cs771

Good morning - I have a few very basic questions about benefits, rights and features (BRF - IRC - 401(a)(4)). I believe it applies to all stock bonus, pension or profit sharing plans. However, it does not apply to governmental 457(b) plans. Does it also not apply to governmental 401(a) Plans? What about 403(b) Plans? My understanding is governmental plans are not required to comply with 411(d)(6) either, correct? Finally, if BRF does not apply, then is there a similar standard to look to with governmental plans? Thank you!

Good Morning - Can someone please walk me through how to properly correct the following situation: Small plan - less than 100 participants determined they were incorrectly reporting loan failures. The loan would default due to the participant separating from service and the sponsor would offset the loan once there was a distribution of the account. Sometimes it was in the current year and sometimes it was 5 years down the road. There are several participants who terminated employment several years ago and they are trying to properly tax report on these loans. My understanding is you can self-correct on those loans that are within the three-year statute of limitations by reporting on a 1099-R in the year of the failure. Those that are beyond the statute of limitations would need to go under VCP to request 1099-R reporting in the current tax year (those within the statute of limitations could also be reported in the current year as well with IRS approval). Is this correct? Now for the real question - I know one can self correct by the end of the second plan year on these loans failures whether an significant or insignificant failure. My understanding is a determination needs to be made outside this two year window as to whether this is significant or insignificant, correct? I think I am unsure because the loan corrections under EPCRS are not intuitive to me (but what is).

Are you counting those terminated employees with account balances as both "active participants" and "participants"? I thought you would count terminated employees with account balances as participants because they fall under the former entitled to current of future benefits, but not active since they have terminated.

An S Corp with 4 owners. 2 owners are looking to be bought out in the next 3-5 years. Additional options outside qualified retirement plans are being considered. Is there a nonqualified deferred compensation plan that would work in this scenario - possibly having remaining 2 owners pay the deferred compensation out of future earnings or fund it through life insurance? If so, can you please provide a general explanation of how this would work? Thank you!

As expected, lots of things to think about. Thank you all for your responses.

As an aside, I have never seen this outside of an ESOP and do not know how this could work. Thank you for any insights you provide

Private company sponsoring a participant-directed 401(k) plan with employer match and profit sharing wants to offer company stock as an investment alternative to all participants. Participants will be permitted to purchase employer stock with its current matching and profit sharing dollars in the plan. Company will need an annual valuation, document amended, etc. Any issues with doing this with private companies...outside the risk of litigation related to stock drop, etc? Administratively, how does this work? For example, Participant A wants to move $20,000 of profit sharing dollars from current mutual fund investment to employer stock. The $20,000 is distributed to the company and the participant now has X number of shares? I could see this resulting in cash flow concerns if years down the road if a large number of participants with employer stock terminated employment and were looking to cash out. What type of restriction on distribution is typically seen?

I appreciate it. We are not even at the ESOP feasibility stage, but I was looking to see what types of answers I would get off of this before we moved any further. If someone came back with an answer that this if not a control group or affiliated service group than you cannot have a multiple employer ESOP then it would save a big waste of money. We will definitely NOT put an ESOP in without doing a study and reviewing all avenues, but was hoping to get some direction. I do appreciate what you have provided.

any ideas would be greatly, greatly appreciated.

We have a situation where the facts are that there is a single person money purchase plan established back in the early 1970's. Participant properly contributed to the plan during that time until his death in 2008. His wife is the sole beneficiary. Upon review of the plan, it was discovered that it was never properly amended since its initial establishment. The plan also failed to file Forms 5500-EZ once it reached the asset requirement. The participant also missed one RMD in the year prior to his death. What do you recommend to shut this plan down? Prepare all the amendments since the 70's, file under the late amender, make the proper RMD distribution, then file a request to terminate? The only thing that has been done is the late Forms 5500 were filed. The spouse wants to receive the money as soon as possible and we are trying to move forward. Any suggestions would be greatly appreciated.