For an active participant who is beyond NRA (which is 65), where the assumed retirement age would otherwise also be 65, can we assume a later retirement age (maybe 3 or 4 years in the future) for only this particular participant if the feeling his he will not retire in the immediate future, rather than go year by year?? I believe this is fine, but just wanted to confirm my thinking and maybe get thoughts on anything I may have not thought about. Thanks in advance.

I was looking at adding the in-plan Roth transfer option to a plan (knowing I will need to adopt a plan amendment by the end of 2013) and thought that would take care of allowing that option for all participants in the plan without the need of adding in-plan Roth rollovers. I never amended the plan to allow in-plan Roth rollovers because I didn't like the limited use of it (because of the distributable event issue).

However, the way I read Section 902 of the ATR Act of 2012, it appears to me that I should add BOTH options at this point (which means adopting the rollover amendment now and then adopt the transfer amendment once that is available) because it appears that the Roth transfer option only works with plan assets "not otherwise distributable".

Therefore, if the plan has an age 59-1/2 in-service distribution option and I only adopt the in-plan Roth transfer option, a 62 yearold participant would not be able to convert pre-tax money to Roth money because it would otherwise be distributable.

Am I interpreting this correctly?

Thanks.

James

Participant retired in 1988 with a 50% QJSA in favor of his wife (X). At the time of retirement he presented a valid marriage certificate and things were fine for 25 years. Participant just passed away and the retirement payment was reset to 50% and made payable to X. So far, so good.

The plan administrator received a call from a woman (Y) who alleges that she was married to the participant in the 1960's and they never divorced. She is asking what benefits she is entitled to from the plan.

The QDRO procedures obviously don't address this situation. We are inclined to tell Y that the plan intends to continue to honor the QJSA in favor of X until we receive a domestic relations order that tells us to do otherwise.

I know this has come up before, but I cannot find any cases or guidance.

Ideas are appreciated.

401(k) Plan uses the calendar year, and is notorious for providing data late. We just finally recieved 2012 data (after 4 written requests and numerous calls). In data submitted we find that ownership changed during the year so at year end, the three firms previously covered as a single employer are no longer a controlled group. Problem is when does this change apply to the Plan, and when does the Plan become a multiple employer plan. If we apply "multiple employer status" for 2012, one group under the Plan will fail ADP Testing and be considered Top Heavy. If status is applied in 2013, same problems for that year. During both years a key employee does contribute deferrals under the group that fails ADP and is Top Heavy, so where no employer contribution was used, a Top Heavy Minimum is required. Hoping there is a transition period under regs for this situation. Of course there has been no documentation on this topic processed. Any thoughts or insights? Thanks!

2 member LLC.

Schedule K-1 income subtotal was $409349.

I believe you deduct Sec 179 which was $5946

and then deduct deferrals which was $22000

is there another calculation to be made before you arrive at earnings for plan purposes?

I believe both partners have earned well in excess of 415 limit, but just want to confirm.

Can a company that is Sub-S have a medical reimbursement plan?

We received 3 penalty notices for 2012 Form 5500 filings so far this week. The common ingredient? All were filed on 8/9/13. All of them were on extension and in 2 of the cases, the clients received the extension acknowledgement on the same day as the penalty notice. Oddly, the IRS thinks it is okay to use whatever date they deem appropriate on their letters. The penalty notices were all dated 9/16/13.

Is anyone else experiencing this?

Hello,

If the plan doc allows hardship from only pre-tax deferrals, can Roth deferrals be used as a basis to calculate the max hardship available?

$1000 pre tax contrib

$1000 roth contrib

the max hardship (assume need is $3000) is $1000?

internal discussion that it would be $2000. how could $$ be taken from a source (roth) that doesn't allow for h/s and participant is not 59.5 ? and the account balance is below $2000 in the pre-tax account.

Thanks

We're preparing a VCP filing for a client who has been calculating their Integrated profit sharing contribution wrong for a number of years. In trying to figure out how far back the error goes I'm seeing a document dated 1995 that shows the fixed contribution rate as 8.5% of compensation up to 80% of the taxable wage base plus 13.9% of compensation over 80% of the taxable wage base.

