thepensionmaven

OK, let me start over, as there appear to be new facts.

True, totally missed that one. Accountant gave some erroneous information. Apparently plan effective 7/1/2016, but the first employee contribution not made until December, 2016. SH Notice supposedly given out. Compensation is defined as compensation from date of entry. I would think date of entry, meaning July 1st, even through the accounts were not opened until December 1st and first deductions were December 15th. Safe harbor has yet to be calculated, accountant adamant compensation should be from December 1st, not July 1st despite our attempts.

client formed their own 401K after deciding to leave ADP MEP, December 1st, 2016. Effective date of plan 12/1/2016, plan is a SHNE with the 3% non-elective contribution. Wouldn't the safe harbor contribution be due for only 1 month? Plan Year and limitation year both calendar year.

I am recalling an ASPPA workshop of a few years ago, where it was advised not to give any HCEs the safe harbor non-elective contribution. I was not an attendee. My client maintains a safe harbor 401K/PSP new comp allocations. After 3 years, now he wants to know why he or any of the family members did not receive the "safe harbor" 3% contribution. Besides that language in the plan document, as well as the fact that the general test stands a greater chance of being blown, what are some other good reasons???

Yes, but the total number of participants is under 25. Hoping for not covered, but I can't see it.

I just got off the PBGC website after setting up a premium payment for my clients' initial plan year. At which point I started thinking that since the client is a husband and wife owned LLC, there may be a possibility they would not be covered (hopefully)??

We are receiving conflicting answers on due-date of 1096/1099R to IRS. Some accountants maintain 2/28. others are saying the rules changed for 2016 to 1/31/2017. Which is correct???

We just took over a small plan, 12 participants, all assets in a pooled brokerage account, each investment can be readily valued. I would think the plan would be eligible for the small plan audit waiver. Prior TPA filed Form 5500 with Scheule I for 2015. Any reason why we can not file 50-SF for 2016?

Assume you are saying that client can not make the full $53K to new PSP?

Client has contributed to make the DB sufficient for termination and all rolled over by July 2016. Does 401(a)(7) apply if the client wants to make the full $53,000 contribution to his PSP for 2016, made prior to March 15th of 2017?

We just received W-2s for one of our plans. The W-2 lists 401(k) contribution as well as Roth, the total of the 2 is over $18K. The plan allows for participant voluntary contributions and the accountant is willing to redo the W-2s. Any problems?

Participant and spouse split her account balance in 2016 according to the terms of a QDRO Plan account is pooled account, upon instructions from the client, since the spouse was rolling over, the brokerage firm wrote the check directly to the financial institution. I assume the spouse should be issued a 1099, code G with the plan as the payor and the participant's account would show the money coming out of her account. However, the spouse is not a participant. Is this cause for concern?

I agree, but maybe I'm not explaining the situation fully. Client tells me they do not have a 125 cafeteria plan; but they pay 75% of the employees health insurance, participant pays the 25% via payroll deduction. Would the employee deduction from pay for the health insurance be added to Box 1 of W-2 just like the 401(k) contribution is, for the definition of compensation for plan purposes? Plan defines compensation to include 401(k) as well as 125. I think (and could be incorrect) that if the client does not have a 125 plan (plan document), the amount the employee pays is not add back in??

We administer a new 401k plan that defines compensation as W2 plus 401k plus 125. Client pays 75% of employees individual health insurance premiums, employee pays 25% which idps deducted from pay. Client does not sponsor a cafeteria plan. Since this is pre-tax as is the 401k contribution, is the employee premium included in the calculation for the safe harbor non-elective contribution?

We have just learned the client was under the ADP Total Source admin and 5500s and have subsequently adopted our VS plan as an amended plan with the original effective date. The ADP plan was effective 8/1/2008 but under the ADP Total Source as Employer/Plan Sponsor as well as the Plan Name. ADP files one 5500 for all its clients and attaches a listing the name and EIN of each adopting employer and its EIN. Obviously, DOL has no record of our client's ever filing a 5500 under their own Sponsor Name. We took over the plan in 2016. To DOL, wouldn't this be considered the "initial return"? With $0 at beginning of year, the converted value of the investments as a "transfer"? Would the effective date be the original, 8/1/2008 or 1/1/2016?

Yes, 401(k). Self employed have until the due date of the 1040 plus extension.

Thanks very much.

Thanks, ETA. The 2nd part of the question revolved around the partner making two contributions in the same year - one for the prior year and one for the current year. I would think that if the calculation of the $18K for one year was over-shot, the balance could be used for the current year? So there would be one contribution during the year relative to two calendar years?

Partnership on extension, partners can make the $18K by the due date of the partnership return. Can he make two (2) $18K contributions, one for 2016 and the other for 2017. Suppose, and it is very likely, the payroll company does not stop the dedutions at $18K, can any overage be considered for the calendar year actually paid?

Client is a PC with 2 dentists and 8 employees. There are two investment accounts, both are pooled and are being allocated on the "balance forward" method. Somehow, there are two plans, two sets of 5500s, both plans identical in form We just took over the plan(s) for 2016 and advised the two plans should be merged We had the client adopt a merger and transfer agreement in essence transferring the one "plan" into the other; but since the accounts are commingled, it would appear as there is no need to go beyond this step? Does this necessitate preparation of 1099Rs ?

Potential client started business in June 2016 as a sole proprietor, wants to set up 401K/PSP by 12/31 He was told by another TPA firm if he establishes the plan 12/1/16 (I assume they are speaking of a December 1, 2016 effective date - which makes no sense), that he could only base his 25% on net schedule C from December 1- December 31. Why would not effective date of the plan not be 1/1/2016 if the intent was to make the full 25 PSP on his self employed income? Then again, if the full Schedule c was from June - December, why would the prospect be told that he could only do one month? Unless, the broker did not explain the situation correctly.

My client and his wife are 50/50 owners. Wife active particpant needs to take RMD for 2016. I have never the experience of having to calculate RMD for a DB. She will not retire for some time. My actuary mentioned taking the vested accrued x 12, but that seems too simplistic. How is the RMD for DB calculated??

Thanks, guys.

Thanks, I guess I was not clear. Participant 55+ owner turns 70 1/2 September 2016. The calculation for 12/31/2016 is straightforward. If delayed until 4/1/16, I believe the MRD due 4/1/ is the same amount, but the life expectancy would be her age in 2017. The calculation for the second distribution would be based on the (12/31/2016 account value less first distribution) / life expectancy in 2017. How do we do the MRD for a DB under the same circumstances. I now after 2005 can't use the account balance method. TX.

It has been awhile since we calculated an RMD if the participant wants to take two distributions in one year. As far as I can remember DC 12/3115 account value used for both 2016 and April 2017 divided by life expectancy uniform table for age in 2016. The second distribution has to be taken by 12/31/2016 and is based on the 12/31/2015 account value less the amount of the first distribution using the factor for the participant's age in 2016. DB Can't use the account balance method after 2005. Actuary has advised accrued benefit as of end of prior year x 12, but that seems too simplistic. How do you calculate if two distributions in one year?