MPLSLAW

The requester does not mention if the company is an S Corporation or an LLC which have rules for reporting most owner's health insurance premiums as taxable income on W-2 or K-1 and the self-employed owner then claims a deduction on their individual income tax return. that might be happening here. Agree - not part of the 125.

The short form does not reveal much in terms of operational compliance. To the extent that the IQPA audit report (filed as an attachment to the long form) includes footnotes or notes financial adjustments as a result of compliance errors, I would think the chance of DOL or IRS examination would be higher. But I have no information to prove that these agencies read the full auditors reports.

You didn't say but we are assuming the account was invested during the 70 days until it was processed. If the investment was put to cash when the original request came in and there were no earnings during a stock market run up, there may be a breach of duty claim. Just saying.

Agree with the others. I have had a long standing battle with accountants who advise business owners to set W-2 artificially low to save FICA taxes without explaining the limits that is putting on their deferral opportunities into tax qualified plans.

It seems like over 80% of the Minnesota QDROs I get for review on behalf of plan sponsors are drafted by Tom Hughes firm in Minneapolis. www.thomashughesltd.com

Ditto on the operational error under VCP. the key to getting a compliance letter (I have received a number of these) is finding written communication to the employees, no matter how informal, to support the operational procedures used. The IRS reviewers often use the words "employee expectations" in this context.

S Corp ESOP transferred shares for a number of years to profit sharing accounts within the ESOP to avoid a non-allocation year under 409(p). The company revoked the S election early in 2019. Can they transfer the profit sharing shares back to the ESOP? Assume appraised value would be used for the transfers.

Accounting firm is searching for a custodian for its 401(k) plan. It interviews several providers. One of the two finalists is a client of the accounting firm (tax - non-attest). Any problem if the firm selects the client???? These relationship questions can get sticky sometimes.

Over 10 years ago I had a governmental nursing home that had adopted a 401(k) plan improperly. We filed under VCP requesting to convert the plan to a 457(b) plan and received a compliance letter approving the correction via restatement. Funds remained in trust. I have not looked at the later Rev. Proc's to see if they closed the door to that remedy but it made sense to us and the reviewer.

K2retire doesn't say if this is a DC plan, but if so, see FAB 2014-1. I agree with jpod. The DOL says if participant is missing or fails to provide distribution instructions on a plan termination, the fiduciary can distribute to an IRA or if unable to find an IRA custodian willing to accept the rollover, a bank account in order to complete the termination of the trust. this would solve the disqualification issue for failure to distribute within the 5 year requirement.

Agree with Mike P. Code section 410(a) says if waiting period is more than a year of service, vesting must be 100%...

Client purchased all the assets of a company that had recently terminated its defined benefit pension plan. All benefits were funded and all participants received annuity contracts or lump sums. Several years after the termination, the buyer was contacted by insurance company which had funded the terminated plan, that it was holding demutualization shares distributable to the terminated plan. Buyer plans to claim the surplus assets pursuant to the purchase agreement. Will it be subject to the reversion excise tax if it was never the plan sponsor?

The responses track with our initial conclusions. Could the plan instead provide for the 3%SHNEC (not a match) and also provide for a 25% match on deferral contributions up to 4% (maximum employer contribution of 4%) without having to test the match?

Thanks for the response Lou. No. actually the client wants to match 3% of pay on deferrals between 0% and 3% and 50% on deferrals between 3% and 5%.

Client wants to amend plan to provide for the 3% non-elective safe harbor (no deferral requirement) and then match 50% of deferrals between 3 and 5% for an additional 1 % "safe harbor match". Is there a way to design the safe harbor so that both pieces qualify as safe harbor contributions? The regulations have an example with a discretionary match, but client wants to fix the match formula into the plan.