Belgarath

Austin - I do have a slight advantage over you, in that I have 7 thumbs on one hand, so I have a couple more clients with good records, perhaps. I agree with pretty much everything that everyone has said! There's no "one size fits all" answer as far as I'm concerned. Like you, we certainly have takeover clients - imagine a plan you took over in 2010, properly updated for EGTRRA, everything clean, but plan has been in effect since 1967. And until 2006, let's say, it may have been pooled accounts. Now you have to figure this out for years between 1977 and 2013. It was a PS plan that allowed in-service distributions, Rollover money in plan. Loans. And two of the prior TPA's are long out of business and the Plan sponsor has no records. This isn't actually all that far-fetched. And I think the QDRO, as proposed, is simply impossible. So as Qdrophile has suggested, I think the PA sends it back, after determining perhaps what COULD reasonably be done, telling them to come up with something else. Not being a lawyer, I have no idea what you do if the parties prove to be recalcitrant when it comes to determining a reasonable and administratively possible approach. My experience is that once told that their method is impossible, they always come up with something else. I've probably just been lucky.

I don't type as well as ANYBODY. A stuffed monkey with rheumatoid arthritis types better than I do. And come to think of it, probably interprets the regs better, as well... And yes, I missed the -1

Since this is a corporation, I don't think number two applies. Therefore, since the corporation is not owned solely by 1 owner and spouse, they don't satisfy #1, and cannot file an EZ. At least IMHO. A one-participant plan means a retirement plan (that is, a defined benefit pension plan or a defined contribution profit-sharing or money purchase pension plan), other than an Employee Stock Ownership Plan (ESOP), which: 1. Covers only you (or you and your spouse) and you (or you and your spouse) own the entire business (which may be incorporated or unincorporated); or 2. Covers only one or more partners (or partners and their spouses) in a business partnership; and 3. Does not provide benefits for anyone except you (or you and your spouse) or one or more partners (or partners and their spouses).

Hey Tom - while I agree with not being able to date it retroactively to 1/1/14,I'm puzzled by the reference. Isn't that for prior year testing? I'd have said 1.401(k)(d)(4)(i) would be the successor plan reference? Not that it matters - if it is established 10/1/14 or later, as detailed above, then shouldn't be any worries. Just curious as to whether I'm missing some important point.

I think what you are looking for is 4972(d)(1)(B). Since the excise tax doesn't apply, and since "deductions" aren't an issue, then as long as you stay within the 415 limits, you should be fine. I do seem to recall, in a hazy way, that there may be an issue if the tax-exempt maintains the plan jointly with a for-profit organization, but I'm guessing this is pretty rare. However, if that applies, you may want to look at it more carefully.

You can't file an EZ.

If the transferring plan is silent on the issue, then I would say that such a transfer is not permissible. Take a look at 1.457-10(b)(5) - one of the requirements is that the transferor plan must provide for the transfer.

While you should check with your TPA and/or ERISA counsel, since this has the effect of including a previously ineligible classification of employee, it seems to me that the IRS should be amenable to this amendment. Now, although IRS representatives have INFORMALLY indicated that something like this should be acceptable, IRS comments from the podium at conferences do NOT give you reliance as official IRS guidance. So, this is why I recommend checking with counsel.

I'm not aware of any provision that would allow you to exclude these contributions to the HC from the tests.

Well, you could start with 1.401-1(a)(2), which requires a plan to be a definite written program. Beyond that, I'm not certain that the Code or Regs say, in precise wording, that the plan must be operated according to its terms. (They might, and I'm just not aware of the specific reference) However, it is SO well established that a plan must be operated according to its terms, and to not do so is a disqualifying event, that it would be absurd to argue otherwise. You could refer your client to, among other things, Revenue Procedure 2013-12, which defines operational errors as disqualifying events. Although you can correct operational errors under 2013-12, one of the requirements for self-correction, which IRS auditors look for, is some documentation of how such errors will be prevented in the future. So it isn't a never-ending pass to ignore the rules. I think most TPA's struggle with similar clients. I'm continually astonished at how many clients hire us to do plan administration, then ignore what we tell them to do.

Hmph. I say 2 + 2 = 1 How, you may ask? 2 pecks plus 2 pecks equals 1 bushel What's a peck? A quick kiss on the cheek. Math just doesn't make any sense...

Have a client where plan defines compensation for plan purposes as W-2. A client is insisting that opposite sex health insurance premium, while taxable, shouldn't be considered as compensation for plan purposes, based upon their "research." I can find no basis for this whatsoever, and I'd just like to see if anyone knows of something I'm missing? They could amend the plan to exclude such compensation for plan purposes, but that is a separate issue - plan does not currently contain such an exclusion... Thanks.

