Paper is Not Dead (I guess I should have seen the punch line coming...)

http://www.youtube.com/embed/V gOZDWQj3Q?rel=0

If a participant made a distribution request from their 401(k) account on 12/27/12 but the distribution was not processed and paid until 1/3/13 is it correct to record it as a payable on the plan's financial statements or should distributions only be recorded when paid?

I have a situation where the participant's beneficiary is his ex-spouse whom he still lived with at the time of death.

I would assume that she is treated as a non-spousal beneficiary for purposes of the distribution or rollover and required notifications?

Also if rollling over she must roll to a non-spousal IRA as opposed to being able to roll to her own IRA as she would if she was still spouse?

thanks in advance.

Our client is a government contractor and several of the employees are part of a contract under the Service Contract Act. Their contract specifically does not allow them to receive benefits. I know that I need to make sure our plan document excludes them and that all testing is passed. For one year, however, our document was not correct to exclude these people. Does anyone know if DOL and/or IRS will accept that the contract did not allow for deferrals and then we can correct this under SCP?

I have an ESOP where the families that used to own the stock sold 100% of it to the ESOP.

During the sale they took back enough warrants that if they exercised them they all would be >5% owners.

I have looked at the HCE definistion and as long as the warrants don't have voting rights it would seem like these people are not HCEs by ownership.

I am having a brain breakdown. Do people agree or disagree?

Comp is based on plan year and with respect to any participant means: "Wages, tips and other compensation on Form W-2". I gather this means Box 1 on W-2, yes?

However, the only adjustment to compensation is "excluding comp paid during the determination period while not a participant in any component of the plan for which the definition applies" Therefore, mid plan year entry would exclude compensation earned prior to that entry date.

Since "including Salary deferrals" was not checked as an adjustment then comp for plan purposes would be W-2 Box 1 less deferrals, correct? i.e. $10K Box 1 W-2 less $2K deferral would be $8K for plan purposes? Therefore potentially lowering match funding for participants who did not exceed 401(a)17.

Calendar Year Plan

During 2012 Plan Year, a Plan overpaid a QDRO

Overpayment, plus associates investment gain returned to the Plan during the 2013 Plan Year

1. Should the overpayment be reported as a Prohibited Transaction on the Schedule H? My feeling is "no" - but the CPA Auditor "thinks" it should.

2. Should the overpayment be classified as a receivable on the Schedule H?

Many thanks!

Plan Document (Adoption Agreement) currently does not permit automatic rollovers of balances between $1,000 and $5,000.

Is there an exception in the event of a plan termination that says the funds may be automatically rolled to an IRA in the absense of a participant election? Or does the document need to provide for auto rollovers? (The participants will have been given a distribution packet and the option to elect the form of distribution.).

Thanks!!

LEt's say you have a client charging prime + 0 on its loans. Do you tell them:

a) There is little or no risk, the IRS is just puffing smoke

b) There is moderate risk, because hey, the auditors want to find something; or

c) I strongly recommend you increase your loan rate to prime +1 (the most common rate out there) because of the "recent" IRS comments endorsing Prime + 2.

Specifically, I'm looking for practical advice on what others are telling clients to help them avoid audit troubles. I agree with all of the arguments I've read that Prime is just as good as any other since there is essentially no risk.

If an employer is using the 5304 SIMPLE, can they require particpants to only have one investment selection at any given time for their ongoing contributions? I think they should be able to but still allow an employee to change investments but can not split contributions to go to 2 or more providers

For purposes of 4975(e)(6) - has anyone seen a situation in which there was a look-back time period during which a former fiduciary of a profit sharing plan (who is now the ex-wife of the remaining fiduciary/sole participant) would still be considered a disqualified person? I would like to propose a sale of land from the Plan to the ex-wife, but don't want to get tripped up on any PT issues!

I have a plan where I may want to restructure into two components, each with 1 HCE participant, in order to pass nondiscrimination for the profit sharing allocation. Each component separately passes coverage. I would like to use cross testing in Component 1, and Component 2 passes with a uniform allocation (each participant gets a 5% allocation). If I use the average benefits test to pass Component 1, must I consider the match and deferral allocations of the participants in Component 2 when I compute the average benefit percentage ratio?

Employer is setting up a new plan. Without question, she hopes the day will come when she can make "substantial and recurring contributions." The motivation for now is to allow herself and her employees to have a place to park rollovers from their old jobs.

