Is anyone aware how many TPA's/recordkeepers are prepared to administer/recordkeep the new in-plan Roth transfer provision under IRC 402A©(4)(E) as permitted by the American Taxpayer Relief Act of 2012?

Given the fact that the IRS has not yet issued guidance on the new transfer provision, it may be prudent for plan sponsors to wait until such guidance is issued. However, some participants are anxious to convert amounts to Roth in 2013 to avoid higher tax rates in future years.

My company provides a variety of ee benefits (Medical, Dental, Life, LTD, STD, etc.). I am wondering if I need to include the benefits provided by Allstate Benefits? I thought I read it wasn't necessary if they were voluntary benefits. This particular policy provides Cancer (and other specified diseases), Critical Care and Recovery, Short-term disability and Term Life.

Both my agent and the company seem completely baffled by my request for information for 5500 reporting purposes so I thought maybe it wouldn't be necessary.

TIA.

We have a company with a 401(k) plan that was acquired by another firm mid year that only maintained a Profit Sharing plan. Right after the acquisition, the purchasing company immediately made payroll changes stopping deferrals and loan payments. They originally were going to shut down the plan, but now have decided they will keep the plan. They have just resumed payroll repayment of loans to prevent participants from defaulting, and will be resumming deferrals probably. What kind of documentation should we get for the 401(k) plan?

I cannot think of anything besides putting some notes in the file. Did they violated something by stopping deferral and loan payments for a period?

Anyone ever experience this?

Does anybody know if the IRS FIRE system for submitting the 8955-SSA information is down due to the government shut down? If "yes", will there be an automatic extension on filing the IRS Form 8955-SSA that should have been filed on October 15th?

Thanks!

A participant has terminated employment in August 2013, however, is still receiving severance pay through the end of 2013. The participant has an outstanding loan and loan repayments are being deducted from the severance pay. Plan allows for partial withdrawals and wants to just take a portion of their account as a cash withdrawal (not rollover), but, does not want loan to be offset and taxed at the time the partial withdrawal is taken. Loan is in good standing. Loan policy states the following: "An outstanding loan balance must be fully and immediately repaid upon death or termination of employment. However, if a Participant continues to receive severance pay from which loan repayments are made as payroll withholding, then solely for puposes of this Section (...which is the loan section...), a Participant will not be deemed to have a termination of employment until the first day after his last payment of such severance pay."

As a note, the plan specifies that if the loan is not repaid by the end of the quarter following the quarter in which the participant terminates, the outstanding balance will be treated as a taxable distribution fromt eh plan.

Can the participant take this partial withdrawal without having the loan offset and taxed at the same time? The participant wants the loan to be taxed in 2014 after the severance pay stops and the payroll deduction of the loan repayments also stops.

Can the participant "choose" which investments they want to take in the partial distribution (i.e. leave the loan asset and withdraw only from the mutual fund investments)?

Thank you for any input you may have.

For the December 31, 2012 plan year, a plan uses current year testing to run the ADP test. Test fails. The sponsor elects to deposit a QNEC to non-HCE's before the end of 2013.

The sponsor also amends the plan to prior year testing before the end of 2013.

Should the corrective QNEC deposit be included in the 2012 non-HCE deferral average for the 2013 ADP test when using prior year testing?

Thanks.

We filed about 15 extensions back in August for our clients with 1/31/2013 plan year ends. The extensions were correctly filed showing the plan year as 1/31/2013 with the requested extension to 11/15/2013. We just heard from three of these clients who received extension confirmations (one just got it in the mail today). The confirmation is only granting the extension to 10/15/2013 and they are incorrectly showing the plan year end as 12/31/2012.

Has anyone else been having this problem?

Does anyone know of an IRS office that is actually open that we can call?

Any input is appreciated.

