DP

Thank you, GMK.

I'm opening up this topic again. What if the spouse is not a participant in this plan, but she wants to keep her deceased spouse's assets in this plan? Is there a problem with that? Would the account be retitled in her name so she can use her RBD? The deceased participant is 90 and the spouse is 88.

Thank you! Very good information to pass on to the Plan Sponsors.

The plan allows the participant to choose. Even though this option is available to all participants, only a few of the HCE's (usually the Plan Trustees) take advantage of using a self-directed account.

I now have had two different Plan Sponsors tell me today that their financial advisor said all plan assets have to be under one financial advisor. Both of these Plan Sponsors use Edward Jones' brokers as their investment advisor.

I have a 401k plan where several of the participants have their balances in self-directed brokerage accounts using various brokers. One of the HCE's was told recently by his broker, that all 401k plan assets now have to be under the same financial advisor. Was that part of the new Fiduciary ruling?

I have a calendar year plan with a 3% SHNE contribution. A participant terminated in February 2016 so she will be entitled to a 2016 SHNE contribution. She will be working very infrequently as a fill-in employee. The plan sponsor is asking if she can go ahead with a distribution for this participant. The plan allows for distributions immediately after termination. Should she be paid out or not?

401k plan had a partial termination in 2011. Participants affected were made 100% vested. In 2012 one of the terminated participants was rehired. If she had not been a part of the partial termination, she would only be 40% vested. I assume with her rehire, she will pick back up on the vesting schedule and not continue to be 100% vested? Thanks.

This is new to me. How can I determine if they have an affiliated service group? Is there a hard and fast rule? Thanks.

I have a medical practice with 2 shareholders - each 50%. Both of these shareholders each own 25% of another medical practice. Are there any issues with a controlled group here? I want to say no ... but need a second opinion.

Two of my clients have received IRS notices for their 2010 Form 945 saying the amount reported on the 945 does not match what was reported on the 1099R. On both of these clients, what I reported on the 945 matches what was reported on the 1099R. Evidently something was processed incorrectly in the IRS system. Has anyone else received any of these 2010 notices?

I have a small PS/401k plan getting ready to undergo an IRS audit. The plan document was prepared by Morgan Stanley Smith Barney (MSSB) and our TPA firm does the recordkeeping. The local MSSB broker who handled the EGTRRA restatement recently switched brokerage firms, and another branch office of MSSB took over. No one in the takeover MSSB office can find the EGTRRA document or any amendments. I know that the EGTRRA restatement was done since I have a draft copy of the restatement with changes marked on it. Any ideas on how the IRS will react to the client not having the current documents?

Thanks for all your comments. To ward off any future problems, I told the rehired participant that the distribution would have to be paid back in a lump sum.

A formerly terminated participant has been rehired within two years of her termination. She had received a distribution of her vested account balance. I sent her a notice about repaying her distributed amount within five years of rehire so her forfeitures could be restored. She is asking if she can pay back her distributed amount over time with payroll deduction. I've been trying to think this through to see if it would be feasible. I realize the deduction should come from her check "after tax". I would not restore her forfeited balance until her entire distributed amount was paid back. What if she were to terminate her employment again before the entire amount was paid back? How would the partially paid back amount be classified? Should her paid back amounts be held in a suspense account until she pays it in full? The more I think about this, the more potential problems I see. Maybe I should just tell her that payroll deduction is not an option?? I appreciate any input!

I have a calendar year medical practice (Co. A) with a SH PS 401k plan. Co A is merging into another larger practice (Co B) in June 2011. Co A's PS/401k plan is being terminated 5/28/11. Co B has a PS/401k plan. The doctor/shareholders in Co. A always max out on their PS/401k contributions each year. Can they maximize their contribution in Co A's plan for the short year 1/1/11 - 5/28/11 and then receive an additional contribution in Co B's 2011 plan? The Co A shareholders will be minority shareholders in Co B. I understand they can only defer $16,500 in 401k between the two plans for 2011, but can they double up on their PS contribution? Or does it depend on their ownership percentage in Co. B? Thanks.

I have a PS/401k plan where there is an elderly lady, age 78, still actively employed. She is not an owner of the business. Their plan allows anyone over the age of 70 1/2 and still employed to waive the Age 70 1/2 required distribution until they terminate their employment. Last month the broker who handles the investments told this lady that she should have been taking minimum distributions every year. He had her sign paperwork to take out a taxable distribution of around $10,000. Then he rolled over her remaining balance, around $200,000, to an IRA. None of this went through me as the TPA. This lady has no immediate plans for retirement, is still receiving PS contributions, and does not want to cash in her PS/401k account. Now that her PS/401k balance has been rolled over to an IRA, she no longer can waive taking her minimum distributions each year. Would the best suggestion be to rollover this balance from her IRA back into her PS/401k plan? Any other suggestions?

