Lou S.

Why does your client have both a SEP & MPPP? That aside I think a similar issue came up about a week ago. Making sure the the insitution knows these are tax exempt accounts, possibly by filing an update W-9 with them should stop future 1099s.

In my experience the PBGC will usually allow the waiver (with spousal consent) if the waiver is the difference between a standard and distress termination but as others have said, run it by them to be sure.

I'm not an expert on business entities but if they have a sub-S election I'm assuming that means they are taxed like a sub-S Corportaion. If that's the case i would assume that the memebers get 2 forms of income, their W-2 wages as an employee that are generally eligible for pension purpose and their pass through dividends as member/shareholder which are generally not eligible for pension purposes.

Thanks masteff but to clarify we are not talking about doing the RMD on the 1st to return a from as your reply seems to suggest. I agree that would be pattently unfair. Our goal is to get all 4 withdrawal forms returned at the same time and close the account in one fell swoop by procssing the RMD and then the individual beneficiary elections immediately following the RMD. What I was getting at though was what ESOP guy touched on in his reply, if one or more of the 4 wants a taxable distribution, then that amount is going to be a lot more than the RMD, so my question really was can the other's roll their full 25% share w/o having to assign 25% of the RMD to each of them? And I understand getting all 4 at the same time may or may not be practical but we're trying to make it as smooth as possible. If all 4 do want to roll and that is a possibility given the size of the account, then we'll split the RMD between each of them but we'd like to avoid that if possible.

5% owner has been receiving RMDs for a number of years and dies late December 2012. She was not married (husband pre-deceded) and her 4 childeren were each named 25% beneficiaries. If I'm reading the 401(a)(9) regs correctly the RMD for 2013 is the single life expectancy of the oldest child. But how does the RMD get paid? Do each receive 1/4th of the required RMD or is the RMD paid to the estate or can one receive the RMD and the others roll? If one of the four wants a taxable distribution that is more than the RMD does that satisfy the RMD for all? That is can the other three roll over their 25% interest to inherited IRAs? I'm sure this has come up before but I haven't seen it (or if I have it has been so long ago I forgot) and my quick search of the sub-forum did not yield any results directly on point.

No You may find this worksheet helpful http://www.yourhsaadmin.com/MC/pdf/IRA_to_HSA_Worksheet.pdf Or you can go stright to the source http://www.irs.gov/irb/2008-25_IRB/ar09.html

We have a few who send it in but none who have a split definition of comp for calculating parts of the PS. Most of the ones who do it are 3% non-elective safe harbor who send the 3% in each payperiod. They do this mostly for cash flow so they don't get hit with a huge year end contribution. The definition of comp for PS is generally annual pay so sometimes a "true-up" is needed if they mess up on the deposit calcs. For the OP I would agree he check out the definition of compensation in the plan document. I also don't understand the OP's comment that it is 6% on one definition and 3% on the other coming up with 9% total. For exmple maybe it is 6% on base pay and 3% on bonus. An employee's total allocation that case will aways fall somwhere beteween 3% and 6% of total pay. Unless some compensation is counted in both calcs an employee's allocation will never exceed 6%. Now if an employee has anual pay over the comp limit that should be getting the 6% rate and the plan cdocument bases it on annual pay, it sounds like some true up calc may be required to make them whole.

Yes an error was made by the client when they failed failed to provide a correct w-9. It has been fixed. Most of us don't really see any problem. But if it bothers you that much, talk to your client about moving the assets to a diffrent custodian.

Was the loan improperly defaulted? If not, I really don't see what there is to correct.

If he terminated 1/31/2013 he has first distribution year of 2013 with a RBD no later than 4/1/2014. So yes, I would agree that he needs an RMD before any other distribution can be processed.

If you can do what you are suggestioning it would seem to be an end run around the IRS position that safe harbor plans can't be amended mid-year and another argument for always issuing a "maybe" notice over a "yes we are" notice. At least for non-elective safe harbors. Again like I said in my earlier post I really don't know the answer to your question, but I think it is a very interesting one.

