We have a plan with a deceased participant (the owner) with a balance of around $140,000 in his 401(k). Although there was no designation of beneficiary every submitted for the 401(k), his adult son claims to be the sole heir. He claims that his father had a living trust in which the 401(k) was addressed (we are getting copy), and his attorney assures him that will take care of him inheriting dad's 401(k).

Is there any way a living trust can address this, or will the money have to go through probate, or how else will the son get his inheritance?

With regards to Question 2 © on the Schedule C,

"Element ©. Enter any relationship of the person identified in element (a) to the plan sponsor, to the participating employer or employee organization, or to any person known to be a party-in-interest, for example, employee of employer, vice-president of employer, union officer, affiliate of plan, recordkeeper, etc"

When you disclose your firm (if your firm was paid $5,000), are you answering this question "none" or are you giving the relationship such as "record-keeper"? We want to answer this question correctly since third party administrators and investment advisors can be/are "parties-in-interest" but don't want to unduly put ourselves on an DOL audit list. Assume no ownership/relationship between plan sponsor and third party administrator other than providing administrative services. Thanks

According to my research, late deposits are corrected just like a 401(k) plan: late deposits are made and lost interest is deposited to the plan as calculated on the DOL DFVC calulator. (I know, technically, you should only use the calculator if you are going through VFCP, but I think most use the calculator anyway)

My confusion is on the next step: the prohibited transaction penalty (ERISA) and/or excise tax (4975). My research indicates that 403(b) plans are NOT subject to 4975, but they ARE subject (maybe) to ERISA 502(i). Further, Form 5330 cannot be used to pay the 5% penalty under 502(i). Is this true, even for ERISA plans?

After an ERISA 403(b) plan has corrected the late deferral PT, what is the next step? What penalties, if any, need to be paid and how do you pay them? And, does the penalty "pyramid" from year to year like it does with 4975 excise taxes?

I assume I continue to report late deferrals on Form 5500 until corrected, but I feel like I'm missing something if I don't also prepare From 5330.

This is a large plan, subject to a CPA audit, so any cites would be appreciated.

Craig Garner

Does anybody have an opinion as to whether an employer will still be permitted to offer cash in lieu of coverage in 2014, without running afoul of the employer mandate? My argument in favor of this continued practice is that if an employer makes an offer of affordable coverage of a minimum value, and also an offer (under a cafeteria plan) of cash in lieu of coverage, it is the employee's choice as to which offer to accept. But the employer's offer has been made, which should satisfy the mandate. Any thoughts out there? I haven't seen anything to support or refute my argument. Thanks!

In reviewing the minimum value calculator (http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mv-calculator-final-4-11-2013.xlsm) and the associated instructions (http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mv-calculator-methodology.pdf), I haven't figured out the answer to this question: how does the calculator work if your plan provides various coverage levels? (e.g. individual, individual + spouse, individual + children, family, etc.). Does an employer need to determine minimum value for each type of coverage?

Any comments are much appreciated.

If a late deposit of elective deferrals is corrected under VFCP, the employer qualifies for PTE 2002-51 (as amended), and the 15% § 4975©(2) excise tax is waived. It seems like there is no need to file Form 5330 at this point, but I'm getting pushback on that decision. If there is no excise tax, why go to the trouble and expense of filing the 5330?

Thanks for any wisdom. Cheers.

Has anyone ever come across this?

Plan Document has a spousal consent provision. Participant claims spouse on file has not been his spouse for years, but he has not updated company records to reflect this. After questioning the participant they claim to be a bigomist! Who signs spousal consent when multiple spouses are involved?

Would anyone tell me how to allocate investment earnings to a participants separate brokerage account, so a participants 401k) money source receives higher portion of investment earnings? The DC Plan has both employer and salary deferral money sources.

This is a 401(k) Profit Sharing Plan that only has salary deferrals - no employer discretionary contribution. I am having a discussion with the owner of my firm regarding answering this question with the code for Profit Sharing feature (2E), even though there has never been a profit sharing discretionary contribution. In the past, I have always listed this code, even if it was just a plan the only had salary deferrals. My boss is of the opinion that you would only list this code if there had been profit sharing contributions. (I have been out of the field for 15 years, so thought I would post the question here.)

And what about if the plan has the language for a matching contribution, but one has never been made? This would pertain to code 2K which applies to 401(m) arrangements (but not Qnecs/Qmacs).

Thanks for your help, I came back into the field in February of this year, and feel a lot like Rip Van Winkle after being out of the field for so long.

Plan doucment was restated with match calculated on a Plan Year Basis. In the past, the client made the match on a pay period basis. We informed client that additional funds were due to plan for 2012.

