Cynchbeast

It's been awhile since I tackled this so wanted to be sure I have it correct: Sponsor has one participant deferring $100/check semi-monthly and CONSISTENTLY held checks and deposited them very late. Plan started in 2012 and we only discovered the extent of this recently as we tried to put together 2013 data, and everything still due, including lost earnings was paid last month. Facts (I have used IRS calculator to determine lost earnings): For 2012, all deposits were delayed, for up to 217 days - total delayed deposits = $2,400, total lost earnings = $22.85 For 2013, all but the first two deposits were delayed again for over 200 days - total delayed deposits = $2,200, total lost earnings = $44.39 The question is what figures to I put on the 2012 and 2013 Form 5330?

Individually directed with American Funds. In round figures: Husband (still employed) had $43,000 balance, took $20,000 loan then $10,000 in-service; remaining invested balance is $13,000 Wife (terminated) had $42,000 balance, took $15,000 loan then $16,000 distribution; remaining invested balance is $11,000 In both cases, they now have remaining balances less than outstanding loans due strictly to distributions, not market fluctuation.

We ran into an interesting situation. We have 401(k) where owners already took out loans, have fully vested Profit Sharing money and plan allows for in-service after age 50. Both owners (h/w) have taken distributions from their PS such that now both account balances are well below the loan amounts. Husband is still employed but over 50, and so is taking in-service. Wife terminated a few years ago but wants to leave what is left of her money in the plan. Since the 50% limitation for loans is designed to provide a remaining account balance sufficient to secure the loan, what about this situation. We are aware of no restrictions that keep the participants from withdrawing after they have taken their loans. In fact, since the loan balances are now more than the remaining invested balances, the wife would actually end up owing money were she to take a total distribution. Thoughts and experience on this issue?

We have a client that has a number of union employees, and does not cover them in DB. One employee gets both union and non-union income (non-union income is from another company in controlled group). Can he be included in the DB to the extent of his non-union earnings? If so, does it make a difference if he is the owner?

Thank you. So tell me, if the actuary does his valuation as of 01/01/13, what does that mean to you? Is he supposed to only use asset values as of 01/01/13, or does he also determine benefits as of that date, not the plan year end? Any actuaries out there?

Our Adoption Agreements identify the last day of the plan year as the valuation date. Our actuary uses the first day of the plan year for the actuarial valuation and Schedule B On this basis, only participants on the first day of the plan year accrue a benefit As a result, we have several participants in one calendar-year plan who entered on 07/01/13 and so did not accrue a benefit for 2013. Are these people non-benefitting participants, or can the 410(b) test be run as of the beginning of the plan year, which would make them excludable?

That is the way we have always treated it. We did have this issue come up with our software vendor (Datair), who disagrees. I generally have to override that in the testing.

We have a 401(k) plan with ER match, and the owner of the corporation, is already a participant. He has stopped working (no hours and no compensation reported) but is not officially terminated. How is he treated in the 410(b) test? Benefitting in 401(k) with 0% deferrals and non-benefitting in match (since he hasn't satisfied requirements, and there is nothing to match anyway); or Excludable - since he didn't work there during the year I could also ask this as it applies to an employee who is on leave the entire year but has not officially terminated.

We have a PS 401(k) plan with deferrals, 3% SH NEC and New comp Profit Sharing allocation. The plan requires 1,000 hours for PS, with no year-end requirement. There are about 3 participants who terminated in 2013 with less than 1,000 hours and so are not eligible for PS; however: These participants still receive 3% SH The SH allocation is considered part of the PS contribution for the 401(a)(4) General test Without the additional PS allocation, these participants are in the general test getting 3% and therefore the plan does not pass the gateway minimum allocation test and therefore fails 401(a)(4) The gateway test would pass if these terminated participants get an additional 1.38%, but they are not eligible to get any PS allocation (since they had under 1,000 hrs for the year) How should this be handled?

Thank you - it seems that Owner #1 should be in the plan upon return, and there is no need for a second profit sharing plan. Next question - as a 50% owner of an S-Corporation, is she considered a statutory employee to be included in each year's testing (as either benefitting or non-benefitting), even if she has years in which she earned $0 W-2 income?

We have client that is an S-corp with 2 owners and a profit sharing plan requiring 2 years service for participation. Although she was never formally terminated, in past years Owner #1 has not worked or had any hours been drawing any W-2 income for several years (about 10), while Owner #2 has. Now the roles are reversed and effective with the (fiscal) plan year starting 02/01/13 Owner #1 is collecting W-2 income while Owner #2 is not. Owner #1 wants to participate in the Profit Sharing, but we initially thought a 5 year + break in service would exclude her for 2 years, and so were prepared to establish a second Profit Sharing plan with special first year eligibility. The Client's accountant has done some research and believes that an owner of an S-corp is always considered a statutory employee of the corporation. 1) Is the accountant correct, and should we have been treating Owner #1 as a non-benefitting HCE all these years? 2) If the answer to 1) above is yes, do we always treat an S-corp owner as having worked over 1,000 hours, even if census data shows less? (she has had a couple years of under 500) 3) If Owner #1 has had many years without any income, and a couple with minimal income and under 500 hours, does she have a break in service or not? 4) It seems that if we consider her to have no break in service, she can participate in the existing plan (no second plan is needed), but if she does have a 5 year + break in service, then we need the new plan in order to allow special first year eligibility - is that correct? Any insight we can get into this subject is greatly appreciated.

