Employer has semi-monthly payroll but pays monthly commission to many employees, thus they would like to only withhold the 401(k) deferral once a month when the monthly commission is paid. Is that acceptable if the deferral election form states that the deferral will be withheld only on one pay check per month?

Need a little guidence. Can you include investments in a particpant directed 401k (not SDBA) that imposes a minimum investment and/or a minimum networth? Off the top of my head it sounds like it's discriminatory.

Is it feasible to reclassify Defined Benefit assets as rollover assets by simply issuing a 1099? The money never actually leaves the trust, it's just reclassified as a rollover account and no longer affects the DB valuation. I've never heard of this previously but I'm being told it's a normal practice. Sounds a little fishy.

A non-5%-owner participant passed away at the age 79 in 2013; she was actively working up until her passing. Her named beneficiary is her son. Total Acct Bal $372.18. Had she retired in lieu of passing, her RBD would be 4/1/2014. If the named non-spouse beneficiary elects to rollover the Acct Bal, is he required to receive at least a portion of it to satisfy RMD rules based on his 2013 age, single life factor? Would your answer change if the distribution occurs Jan 1 2014 or Apr 1 2014?

Controlled Group consisting of 2 entities. One entity "M" declares a match , the other entity "NM" does not for a particular year. If employee A earns wages from "M" and "NM" and defers off of wages from both "M" and "NM", do we need to use deferrals and wages from "NM" when figuring out the amount of match "M" owes?

Is it possible to word each document to exclude such wages and deferrals from the other entity when calculating the match?

Understand that combined testing ADP/ACP required.

I have a plan that has employees in multiple divisions. The plan allows all of the employees of all of the divisions to make elective deferrals (when the meet eligiblity and entry dates). The plan allows employees of only two of the divisions to receive matching contributions. The plan's definition of an eligible employee specifically excludes all but two of the divisions from the matching contribbutions.

My issue is how should these people be treated for ACP testing and coverage testing. My thought process was that they are excluded from the matching source via the definition of eligible employee and therefore should be excluded from the ACP and in the coverage, not benefitting group in the coverage testing.

From my reading of the EOB, it says that when there is a discretionary matching contribution and one group is given zero, there are two possible options available: One is as I have thought above and the other is to include them in the ACP as zeros and include them in the benefitting group for coverage. My issue with this is that this talks about a discretionary matching contribution that can be give at different levels. My thought is that this may different as my situation specifically excludes them from the testing.

I use Relius and I posted a matching transaction for the each specific division that was to receive the matching contribution. When I run the ACP, it includes the folks who are not eligible for the match as 0%. It also includes them as benefitting for the covereage testing. This seems to support the second theory, but I may have a coding issue as to how I have set-up Relius.

Does anyone have an opinion regarding the which methodology is correct or even preferable? Any thoughts are greatly appreciated.

I have a s corporation and a schedule c. I am the only employee on my corporation.

The 2 business are related and I own 100% on both.

Question: I already have an SEP plan on my schedule c. Can I establish a 401K salary deferral plan on my S corporation?

I am over 50. What are the limits.

Thank you for your help.

Because I have heard that the IRS is fairly stringent regarding the validity of 242(b) elections, I am hesitant about giving the go-ahead on a particular one.

The participant signed a 242(b) TEFRA election 12/29/83. He turned 70 ½ this year, 2013. My question is whether his election meets the requirements of 242(b) regarding “the time at which the distribution will commence”.

The 242(b) signed form says:

“ I elect that benefits be paid to me at the latest age at which such benefit will not cause this election to violate Section 401(a)(9) of the Internal Revenue Code of 1954, as amended, (“Code”) and as in effect immediately prior to the effective date of the Tax Equity and Fiscal Responsibility Act of 1982, (“TEFRA”). “

Although I am not sure this is relevant, the client's last pre-TEFRA document (1981) defines the latest commencement date for the payment of retirement benefits as the later of the date the Participant attained the Normal Retirement Date or the date the participant terminated employment.

Is the above a valid 242(b) election regarding the time at which a distribution will commence?

Basic Information:

ER sponsors a DC plan, utilizes SH Match. ER Would like to have a greater deduction for 2013. It is a calendar year plan. Only a handful of participants mostly the owner and his family. DC plan allows for a discretionary contribution, allocated on a pro-rata (across compensation) basis.

My understanding is that the plan would not be allowed to change the profit sharing allocation method to something more favorable, such as cross-tested. The ER is interested in adding a DB plan, but one that is offset by the DC plan. Typically I would add a DB plan, and amend the DC plan to add language making it crystal clear what the offset arrangement it. And do it all prospectively. In this case, they want the deduction for 2013 and the prohibition against the changes to the Safe Harbor plan during the year would prevent the PS allocation method change.

Would the addition of the DB plan in 2013 be considered a change, such that it would violate the prohibition against mid-year changes on the SH DC plan? I don't know if the DB and DC would be considered 1 plan, or could be considered 2 for this purpose. The DB plan would reference the DC plan and offset, but the DC plan would not, until a new amendment is effective in 2014.

If that doesn't work, could the ER set up a new DC profit sharing only plan to pair with the new DB plan? The SH Match would be provided in DC plan 1, a PS contribution would go into DC plan 2 as the offset, and then there would be the DB plan.

Or is all of this pointless because under ERISA they would all be considered one plan anyways and would be an impermissable change to the original SH plan?

Thoughts? Advice?

