pmacduff

wasn't sure where to post this question and realize client needs to consult with counsel. this is more for my own curiosity. client is removing a trustee from the Plan who is an employee but not an owner. The employee still works for the company. the question asked is what liability would this employee have in the future if litigation is brought against the Plan and/or Trustees that might include the period of time that the employee was a Trustee of the Plan? Employee is not the sole Trustee. Would ERISA's fiduciary six year statute of limitations apply?

ok - that's how I computed it as well and determined no controlled group. nice to have reinforcement that my thought process was working, thank you!

no the individuals have no relationship to each other (married, family, etc.)

here's the data: Company #1: Individual A owns 51% Individual B owns 49% Company #2: Company #1 owns 75% Individual C owns 25% Is this a controlled group? I was charting this and looking at the brother-sister rules and do 5 or fewer own 80% or more, effective control, controlling interest and my head began spinning. I know this should be easy but seems like I overthink or something and end up confused. Any help appreciated!

5558 extension on new calendar year plan (2014 first year) was filed back in late June. The box which indicates "check this box if you are requesting an extension of time on line 2 to the the first Form 5500 series return/report for the plan listed....etc." was inadvertently not checked. Would others go ahead and file another extension and check the box?

Austin - I found the second edition of Derrin's book in our old archives. These page #s don't match up to 183-187 but see attached. Also - I spoke with the broker who originally called about this and he told me that the companies are identical. It was basically just a name/entity type/ein change. DOC063015-002.pdf

Even if the plan allows for delay of RMD until year of retirement the RMD is still required in that year for the rank and file participants.

Employer has a SIMPLE IRA plan for him and employees. Company ceases to exist in 2015. New Company/new name/new EIN with same owner and employees. Can this employer set up a 401(k) under the "new" Company? I don't work with SIMPLES but this sounds to me like the owner needs to wait until 01/01/2016 to start the 401(k). Thank you in advance.

From the instructions: "The information reported on Forms 8955-SSA is generally given to the Social Security Administration (SSA). The SSA provides the reported information to separated participants when they file for social security benefits." My question is...if a separated participant is over NRA and already drawing SSN is the SSA information still provided to the Social Security Administration and if so, do they send a letter to those people? I'm thinking no if the prompt for the SSA is the participant applying for social security benefits.

This is the blurb from the 404a5 notice that would lean me toward net against fees as you mentioned. "Percentage-based charges*, if applicable, are offset by credits that have been negotiated by your plan sponsor. As a result, a credit of 0.05% is currently being applied to your account on a pro-rata basis. Any charges and/or credits will appear on your quarterly benefit statements." Have copious notes, but was hoping to have it on a separate line item to avoid the auditors asking where it was included. Just trying to save time ahead of time

I'm working on the 2014 Schedule H for a Plan. The investment vendor provided a .05% credit back to participants per the contract. The credit is disclosed to the participants in both the 404(a)(5) information as well as reflected on the participant individual statements. It is also reported separately on the overall plan reporting. I'm trying to figure out the "best" place on the Sch H to show this credit back to participants. It's not a huge amount. Perhaps "Other income"? Where would others put this amount on the Sch H? Thank you in advance....

Thank you both. After a reread of that code section I see also that the spouse would not pay the 10% penalty on his portion even if he takes the cash instead of rolling it over. That will be most helpful to him at this difficult time.

I found some prior threads but most were 7+ years old and dealing with non-spousal beneficiaries. I have a spousal beneficiary. It appears that if he rolls over the balance of the account to a traditional IRA then he'll receive the 1099-R with a Code of 4G. If that happens this year (the year of death) then the 1099-R for the loan offset will go under the deceased participant's name/SSN and is part of her final personal income. My question is...does the 10% "early distribution" penalty apply in this case to the loan offset? I'm assuming that the 1099-R won't be coded with a "4" because that portion is not a death benefit but rather a loan offset under the decedent. Any thoughts appreciated!

think Tom's in the throes of busy season like the rest of us?? I think he meant to say that you lose the "get out of top heavy" free option when you have 1 YOS on the safe harbor piece, right Tom?

Thank you GMK - made me smile about the new hire rule Anyway - that was my thought too - give out the info for those folks with the caveat that if they make the 1000 hours, they will be auto enrolled; otherwise not.