During my years in the industry the rule has always been that you had to use MORE THAN 80% of the taxable wage base to be allowed to use an additional 5.4%. Would using EXACTLY 80% with an additional 5.4% have been permitted in 1995? When did that change?

I have a case involving a multiemployer plan where we have identified an operational failure and have come up with a proposed correction and changes to the plan's administrative procedures. We need to make a VCP submission to get the matter corrected, but the problem I'm having with the multiemployer plan is that the correction method involves the cooperation of the participating employers, which we have not yet been able to secure. The employers may say they don't want to correct the problem, and may just stop contributing to the plan. Before we make the submission, do we have to have all of the employers "on board" with the proposed correction, or can we just say that if the employer's don't cooperate, their participation in the plan will be terminated?

Any help would be appreciated.

Is there a problem if an employer forwards only to participants who are invested 100% in a stable value fund educational material on diversification? I know there is sometimes a fine line between education and advice but i'm thinking this falls under targeted education. One of our clients wants to contact those participants and let them know that that the company wanted to forward this specific info to them to make them aware that there were other options to help them diversify. Is this ok?

My employer offers a simple 401k plan with a profit sharing component (no company match). I was just informed, along with several others in the company, that we stand to fail the non-discriminatory testing for this year. If I don't stop contributing immediately, I will be forced to take a refund from the plan. In fact, it may already be too late for me to avoid this.

Due to lack of adequate participation in the plan, the threshold for the plan to fail the non-discriminatory testing is very low (only about 6% of my salary before taxes). I am approaching 50 and was hoping to take advantage of pre-tax savings in my 401K to save even more with catch-up contributions. Now, it looks like I won't even be able to get halfway to the annual max - let alone any catch up contributions. When I approached my HR department to inquire about the company converting to a Safe Harbor 401K I was told that they will not do this because they do not want to be forced to make mandatory contributions each year.

So, I have two questions:

First, do I and other HCEs have any legal recourse here ?

Second, short of finding another employer with a better 401K plan, can you suggest any options for people in my situation who need to invest substantial after tax income in order to adequately prepare for retirement ? I am considering options like Roth IRAs (I am still under the max income threshold - married filing joint). But, I understand the max I can contribute to a Roth IRA is still only $5,500 annually for 2013. This is still way short of what I was looking to save. I am looking for options with the little or no tax implications and high potential rates of return to compensate for what I am loosing due to forfeiture of so much pre-tax savings capability.

Thanks for any insight you can provide.

An employee is awarded back pay on 9/1/2013 in the amount of $2,000 - and it relates to a period in the 2011 plan/calendar year.

First - does anyone know if this amount will be reported on the 2013 W2, or will an amended 2011 W2 be required?

As for deferring on this pay - do you go by the employee's current election on file? Or do you go by the election that was in place for the period that the back pay relates?

I have been with the same employer for almost 15 years. After year one, a 401k plan was introduced with a provision for a 3% Safe Harbor contribution. Each year, the contribution was made by the employer but, in my case, he deducted his contribution from my wages later (off the official books, of course). They calculate what I earn each month and subtract 1) my Health Insurance premium, my employee expenses, the EMPLOYERS FICA and Medicare contributions and, once a year, the 3% he claimed to have made towards my 401k. He did actually make the contribution but not with the business' money since he took it back from me later. I know this is wrong but was warned when I brought other issues up that I better not "rock the boat". Other employees have their health insurance premium paid in full and their 401k SH contributions were made without making the employee pay it back. I think this practice is wrong and he owes me about 14 years of 3% contributions. I make good money so it's substantial. Has anyone had a similar experience and can anyone verify if this is a big problem for the employers since it's ERISA.

I actually like the employer personally and I like the other employees but this is not the only issue I have. There are also issues about the Health Insurance Premiums (I'm in California), FICA and Medicare contributions (Employer's portion) and Expense Reimbursements that have gone on all these years as well.

I have a multiemployer defined contribution plan that needs to be corrected for a few violations. The plan itself is not under investigation; however, the labor union that established the plan is currently under investigation by the DOL for issues unrelated to the plan. Rev. Proc, 2013-12, section 5.09, defines the term "under investigation" to mean a plan sponsor that is under an "Exempt Organizations examination." If the plan sponsor is "under investigation," the EPCRS is not available to the plan.

