thepensionmaven

We have a PSP wherein the employer has not made a contribution since 2013, has the investment broker send duplicate statements for one account, but there are several. I will not belabor this point here, as that is not my question. I know what a partial plan termination is, but as of when is this determined? From 2-3 years from the last contribution, which would make all participants 100% vested? Which would mean anyone receiving a distribution from, let's say 2015 forward must be 100% vested? For 2018, the account is telling us he will be making a contribution, which obviously would include any individual with a W-2 who is still "in" the plan plus any individual meeting eligibility of 21/12/1,000 hours.

Where can I find PLR 8139009 - have search online for about 10 minutes. I having been under the impression that there is no extension of the 8 ½ months for minimum funding, although there would be for deduction.

We have a participant who terminated employment with an outstanding loan. He is requesting a partial direct rollover of his account balance excluding the loan; wants to take the balance of his account as a taxable distribution. Obviously he will receive a 1099R, code L for the loan offset with $0 withholding. Somewhere I recall that the 20% withholding would be calculated on the total account balance excluding the loan - the total being the amount rolled over plus the amount not rolled over. Does that sound right??

How would this apply with a SHNE 401k?

Got it, thanks. I thought there might be a spreadsheet, which is why I asked again. Sorry.

Thanks, Tom.

I thought so, thanks for the confirmation.

I'd appreciate a copy.

Participant takes loan on his vested account balance, terminates several months later, having only repaid 2 quarterly installments. Pardon a senior moment, but I believe the total account balance is the investment fund balance plus the outstanding loan balance. Participant wants to take his money, default on the loan. Loan default would be outstanding balance as of the date of last payment plus interest through the term of the loan. He is eligible to rollover the investment portion of his account and the loan balance plus accrued interest is taxable. Two 1099Rs, one for the rollover, one for the loan default. Participant over 59 ½. Is the loan default subject to 20% withholding?

I know a sole proprietor and/or partner has until the due date of their tax return to make the contribution, including deferrals. I do not believe this applies to a shareholder of an S Corp, maintaining a SHNE 401K with common law employees. I believe the employee contribution would have had to have been made by 12/31 and the employer contribution would have to be made 9/15 on extension.

Clearly the payroll company must be replaced, sooner rather than later. What does the plan say about the deposit of company match? Our plans clearly state the company match be calculated on W-2 -and not during the year as we do not trust the payroll company to calculate properly; and most do not have a cap built into their systems.

We terminated a profit sharing plan in 2016, submitted an LOI to the brokerage firm. One of the participants could not be located, and we asked the firm to have the check payable to an eligible rollover institution that handles lost participant accounts. The investment firm followed all instructions but the one that was to be payable to the firm that would open a rollover for the lost participant. They wrote the check out to the client, and the client deposited the check into his corporate checking out and had totally forgotten about it; we have told him more than once to get the check reversed, but he has done nothing. The accountant recently advised the client a final 5500 can now be filed as there is $0 in the plan. This would be nice, but does not pass my smell test.

One of the employees bought the company, stock sale. Plan is terminated except for one account which is with a bank. Bank will not release the account until they have “proof” that the new owner/trustee was named trustee by the previous owner. Because of this, two participants have not been paid out. Plan was terminated in 2014.

We have a PSP with owner-only as plan trustee. The trustee died many years ago; one of the employees of the company bought the business after his death. The trustee did name the new owner as trustee of the plan, but no one can find that resolution, except that a corporate resolution naming the new owner was prepared and the new owner signed as employer and trustee. The plan is funded with a pooled annuity and a small sum in a trusted bank account. The annuity was surrendered, all but two were paid out as they terminated employment. They both received their RMDs prior to rollover. The bank has been giving the trustee and his attorney a hard time releasing the funds from the checking account saying basically, that they does not and will not recognize the current trustee as trustee because he has not presented the "proper" paperwork naming the successor trustee. The plan document states the beneficiary (wife) is to be the trustee in the event no trustee no trustee can be found. DATAIR doc. The bank will not even accept this as proof; the plan has been updated each time, GUST, EGTRRA and PPA with the new trustee. In lieu of digging up the original owner/trustee's burial plot, I would think getting the DOL involved might be the only solution at this point. 5500 fillings are up to date. Suggestions?

I would appreciate a copy as well. TX.

An accountant we deal with forwarded his client's P&L for 2017, there are 2 partners. Would not each of the partners' contribution be based on net ordinary income plus guaranteed payments?

Prospect sold his company (s-Corp) effective 2/1/2018 - strictly asset sale. Employees were terminated 12/31/2017 and were not hired by the purchaser. Remaining employees are seller and spouse, no common law employees As of 2/1/18, it is the same company but with a new name, employer ID# same. Seller wants to start a defined benefit plan. Since the corp EIN the same, is it feasible to start the plan 1/1 under the old corp, then change sponsor and name of plan 2/1? Or make effective date 2/1 and prorate the salaries 12/11ths and have a short year 2/1-12/31/2018.

I should know the answer to this, but an accountant just approached me with a client who started a 401K in 2007, hired her sister as a PT employee (yes, under 1,000 hours) and ADP told her she did not need 5500s as the employee was excludable?? Obviously, if the employee is excludable, no 5500s until investment value greater than $250,000. I believe excludables must be counted.

As well as worth mentioning (in writing of course) to the client. TX.

I don't know how many times I have mentioned to different clients (mostly doctors) that they can not make employer contributions during the year and wait until 9/15 of the following year to make employer contributions for the NHCE participants. Need cite, please.

We administer a “ hard frozen” plan. Many of the participants terminated recently, and they can not be found. Since these are NHCEs, and are past the plan’s NRA, they are entitled to actuarial increases in accrued benefits. In the case of a frozen plan, where participants not only can not be located, but are past NRA, how would the RMD be calculated and who is entitled to receive, assuming the beneficiaries can not be located, as well?

Agree with Larry. Failure to follow the terms of the plan is a qualification issue. Have a look at RevProc 2016-51 aka EPCRS Fire the TPA - the TPA is supposed to keep the client out of the fire, not draw him closer to it.

Agreed.

In reply to Bird, yes I read the above, and yes, the plan calls for quarterly changes. I was speaking hypothetically if the client wanted to go with monthly changes, the plan must be amended.

Datair VS. The plan allows for quarterly changes, a participant can stop at any time. I take "stop" to mean completely stop, ie not contribute to the plan anymore; and "suspend" more as a "stop and go". Apart from hardship, the plan does not use the word "suspend". Aparently this NHCE stopped January-February, resumed in March-April and wants to stop again in June. I think amending the plan is in order.