Situation:

• Single taxpayer aged 25
• W-2 $6,300
• Sch C loss($5,236) started this business after working and getting above w-2
• Adjusted gross income $13,198 (interest, dividends and capital gain make up the balance)

Can the taxpayer make a $2,500 Roth contribution for 2012?

What I'm reading points to max Roth contribution of $1,064, but a CPA's research seems to indicate the $2,500 is OK... Am I overlooking a key piece of info?

I haven't had to deal with this until now, so I need to get some clarification. An employer has both union and nonunion employees. They establish 2 401k plan. The plan for the nonunion employees excludes the union employees, but the plan for the union employees has no exclusion for the nonunion employees. I am being told by someone in my office that it isn't necessary to exclude the non union employees. Is there some language elsewhere that is required to allow this document to benefit only the union employees?

Thank you

I have a company that manages multiple restaurants. Until 2012, they had one plan (#001) covering all of the restaurants and the plan was considered a small plan for the audit requirement. In 2012, they set up multiple smaller plans (#002 - #005) based on the particular location of the restaurant that the employee worked at. So, at 12-31-12, there was a significant amount of "transfers out" to these new plans.

The new plans all have the same EIN (just successively numbered plans, 001..002...003, etc.). Each of the plans have an identical plan document and operate under the same plan provisions.

This isn't a controlled group issue because the plans all have the same EIN (one employer). I can't locate anything in the regulations that address the audit requirement in this particular situation. It seems that they broke the large plan into smaller plans to keep from having the audit each year. But substance over form says that these plans are essentially one plan...

Has anyone ever come across this issue? If you can help shed some light on this, I would appreciate it.

Thank you.

If the plan sponsor decided to file Form 5500-SF instead of 5500-EZ - which did not require that Schedule SB be filed with 5500-EZ, doesn't a Schedule SB now have to be filed if they go ahead and file 5500-SF???

Several years ago, we met an attorney who used a document called "conversion minutes" to "convert" a defined benefit into a profit sharing plan. The name of the plan did not need any change as the defined benefit was called "pension plan", the plan continued as Plan #001 and the 5500s were subsequently filed as Plan #001, but as a profit sharing plan.

Over the years, we have seen several of these plans, all the documentation prepared by the same attorney. He said this could be done, but ONLY in the case of a plan whose sole-participant is the owner of the company, or a sole proprietor. After all, there are no common law employees, and technically, if there were any discrimination in benefits, since the owner is the only participant, this is of no consequence.

Thoughts??

Maybe an old issue but I couldn't find an answer to my specific query. I'm back in the benefits world after a 5 year hiatus and am still shaking out the cobwebs and catching up on changes to the law. There's been a few... Could really use your collective assistance in straightening out some things as I plow through becoming acquainted with my employer's benefit plans.

Employer maintains a125 Cafeteria Plan which contains the following provisions:

"3.3 Benefit Component Elections -- Each Participant shall elect among Benefit Components and shal designate the amount of Salary reduction and/or Employer Credits (or portion of the total) to be applied during the Plan Year for each of the Benefit Componenets, and the amounts so disignated shall be credited to the appropriate Benefit Component subaccount."

"3.4 Cash Benefits -- A Participant may elect to receive in taxable cash compensation any amount contributed by the employer as Employer Credits."

Internal Revenue Notice 2012-40 contains the following:

"As noted, the $2,500 limit applies only to salary reduction contributions and not to employer non-elective contributions, sometimes called flex credits. Generally, an employer may make flex credits available to an employee who is eligible to participate in the cafeteria plan, to be used (at the employee’s election) only for one or more qualified benefits. For further information on flex credits, see Prop. Treas. Reg. § 1.125-5(b). For example, if an employer contributes a $500 flex credit to each employee’s health FSA for the 2013 plan year, each employee may still elect to make salary reduction contributions of $2,500 (as indexed for inflation) to a health FSA for that plan year. However, if an employer provides flex credits that employees may elect to receive as cash or as a taxable benefit, those flex credits are treated as salary reduction contributions for purposes of § 125(i)." (emphasis added)

Not all employees get Employer Credits (depends on your union and date of hire). Employer's credits vary in amount (based on union negotiations), but can be up to $1,200 per month which easily exceeds the $2,500 annual limit.

