jmartin

Distribution department incorrectly processes a rollover as a lump sum. Participant has balance of $8,000. $5,000 went to the rollover company and is being coded as a G on the form 1099. The remaining $3,000 was sent to the IRS as tax withholding. Participant received zero dollars. That 1099 is being coded as a 1. What options does the participant have regarding the $3,000 tax withholding? Can they contact the IRS to explain the situation? Or is their only option to file their taxes and receive most of the $3,000 back as a refund? I am assuming that with the latter route the participant would need reimbursed the 10% penalty (any way to avoid that?) and any part of the $3,000 she doesn't get back.

A Participant completed a beneficiary form naming his spouse as the primary beneficiary and his sister as the contingent. The participant gets a divorce but does not revise his beneficiary form. He then dies. Isn't the ex spouse still the beneficiary?

Plan has 120 participants, 95 of which have balances. We amend the plan effective 1/1/17 to exclude, by name, 30 non contributing participants. That gets the BOY Count to under 100 and therefore no audit. Anyone see any issues? Any issues with making another amendment later in the year, say February) making "all employees" eligible for the plan?

Participant A passed away. His beneficiary is nephew B, who happens to be 8 years old. Father C is the father of participant A and has custody of nephew B. I would expect that the distribution form would be send to Father C who would take the distribution on behalf of nephew B. Is that correct? Also what documentation would you recommend that we get to prove Father C has custody of nephew B?

I have a participant whose company was just purchased (asset sale). He is considered a new employee at the new company. As such he is eligible to take a distribution from the other plan. He called today to request distribution paperwork and let slip that he is going through a divorce. There is no domestic relations order yet. I believe they are at the very beginning (as in they just hired lawyers). Isn't his 401k balance frozen until a DRO is received? Is there any IRS or DOL citation that says this? The plan doc just references QDRO's which we are no where near yet. His adviser is demanding something in writing.

Everything I read says that if you are refunding after 12 months than you must make some form of a qnec. The issue seems to be can sending the ACP Refund to the forfeiture account be considered a correction even if not the right one? If so than we just distribute from the forfeiture account and send to the HCE. If not then wouldn't a QNEC be owed? Also what about a 5330?

A plan failed the ACP Test for the plan year ending 12/31/2014. There was a ACP refund due to to be given to HCE Randy. The refund amount of 117.18 (110.98 plus 6.20 earnings). The prior admin (we recently took over this plan) "corrected" by sending the 117.18 to the forfeiture account. I am not sure when in 2015 this was done. This amount should have been sent to HCE Randy. What is the correction from here? Can we simply move the amount out of forfeiture and back into his plan and then process the distribution to the participant? Or, Do we need to do a QNEC or One to One?

does anyone else have any input?

Let's assume the match was vested and should not have been forfeited. Does that change anything?.

A plan failed the ACP Test for the plan year ending 12/31/2014. There was a ACP refund due to to be given to HCE Randy. The refund amount of 117.18 (110.98 plus 6.20 earnings). The prior admin (we recently took over this plan) "corrected" by sending the 117.18 to the forfeiture account. I am not sure when in 2015 this was done, but let's say it was done after March 15th (if it matters) This amount should have been sent to HCE Randy. What is the correction from here? Can we simply move the amount out of forfeiture and back into his plan and then process the distribution to the participant? Or, Do we need to do a QNEC or One to One?

Working on a presentation regarding RMD and I am looking for insight on two basic questions: - When were RMD's first elected? It has to be before Tefra - Why did they choose 70 1/2 as the age? - Whey did they decide to use a mortality table vs just using a set percent? Any IRC you can site would be helpful as well but not required. Thanks in advance

Doing more research and I consider a RMD a lifetime distribution. As such once it starts it must continue throughout the participants life time? Difference sites keep referencing various parts of section 401(a)9. I have seen a lot of sites saying yes to being locked in. Below is an example from McKay Hochman. I thought the post intriguing since they do plan docs. Here is a link to a McKay Hochman post: http://www.mhco.com/BreakingNews/ARMD2_121114.html Thoughts anyone?

I know for the ERPA exam you must get a "105" or higher. I was curious if anyone had an idea of approximately how many questions you need to get right. Granted there are multiple sections which makes it a little difficult but based on their failed test examples I get the impression you have a quite a bit of cushion...

Anyone have any thoughts? I think I may be on the right track but want to make sure as this is a law firm...

Revised the topic to make it a little more clear.