An existing client roughly 2500 employees is adding auto enroll to the 401(k) plan. Plan entry dates are January 1 and July 1. The vendor recordkeeping the plan says that they need to have the upcoming eligible census data each year no later than May 31st for a July 1st entry due to timing issues and the auto enroll information they will be sending out to the newly eligibles. The client has people hired in June of 2014 that are "borderline" as to whether or not they will make the 1000 hour requirement for eligibility by their anniversary date. We won't know until we have the census info for June, which of course is after the deadline of the vendor to set them up for July 1st entry. Once we do know who met the eligibility the vendor still needs ~30 days to send out the notifications, which would put the new enrollees past the July 1st entry date. I anticipate we're going to have this same issue each approaching future entry date due to the type of business this is and the employee demographics. What's the best way for the client to handle this and have others seen this issue? Or am I missing something easy and obvious?

oh and by the way, GMK, the tune for your March 11th post sounds to me like "Ruby Tuesday" by the Rolling Stones....

I am currently working with a client who has transferred from a PEO (#1) to another PEO (#2) for payroll, benefits....everything. They were in the 401(k) of PEO #1 and want to join the 401(k) of PEO #2. PEO #1 is telling them that they have to transfer the $$ from their plan to the PEO #2 plan and cannot offer distribution options to the participants. I'm thinking this is a Plan Doc issue as John mentioned. The receiving PEO (#2) 401(k) Plan allows Employers to terminate participation anytime and treats that portion of the plan as termed. Participants are given distribution options. Client wonders why PEO #2's Plan would allow that but not PEO #1's Plan. Again, I'm thinking a plan doc issue?

Thank you John and Lou! I was pretty sure that was the case but as time goes on and esp. this time of year my brain can muddle thoughts. (as a side note the Plan is on a Corbel VS document)

I know I have seen this question before & probably even asked it myself! Background: plain 401(k) profit sharing plan the over age 50 owner made $22,669.18 in 401(k) contributions the ADP test passes. there is no match in the plan computing the profit share contribution to maximize the owner using a cross tested formula. The 2014 individual limit is $52,000. with $5,500 401(k) catch up, $57,500. Since this owner only made $5,169.18 in catch up contributions is his total allocation amount limited to $57,169.18 or can he still get to $57,500? I know it's not much in this instance but I want to do it right and get the client as much as possible. thanks in advance!

Ok - so the rule is 5+ years and 59 1/2 - it doesn't matter that he made his first roth contribution 5+ years ago if he is under 59 1/2? and my 1099-R Box 7 code is B1 with 2007 in box 11 things were much simpler in the pre-tax days....sigh

Thanks Belgarath...participant is only 50 I want to be sure I understand - he will have to pay the 10% excise tax but not ordinary income tax on the earnings? Or is he still on the hook for the tax on the earnings as well even though the year of first contribution was more than 5 years ago because he isn't 59 1/2?

ok -my head is swimming from these 1099-R codes. I have a participant who met the 5 year waiting period for his roth account but took the distribution in cash in 2014. Is the roth portion 1099-R code B that I should use? I realize I will be putting the first year of the 5 year period (which was 2007 BTW) into Box 11, I just don't know what goes into Box 7..... thanks in advance I think may have the answer now as this participant is NOT 59 1/2 yet. So it really isn't a qualified distribution, correct? In that case I would use Code B1?

jpod - didn't think of it before but that fits in to the situation....plan states that forfeiture occurs upon the earlier of distribution or 5 breaks-in-service. This is the 5th BIS year and distribution has not yet occured. The non-vested portion would have been forfeited at the end of the 2014 PY. So to look at it another way - if the participant had not passed away those funds would be forfeited at PYE 2014 per the plan. Then say the participant passed in 2015 or beyond then, as you mention, the forfeiture dollars would not be brought back to the account to be vested simply because the participant passed away prior to payout.

forfeitures occur as of the earlier of 5 breaks-in-service or distribution of account. The plan is on a Corbel nonstandardized 401k PS document. I will pull out the actual Trust Doc to review, just had the AA handy originally. The situation is alittle unusual in that the deceased participant is the son of the owner of the Company. While the owner would prefer to be able to vest the account 100% for the beneficiary (daughter-in-law) he just wants to follow the proper course. I believe that the 40% vesting stands but had been thinking along the lines of what mbozek said about the plan's definition of a "participant" and then in relation to the section on vesting. thank you all for your replies.