My question - should the employer's flex credits be treated as salary reduction contributions, thus violating Section125 limits?

Your expert guidance and opinions (whether humble or not) would be most welcome!

I have a recently divorced employee who wants to 'liquidate' her account in our plan by awarding 100% to the ex. They intend to split the lump sum and go their separate ways.

I cannot find any legal precedance to refuse the order. The document meets our terms, and just states that the ex gets everything. However, I know that the employee is essentially getting an early retirement distribution by filtering it through her ex.

Any thoughts?

A plan previously hit the 120-participant threshold (years ago). As of 12/31/2012 the plan dropped below 100 participants so we are choosing to file as a small plan for 2013.

It is my understanding that once a plan has reached 120 participants they must file as a large plan until they drop below 100 participants. But, after dropping below 100 participants, is their threshold for a large plan filing going forward to be 100 participants, or 120 participants?

The plan is amended to excluded several HCEs. These are not key employees, however. Do they need TH minimum on comp for the entire 1/1-12/31 period if they became ineligible at 9/1?

This topic was discussed briefly on another thread with a conclusion that concerned me.

Is a non qualified Roth 401(k) cash distribution subject to the 10% early withdrawal penalty? Not just the earnings, but the entire distribution?

I have always thought it was and would be shocked if both the basis and the earnings are not subject to 10%. However, the below paragraph from the IRS site is confusing me. I have also read material that suggests the basis of a non qualified Roth 401(k) distribution is not subject to the early withdrawal penalty.

"Topic 558 - Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs

To discourage the use of retirement funds for purposes other than normal retirement, the law imposes a 10% additional tax on certain early distributions from certain retirement plans. The additional tax is equal to 10% of the portion of the distribution that is includible in income. .....

Any clarification would be great as I cannot find a direct statement that says the Roth 401k basis is not subject to the 10% penalty in a non qualified distribution.

This topic was discussed briefly on another thread with a conclusion that concerned me.

Is a non qualified Roth 401(k) cash distribution subject to the 10% early withdrawal penalty? Not just the earnings, but the entire distribution?

I have always thought it was and would be shocked if both the basis and the earnings are not subject to 10%. However, the below paragraph from the IRS site is confusing me. I have also read material that suggests the basis of a non qualified Roth 401(k) distribution is not subject to the early withdrawal penalty.

"Topic 558 - Additional Tax on Early Distributions from Retirement Plans, Other Than IRAs

To discourage the use of retirement funds for purposes other than normal retirement, the law imposes a 10% additional tax on certain early distributions from certain retirement plans. The additional tax is equal to 10% of the portion of the distribution that is includible in income. .....

Any clarification would be great as I cannot find a direct statement that says the Roth 401k basis is not subject to the 10% penalty in a non qualified distribution.

A 1 participant DB is sponsored by a sole proprietor. We have always suggested he incorporate.

In 2011 he had $0 net profit. He thought 2012 was going to be a good year so he contributed $50,000 mid year without ever consulting us. It turns out he had $0 net profit for 2012 (plenty of revenue but plenty of expenses). With his MAP-21 election his minimum would have been $0.

I don't believe he can remove the contribution based on it being non-deductible. Does anyone agree or disagree?

Thanks.

A Form 5500-SF was filed for a 1 participant plan for 2010 and 2011. The 1 participant is the 100% owner of the corporation that sponsors the plan. The plan has always had less than $75,000 of assets.

They should be eligible to file a 5500-EZ. The question is, would they be able to file no return since they are 5500-EZ eligible but have assets less than $250,000? In other words, are they eligible to not file given they already electronically filed in the past?

Thanks.