I have 2 questions. First, in a multiemployer plan the "plan sponsor" is the plan's board of trustees. The board is not under investigation, but the labor union who established the plan and where all of the union-side trustees come from, is under DOL investigation. Would this be considered an investigation of the "plan sponsor." Second, the union is being investigated by the DOL, bot the IRS (as far as I know). Would the DOL investigation make the plan ineligible for the EPCRS?

Any help would be appreciated.

I think I'm right on this, but an accountant is challenging it, and I thought I'd just see what others think.

Corporation A sponsors a 401(k) plan, utilizing the safe harbor match. Calendar year plan. As of some date this month, Corporation A's assets will be purchased by corporation B. The plan will be terminated with a termination date of 9/30/13, and will satisfy the safe harbor requirements through that date, so will qualify as a safe harbor plan.

It seems that this is perfectly acceptable under 1.401(k)-3(e)(4) and 1.401(m)-3(f)(4).

The accountant is asserting that this doesn't qualify as a 410(b)(6)© transaction because 401(b)(6)© doesn't include an asset purchase. I disagree, based upon the regulations. See 1.410(b)-2(f) below. Am I missing something? Seems prettty obvious to me, but I'm always willing to question myself...

(f) Certain acquisitions or dispositions. Section 410(b)(6)© (relating to certain acquisitions or dispositions) provides a special rule whereby a plan may be treated as satisfying section 410(b) for a limited period of time after an acquisition or disposition if it satisfies section 410(b) (without regard to the special rule) immediately before the acquisition or disposition and there is no significant change in the plan or in the coverage of the plan other than the acquisition or disposition. For purposes of section 410(b)(6)© and this paragraph (f), the terms “acquisition” and “disposition” refer to an asset or stock acquisition, merger, or other similar transaction involving a change in employer of the employees of a trade or business.

I have a plan that had an AFTAP that was between 60 and 80% last year. A payment was made during the year which violates 436(d) in that 100% of the lump sum payment was paid to the non-highly employee. I originally considered this a "disqualification" event and was researching different correction methods for this type of issue.

Upon doing some digging, I ran into this section from 436:

"436(d)(3)(B)One-time application.—

436(d)(3)(B)(i)In general.—The plan shall also provide that only 1 prohibited payment meeting the requirements of subparagraph (A) may be made with respect to any participant during any period of consecutive plan years to which the limitations under either paragraph (1) or (2) or this paragraph applies.

436(d)(3)(B)(ii)Treatment of beneficiaries.—For purposes of this subparagraph, a participant and any beneficiary on his behalf (including an alternate payee, as defined in section 414(p)(8)) shall be treated as 1 participant. If the accrued benefit of a participant is allocated to such an alternate payee and 1 or more other persons, the amount under subparagraph (A) shall be allocated among such persons in the same manner as the accrued benefit is allocated unless the qualified domestic relations order (as defined in section 414(p)(1)(A)) provides otherwise."

It would almost appear that 436(d)(3)(B) says that one prohibited payment MAY be made during a period in which the plan is restricted or partially restricted. This seems bizarre to me, but I have not found any explanation or guidance regarding this paragraph.

Has anyone out there ever run into this? Am I misunderstanding something here? Any and all help would be greatly appreciated! Thanks,

We have a client who has had a PS 401(k) since 2007. They have adopted a DB effective 2012; there is overlap in participation in the 2 plans but there are some people who are excluded from one plan or the other.

For the DB, can we disregard service prior to 2012 or is the PS plan considered a predecessor plan?

Any thoughts on whether beers after a shift at a beer brewery are taxable compensation. It does not appear as though they are provided for the convenience of the employer. The only potential/arguable exclusion I can think of would be as a de minimis benefit.

Is there an age above which one cannot start a defined benefit plan. In other words, if an 80-year-old actively self-employed person wants to start a DB plan with NRA of 65 and 5 year of participation (so the 80-year-old's NRA would be , is there anything stopping him?

Thanks!