A 401(k) Plan uses the Safe Harbor definition for hardships. A participant has an issue with their water supply into their house. The water has become contaiminated. He wants to take a hardship under the casualty deduction under code section 165. The insurance does not cover the issue. Will this qualify?

Hypothetically - A plan is adopted effective 01/01/12 and never files the report for 2012 (the first year). How does IRS ever catch wind of this?

Hypothetically - you are an ERPA. Your employer starts a PS in 2012 and rolls over some IRA money into the plan then proceeds to withdraw most of it. No ER contributions or salary deferrals were ever made. No 1099-R ever issued and no 5500 report ever filed. Because of your function in the company, you are fully aware of all this, but of course your boss wants you to look the other way. What would you do?

Any insight as to how the IRS might catch wind of this and what impact this might have on you?

We work with a 401k plan with two owner/employees who hit the 402g limit and with profit sharing, hit the 415 limit. They've adding 9 staff members in 2014 with a payroll of $1.1 mil exclusive of the owner’s compensation. Of the 9 staffers, two will make in excess of the compensation limit and the other 7 will hover around or above $100k. None of the 9 will be owners or officers and there are no family member-employees. We're expecting 100% participation from the staffers.

In considering plan design, we initially considered incorporating the staffers and adding safe harbor since as near as I can tell the plan instantly will be top heavy. However, the owners are balking at the cost of either the basic match or the non-elective given the size of their payroll. Similarly, we considered new comparability design but anticipate that will be cost-prohibitive as well.

We're considering starting a separate plan for the staffers, which would exclude the owners and vice versa. From what I've read, as long as no key employees participate in the staffers' plan, they do not need to be aggregated for top heavy testing. We're aware, however, that if any of the circumstances change and a staffer becomes a key employee, they must be tested together for top heavy.

What I don't understand and cannot seem to find is what other impacts (other than administrative burden/expense) to nondiscrimination testing sponsoring two plans will have. Would the plans have to be aggregated for benefits, rights, and features if they use two different profit sharing formulas? Since neither plan will exclude employees or have allocation conditions on employer contributions, we don't anticipate coverage to be an issue if they have to aggregate the plans. Likewise, with ADP/ACP.

There has to be something I'm missing. Thoughts? Will setting up a separate staffers' plan work?

I know this has been brought up before, but I can't find any examples and I'm looking for some clarification. I’m hoping that you can help me with a question since it was brought up during a recent audit of a termination of a cash balance plan.　 It is specifically in regards to IRC 411(b)(5)(B)(vi)(I) and the 5 year average of interest crediting rates and when/how they apply.　 This is a purely hypothetical example.

In the following example, how would the Cash Balance Account be determined as of 12/31/2013?

Plan Term 4/30/2011.　 Cash Balance Account as of 12/31/2010: $1,000 no more pay credits.

Interest Crediting Rate as defined in plan

2006: 4.50%

2007: 4.50%

2008: 4.50%

2009: 4.50%

2010: 5.00%

2011: 6.00%

Would you use the 2011 rate of 6.00% for 4 months of 2011 and then the average for the other 8 months of 2011 and then 2012 and 2013 (ie, 6.00*4/12 + 5.00 + 4.50*3 + 4.50*8/12)? Or would you use an average for all of 2011-2013 (ie, 5.00 +4.50*4)?

How would this change if the plan term date were 12/31/2011?

Thanks for any help you can provide.

Any good write-ups on using rate banding when allocating a profit sharing.

I'm kinda hazy on the topic. One of my plans magically passes testing when I check that little box in Relius. Otherwise it fails.

Just wondering what, if any, experience anyone has had with this question. Probably dependent upon the old facts and circumstances, but have you encountered any particular pros or cons to either keeping the plans separate or having the ESOP/401(k) combined?

The employer currently has a safe harbor plan ( and will be safe harbor for 2014). In addtion the plan offers participant loans.

The loans are getting out of control, but not to the point where the Plan Sponsor wants to remove them.

the Plan Sponsor is considering limiting one loan outstanding at a time. Does this change in the loan policy need to be implemented before 1/1/2014, or can this procedure be changed durnig the 2014 plan year. We are not amended the plan to add or remove a feature, only modifying the current loan procedures.

thanks

I will be filing an amended 2011 return for a large plan filer in respect to an incorrect participant count. Must all schedules and audit report accompany the amended form OR just the Form 5500?

Owner does not contribute his his wife's salary deferral contributions until February 15, 2013 for his 2012 payroll withheld deductions. He did contribute all his employee's 2012 salary deferral contributions timely.

