thepensionmaven

My cause for concern, being proactive in determining an IRS or DOL position upon audit, is that either or both agencies might see this as a participant using his account as a savings account and the Trustee may not have advised the participant as such. The loan is not over limits and, so far, the hardships have met the safe harbor requirements

We have a participant in a 401(k) plan that took a plan loan in 2017 and two (2) hardship distributions two months apart in 2018. He is repaying the loan, and now wants another hardship distribution, which he does not qualify for. The total sum taken from his account is over $200,000. Question, if the plan were to be audited, would not the IRS consider this a breach of fiduciary duty to have signed off on these distributions?

A terminated participant has a vested account balance of less than $1,000. Per the terms of the plan will make a mandatory distribution of account balances that are $1,000 or less. The distribution will be made as soon as administratively feasible. The vested amount is >$200, must the participant sign an election form?

Client received two 1099Rs 2018 for one excess contribution plus earnings, as follows: One 1099R shows the excess plus earnings both as gross and taxable The other is blank in box 1 and $0 taxable. Have not seen this before.

My client is a PLLC, taxed as a sole prop. His total contribution of $55,000 goes on his 1040. Participant accounts are in group annuity contracts with buckets for employee, employer safe harbor and employer profit sharing. He apparently overshot his $18,500 by $3,200. Since he does not get a W-2, accountant wants to know if the $3,200 would be able to be considered as SH, assuming the fund holder made aware there was some sort of bookkeeping error on how the contribution was coded into their system.

So, in essence, what would the proper language look like?

We had exactly the same situation in 2015 and were advised at that time to make a new plan effective the first day of the month after the client was not a member of the MEP, (5/1/15) created a short plan year (5/1/15-12/31/15) and did all testing an calculation of the SHNE on an annual basis using full W-2 for 2015. Thread is in here somewhere.

Agree with Bob the Swimmer.

Suppose a participant terminated employment prior to NRD, is now well over NRD at this time,and can not be found, client has attpted to locate. Do he need to do a search each year? How would the RMD be paid? Beneficiaries have been attempted to be located to no avail. Participant shown on valuation as term vested.

We use CIMA, no complaints.

Yes, but that's not the question. Is a plan terminated when the money is out of the plan account or when an IRA is actually established. Difference will mean another set of 5500s

We have a plan that was terminated 12/31/2017. IRS considers a plan terminated if all assets are distributed within 12 months of the termination date. There are two participants who could not be located and the client directed 100% of each participant account payable to an eligible rollover institution that accepts and establishes IRA rollovers for missing participants. The checks were prepared last week and mailed to client, payable to the financial instution. If the checks are mailed ASAP to the rollover institution, is the plan closed since the money came out of the plan; or is the plan considered when the rollover institution establishes the IRA accounts?

Thank you, I was speaking of 2020, I know the Notice rules. I was questioning the participants who were not contributing; This is the client's only plan, therefore the Notice would take care of top heavy. Just needed confirmation. Thanks

Client maintains standalone 401k with match. Had he give appropriate Not ice of Safe Harbor by Nov 30th, would it have been possible to amend the plan eff 1/1/19 to a safe harbor match? There are many employees that are not contributing, causing both ADP and ACP to fail. This is a standalone plan and employer has not used the PS potion of the plan and does not plan to. What does he do with the other already in the plan, obviously count them as participants and not match, what about top heavy contribution?

And what makes you say "it amply illustrates the absurdity of our tax-favored retirement plans system". As another pension professional mentioned a few years ago..."SIMPLE plans are for simple minds."

Confusing to say the least. Client established a new DB in 2014. Less than $250K, so no 5500s. She tells him the following year "oh, yes, I have a 401K account I rolled over from another financial institution, consisting solely of funds from a pension plan we recently terminated. Apparently new broker took the assets and rolled into a "401K" account with no additions/subtractions. It is apparent to me, at this time, and after consulting with my ERISA attorney, that the broker who set up the account messed up (to put it gently) and opened up a 401K account and not a IRA Rollover. Obviously this person does not know what he is doing. This being said, I should speak with IRS and rescind the filing, or amend the filing showing everything as $0.

Larry, I certainly have a problem with this - taking it over. The account that holds the money from the terminated plan was rolled over to a 401(k) account, is titled as a Qualified Plan Account - Type 401(k). I came to the conclusion in October prior to filing the 2017 5500s that the 401(k) should have been filed previously, along with the new DB. Apparently the prior TPA new nothing about this 401K plan, and since the asset value of the new DB plan was less than $250K, did nothing. I assume I need to calculate her RMDs from both accounts. What a xxxxing mess.

Client has just forwarded an ERISA account application (not a plan document) dated in 2014 for a 401(k) account; apparently this client will sign anything put in front of her, and ask questions later. Client insists this was supposed to be an IRA rollover, and apparently never checked the title of the account.

According to the client, the previous TPA filed form 5500-Sf as a 1 participant plan for 2017. Should this be amended to $0 beginning of year and $0 end of year??

I have a takeover DB, the client , a sole prop., recently changed brokers. The rollover was done a few years ago, from a previous DB plan, but previous broker incorrectly titled the account "401(k)". The rollover was approximately $1M. The broker was from another brokerage firm I am working with the new broker and we want to straighten this out. This is not a 401K, she does not want a 401(k) and will never contribute to a 401(k); in fact she had always been under the impression this was an IRA rollover; upon further digging, I discovered this was indeed a rollover. Questions is, since the account was titled incorrectly, and has just been re-titled "IRA' with the new broker, would form 5500 need to be filed, or could the client claim "ignorance", "stupidity" or whatever, and if she were to be audited, explain what happened. The DB has less than $250K.

We use Datair for our documents; allows for both pre-tax and Roth, with any mix as long as the combination does not exceed 402(g). The question we run into about this is, how do you treat Roth when it comes to the SHNE contribution?

Yeah, voluntary after tax, so we must do the ACP testing. Good thing a few of the HCEs will not be contributing! Just the owners. I do realize 415. Thank you.

Client currently has 401(k) with 3% SHNE. No ER profit sharing. they want to add a provision for voluntary contributions. this this allowed and would any testing be involved, and what type?

Thanks, I mentioned 100% vesting a few years ago, and will remind him again.

Client wants to make a contribution for 2018. I would think IRS, in considering the plan "terminated" would disallow a deduction on the grounds that the client has not made a recurring contribution for more than several years; and all of a sudden decides he has ti make it as his accountant told him he needs the deduction. Just doesn't pass the old "smell test" to me.