Madison71

I definitely don’t work alone. I’ve found this to be an invaluable resource for varying viewpoints and additional expertise outside of my team. Sometimes the questions are ones neither I nor my team has seen and it is typically one someone or multiple individuals have experienced on this board. I’m learning something new most days from the experts on this board and I have been doing this for awhile

They have only audited the returns and not the plan? You could claim mistake in fact in that the IRS has denied the deduction for lack of earned income. I would think b. or maybe c. - whichever one results in tax-exempt in intent and non-deductible contribution plus earnings are refunded. I believe if have only losses then refund the non-deductible contributions only without factoring in the losses.

Yes - you can use the 2017 form if 2018 is not out yet. I believe it says in the Form 5500 Section on When to File.

Read the plan document?? Man - who wants to do that??

Can’t recall - I do see in Rev Rul 96-48 it talks about employees as eligible to make pre-participation rollovers are referred to as limited participants for purpose of the rollover only.

I agree as well and I recently came across this issue - EOB I believe. As an aside, I was counting them as a participant on the 5500 because they had an account balance. I think I wasn’t counting them as an active participant though...Not sure if that was correct

My wild guess is that the answer might change if it was a stock sale or asset sale? If asset sale and buyer did not assume the SIMPLE, then the seller is still sponsoring the plan, but it may not have any employees left, so it may be able to terminate the plan depending on whether it still has employees participating in the plan. If stock sale, then my understanding is that it cannot be terminated mid-year and acquired company employees are permitted to continue to contribute to the SIMPLE. There is a 2 year transition period related to the business transaction as well. ...or you can disregard my wild guess and follow EBECatty suggestion

EBECatty makes a great comment as to asking the reviewer for their input. Is this an adoption agreement? If so, my understanding is a change in the company name/EIN is a front page swap change that does not require an amendment. As an aside, ensure this change is indicated on the Form 5500 in year stating the company/EIN change or you will have other issues down the road.

My recollection is you are no longer required to report delinquent loans as a prohibited transaction on Schedule G (if filing Form 5500). You report as a delinquent contribution on SF, Schedule I or H depending on Plan and continue to do so until the plan year following correction.

Of Course - the sponsor may have just failed to restate, but Ft. William has a PPA doc.

Restated doc - it’s required

Thanks again Larry. I was specifically holding out on the additional information hoping you specifically would answer and then I would add additional details and you would respond with "why don't people give us all the info the first time." I was then thinking about adding some additional questions to that...Just kidding - my apologies on holding out info the first time. I appreciate the time.

Thank you both. Larry - I agree with you as to the foolishness. Unfortunately, I did not draft the document. Ex-spouse is claiming a QDRO is in the works for 1/2 the account which they were obviously very slow to draft, but I guess it is stated in the divorce decree which has not been provided. Notice of a QDRO being drafted is not enough to freeze the account according to QDRO procedures - an actual order is required. Current spouse wants paid out now. Just checking with this board. Thanks again

Good Afternoon - I should know this answer, but I'm unsure and was hoping I could get some thoughts from this board of experts. 401(k) plan has the language in it where divorce or legal separation does not revoke the beneficiary designation. Participant completed beneficiary designation naming his spouse (at the time) as the primary beneficiary which I know is required unless waived. Participant gets divorced a couple years back and plan never receives a QDRO. Participant subsequently remarries and dies shortly thereafter. There is no one-year marriage rule in the plan. Participant never completes a new beneficiary form prior to his death naming his current spouse. Who gets the money? I can argue both sides which I'm going to blame on a long week. Thank you!

There is typically language about a special valuation date where you could do a valuation prior to distributing out if concerned that there are significant losses and expenses during the year that will be absorbed by the other participants. There would be no discrimination issues with owner sharing in those losses by doing a special valuation. However, there shouldn't be an issue distributing without doing this valuation if permitted by the plan - you just may have some upset participants asking a lot of questions post val.

What does the doc say about valuations and ability for special valuations? Is plan annually valued

Participant - Husband is requesting a primary residence loan of $25,000. Participant submitted paperwork showing the actual costs incident to the acquisition of a principal residence is $65,000. The paperwork shows both the husband and wife on the purchase agreement. Primary residence loans permitted in the plan and the loan is in the process of being approved. Another loan request recently came in from another Participant in the Plan - the Wife for $50,000 with same purchase agreement submitted. Individually, these amounts would be approved. However, when added together, there is an extra $10,000 that would not be used for the actual costs of the principal residence. I understand there are tracing rules on these residential loans. Is there an issue on approving both loans in this case? I would think so, but if so, how do you avoid this issue from occurring in there were multiple unrelated plans? Does self-certification help? Thank you!

Hilarious. I had to sit through this movie twice - twice at the movie theater for reasons I will not disclose. I fell asleep both times

Tom - I threw logic out the window a long time ago on this stuff. I like that an expert such as yourself is still using logic to figure this stuff out. I guess I need to add this skill back into my toolbox.

Hello. There is really not a lot of good options to self correct under EPCRS for loans. I think that has been a long standing issue raised by ASPPA and others. Technically, if the loan is past the cure period of a current employee, then it is a deemed distribution requiring reporting on a Form 1099-R. The loan is then outstanding and continuing to accrue interest. Obviously, this is a terrible result because the plan sponsor erroneously put in a stop date, so it was their error. This could be addressed by filing a VCP or taking their chances by not deeming and just re-amortizing the loan over the remaining term.

I think when you pay online you have to put the date it was filed in EFAST. I believe it is triggered off the filing date which may be less than small plan or large plan filing fee if less than a certain number of days. I always either file on behalf of the client or have them file electronically same day as payment.

Facts and circumstances - it sure sounds like an employee even if paid via 1099 since continue to work in the same office after the sale of the business. However, I think that is a determination that should be made through a legal opinion. He has the same issue with the new business with the two "employees". By paying fees, do you mean payment for services performed for new co.? It sounds like they would be doing work for him. You then have the same question - are they a true employee or an independent contractor - facts and circumstances determination. If treated as an employee, then could include eligibility requirements for those employed after a certain date assuming they worked limited hours.

Thank you for letting us know. I still think you could make an argument on the discretionary profit sharing contribution piece if it was made infrequently. If it is under $5,000, then you could argue the trigger was the mandatory cash-out?

Complete guess, but I think you can make a reasonable argument that both distributions would exclude the NUA from the participants income. In 2017, there was a triggering event and the entire account balance was distributed in a single tax year. The PS contribution likely discretionary was not part of the participants vested balance until made to the plan

I recall there being several conditions that needed to be met which included a review of the contacts to ensure not legally enforceable against the employer. I think you can reverse course as long as meet those three or four conditions in FAB 2009-2. I would get a legal opinion on it. That will be an interesting conversation if could have eliminated an audit expense for a number of years.