Is a Form 5330 necessary? Do I have to report late deferrals for owners on the Form 5500? Client does not want to contribute lost earnings for himself or his wife.

Employer wants to make nonelective contributions on behalf of a certain group of employees to a profit sharing plan created solely for the purpose of receiving such contributions. Employer has determined that it would like to define eligible employees as those with 2 years of service (with immediate vesting) as of the effective date of the profit sharing plan, and the profit sharing plan will be closed to new entrants after the effective date of the plan. (Basically, although there is no intention to do so, the employer could achieve the same result by putting all the eligible individuals on an exhibit to the plan and defining eligible employees as those individuals listed on the exhibit.) There are HCEs and NHCEs in the group of employees, but the plan is expected to pass nondiscrimination and 410(b) coverage testing. Does this plan design cause problems under Code section 410(a) or otherwise? Could this design cause the plan to fail to be a "bona fide plan for the exclusive benefit of employees in general"?

Widow, age 51, is rolling over her deceased husband's (age 53) lump sum settlement from his Qualified Plan to an IRA. Will her IRA distributions prior to age 59 1/2 be exempt from the 10 percent penalty tax? How should the IRA be titled?

Are non-ERISA 403(b) plans (e.g., governmental 403(b) plans) required to have QDRO policies? I believe they do because the 403(b) regs say "under section 414(p)," which I take to incorporate all of the 414(p) requirements.

Assume state law is silent on the issue.

The latest CPI-U value was supposed to be released this morning, and that would determine the limits for the new year.

I guess since the government is shut down, nothing has been released, so everyone gets to wait.

One of our clients had issues with the auditor finishing their report and didn't file yesterday. What is the best option....can they file today and just cross their fingers? Or, will they have to file through the DFVC program?

I am filing 7 late 5500 EZ forms for a client back to the mid 00's. There is no DFVC for these so we are intend to file late and beg for mercy. Since we are filing these en masse this month (10/2013), should these be sent to Ogden, UT with a letter of reasonable cause, or should they be filed online at DOL website?

Would it make sense to file these online on a 5500-SF, indicating an 1 participant plan?

Thanks

The IRS asks for plan documentation when reviewing an application for a favorable determination letter and we don't have it. Section 5.09(3) of the Rev. Proc. 2013-12 says that we are "under investigation" and thus, ineligible for VCP.

Are we just screwed or do any of you have any suggestions of how to correct these issues without going into Audit CAP?

Husband and Wife are divorced in 2009. They have a QDRO at that time that assigns Wife $7,000 of Husband's account. At the time of the divorce, Husband only had $10,000 in his account, so after Wife gets the $7,000, he's left with only $3,000 in his account. The issue is closed.

But, in the divorce decree, Husband is supposed to sell the marital house and give 1/2 the proceeds to Wife. He sells the house for $40,000 but doesn't give her any of the money. Wife files a contempt action and the Court rules that Husband is in contempt.

Since 2009, Husband has worked a ton of hours and his account balance has exploded. Wife files a new QDRO assigning Wife $20,000 of Husband's account. Keep in mind that just about all of that money was earned AFTER the marriage ended.

1) Is this permissible if Husband agrees to it?

2) Is this permissible if Husband does not agree to it?

Thanks.

Perhaps this inquiry is premature but due to the partial shutdown of the government (at least that is what I assume is causing this) the IRS hasn't yet updated its usual sites with the September 2013 30-year TSR rate and the September 2013 Minimum Present Value Segment Rates under IRC 417(e)(3)(D). Given the provisions in our plan (look back and stability periods), we could wait a while for the Minimum PV Segment rates but the September 30-year TSR is used for actuarial reduction in one of our plans for any benefit commencing November 1.

We can "get to" the monthly 30-year TSR by adding up the daily rates and dividing by the number of days for which it was published...this producing a 3.79% rate...but, of course, that isn't "official".

Are there other authoritative sources for this info? I checked and didn't see any IRS Notice covering the info for this period. Any other thoughts...other than hope for an earlier versus later end to the partial government shutdown?

This is the URL of the site from whence we usually get the 30-year TSR http://www.irs.gov/Retirement-Plans/Weighted-Average-Interest-Rate-Table and this is the URL of the site from whence we usually get the Minimum Present Value Segment Rates http://www.irs.gov/Retirement-Plans/Minimum-Present-Value-Segment-Rates

Thanks for any and all thoughts on this evolving dilemma.