One of my clients would like to put in 12,000 in deferrals, 5,500 in catch up and 39,000 as a profit sharing. Would that be allowed? I told them no, and then they wanted to see where that was written in stone. I couldn't find anything that specifically said that. Anyone know?

How is severance pay handled under 415 regulations and for purposes of plan compensation if it is paid before the employee officially terminates? I have recently seen a pre-approved document that allows severance pay if paid prior to the time the employee terminates, for example on his last day, CAN be included unless the plan excludes it?

I was under the impression that ANY severance pay was not plan compensation eligible?

Any thoughts!

Sponsor of 2 defined benefit plans is assessing possible request of funding waivers for both plans. The material facts about business hardship are identical for each waiver request, and I'm sure the requests will be resolved in a single ruling (e.g., PLR 201229015). So, it makes sense for the IRS to charge just one user fee.

However, Rev Proc 2004-15 does not address the issue, Rev Proc 2014-8 does list a waiver (singular) at $14,500, and I would not necessarily describe the waivers a part of "only one transaction" as per 8.03 of 2014-8.

Any thoughts or experiences? Would like to be able to confidently describe relevant costs to sponsor before we start down this path.

Thanks in advance

Would either participant be included the adp test?

1 - An [eligible] participant is now terminated, but listed with no compensation (or hours).

2 - An [eligible] participant is "still on the books" and only works as needed, so they have no real term date, but is listed with no compensation (or hours).

I have an employe who has worked for a company for 4 years. However, he never worked 1000 hours in any of those years. For the 2013 plan year he worked 1000 hours and is now eligible. The plan's entry dates are 1/1 and 7/1. Which entry date do I use for him? Does he come in 7/1/2013 since that is when he met 1000 hours or would it be 1/1/2014?

Plan permits entry after 1 month of service - no age requirement - entry dates are 1st of each month

I'm using the carve out method to do 401k testing - removing all those not meeting statutory eligibility

Through an asset sale effective 12/31/12 - the plan sponsor acquired an entity - it has a couple hundred employees many who have been with the entity for many years

The employees of the acquired entity are eligible to participate in the purchasing employers 401k plan effective 1/1/13

The plan sponsor wishes to recognize service with the prior employer for vesting

Question - can I carve these people out of the ADP test since they became employees 12/31/12 despite the employer permitting them entry at 1/1/13 and giving vesting service?.

Thanks

Hi there.

I have a 1099-R that has been completed to show a Rollover distribution.

Box 1 has been completed with the total amount of the rollover, Box 2a has been completed to show $0.00 as the taxable amount, and Box 7 has been completed with Code G.

Now I need a tie-breaker.

The form has also had Box 13 completed to show the state and Box 14 completed to show the total amount of the rollover distribution. Box 12 does not have any amount entered.

The instructions for Boxes 12-17 seem pretty vague.

If 13 and 14 are completed, but no amount is shown as being withheld in 12, will the state think they are owed money? I would rather leave all these boxes blank since it was not a taxable distribution.

Thank you very much! Happy tax season to all.

In a SEP plan (5305 SEP) that excludes union employees and has a one year service requirement, if an employee changes to non-union mid-year, is he ineligible for a contribution until the next year?

I believe this is ok, but wanted to see if I am missing anything. Company A has a 403(b). A new company B is formed and started a new 403(b) Plan. That new plan is identical to company A's Plan. About 100 people are leaving company A to work for company B. There are no other employees. The two companies are not a control group. Can they transfer the assets for the affected participants from A to B?

Participant turned 70.5 in 2012 and commenced rmd on 4/1 /2013 for 100%j&s amount with cola increasing at 4.75% as annual annuity(not monthly). Need.to make adjustment for 2013 accrual. Benefit at 12/31/2012 was AE of NRA amount(formula late accruals are much smaller).

At 12/31/2013 i compute plan benefit as AE of NRA benefit. Next subtract similar amount as of 12/31/2012. Then compute 12/31/2013 AE annuity of benefit paid during 2013(since no risk of forfeiture accumulate payment with interest only before annuitizing). Subtract this piece to get my life annuity additional accrual. Turn this into 100% j&s annuity and add to 1st year payment increased at 4.75% to get my year two annual payment amount. Does this sound correct?

Client terminated their plan effective with 2012 PYE of 8/31/13. The 5500 needs to be amended as they apparently had a bond and "no" was checked to this question. Can we still file using the 2012 form, or do we need to use the 2013 form? I still have to file their final for 2013, as they have liquidated all assets at this point.

Husband and wife each have 50% ownership in their own companies. The other 50% of her company is owned by a friend and the other 50% of his company is owned by his brother. Due to the couple's minor children, they can't rely on the spousal exception. So, the 80% test is satisfied because it looks like husband and wife own a total of 100% of each company. But the identical ownership (50%) test also adds up to 100%. I feel like there's double attribution going on here -- or maybe the fact that neither has effective control (voting power) in the other's company that makes me think that the 50% test is not met. Is my intuition steering me in the right direction, or am I grasping at straws and just need to face facts?