Try 1.401(k)-1(b)(3). I think that's what you are referring to.

Can't be reduced below 1%, AND advance notice needed.

Correct. The non-governmental plans have no rollover options available, although they can permit direct transfers to another tax-exempt entity 457(b) plan.

They are not required to receive top heavy if they terminated employment prior to the last day of the plan year. See 1.416-1, M-10. However, your document may provide it, in which case you must follow the document. I've never seen a document that doesn't adequately spell this out, (albeit some of them are poorly written, making it difficult to determine) so you may want to dig a little deeper into the document and/or adoption agreement, if document utilizes an AA. Have fun!

Hi GMK - no, I meant to say once the RBD is reached. Why would a life expectancy for RMD purposes even be considered if the RBD has not yet been reached, since there is no RMD until the RBD? Maybe I'm misunderstanding your question? So employee dies prior to RBD (employee's RBD). Spouse is sole bene and is entitled to use an RBD that is the later of December 31 of the following calendar year, or December 31 of the calendar year the employee WOULD have attained age 70-1/2. Once that RBD is reached, then the spouse life expectancy is used to calculate the RMD, not the life expectancy of the deceased. At least, that's how I understand the regs.

GMK, I agree with you - I see no basis for using other than the surviving spouse life expectancy once the RBD is reached. See 1.401(a)(9)-5, Q&A-5, ©(2). I expect M-H will get back to you. A year or so ago I found an error in one of their blurbs, wrote to them, and they promptly acknowledged it.

No 402(f) notice, but you still have to give a notice re electing out of the 10% withholding, etc., as required under, (I think - didn't check reference) 3405. So you don't get to avoid notices altogether... There are penalties for failure to provide this notice, albeit pretty small as I recall. Something like 10 bucks per notice failure.

It would have helped if I had read the instructions for the darned thing first. From the instructions: "If your plan is a SEP, SARSEP, or SIMPLE IRA, leave this line blank."

If a client has a SEP, or a SIMPLE-IRA, and they freeze/"terminate" it and set up a new 401(k). do you: a. Assign plan #001 to the 401(k), or b. Consider the prior SEP or SIMPLE-IRA as plan #001, and assign the 401(k) plan #002? I do actually have a reason for asking this: in the VCP procedure for correcting a SIMPLE-IRA, the Appendix asks for the plan #, and I would normally have used option #1 above.

Thank you all. There actually is no plan - this is indeed a hypothetical question that came up in conversation, so I appreciate the responses and information! Although, I have found that most of the "hypothetical" issues that come up in conversation eventually turn out to be based on something real - albeit with substantially different facts than first discussed...

Thanks. For some reason (not being a DB person) I thought that plans were required to increase the monthly payment for late retirement, to reflect the shorter period of receiving benefits. Apparently that is not the case, and I appreciate your response.

Suppose you have a DB plan that institutes a hard freeze - no further accruals after, say, 1/1/2015. Does this negate required late retirement "adjustments" to the benefit accrued on 1/1/2015? In other words, your Normal Retirement Benefit as of 1/1/2015 (frozen) is $1,000 per month, beginning at age 65. No further accruals. But there is (or was) an actuarial adjustment of (pick a number, I have no idea - say 0.5% per month) for every month you continue to work past NRD. Does the hard freeze also negate that adjustment, or is the adjustment still required, even though there are no additional "accruals" for anyone? Thanks!

As a non-lawyer, my thoughts on this are certainly little more than random musings. But FWIW, it seems to me that the fact the new fund, whatever it may be, underperformed the old fund, may be immaterial. By that I mean that the plan investment committee which selected the investments is under no obligation to continue to offer that same fund. So if your "old" fund earned 25%, or 200%, or whatever, in one month since the transfer, that's meaningless IMHO. If the selection of the new fund was undertaken in a prudent manner, as suggested earlier, then I'm not sure you really have a lot on your side. The fact that you threw away the notice probably doesn't help your cause. Just out of curiosity, if you HAD opened the notice, and seen the available fund lineup from which to choose, what fund would you have chosen? What would this fund have earned in the 1 month period, compared to the default fund into which your account was placed? If you DO have a solid case (and again, as a non-lawyer based only upon some sketchy facts and discussion, I feel like that may be doubtful) I think this may be a more appropriate measure than comparing it to the old fund which would have been unavailable to you in any case.