We have a partner who at 12/31/14 had 6.9% ownership. The ownership was derived by looking at the capital and income expenses (whatever is highest). Needless to say it changes ever year. For this partner, it is expected that is ownership will be under 5% for all future years. He turns 70 1/2 in 2015. Issue 1 - If he owns 5% at any time during the 2015 plan year he has to take an RMD for 2015. If he owned 6.9% at 12/31/14 then at 1/1/15 would still have the same ownership? Or could we argue that at 1/1 it’s zero because they do not know the ownership for the year until after year end. My guess is probably not. Issue 2 - Would you consider him a 5% owner because of his 2014 ownership? For HCE and Top Heavy you use prior year but it seems like for RMD is current year only? Issue 3 - I also found that once a 5% owner has to take RMD he is “locked in” so that even if his ownership dips below 5% he still has to continue taking. Is that correct? I think yes. Issue 4 - His 12/31/14 balance is 0. He has a 2014 receivable profit sharing contribution that will be deposited in July 2015. IF he has to take an RMD is his first one zero?

Sorry I meant the doctor joining the practice. Sounds like an independent appraisal is needed. What if the doctor uses his own accountant who is not affiliated (assuming they are an expert in real estate,etc)? Is there a spot on the 5500 for this? didn't think there was on the SF but wasn't sure.

Posted this in other sections. Wasn't sure which to put in! A doc has joined a gastroenterology practice. the plan doc allows for investments in real estate. More specifically the do wants to invest in the shares of the endoscopy center part of the gastroenterology practice. This leads to a couple questions. - Since the plan is a small plan (SF), does the 5500 require an appraisal? - If yes can the appraisal be done by the accountant? - If an appraisal is needed, is it every year? - If the practice does not have a formal appraisal done every year would a CPA or managing partner letter work?

Posted in other forums here as I wasn't sure where to put it. Sorry. A doc has joined a gastroenterology practice. the plan doc allows for investments in real estate. More specifically the do wants to invest in the shares of the endoscopy center part of the gastroenterology practice. This leads to a couple questions. - Since the plan is a small plan (SF), does the 5500 require an appraisal? - If yes can the appraisal be done by the accountant? - If an appraisal is needed, is it every year? - If the practice does not have a formal appraisal done every year would a CPA or managing partner letter work?

Posted in two other forums here. Wasn't sure best place to put it. Sorry. A doc has joined a gastroenterology practice. the plan doc allows for investments in real estate. More specifically the do wants to invest in the shares of the endoscopy center part of the gastroenterology practice. This leads to a couple questions. - Since the plan is a small plan (SF), does the 5500 require an appraisal? - If yes can the appraisal be done by the accountant? - If an appraisal is needed, is it every year? - If the practice does not have a formal appraisal done every year would a CPA or managing partner letter work?

Any other opinions? She is definitely a NHCE. Let's add another scenario: The plan has 4 allocation groups. Group 1 is the top level partners. Group 2 is mid level partners. Group 3 is remaining partners and staff. Group 4 is any nhce required to get a contribution to pass rate group testing. Could this nhce be amended into group IV to get a contribution?

A law firm has a plan with a 1 year (1,000 hr) service requirement for profit sharing. Entry is monthly. They hired a new attorney 12/15/13. She satisfied the requirements 12/15/14. She would enter the plan for PS purposes on 1/1/15. Unfortunately they told her she would get PS in 2014. Since she is a nhce for 2014 (may be a HCE in 2015, not sure since they use top 20), can the plan be amendment bringing her specifically in the plan by name for ps purposes? I know they could have in December 2014 for sure but was unsure since it is 2015.

Question on the HCE comp limit which increased to $120,000. I always get this confused. Which one is right? Employee who earned $120,000 in 2014 calendar year will be a HCE in 2015? or Employee who earned $120,000 in 2015 calendar year will be a HCE in 2016?

I have a 401k plan that excludes union. there is a participant who entered the plan (and accrued a balance) but recently joined the union. As a result he is no longer allowed to contribute 401k. Can the participant still take a loan? I don't see anything in the loan program that indicates union or any excluded participant cannot. My thought was that since he is still considered a participant, he would be allowed.

Husband owns 100% of Dentist Office A. Wife owns 100% of Dentist Office B Minor child age 18 (under 21) Adult child age 25 (over 21) The husband and wife have no association with each other's businesses. They are not attributed each other's ownership. Same for the adult child. However the minor child is attributed ownership of both companies making them a controlled group. Question: Once the minor child turns 21 will they cease to be a controlled group (assuming all other factors remain same)? My thoughts would be yes but wanted to double check.