Client wants to amend plan back to pay period basis effective 1/1/2013. Can this be done now? The plan has no allocation requirements for receiving a match.

participant in DB and DC

decided to take annuity.

so they can set something up at the bank.

Should that be under the person name, or under a 'trust' at the bank.

I think they have to keep things separately. the DB is simply an annuity and must be funded if needed if the lady lives longs enough.

the DC was a money purchase, and should simply be an annuity based on whatever was the balance.

Does the administator of a ps plan have total discretion in the maximum length of a participant loan. Could the only loan in a small plan be limited to 2 years without any specific criteria?

A participant is being told that his house will be sold on the courthouse steps for back taxes unless they are paid by a specific date. It's not exactly a foreclosure or eviction, although the result is the same. How do others feel about this as safe harbor hardship reason?

Have a profit sharing plan, small number of participants, who participate in a pooled arrangement. The investment pool is managed by an RIA who went to cash for most of December, 2012 and didn't reinvest the funds until about January 15, 2013.

Looking for confirmation on this, this being question 4i on the Schedule I regarding 'Did the plan at any time hold 20% or more of its assets in any single security..(etc)' should be answered Yes for the 2012 return AND the 2013 return. Everyone agree?

If so, would it behoove us to attach an explanation?

Thanks in advance.

Doctor A is currently a sole prop with a 401k Plan and DB Plan. he is considering creating an LLC, the members of which would all be doctors (and HCEs), for the purpose of contracting with medical payors—hospitals, insurance companies, etc. in an effort for collective contracting and bargaining.

The Plan is to have the LLC enter into a participation agreement with Doctor A's current Plans so the compensation he receives for services rendered through the LLC would be eligible for retirement plan purposes. His two Plans would also exclude all of the other members of the LLC (since they are all HCEs, this shouldnt present a problem).

However, my question is does this create an issue for 401(a)(26)? Doctor A and several other doctors from the LLC will have met the eligibility criteria and be eligible for the DB Plan. But all except Doctor A would be excluded.

This is a strange question, but I am just wondering if there are any legal minds out there willing to chime in. If a plan is possibly the victim of a ponzi scheme, is there any legal reason to keep the plan in tact or does it matter from a recourse point of view.

In other words, if the plan is terminated and the plan assets rolled to IRAs, does the victim lose any of its recourse opportunities once the assets move to an IRA.

I'm no attorney, so I don't want to recommend plan termination if it would jeopardize recourse against the wrongdoer.

Under what circumstances should a business associate agreement include provisions relating to de-identification? Where can I find examples of de-identification provisions?

Self-directed 401k is currently invested in a GAC with a popular insurance co.

For asset-protection purposes, owner/trustee would like to rollover assets from his IRA into the plan, which the document allows.

HOWEVER, what he wants to rollover into the 401k is non-publicly traded stock, in kind. And we can amend the plan to allow in-kind rollovers, available to all participants.

But since all employees must have the same investment opportunities, what must be offered in addition to the GAC? Just this stock, which is no longer for sale? Any stock? Self-directed brokerage accounts?

Of course we'd like to offer as little as possible, but we also want to keep the plan in compliance.

Thank you for any guidance.

We have a plan where a participant took a distribution of funds (including Roth funds) and rolled the funds into an IRA. Three years later, the participant has been rehired and wants to "buy back" the non vested portion that was forfeited when the distribution was originally taken. The participant intends to "buy back" by issuing a check from their personal account (not using the rollover acocunt). When we receive the funds, we will deposit the appropriate amounts into the sources from which they were taken. When this is done, we indicate that the amounts of the repayment were marked as after-tax basis. The issue we are encountering has to do with the Roth funds. How should the funds redeposited into the Roth account be handled? What about earnings? If the participant meets the requirements, would the earnings be Roth qualified? Should the "buy back" amount, attributed to the Roth section, be deposited into an alternative account? Is it possible that the participant will "double up" on the Roth funds because they have rolled over the Roth funds?

Not sure I explained this well, but any comments are greatly appreciated.

I have a potential opportunity to become an owner of a TPA firm (small non-producing) in the next 3 to 5 years. I was hoping some owners out there might share some advice:

1. Is there anything you wish you had done or concentrated on before becoming an owner of a TPA firm?

2. What is the biggest challenge you face?

(Quality employees? Keeping up with the demands? Staying profitable? Growing the business? Work/life balance?)

3. What is the best thing about being an owner?

4. Would you do it again? (Become an owner)

5. Any other miscellaneous advice?

TIA!