Bird

I think it depends on what type of insurance (and I don't think the instructions provide guidance, at least not clear guidance). If term, and yes, I have seen plans with term insurance, then it is definitely an expense item...I'd use line 8g (SF) "Other." If whole life or UL or some variant that develops a cash value, then I treat it as any other asset of the plan, so premiums are really transfers and don't get reported anywhere. The gains or losses are part of the "other income" on 8b (again, the SF form).

I found the thread that I was thinking of; read it here if you are interested. I guess I would/could rephrase things to say that the supposed "rule" that a loan must default if any amount is outstanding after 5 years comes from the TEFRA Blue Book, from something like 37 years ago. As far as I know, there are no current regs that require a loan to default at that point - only rules that it can't be amortized over more than 5 years. There is a difference. I/we have better things to do than default a loan that has a $32.73 payment remaining at the five year point.

I'm not sure that checking the wrong box is fatal, and that may be the best solution (to treat it as a purchase). At the end of the day, the reason for the assignment is not necessarily relevant to anyone...I mean, what would the insurance company do differently if the "sale" box had been checked? The end result either way is that the policy is now owned by the participant.

I think you're right, his (new) wife would have to be the beneficiary of all plan benefits. But that doesn't mean the language in the divorce decree can be completely ignored as an "oops, never mind." It may not be enforceable but I'd assume there is some breach of contract violation if he does anything that invalidates that clause; I'm not a lawyer and I don't know for sure. But you and he had better make sure his attorney understands these interactions 100% or gets someone who does know. I see nothing but red flags waving - second to die insurance with some wifty provision that the first spouse gets the policy at his death, raw land in the plan. Oy.

Not in my opinion. I'd have to review prior posts on this to see if I ever agreed that this is at least theoretically correct, but I've always felt the cure period effectively extends the 5 years.

That should work. Don't forget to get the participant to sign forms for the original distribution, and report it properly as taxable except for the basis; he'll have to show the rollover on his tax return. Of course there was a failure to withhold...I'd explain that and let the client instruct me not to do anything about it.

If future payments will be more-or-less on schedule, nothing needs to be done. As long as all payments are within the cure period, just let it happen and don't make extra work for yourself.

Mmmm, of all the complaints I have about vendors, that's one I've never had. (Just musing.) I think in any scenario where forfeitures reduce an employer contribution the total allocation is going to show up as a contribution, no? (So the "contribution" is really an "allocation" and the deduction doesn't equal the total allocated.) Is this really any different?

I'm not quite sure how you're reading this but I agree with Mike. I suspect your misinterpretation is that you are ignoring the "not more than" phrase before "2 years of service" and concluding that you don't have to 100% vest for any waiting period up to 2 years, but of course the language immediately prior to the quoted part says that a plan isn't qualified if it requires more than one year of service.

To clarify, "frozen" might be an acceptable informal way to describe the activity. But I try not to use informal words that have a real meaning in a different context and don't like it...had a very difficult time with a client once who kept using the term "distributions" to mean "contributions" and he was asking why we were giving "distributions" of new company money to participants who hadn't been employed for some time. Sort of a "who's on first" routine b/c the conversation made no sense until we started talking about actual names involved.

I would use the term "amended to preclude future contributions" and I believe testing is based only on the period during which it was possible to make contributions.

Our (FTW) documents offer different vesting schedules for regular PS and TH contributions.

Assuming it was an asset sale, and not a purchase of the entity itself by the buyer, the old entity can continue through 12/31. No problem at all.

But the amendment in the example is retroactive and he comes in a year early. I don't think you can make someone wait 2 years, then change eligibility just as they happen to enter, and use a a graded schedule. I think it depends on the effective date of change (retroactive or prospective) and the maximum effective waiting period for each employee.

I agree with Kevin. I'd like to say that it shouldn't take more than 2 weeks, and that's really more than should be necessary if all parties cooperated...but there's the rub. I don't think anyone can "do" anything about as long as it's all completed within the noticed window (and I'm not sure what is actionable after that anyway).

Shouldn't we be asking the original poster if the plan uses the safe harbor definition of hardship? If so, then the purchase of a primary residence qualifies, period end of story. It's hard for me to imagine that the participant is looking for so much money that they will get back a down payment plus various closing costs...plus the amount due to complete the purchase. (If it doesn't use the safe harbor definition, then pretty much the same logic applies anyway; who is going to argue that the purchase of a home doesn't qualify?)

This is accurate but I'm not sure about the conclusion. First, note that qualifying self-directed accounts don't need it, and second (for a pooled account), note that it says "regulated financial institution," not "investment." So if the assets are held in a Wells Fargo brokerage account, you would just say "Wells Fargo Securities" and not list each investment in the account.

2007 and 2008, really? It was indeed ineligible for rollover, but it's too late and trying to get it out now without tax consequences is probably impossible - you can try to explain it to the IRA provider but they will absolutely want a code for a 1099-R and I can't begin to imagine what code would be correct. I'm usually on the other side and don't appreciate it when participants say something to the effect of "what are you gonna do about it?" but that would be my inclination. Someone might be going through the motions so they can shrug their shoulders and say "we tried."

I think your boss is right. If you are creating the model portfolio, and making decisions about the content of the portfolio, then you should be showing actual results. You appear to be talking about subtle changes, but suppose you had an "aggressive" portfolio that was invested in an S&P 500 fund for a year, and the fund lost 20%. If you then change the portfolio to cash, or a short fund, you'd be able to show no loss or even gains on the model. Not in the least bit accurate; it's like retroactively changing the results for a mutual fund by changing the investments to something that "could have been."

IMO someone who was paid out needs no further action. Having said that, when we used to file Form 5300 upon termination, there was a question about forfeitures in the last 5 years. There usually would be one or two, and it wouldn't be a problem, but I asked a reviewer about it once and was told they were looking for evidence that those prior payouts/forfeitures were somehow related to the termination of the plan - i.e. that perhaps an effective partial termination had taken place prior to the official plan termination. If the participants voluntarily left (quit) then it was "ok." If the plan sponsor fired or laid off a bunch of people then they would want to look at it more closely. I never had that situation so I don't know if they apply a (the) mathematical formula or just go with their gut. Long story short, if the terms quit, I wouldn't worry too much (unless "quit" was because they had no choice). At some level you have to ask "what are they gonna do about it 3 years later...?"

Schedule C businesses never have wages or designated pay or whatever you want to call it..or shouldn't; as discussed elsewhere on this board, it happens sometimes but it's not "right." A sole proprietor's compensation is the Schedule C bottom line profit...with some adjustments; most notably, you have to reduce that number by 1/2 of the self-employment tax, and then you have to factor in the contribution itself. So, for a maximum SEP contribution of 25% of pay, if your net after subtracting 1/2 SE tax is $100K, the max contribution is $20K (100-20=80 and 25% of 80 is 20).

Thanks for all the replies! I will definitely push back.

We have what should be an easy audit for a tiny plan, but the auditor works from her home and insists on everything being faxed for security. She says the IRS says that using Sharefile or something similar is "disclosure." Maybe I'm being stubborn but we're not faxing 80-100 pages from a fax machine, and I'm not inclined to spend even $1 on some program that will convert efiles to faxes. I hate to be antagonistic but I'm inclined to talk to the supervisor on this...anyone have similar experience/solutions?

We report what is on the trust report. I believe if direct RK fees were charged to participants, that would show up on the trust report. Sub-TA fees and commissions that are paid out of 12b-1 expenses do not go on 8f of 5500SF...IMO.

You mean 17? If someone with a better memory doesn't post that cite, I will find it. Bump it if no response in a day or two.