Hi. I am a small business owner of age 34 with three small kids and stay home wife. I don't have any retirement plan at this moment. All my after-tax savings are in stocks and mutual funds. I don't pay myself high wage to avoid income tax and Social security deductions, so I don't earn enough wage to make big contribution to tax free retirement accounts. However yearly capital gain (especially short term since I trade as well) from these stocks are adding on to our income tax bill and pushing up to higher bracket.

Anyway I am thinking if there is any retirement plan that I can move our savings to so future capital gains won't be adding on to our income statement? Please suggest either retirement plan or anything tax free fund to save up for kids education that is available to me.

Also will I still be allowed to trade stocks and mutual funds in that retirement plan? If the fund's capital gain does not contribute to income tax, I assume capital loss would not also contribute to the income statement. In that case how can you harvest the loss?

Thanks for all the advise. My tax accountant is useless in answering about retirement question. Is there any professional service that I should approach?

I guess I'm old school, but I miss the days when as a TPA our focus was on our client and how to help them with their retirement plan needs. It seems that has all but faded away. We deal with brokers, not clients. The platforms use participant money to pay for TPA "conferences". TPA firms use platforms as "sponsors" in their advertising and promotional and even charity events.

Is it unrealistic to think I could find a firm who wants an experienced administrator who wants to work for the client and not for the platform?

Thanks for letting me vent.

Can someone explain how the Grace Period works under a FSA plan? And how to correct monies that have been forfeited if the prior years forfeitures were never used due to employer misunderstanding of the grace period.

- My understanding was if you made an election for example of $2,500 under Health for 2012. You can submit claims until March 15th of 2013 BUT the claims would have to be dated during the 2012 plan year. In other words you still have time after the close of the plan year to submit but the bills/claims must be attributable to 2012. I now understand this is incorrect....

- Under the grace period if your election was $2,500 in 2012 and you only submitted $1,500 in claims, you still have $1,000 BUT you can have claims which are dated in the new year (2013) until 3/15 which can use up the $1,000. Is this the correct???

We were allowing employees to use up any amount that was left as of 12.31 until 3/15 of the next year however we informed them that the claims have occurred during the plan year it applied too. If this is incorrect what do we do with the monies that were forfeited from the prior plan year? Can we pay it out to the participants?

So for a regular 409A Deferred Comp Plan, participants must elect the timing and form of distribution before the beginning of the applicable taxable year - any similar requirement for a 457 Plan? Or can the participant decide upon the form of distribution after becoming eligible for a distribution?

I am working on a DB plan with a business owner and one staff person. My software is indicating the the plan is not passing the participation test because the staff person didn't benefit in 2012. In fact, she didn't work 1000 hours in 2012 (and that's why she didn't benefit). Is her not having worked 1000 hours a reason for the plan to fail the participation test?

Any thought would be appreciated!

The available rates to use are 7.5% to 8.5%.

We've always used 8.5%

Is there ever a situation where a lower interest rate would yield better results?

401k plan with age 21 and no service requirement for employee deferrals. Entry date is first day of the month coinciding or next following date requirement met. If an employee was hired on December 2nd (which was a Monday) would they enter the plan Dec. 2nd or Jan 1st? I am thinking they would enter Dec. 2nd because that was the first business day of the month. Thoughts?

Suppose a traditional DB plan provides nhces a benefit of .5% of average salary. The employer also sponsors a 401(k) plan.

Could the 401(k) plan provide nhces with a 6.5% mandatory employer contribution in the 401(k) plan and meet the minimum gateway?

It seems that a DB benefit is generally worth more than twice a DC contribution. The logic being a 5% top heavy minimum in a DC plan is equivalent to a 2% top heavy minimum benefit in a DB plan.

Thanks

We have a client who has failed to withhold deferral payments on bonuses for several years. The affected participants will also be due a match contribution on the missed deferrals. This affected both HCEs and NHCEs and will be corrected under VCP.

A question is coming up as to what happens with the prior ADP/ACP tests. This plan has never used the ADP/ACP safe harbor. They did fail testing a couple of times in the years affected and a few passes that were close to the limit (based on testing where bonuses were not counted for deferrals and match). Are we reading the EPCRS procedure (section 6.02(2)(d) pasted below) correctly to interpret it as requiring that the ADP/ACP tests must be rerun for each of the affected years (likely resulting in late ADP/ACP corrections for the prior years that will also need to be corrected under VCP)? We'd like an outside thought before we implement any corrections. Thanks.

(d) The correction method should not violate another applicable specific requirement of § 401(a) or 403(b) (for example, § 401(a)(4), 411(d)(6), or 403(b)(12), as applicable), 408(k) for SEPs, or 408(p) for SIMPLE IRA Plans, or a parallel requirement in Part 2 of Subtitle B of Title I of ERISA (for plans that are subject to Part 2 of Subtitle B of Title I of ERISA). If an additional failure is nevertheless created as a result of the use of a correction method in this revenue procedure, then that failure also must be corrected in conjunction with the use of that correction method and in accordance with the requirements of this revenue procedure.

There is a 90 year old participant in a new plan of ours. He retired from the company 20 years ago and he cannot be located but has over $20k in his account and requires an RMD. Please let me know how you have dealt with these types of situations. Thank you.

This is a 401(a) defined contribution plan which is funded solely by the voluntary contributions of the public-sector workers in New Jersey. It started in 1963 with a single investment choice---a common stock portfolio. It has never expanded its investment menu. Are the Trustees in breach of their fiduciary duty?