Participant bought a house (primary residence)with a Partner some time ago. Now, they do not get along and Participant wants to buy the other half of the ownership of the house. Does this qualify for hardship withdrawal?

Could a loan be for 30 years?

2012 Calendar year DB sponsored by a self employed person who's tax return is on extension to 10/15

2012 Minimum Required contribution $0

2012 Maximum Deductible Contribution $400,000

Contribution is made 10/1. Is it deductible for 2012?

Can an estate directly transfer defined contribution retirement plan accounts to inherited IRAs benefiting the estate's beneficiaries in a manner similar to direct transfers from IRAs held by estates?

In PLR 201208039 the IRS permitted an estate that was the sole named beneficiary of an IRA to make direct trustee to trustee transfers into separate inherited IRAs (one for each of the estate's beneficiaries). The transfers did not constitue taxable distributons and the beneficiaries were able to defer required minimum distributions over the remaining life expectancy of the decedent.

It would be very helpful if similar direct IRA transfers were permitted for defined contribution retirement plans. However, it appears that estates are not permitted to transfer (rollover) retirement plan accounts under Tax Code Section 402©(11)(A) because estates do not qualify as individual designated beneficiaries under Tax Code Section 401(a)(9)(E).

I have a friend that recently received a notice that her former employer is terminating his 412i plan that she knew nothing about and she needed to tell them what she wanter to do with the money. The administrator is telling her that before they can terminate the plan the IRS requires that her benefit must be fully funded and to do this they need to purchase an annuity on her before she can cash it out. If they do this she would be faced with a 7% surrender fee on the annuity. This does not seem resonable can anyone help

It must be getting too close to 9/15 -- my brain is on overload.

In a plan with immediate eligibility for deferrals, but 1 Year of Service for SH match, I'm questioning how the match is calculated. The document calls for compensation while a participant for the match calculation. We have a participant who deferred less than 1% of full year compensation and became eligible for match on December 1.

Using the basic safe harbor match formula, my first thought was that she should receive a match for exactly the amount of her December deferrals. ($15 in this case.) Datair came up with a higher number than that, so I started trying to figure out how it was calculating it. Apparently Datair is comparing the total deferrals for the year to the match eligible compensation and using that percentage to figure the match. ($125.72 in this case.) That seems to defeat the purpose of having delayed match eligibility and using compensation while a participant.

Is that correct?

Client is leaving Alliance A to go to Alliance B. Alliance A has sent client a bill for $1250.00 for their 'deconversion fee'.

Is this payable with forfeitures if plan allows for forfeitures to pay plan expenses?

Thoughts?

I feel like my head is full of sand today.

A corporation is dissolving, and all employees, including the HC, will oficially terminate employment on September 30, which is one month prior to the plan year end. The plan will be terminated, with a plan termination date of 10/31/13 - the plan year end.

Plan currently has a 1000 hour/last day requirement. Since the HC owners will be terminating employment prior to the last day of the plan year, they want to amend the plan to provide only 1,000 hour allocation requirement, but no last day requirement. So far, so good.

Here's the question. They had one NHC with 1000 hours terminate in May, They don't want to give her a contribution, so they want to make the amendment effective June 1, 2013.

Am I imagining trouble where none exists, or is this going to be a discrimination problem? It will only affect 1 NHC adversely, and there are a total of 4 NHC, so even if a potential problem, should pass nondiscrimination testing?

Thoughts?

If a 401(k) is amended to not allow for new life insurance policies to be purchased, may the old policies continue? If they are permitted to continue, is this subject to annual non-discrimination testing?

Is it permissable to take a loan against an insurance policy that is held as a plan asset? If so, would it be treated as any other plan loan with regards to limits, repayments, default etc? Seems to me it would.

I have a client who granted an employee a hardship distribution to make the next 12 months payments on their student loan. The Hardship safe-harbor for educational expenses required the expense to be for educational expenses to be incurred in the next 12 months. Do you think studen loan payments qualify? Thanks in advance.

I am trying to figure out what to quote for adding Roth in plan transfers.

It seems like most of the work is at the time of the transfer.