Practically speaking, how is the substantial and recurring contributions rule enforced? If a plan is opened and no contributions aside from rollovers are ever made, is that a problem? If they add a 401k feature in year 3 or 4 is that a problem?

Are people doing the 0% money purchase plans in these situations?

Finally, Corbel's 401(k) plan has a "frozen plan" option with NO qualifications (i.e., no mention of the substantial and recurring issue). What is the purpose of that, as it seems to contradict this rule?

Edit:

Another Finally - is it a disqualification issue, or a partial termination issue? I see the substantial and recurring terminology crop up in the partial term rules.

Obamacare added a new section 18B to the FLSA, requiring employers that are subject to the FLSA to send out a notice of the Health Insurance Marketplaces to all employees. This notice is due on October 1.

The Department of Labor recently issued an FAQ stating that there is no fine or penalty under the law for failing to provide the notice.

Can anyone provide any insight as to whether there any other employment-type laws or any litigation risk that an employer should be concerned about if it does not send out the notices or only sends the notices to some employees?

I have a new takeover client. In inital review of the plan I noticed that a terminated participant has a defaulted loan. I send client financial institution paperwork to process deemed distribution. Client asks if particpant can take lump distribution and then pay back outstanding loan balance. Particpant is over 60 so no penalty for early withdrawal. He is trying to avoid taxable income of loan.

thoughts?

We are providing 410(b) testing for a large company containing 5 IRS approved SLOBS. The individual SLOBS contain a single company and plan, and several contain multiple companies and plans. As required by the regs, we test each SLOB for 410(b) separately. All pass except one. However, if all the SLOBS are tested together,like a contrilled group would be, 410(b) is satisfied. Is this acceptable, or must the failing SLOB be brought into compliance standing alone?

An employer has an existing traditional 401(k) Plan in place (no safe harbor, not top heavy, ADP Tests each year) that only allows deferrals and rollover contributions. The employer adopted a brand new 401(k) safe harbor plan, transferred deferrals only from the existing plan to the new plan, and may or may not have allowed participant distributions of the rollover contributions from the existing plan (under the existing plan, distributions of rollover contributions were allowed at any time).

All employees of the employer are covered under both plans.

Has the employer run afoul of the successor rules? Any other rules? Can you carve out the deferral piece in this way?

Can this employer now terminate the traditional existing 401(k) Plan?

I feel like something is wrong with this scenario. I do not know why a new plan would be adopted, as opposed to amending the existing plan.

Thank you.

well, there is only 1 more month before the figures will be released, but based on the figures currently available (and of course assuming my spread sheet still works)

next year we will have

260,000 as the comp limit

52,000 as the 415 limit

170,000 key ee

210,000 DB limit

everything else "same as same as".

I can't imagine things changing so dramatically to change these results.

catch up is getting close to incrementing (up to 5934, but regulations permit increases in units of $500)

if I understand things correctly, (at least my mom might be curious) soc sec increases would be based on the following

CPI-W values for July Aug Sept

Of course we won't know Sept 2013 until next month, but again, I can't see things changing that much - I will use June July Aug for 2013)

2012 values 225.568 + 227.056 + 228.184 = 680.808

2013 values 230.002 + 230.084 + 230.359 = 690.445

690.445 - 680.808 = 9.637

9.637 / 680.808 * 100 = 1.4% increase

I was wondering if anyone had any experience with this....

We have a Canadian corporation that wants to have a US plan for its US employees. There is no separate US entity. Can this be done?

Hi,

I have a non-profit who is wanting to make an non-elective contribution however they are funded by a grant which restricts them from paying bonuses from the grant money. I do not believe Non-Elective contributions are considered bonuses since there is no "achievement of objectives" associated with the contribution as the below grant language indicates. I also believe that Non-Elective contributions are benefits to employees which helps with employee retention.

Does anybody have any good references that I can provide to the client so they can be more at peace with making the non-elective contributions? I have found the DOL's definition of a profit sharing plan and no where does it state bonus plan.

Grant's Exclusion of Executive Compensation

In setting or approving base compensation and benefits, the Board of Directors shall consider the market rate for the role and skill level of the individual to perform in the role as well as the notional projections included in the proposal submitted on behalf of Company A. Executive bonuses shall be awarded by Company A's management or the Board of Directors based on the achievement of objectives as set forth by management or the Board. However, no bonuses paid to Company A's executives will be funded from appropriated funds, but only from Program Income as defined by Circular A-110, e.g., membership fees to Company A.