Does anyone know of where we might find some sample notices we can provide our clients to notify employees of implications of Supreme Court's decision re DOMA and same sex marriage? We have prepared a notice for our clients, but some have asked for samples to provide the participants.

We were contacted by someone with a very old plan who wants to terminate and rollover all his money to an IRA. The ONLY participants in the plan have been the owner and his wife (always a 5500-EZ), and unfortunately, he has only the original plan documents. They have never been amended or restated (about 20 years old). 1) What would IRS's position likely be concerning a one person (h/w) plan that terminates under these conditions? 2) What would be the best way to bring this plan into compliance?

He intends to rollover his 401(k) into an IRA before the end of this year. Since his first RMD is not due until 04/01/14, can he rollover his entire 401(k) balance now and forget its RMD, or must he take the RMD first before rolling the remainder over?

Non-owner participant is age 89 and retiring this week. He has money in 401(k) and IRAs. 1) After separation from service, must he start RMD from his 401(k) in 2013 or 2014? 2) Can he take some of his IRA RMD from the 401(k)?

Sorry, I realize this doesn't pertain directly to retirement plans, but it is related to retirement. We have client who normally receives his Social Security check on the third Wed of each. He unexpectedly received his Social Security on 11/01/13, and then again on 11/13/13. So it appears he was overpaid. Assuming this was indeed a mistake and he continues to receive regular checks from December on, how much time does the SSA have in which they can come back and demand the money?

1) Sponsor of 401(k) was corporation, sole stock holder died suddenly and his son claims to be sole heir 2) Son has already gotten his father's money out of plan and simply isn't cooperating with process of paying out other employees. He "doesn't have time". 3) Since investment company hasn't received adequate documentation showing son as successor trustee, they will probably consider this an abandoned plan and notify IRS. We are told this process could take up to a year. Questions: 1) Does anyone have experience the this abandoned plan process? 2) If we stay on as TPA, how do we handle 5500 filing for 2013 (and any subsequent years) when in effect there is no plan administrator or plan sponsor? Note: the son keeps providing us with pages from his father's trust, but the document does not seem to include the father's corporation (the sponsor) so we believe that to be a part of the father's estate and son is trying to avoid probate

No, he just took his. So he can't be bothered with everyone else. Also, as we think this through we are wondering how to handle the 2013 5500 filing (if we do it) since there is no plan administrator to sign. Suggestions?

We are still having trouble, many participants are clamoring for their money and the son is not cooperating. We may now have to treat this as an abandoned plan. Does anyone have experience with this?

In response to Buffy - yeah, that was really strange. The son signed form as both participant and administrator, and we included death certificate and other documentation that they say is not sufficient, yet they gave me some bizarre explanation as to why they would accept the request for him and not others. Of course, that creates the situation we are in now - he got his money and can't be bothered with the other participants.

Owner of Plan Sponsor (he was trustee and plan administrator) died suddenly on 06/01/13. His sole heir seems to be his son - no spouse and no other children. The son and his attorney have had ongoing contact with us and has provided death certificate and some pages from his father's trust, as well as attorney letter saying he now manages his father's company. Company has closed doors and plan is terminating. Plan is a 401(k). We are having trouble distributing funds to participants. Monies are with AXA Advisors. They have already allowed son to roll over his father's money into an IRA - a large amount. But they will not distribute to any other participants because they will not accept son's signature as plan administrator. They have provided us with a list of what they need to appoint the son as plan administrator, and the son's response to this was: "I don't have time for all of that, I'm sorry." I can call his attorney - which I have already done once - but of course that costs him and so I must be careful about that. Any suggestions on how to proceed.

Client has upcoming audit; last item on auditor's notification was loans; plan allows multiple loans. Profit Sharing with all funds pooled; 3 participants had multiple loans and sponsor continued deducting on loans past payoff date. We didn't know this until the following year when doing the trust accounting. In 2 cases, the excess on paid off loan was credited to subsequent loan(s), and in the third case, it was refunded to participant. Any ideas on how the IRS auditor might look at this? Any suggestions on how to present the facts in the best possible light?

We have a plan that for 2012 transitioned from small to large plan (now @ 130+ participants). Due to miscommunication, the sponsor has not yet obtained an auditor's opinion and the filing deadline is days away. Any experience in filing Schedule H and checking NO to question 3d (Did the accountant perform a limited scope audit).

Does anyone have any sample letters to advise clients of impact of DOMA ruling by Supreme Court, and ask for confirmation of owners' and employees' marital status?

We have a client who has been notified of an IRS audit on his Profit Sharing Plan (always fun). They of course are asking for all plan docs, amendments, etc. Question - Plan was restated effective 2010, and then we prepared and the sponsor signed the 2011 Required Amendment. We have not revised the SPD. Does this amendment require an SMM?