I will need to:

1. Set up new sources on my computer for each old source being rolled.

2. I will have to set up new accounts for each new source.

I am guessing this will take 20-30 minutes. (I'm slow, I know)

At distribution time, how much extra time will be needed?

Does anyone have a Roth distribution checklist they would be willing to share? (or help me build) Things like "Is there a recapture?"

small plan that is top heavy contributes a safe harbor match and a profit sharing contribution. Document states p.s. is allocated based on a comp percentage. however, system is allocating profit sharing giving each eligible participant a p.s. contribution of 1.13%. Is this acceptable? The plan has $36898.22 of it's $90,000 employer contribution after a $53101.78 safe harbor match.

Has anyone had experience with whether the IRS is willing to allow the VCP program to be used for something that is not a qualification issue? In the situation I'm looking at, employees were permitted to choose at retirement whether to have accumulated leave contributed to a defined benefit plan or to receive it in cash. The employer erroneously believed that in the case of the employees who chose the contribution, it would be a pretax contribution. The employer therefore did not withhold taxes on the contributions. Having now received legal advice that such contributions would be after-tax, it is attempting to fix the situation for past years.

Reading through Rev. Proc. 2013-12, I cannot see a way that VCP can be used to remedy a provision which is not disqualifying, but which caused unanticipated adverse tax consequences. However, I entered this matter late, after another firm had already prepared a draft VCP submission. I therefore want to be very sure of my ground before I talk to the client.

LLC member made a $17,000 401k deferral on 12/27/12 to TD Ameritrade. Their CPA is telling him today (9/11/13) that he earned NO schedule C income in 2012 and therefore there was no way he could have deferred money into the 401k Plan. Is there any IRS guidance on how to handle this? We are asking Relius about our options and will need to call TD Ameritrade but the CPA is saying that there "must" be IRS guidance on what to do. Thx.

I have a plan where an employer failed to make required contributions under a Rehabilitation Plan. IRC Section 4971(g)(2) imposes an excise tax on the employer equal to the amount of contributions owed. We are filing a lawsuit to collect the Rehabilitation Plan contributions owed and were wondering if the plan has any obligation to add a cause of action to collect the excise tax. It appears it is the employer's responsibility to report the tax on IRS Form 5330 and pay that to the IRS, so we're not sure if we have an obligation to attempt to enforce that requirement.

Any help would be appreciated.

Custodian used DB plan assets to pay 401k plan benefits in 2012. Error was discovered in 2013 and 401k plan reimbursed DB plan with earnings. Would you consider this a prohibited transaction?

Dumb question

On the SB -- what is the contribution date (line 18)?

(a) Date contribution is reflected on the asset statement?

(b) Post-marked date of check?

© Receipt date of check?

(d) Other

Thanks.

What if a person does not modify their auto enroll deferral %, but does modify their investment allocation %? Does this person remain in the autoenrollment group or does the affirmative investment allocation % remove them from the group?

Example: A ptp in a plan is auto enrolled at 3% and has their contributions placed in the default investment election. The participant modifies the investment election to have the future elective deferrals invested in a different fund.

The plan now wants to increase the automatic enrollment % from 3% to 5%. Would this person still be included in ther automatic enrollment population and, thus, have their deferral % increased from 3% to 5%? Or would the change of investment election take them out of the auto enrollment population and cause their % to remain at 3%?

Side note: If the participant does not change the default investment election, but does transfer funds, would this change to their account balance take them out of the auto enrollment population?

Any help is greatly appreciated. Any cites would be desirable as well.

This is the first time I’ve encountered a 401(k) plan with “segregated accounts” whereby individuals can elect to have their assets placed into a separate trust that (i) is managed by the plan trustee's advisors or (ii) are managed by the participant's appointed investment advisor. Any particular issues the plan sponsor should be aware of when dealing with these types of accounts?

This seems like a very basic question, but I haven't been able to find a clear answer anywhere. Is it possible for a single employer to maintain two separate 401k plans, one each for HCEs and NHCEs. Obviously, they would want to do this to get around the discrimination/coverage testing requirements. From what I have gathered, the control group/aggregation rules would make this kind of pointless, as the coverage and discrimination tests would be calculated as to all of the employer's eligible employees in both plans. Therefore, for purposes of testing, both plans would be aggregated. Is that correct? Thanks.