We took over a cash balance plan in October, 2010. The prior actuary had converted the plan from traditional DB to Cash Balance. The amendment was effective January 1, 2009 but the Resolution was not signed until January, 2010. The actuary did have the plan sponsor sign a form he called "Election of Plan Amendment Effective Date" which basically stated that the amendment was effective for 412. Can this be done? It seems to me this was a discretionary amendment that was adopted late. What are the ramifications of this late adoption? I was going to file the Cycle C document for a determination letter (on cycle) and I want to be sure I've covered all the possibilities.

I have a DC plan that defines compensation as regular compensation, EXCLUDING overtime and commissions. The plan fails the 414(s) compensation test. As a result, I go back and INCLUDE overtime and commissions in covered compensation. Do I also have to go back and now include the additional HOURS that are represented by this additional compensation for purposes of computing eligibility and vesting?

Hi all. I recently posted under "Operating a Consulting or TPA Business", but I am still a little nervous about my new venture. Long story short: I have been a Qualified Plan DC TPA for almost 16 years, and love it, but need to increase my income. Someone approached me about needing someone to simply manage insurance premium payments and that little acorn has morphed into a full blown oak tree.... adding cafeteria plan admin to my existing menu of services.

Is there ANYONE out there, maybe in the Pacific Northwest that would be willing to be an occasional 'mentor' to me? I say Pac NW b/c I'm in the SE and don't want this to be misconstrued as price fixing or client-stealing or ANYthing nefarious. I just need some reassurance that I'm on the right path, some guidance on marketing my services, and some pointers on education. I don't like reinventing the wheel. And I am willing to pay for your time!

Thanks, and I hope this isn't too far fetched of an idea, but I'm ready to get this thing going, I just wanna know I'm going in the right direction!!

Thank you!!

A participant requests an in-service distribution from her 401k plan. The distribution is processed. The participant subsequently changes her mind. Can the participant do a in indirect rollover back to the originating qualified plan? (still within the 60 day time frame) If so, does the participant have to pay back the taxes to make the rollover whole?

Is it possible to invest in a life insurance policy on a participant within a cash balance plan with the plan's death benefit being defined as the PVAB? So the insurance policy is basically just an investment of the trust, not a vehicle for providing a death benefit.

I guess the real question is, do the incidental benefit rules on insurance not apply if the plan's death benefit is just the PVAB?

I know this seems silly (why would you pay for a death benefit that you couldn't have), but I was asked the question, and I can't seem to find anything in writing that addresses the topic.

I was told that you can't buy life insurance that provides a benefit in excess of the plan's defined death benefit, but again, I couldn't find that in the regs either.

Any thoughts anyone? Thanks!

Facts:

Partnership of Doctors - not entirely clear on how they are partners but each has his / her own SEP.

There are 2-3 individuals considered to be "shared staff." They are paid by the 'parntership.'

In 2013, the shared staff went from being paid by 1099 to W-2.

1) Can the docs continue to maintain their individual SEP's - I believe the answer here is no.

2) Do the shared staff people need to be covered - the answer would be YES

Could they establish a new SEP that covers all the docs in the partnership and the staff? If they are a partnership in the literal sense, they could not have a SEP - only an employer and not a partnership can set up a SEP.

SEP is murky for me - I'd think a straightforward profit sharing plan would make more sense all the way around.

I have been looking at some articles lately, including examples provided by McKay Hochman, Derrin Watson and others that talk about the spousal exception (relating to attribution under the controlled group rules) not being applicable when the couple has a minor child because ownership is attributed to the child and that messes everything up. There are comments about that being the letter of the law, but not necessarily the intention. I have to believe that there must be a pretty large number of couples where each spouse owns his/her own (separate) business and they have at least one child. However, I haven't seen any write-ups about the controlled group status being enforced, and I'm pretty sure it's not because they are following the rules (yes, I'm a cynic). Has anyone heard the IRS make any informal comments about this, or has anyone seen it enforced? Or is this one of those things that's quietly swept under the rug and nobody talks about it?

One of our clients is going through a divorce, and I had recommended a QDRO be drafted by a local firm. The QDRO was drafted and sent to us for review. The QDRO had my firm as the Plan Administrator. I called the preparer and asked them to correctly enumerate the Plan Administrator as the Employer. I was sent a new draft and will still down as the Plan Administrator and had them redo.

This was the last I heard of the issue, until last Friday when we were served with the QDRO papers as filed in the court. Needless to say, my firm had been incorrectly listed as the Plan Administrator. Upon receipt, I called the opposing attorney as well as the QDRO preparer.

It appears as though the investment broker is related to the wife, and he is not knowledgeable on pension matters and he is the one who told the parties that we are the Plan Administrator.

Has anyone else run into a similar circumstance and how was this handled.

Having been a pension professional for over 30 years, I am finding it more difficult to deal with incompetent people.