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Lou S.

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Everything posted by Lou S.

  1. Lou S.
    The forfeiture account is not a participant. Why does the plan still have forfeitures in it if everyone was paid out? Forfeitures should have been reallocated to participants or used to pay fees according to the terms of the document. edit - if the forfeitures are being used to pay admin fees can you show them as a payable at EOY and show a zero balance final return?
  2. Lou S.
    We have done this on a few occasions in the past. I don't see any prohibition against it. You can make the refunds once you have all the data to calculate them. If it is daily valued, yes we would calculate G/L though the date the refund was requested, I don't think the IRS would ever challenge that as an unreasonable position.
  3. Lou S.
    You could word the amendment to grandfather in the union employees, but if you do that make sure it is OK with the CBA as well as the OK with the Plan Sponsor. Allowing union employees to participate but not others could be a big no-no with the union that collectively bargains benefits for its members. I believe it is "typical" to exclude the union employees both existing and prospective when such an amendment is executed. Though I could be wrong as my experience with union employees in or out of plans is limited.
  4. Lou S.
    A hardship to acquire your principal residence should not present a problem.
  5. Lou S.
    Is this a controlled group or multiple employer plan, I think the answers might be different in each case.
  6. Lou S.
    Short of reviewing the TH test to confirm it's accurate, you have not missed anything wrt to the qualified plan.
  7. Lou S.
    For calendar year 2016 he has a maximum catch-up of $6000. You failed the ADP test for PYE 6/30/16 and recharaterized $1,500 as catchup so he has $4,500 possible left for 2016. Since he defered the full $24,000 in CYE 2016, of the $15,000 deferred 7/1/16-12/31/16 $4,500 is catchup and $10,500 goes into the test for PYE 6/30/17. In 2017 he has not yet hit the 402(g) limit so all $12,000 goes into the test. For the 7/1/16 - 6/30/17 PYE the deferral in the ADP test are $10,500 + $12,000 = $22,500. If the plan fails you can recharaterize up to the 2017 cacthup limit of $6,000.
  8. Lou S.
    You file it now and pay whatever penalty the IRS assess or try to get the penalty waived.
  9. Lou S.
    Yes.
  10. Lou S.
    If your new corp simply assumed sponsorship under an amendment or resolution of your old plan, you have one plan that had a change of sponsorship. If you are the only eligible participant and assets are under $250,000 you are not required to file form 5500-EZ If you formally terminated your old plan and rolled the assets to a new company plan then you need to file a final Form 5500-EZ for the terminated plan event if the assets are under $250K
  11. Lou S.
    You probably have partial terminating on the date all the employees no longer work for company A. The practical implication being full vesting of affected participants how no longer work for Company A While Company A will presumably no longer have common law employees, Company A will probably exist for some time for receivables and closing the corporation and the owners may even still draw a salary or bonus. I see no problem with terminating the Plan on 12/31/18 instead of 7/15/18, assuming there is a valid business reason which is likely easy to justify. Now if they are trying to make the PS contrib for 2018 to owners and exclude all the employees under a last day rule, the allocation is almost certain to fail non-discrimination testing unless all the terminated employees are HCEs. If the Plan has fail safe language that language is likely going to pull back all the employees terminated on 7/15 back into the allocation of the PS contrib. But you'd want to read the terms of the Plan document to be sure.
  12. Lou S.
    I'm not a lawyer and bankruptcy is not my specialty but my understanding is Qualified Plan Assets fully protected. Traditional IRA and ROTH assets protected up to $1M adjusted for inflation. I think it's up to around $1.25M since the passage of the law. States can grant higher limits but it varies by state. Rollover IRA if traced back to Qualified Plan generally get the same protections as Qualified Plans. A decent summary can be found... https://www.investopedia.com/ask/answers/081915/my-ira-protected-bankruptcy.asp
  13. Lou S.
    Bob, a large contribution by your employer in 2017 to take the tax deduction under last year's tax law with the probable anticipation of making a smaller contribution in 2018 and using the prefunding balance due to the December tax law change might explain the jump in the prefundng balance.
  14. Lou S.
    Must have or are supposed to have?
  15. Lou S.
    Run to the DOL, don't walk. Save as much documentation as you can. I'd be very concerned by a company that is not making payroll.
  16. Lou S.
    Yes.
  17. Lou S.
    Why on earth would you add amounts that have been forfeited back into a top heavy test? They weren't distributed to the participant in the 12 month look back period and they aren't part of the participant's balance on the determination date.
  18. Lou S.
    The answer to most of your questions is "maybe". As Mike suggests you should discuss the options for the Plan's funding and possible in-service distribution options with your Plan's actuary who should have far more details than we would on this board.
  19. Lou S.
    I believe Pencheck, Millenium Trust, Nationwide and several other provider all setup rollover IRAs for lost participants. Call around and find one you like that will take a missing participant without an address. You can also look into the PBGC missing participant program which was recently expanded to cover terminating DC Plans.
  20. Lou S.
    This is from ASPPA about 3 years ago, I don't know if things have changed in the last few years https://www.asppa.org/Resources/Publications/Plan-Consultant-Online/PC-Mag-Article/ArticleID/5125 There is more in section 2 of the article that is worth reading through. Not sure if anyone has any more recent experience with this issue and the IRS but this was last info I recall on the topic when doing a continuing ed through ASPPA webcast which agreed with the article as far as I recall.
  21. Lou S.
    And another thing to consider even if this is a proper transaction - if it's the Cash Balance Plan that holds the property - you can seriously mess up the minimum funding and/or maximum deductible rules if Cash Balance Plan is the one that owns an interest in the property if you fail to properly value it each year. In short if the guy really is trying to buy a 2nd home with his retirement assets it's a big no no as Larry has correctly already pointed out twice now.
  22. Lou S.
    I'm going to say Larry is almost certainly right in this case that this will in fact be a Prohibited Transaction, but Jpod is also correct that there is a slim possibility that this is proper investment of the plan. bpenfold, if this is allowed, that being a very big if - the Plan need to be the registered, titled, deed owner. you can't simply take the money out of the plan, buy the place, and list the property on the balance sheet. And yes you need an independent appraisal every year to determine fair market value. there have been 2 replies while I was typing so sorry if this was covered.
  23. Lou S.
    I'm pretty sure if your Plan's definition excludes bonus from match and the plan passes 414(s) testing on your definition of comp you are done. I don't recall this throwing you out of Safe Harbor or or requiring any additional ADP/ACP testing. If someone has a citation to counter that I'd be interested because we often don't do a lot with excluding comp in practice because in small plans 414(s) is often a problem.
  24. Lou S.
    What is the plan's definition of compensation? Is the definition non-discriminatory under §414(s)?
  25. Lou S.
    Did the plan pay her more than her account? I'm confused.
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