We just set up a separate checking account and enrolled as a Batch Provider. I'm getting ready to process my first distribution and have a question about the client authorization. Did you have the client sign Form 8655? If not, what form did you use? And does the form have to be submitted to the IRS ... or just kept on file in our office. I think once we get up and running with this system it will be better than mailing paper coupons to the IRS and guessing what date they were deposited. Thanks.

An employee receives the maximum contribution of $49,000 in his employer's Profit Sharing plan. He has a 33% ownership in his employer's company. Can he also contribute the maximum amount to his SEP during the same plan year? I saw some discussion on this topic back about 4 or 5 years ago and it was permissible then. Have the rules changed since then?

Let's say you decide to use this option, and you have tax w/h totaling $1,500 from distributions occuring throughout the year. Then in December, you have a big distribution with $2,000 in tax w/h. If you send all your w/h of $3,500 in with the Form 945, it's now over the $2,500 limit. Is the client penalized?

Pardon me for jumping in, but you can submit your payment with Form 945-V when you file Form 945 after the end of the year. Our office has never done this though. We've always submitted the deposits with a tax coupon when the distributions were made.

This is how I have always handled my Federal Tax deposits coming from a plan's brokerage account. Now that the IRS is discontinuing the use of Form 8109-B coupons, how will you handle the deposits? I checked with one of the brokers who handles some of our PS/401k plans. I thought maybe we could set up an EFTPS account using the plan's brokerage account. According to the broker, that won't work. He said they could wire the tax deposit to the IRS for a $30 fee. Sometimes the fee could be more than the tax deposit, so I don't want to use this option. Our office has talked about having the broker write a check to the plan sponsor for the amount of the tax deposit. Then do an EFTPS deposit from the plan's sponsor's business account. But then there's the chance of having the plan sponsor entering this deposit as a "941 deposit" instead of a "945 deposit". That can be a nightmare to get corrected. Anyone have a suggestion? I would really like a solution where I have control over the deposits to make sure they are made timely.

I am working with a Profit Sharing Plan that the IRS is auditing for 2007. This plan, which was administered by the ADA (American Dental Association), was terminated and paid out in 2008. During the audit the agent found where a participant was not paid the correct vesting percentage due to the plan termination. The participant has elected to take a taxable distribution of the amount due her. The plan sponsor closed his corporation back in 2003, and the Federal and State Tax ID's were also closed. The former president of the company is writing distribution checks for this participant from his personal bank account. Will I have to apply for new Federal and State EIN's in order to process the taxes withheld on this distribution? Or is there another way to deposit and report these taxes? The ADA is not involved in making this distribution. Thanks.

I have a calendar year PS/401k plan with a 3% non-elective SH. They have a integrated PS formula. For the past 20 years, the company has maximized the HCE contributions each plan year. The HCE's make well over the maximum compensation limit, so at the beginning of each year, we can calculate the PS contribution percentage for the NHCE's. The plan document says that the Employer Contributions are allocated on the last day of each month. So at the end of every month, the 3% SH and the PS % is deposited into each participant's account based on that month's salaries. With the change in the economy, the company decided not to fund the PS after the May contribution was sent in. Only the 3% SH was funded for Jun - Dec. Now I'm trying to true up the PS contributions already deposited with the YTD salaries. If I give all eligible participants a 3% PS contribution integrated at TWB, there will only be a small amount of PS contribution due for the 2009. However, there are nine participants who terminated mid-year. When I calculate their actual 2009 PS contribution, all of them have had too much PS deposited into their individual accounts. One of these participants has been paid out and has a zero balance. My question is can we legally remove the excess PS contribution from the other eight terminated employees accounts? If so, how do we notify the employees? Thanks.

I have a dental practice with a calendar year PS/401k with a 3% non-elective SH contribution. On 12/1/09 a Safe Harbor notice was given to the employees stating a 3% non-elective contribution would be made for them in 2010. The doctors now say they don't have the money to fund a 3% SH for 2010 due to their economic situation. I prepared an amendment to cease their SH non-elective contribution on 1/6/10. The SH non-elective will be funded through 2/5/10 and we'll use ADP testing for the 2010 plan year. This plan is also top heavy and there is not much 401k participation with the staff. This severely limits the doctors to what they can contribute to the 401k. Now the doctors are talking about starting a SIMPLE IRA for their company. Since the PS/401k will be funded through 2/5/10 with a SH contribution, doesn't this prevent them from starting a SIMPLE IRA during 2010? Also they are asking if they can retroactively terminate their plan as of 12/31/09 to avoid making contributions for the 2010 plan year. I don't think this would work either. Any other suggestions of what can be done?

Thanks, JTK. I hope we can get the payroll service to reimburse the employer for the QNEC and earnings. I have the link to the VFCP Calculator for Lost Earnings if anyone is interested. http://askebsa.dol.gov/VFCPCalculator/WebCalculator.aspx