunded her deferrals.

End of the year arrives and Employer does a match.

If she otherwise meets the criteria for match eligibility, is she entitled to match?

I believe the opt out is as though those 401(k) contributions did not exist and think she should not receive match, but the software is "thinking" differently!

For a small plan that allows roth deferrals a participant gave a check to the plan sponsor who then made a large contribution to her roth 401-k money source (did NOT go through payroll). Is this allowed with a roth 401-k and if not what would be the correction?

I keep reading that fiduciary education, specifically educating plan committee members is the new, important process. I like the idea, but haven't seen any good resources about what should be covered. Can anyone point me to a good source for a starting point?

Who can shed some light on a supplemental QUARTERLY statement requirement under Sec 508 of the 2006 PPA.

When it is it required if the plan is say with John Hancock.

I have a plan with a beginning of year valuation date of 12/31 that uses calendar year pay for the year ending on the 12/31 valuation date - 12/31 to 12/30 plan year and 1/1 to 12/31 compensation year. Let's use a 12/31/2013 to 12/30/2014 plan year and a 1/1/2013 to 12/31/2013 compensation year for example. Several participants have compensation well in excess of the 401(a)(17) limit every year, and I'm confused about which limit to apply.

For reference, 401(a)(17) limits for years beginning:

2014 - 260,000

2013 - 255,000

2012 - 250,000

2011 - 245,000

2010 - 245,000

The plan uses a high 3-year average. To calculate average pay to determine the 12/31/2013 accrued benefit, should I look to the plan year that ended on 12/30/2013, and then to the compensation year for that plan year, 1/1/2012 to 12/31/2012, and use the limits for 2012, 2011 and 2010 to calculate the average, or should I look at the limit that applies for the current plan year beginning on 12/31/2013 and use the 2013, 2012 and 2011 limits for the average?

I think for the end of year average, I should use 2013, 2012 and 2011, but I'm not sure if I should be using the same average at the beginning and end of the year. I've gotten myself confused and would appreciate some outside input.

We are TPA on an old profit sharing plan that has pooled assets with Schwab. The plan made several distributions in 2013. The plan trustee didn't want any of the money running through the company bank account, and didn't have a separate bank account for the plan. Schwab was instructed to cut checks to the IRS and mail them in. The checks were sent with no accompanying explanation or forms, and a note in the memo line that read "f/b/o [participant SSN]".

Any suggestions about how to reflect that on the 1099-R and 945 forms?

Our legal department said that under Obama care we can no longer pay for an EE's COBRA. Is this true? Would you please give me the link with the answer?

There are income limitations for Obama care that is what is making me say this is not true.

Thank you for your help.

One-person DB Plan. In 2012 the participant defaulted on a loan, and a 1099-R was issued for the 2012 year. The total loan taken was for $50,000. At the end of 2012 the outstanding balance on the loan was $42,000 because the participant had made some repayments. The 2012 Form 1099-R was issued for the full amount of $50,000 showing the entire amount as taxable. In 2013 the participant took a cash distribution of the remaining balance in the Plan. The participant had paid back $8,000 of the loan (this was part principle and part interest) into the Plan. My thinking is the amount he repaid created basis in the Plan and he does NOT pay taxes on this again for 2013 when he took the cash withdrawal of the remaining assets. Is this correct? If so, does the principle payments only create basis, or both the principle and interest payments ($8,000 total) create basis?