I think you can clearly make the amendment because you currently are not a safe harbor plan. The real question is, does making such an amendment automatically have the effect of turning your "maybe" notice into a "no" notice for 2013? I don't have a good answer to that question but then I've never understood the IRS position on no mid-year amendments to safe harbor plans, particularly when rights are being expanded in some way for participants.

A participant has and outstanding loan in a 401(k) Plan and has also taken most of the allowable hardship limit. The participant's hours have been cut such that making the payments is most of their take home check. The participant would like to defualt on the loan but the outstanding balance is more than the allowable hardship limit. If the plan sponsor allows the participant to default, what are the qualifiaction issues for the Plan? Are there any options I'm missing? Loan is already amortized over maximium repayment period.

They were not an employee of the Sponsor. Absent some provison in the document that would grant them service for thier independent contractor time, why would they get credit for it?

Agree. Looks like a textbook PT.

On the DB, I agree with SoCal. Don't see any set of facts where 20% of 5 year comp would ever be more than 100% of 3 year year comp, even with the 10 year service phase in. On DC, yes if employee contribution approaches 100% of pay, there in therory might not be room for the 3% (or 5%) T-H minimim. Pre-EGTRRA docs most plans had a mechinism to refund employee contributions in that case. After EGTRRA doc you had to correct it through EPCRS, I'm not sure if that change or not in the latest EPCRS release. I thought they brought back refunding deferrals to correct 415 excess as a self correction if done in 401(k) correction time frame (2.5 months after PYE). Though as AndyH correctly points out you have to satisfy BOTH 415 and 416 so some correction is likely needed if the situation arises whether you self correct or correct through EPCRS.

It should all be in the current custodian's contract or account aplication what the rules are for transfering assets; they can vary a lot. In some cases it just feels like they are giving you the run around but it in today's litigious society it is hard to blame the institutions for getting proper documentation before they wire/send sometimes several million dollars to god knows where.

ESOPguys response in on point but I'll add. In the IRS’ wisdom when 401(k) plans came about they called them CODAs standing for Cash of Deferred Arraignments where you would enter into the great sounding “Salary Reduction Agreement” - (later renamed the Enrollment Form) because as the commercial says "Who doesn't want more cash?" Apparently the IRS believed we were all playing the part of the baby who doesn't want more cash. I mean who doesn’t want a Salary Reduction Agreement? Only the IRS could have come up with that terminology. So employee contributions 401(k) are technically wages subject to FICA but employer contributions such as DB, profit sharing, SEP, match, etc. are not treated as wages and are not subject to FICA. Unless you are self-employed but that's a whole nother can of worms. So for now at least money coming out of plans is not subject to FICA and some money going into plans is also not subject to FICA.

What does the plan document say about compensation?

No if the employees are not HCEs because they are not 5%+ owners and do not earn over the dollar limit they are NOT HCEs. It does not matter if you are using the TPG or not. We have some plans that use the TPG that sometimes have more than 20% over the dollar limit and other years where they have fewer than 20% over the dollar limit. typically when the work force is on commision and income varies with the economy a lot. The TPG will only throw out some HCEs from the test, it will never bring in additional ees to the test. That is TPG election <= non-TPG election.

www.irs.gov type in EPCRS in their search box

I assume you didn't give out the "maybe" notice? I don't know if there is anything on directly point (maybe someone who has delt with it will chime in) but it would certainly be an aggresive position to give out a new notice this week and amend out of SHNE for 2013 after handing out a yes notice.

It depends on why the 6 employees are "missing". I've seen it before where some employees who were in the top paid group terminated before the end of the prior plan year and had no comp in the testing year. In that case your test may actually be correct as is.

Thanks, that seems to be a reasonable approach that is not a particularly an undue burden.

I'm sure this has been covered but apparently my search skills have failed because I couldn't find anything in the many threads referencing this topic. We try to strongly discourage principal residence loans but if a client is instant, what documention must a Plan Administrator get to certify that it is really for the acqusition of the participant's principal residence? Is a statement under penalty of perjury from the particiant acceptable? An "offer sheet" on the house? Evidence they have entered escrow? Do you have to have to get a copy of the title afterwards and evidence they moved in? Someting in-between the extremes? Curious what other folks do on this. Didn't see anything in the code or regs that was on point but if I missed it, a citation would be appreciated.