Stash026

My understanding always was that Plans weren't required to withhold 20% on distributions under $200. However I pulled up the 2018 Publication 15-A and in Chapter 8 it's not listed as an exception for the 20% withholding. All that it says is: Exceptions. Distributions that are (a) required minimum distributions, (b) one of a specified series of equal payments, or (c) qualifying “hardship” distributions aren't “eligible rollover distributions” and aren't subject to the mandatory 20% federal income tax withholding. Does that mean that we should withhold the 20%, even on a "small" distribution or is it listed somewhere else as an exception? Thanks again everyone!

Thanks guys! So a Simple 401k does have to be 1/1-12/31, but others can be off-calendar year. Got it!

This may be a silly question but I have someone adamant that a 401(k) plan "has" to have a Plan Year from 1/1-12/31. I tried to find it in the regulations, but can't seem to find it. Any help? Thanks again everyone!

A little bit more, it's the person's tax adviser who is claiming that: "while the word “distribution” can encompass the term “roll-over,” the IRS are referring to withdrawals, and there are no penalties for doing an “in service roll over” and it’s really the company plan itself that may or may not put limitations on that" I don't see how it holds weight and the adviser is just trying to get his hands on the money. Does anyone disagree?

Thanks guys. The participant was looking to roll out his 401(k) deferrals. This confirms it. Thanks!

I've gotten conflicting answers to this, so I wanted to get some clarity. Does the IRS allow for in-service distributions of 401(k) contributions under age 59.5? Specifically, the person is trying to roll the money into an IRA. The current Plan Document does not allow it, but the employer is willing to amend it if allowed. If someone direct me to exactly where in the code it says it, I'd appreciate it!

Yea, I just overlooked it. Thanks!!!

That's what I thought, but they previously filed a 5500-SF and I don't see it on there. Am I just overlooking it?

I just took over a plan who changed their EIN number during '17 (I'm not 100% sure why, but that's irrelevant). Anyone have any experience on notifying the IRS of this change, so we don't have an issue when filing the Form 5500? Thanks in advance!

I have a participant that is currently making quarterly repayments, but the large cost has become too burdensome and they'd like to have it taken out via payroll deduction instead. My question is what interest rate would you use in order to handle the request? Would you use the rate at the time the loan was taken or would you use the current rate? Also, they asked if they could pay the loan back over a little bit longer of a time period (they originally set it for 3 years). Thanks in advance everyone!

Great, thanks! So bascally it has an impact on the amount that can be taken in the future, but it's not mandatory that the person repays the defaulted loan. Correct?

I know a participant can continue to make repayments on a defaulted loan (if an after-tax account is set up), but are they required to? I've seen/read different things, so I want to be clear. Thanks!

This was a plan we just took over. It had a 6-year graded vesting schedule and therefore a forfeiture account in it. I'm still reviewing the setup, etc of course. That said they asked if they could use that money to pay yearly plan expenses (i.e. filing 5500, compliance work, etc), which is what I want to confirm (or if it can just come out of the assets in general)

I know there are different rules, since it's similar to a Defined Benefit Plan, but can Plan expenses be paid out of a Cash Balance's Forfeiture Account (similar to a 401(k))? For instance, TPA Fees? Thanks!

I have a plan that needs to correct for 5 loans that were previously defaulted, with 1099's issues, but it's been discovered that the error was caused by the Employer. I want to make sure I'm completing all the necessary forms to have the defaults reversed and allow these participants to begin making repayments as they desire to. Can someone please let me know which are the required forms? Thanks in advance!

I have a client with a great number of highly compensated employees. They want to have a different matching formula for some of the HCE, but not necessarily all of them. Is there a way anyone can think of that works and isn't considered "biased"? For instance, can we have a different matching formula based on years of service and how big of a discrepancy could there be? Thanks in advance!

I have a small company where the ex-spouse of the owner is still on the payroll. I just want to make sure my thinking is clear as to if she would still be considered a Highly Compensated Employee due to attribution? Thanks in advance!

I did see that, but this is a 5500-SF (it's 3 people), not an EZ

Employer had a 401(k)/Profit Sharing Plan, and for 2016 they put in a Cash Balance Plan. The assets are: Profit Sharing - $375,000 Cash Balance - $100,000 (all receivable) Since the assets between the two plans are greater than $250k, is a 5500 required to be filed for the Cash Balance as well? I'm actually not seeing the $250,000 requirement in the instructions directly, so I just wanted to be sure. Thanks in advance!

I handle the administration for a construction fund. It is my understanding that the IRS has required that a construction fund to use the Presumptive method to calculate withdrawal liability. This fund has never needed to do a withdrawal liability calculation until now. This method requires 20 years worth of contribution history for the Fund but the Administrator can only give me 11 years worth of information. Does anyone know if we could instead use the pool method since the information simply isn't available? Thanks in advance!

The auditors are making a change to the beginning balance for 2016 which they deem to be negligible, and are therefore not issuing an amended '15 audit (they are simply putting a footnote in their report). In theory this would mean that the beginning balance will be different then the '15 ending balance. Is there a way to note why somewhere that I'm missing, or will the IRS simply pick it up from the attached report? Thanks in advance!

I've gotten two different responses to this from two people I trust. In a 401(k)/Profit Sharing Plan, if a participant's account balance is less than $5,000 is spousal consent to a distribution (due to termination) required?

I have a client that maintains two plans, and had tax withholding due to distributions from each plan. Should these be reported on one Form 945 (it's the same EIN number), or do we file two separate forms? Thanks!

I have a participant who turned 70.5 in 2013, but at that time he wasn't eligible to receive his pension. The 2016 Plan Year was his fifth, making him eligible to start receiving a pension (though he is still actively working and has already accrued another year of service in '17).. So what would the required start date be for his RMD? He wasn't eligible on the 4/1 following the year in which he turned 70.5. Thanks in advance!

duckthing - I believe it is a Safe Harbor Match. Everyone is eligible, assuming the reach Eligibility (21 & 1).They want to add the Profit Sharing, so working out the testing separately. Initially they only wanted to cover the salaried employees, but there aren't enough non-highly to pass the 70% coverage