Belgarath

"Remember the entire withdrawal needs to be repaid; not just the check amount." Yup. I gets even better. The owner/Trustee withdrew the funds, and didn't withhold anything! Pooled account plan, so we didn't discover that there was a distribution until a couple of days ago, when reviewing the fund numbers for 1099 due to a QDRO distribution last year. Fun times! We have sometimes (rarely) had a repayment, but only of relatively small amounts. Those (small amounts) are also the ones where the employer is likely to say it isn't worth the hassle, and just repays it with interest, 'cause they don't want to fight with the employee.

Thanks for the input. BG - assuming the repayment takes place after the 1099 date, I'd think it would be reported as a taxable distribution, and repayment would represent basis. Agree/disagree?

DC plan, partial distribution. Repayument does sound like a better option - I'll have to reconsider in greater detail. Thanks.

During 2021. Calendar year plan.

So, the 100% owner, who is over age 65 which is NRA, takes a distribution from the plan. Problem is that the plan does NOT permit in-service distributions, even at NRA. I THINK this overpayment can be corrected under SCP with a retroactive amendment to conform plan terms to the operation of the plan. I haven't delved deeply into Rev. Proc. 2021-30 yet - just going from memory. But I wondered if anyone had dealt with this recently and had an opinion? Thanks. P.S. it does appear that it would otherwise be allowable under 6.06(4)(a), which refers you to 4.05. Under 4.05(2)(a)(i) and (ii) - it appears it satisfy (i). My only "squeamish" issue is whether it satisfies (ii) since it is due to the impermissible distribution to a HCE. It would be available to NHCE's as well, but the only current correction would be for a HCE.

Yup. Lesser of 10% or $1MM.

I didn't know what a "PTET" was, so I googled it. I include one of the links below if anyone is interested. I'm sure there are zillions of other links! https://www.tax.ny.gov/bus/ptet/

Full 1.5 MM.

Good point. You've convinced me.

"Super integrated" to me always conjured up an image of laundry detergent. I have no idea why it brought that image to mind...

Well, I think the potential ambiguity is the number of hours the employee was working prior to becoming a common law employee. So if working 10 hours per week, this person would NOT have become a leased employee, even if working for a full year. On the other hand, if the employee was working 40 hours per week, they WOULD have become a leased employee, "but for" the fact they became a common law employee prior to having the opportunity to satisfy the "substantially full time for at least a year." So, say you have 1 YOS eligibility. Person was working for 10 hours per week as a temp for 6 months, (260 hours) but when hired as a common law, has 800 hours in the second 6 months. Do they have a Year of Service or not? Depends upon how you interpret it. Personally, as I said, I favor counting that service.

Thanks - very helpful. Makes me feel more confident - although we left choice up to the client, we had recommended it as "safer" in our opinion. But as far as Relius doc goes, I'm still not aware of it being formally addressed. Have you asked them?

Ah, got it. So you are talking about a situation where an employee who was hired through a temp agency, then formally becomes a common law employee prior to satisfying the "substantially full time for a year" requirement? If that's the case, I don't believe the document we use would cover it. As far as I know, this is "Administrator's choice" - I don't think there is formal guidance on the issue. Perhaps some pre-approved documents either have an election available, or it is hard-coded one way or the other, but I don't think the Relius document addresses it. We've had this situation come up a time or two in the past, and after discussion with the client, they elected to count this service for eligibility and vesting, which I think is reasonable. P.S. - in the situations we had, the employees were "full time" when they were temps - they just didn't have enough time in to meet the "substantially full time for a year" requirement before they were formally hired as common law employees.

Not sure which doc you are using, but the Non-Standardized Defined Contribution document using an Adoption Agreement has it in Appendix A, Section B, n. At least, I think this is what you are asking, but not entirely sure.

Hey Mike - did they give their reasoning for this statement/position? I frankly find it confusing, given what seems (to me) to be the pretty clear language in 1.401(a)(4)-4(e)(3)(iii)(B). Is there any official guidance that updates the regulation? Thanks.

Agree with ESOP Guy. (Not the question that was asked, but just fyi - you can disregard service prior to the effective date of the plan for VESTING purposes.)

Family aggregation! Less affectionately (but more commonly) known as family aggravation.

Well, there's no CIVIL penalty as long as you provide it when requested by the participant, DOL, etc., etc. - however, if I recollect rightly, there is a potential CRIMINAL penalty under ERISA 501 if you WILLFULLY violate disclosure requirements. No dispensation I know of for an international man of mystery...

Curious as to how the tax reporting on this would be handled. Say account is worth 100k. 50K to the alternate payee. But then the plan pays the participant 20k from the alternate payee's account that was created under the terms of the QDRO. Is the alternate payee taxed on 50k, or 30k?

Yes, I would.

Thanks Peter.

Thanks.

Question - seems like there may have been litigation on this... suppose you earned the income and made contributions to the plan while working in a state that has an income tax. Then when you retire, you move to a state that has no income tax (like NH in the example above). Can your state of residence while working/accruing the pension attempt to tax the retirement income you receive while now living in NH?

Correct, it was not targeted at TPA's. But, since what happens in the CPA world sometimes has an effect on us, whether directly or indirectly, I thought I'd ask - just for example, if all this stuff is new, and if it causes CPA's to somehow need information from us sooner. Or, if it makes the CPA's work more difficult, will it mean we get data LATER than usual so that we may need to plan for larger last-minute rush, etc., etc.

Question - does any of this actually affect what we do as TPA's? Will CPA's need anything new from us due to the following? (I'm thinking the answer is no) I just received invitation to a Webinar that said the following. On recent IRS Forms 1065, Schedules K-1 and in related instructions, IRS launches massive reporting requirements re: negative tax basis capital accounts, at-risk activities, passive activities, partner level built-in gains, disregarded entities and many more. We can’t wait to be a deer in the headlights preparing Form 1065 and Schedules K-1. In this action packed program, you’ll learn: Course Outline Negative tax basis capital account reporting – What must be computed and disclosed (and by when) – How IRS keeps moving the target How partnerships (and S Corps) face the at-risk (and passive) activity reporting blues (and what to do about them) Plethora of other new info required re: built-in gains lying in wait Consequence laden all new reporting re: disregarded entity partners New disguised sale reporting New disclosures re: liabilities of partner Stunning penalties for failure to wholly and accurately complete K-1