Belgarath

Thank you! P.S. - so I think I was simply asking the wrong question. The real question becomes, (assuming the RMD was NOT being paid from an annuity contract purchased from an insurance company) what happens to the remaining plan assets if both husband and wife die in a car crash after RMD's commence? Seems like there is no further plan retirement benefit to be paid, so funds will revert to employer? (Employer is sole prop, so I guess this ultimately means it reverts to estate?)

I should know this, but DB plans are strange. Suppose someone is still working (100% owner) and becomes vested AFTER attaining age 70-1/2. Now must start taking RMD's. Question is: if the RMD method selected is 100% J&S with his spouse as beneficiary, and he dies, since this is an RMD, the spouse should be able to elect a lump sum payment of the death benefit (assuming proper waiver had previously been executed, and plan allows a lump sum), correct? In other words, an RMD method election doesn't lock in that method as a post death payment method for the beneficiary, does it? DC RMD's are so much simpler... P.S. - it seems like 1.401(a)(9)-6, Q&A-14(a)(5) covers this? Or am I all wet? Thoughts on this situation - evidently participant is concerned that if both he and spouse die together while taking the RMD's that nothing further would be paid out to contingent beneficiaries.

How can you use 5-year cliff? Wouldn't this automatically be top heavy (no non-keys) and therefore subject to 3 year cliff, rather than 5-year cliff being available?

Yes, I have seen this as well.

For all of you and your families and friends, wishing you all a Happy Holiday Season - drive carefully, and enjoy!

I don't have time to do any research on this question, but my recollection is that it must still be a "deferral" - in other words, she can't write a check. But don't take my word for it!

Interesting question. 1.403(b)-10 would require distribution restrictions that are no LESS stringent than the distribution restrictions under the annuity contract, but it doesn't specifically address this question. The fact that the distribution restrictions would prevent hardship withdrawal if the transfer was going the OTHER direction would also lead me to believe that it is reasonable to preserve the hardship option for those assets transferred TO the custodial account. At least in theory. HOWEVER, you'd have to determine if the custodial account agrees, or has language that permit this. I'm dubious that they do, but maybe...

I don't think you can give an answer that fits all situations. I'd say that generally, however, clients want closure/certainty, which doesn't exist while the application is pending, so they can get frustrated. However, they certainly don't blame me because the IRS hasn't yet even assigned it to a reviewer.

Filed a very basic VCP on a SIMPLE-IRA plan in June. Received an acknowledgement letter in mid-AUGUST. Called twice recently to check status. In spite of the IRS voice mail promising a call-back within 2-3 business days, it took 7 business days, but at least they did call. I didn't speak to the person - they left me a voice mail, but it has NOT YET BEEN ASSIGNED TO A REVIEWER. It will be "at least several weeks" before it is even assigned. Just an fyi to prepare yourself to hurry up and wait...

I wouldn't lose any sleep over paying this with a hardship withdrawal. The regulation deems it an immediate and heavy financial need if it is for ..."up to the next 12 months..." Sure, you can split hairs about the meaning of the word "next" in this set of facts and circumstances, but given the precise example above, in "real life" I'd allow it. I'm sure that RBG is correct, and that it was billed once already anyway, unless there was a screw-up in the billing orifice (yes, the typo is intentional - we had plenty of issues with billing stupidities when our kids were in college). If you wanted to pro-rate it, I certainly can't argue with the conservative approach.

HRA's are employer funded, not a salary reduction. You might be thinking of an FSA.

Can you roll over profit sharing funds to a SEP? Sure. Does the PS plan have to be terminated? Not necessarily, if it allows in-service withdrawals and the client qualifies for a complete in-service withdrawal of all funds, but I can't possibly imagine why anyone would not terminate the plan if they are rolling all the funds out of it. (Unless they intend to continue to contribute in the future.) A final 5500 form would be required for the terminated PS plan, assuming it is terminated. And the PS document must be up to date, if it hasn't been appropriately restated already.

While I agree with Jpod that it is a bit of an administrative fiction in such a situation, I'd put it a little more strongly than "it couldn't hurt." I would absolutely recommend that there is a deferral election in place before writing a check, etc. The requirements of 1.401(k)-1(a)(6), which also refer you back to 1.401(k)-1(a)(3), are such that you may have a difficult fight with an IRS auditor if there isn't an actual "election" in place. If there isn't, then of course as Jpod suggests, you would have to make your case, but it is so easy to avoid trouble by putting an election in place prior to any contribution that I can't see a valid reason for not doing so.

They say there are two things that you never want to see how they are made - Laws and Sausages.

I'm not aware of a minimum age requirement. However, I've never specifically investigated the question.

When using pre-approved plans, which these days are most of our plans, we do not generally submit for a d-letter. We give the client the choice, and as you mentioned, the fee (plus our fee to prepare the filing) is a deterrent and virtually none of them elect to file. We have the odd DB plan (are all DB's odd?) that files, but very few plans file. And what ETA and RBG said.

No. It is not a BRF. Not an optional form of benefit, not an ancillary benefit, not a right or feature.

Tom, I hung several of your Grinch relatives on the tree last night. MY relatives also hang from trees, but they are hanging by one arm, while eating bananas with the other... FWIW - We've always taken the IRS approach for exactly the reasons specified.

When was the plan actually amended for this change? Depending on the date, Tom's comment might be applicable or might not. For example, if this change was actually made prior to 2015, then it wouldn't apply. If amended in 2017, then he's made a great point on a tricky little "gotcha" that you need to be aware of.

P.S. - from the DRAFT 2017 1040 instructions: Enter on line 16a the distribution from Form 1099-R, box 1. From this amount, subtract any contributions (usually shown in box 5) that were taxable to you when made. From that result, subtract the amount of the rollover. Enter the remaining amount on line 16b. If the remaining amount is zero and you have no other distribution to report on line 16b, enter -0- on line 16b. Also, enter "Rollover" next to line 16b.

Methinks it is just that easy. The amount from the 1099 is entered on 16a. Then 16b is zero. I haven't looked at a 2017 1040, but on the 2016, you were supposed to write "rollover" next to line 16b.

Agree with QDROphile. I suppose you could give him 1.401(k)-1(f)(3) as a citation - at least it does discuss the fact that gains, losses, etc. must be separately allocated to the Roth account on a reasonable and consistent basis. If physically separate accounts were required, such language would be unnecessary. But if he hasn't understood this already, you will probably be beating a dead horse anyway.

Yes.

Check your current document. A 401(k) arrangement is an additional FEATURE added to a profit sharing plan, even though commonly referred to as a "401(k) plan." Most 401(k) plans PERMIT a profit sharing contribution already, even if they do not utilize it. If they want to establish a new Profit Sharing plan on top of their existing PS/401(k) plan, yes, they can do that, and they could exclude service, for vesting purposes, prior to the effective date of the plan. I don't know the situation - with modern relatively short vesting schedules, unless they have a lot of employees, a lot of turnover, and substantial contribution levels, it is hard to see how the added expense of maintaining another plan is justified - but perhaps it is. Others here may offer some better insights.

So, employer has group health plan. Employee terminates in 2017, elects COBRA coverage. So far, so good. Suppose the employer modifies the health coverage effective 1/1/2018, increasing deductibles, out of pocket expenses, etc., for everyone. To somewhat mitigate these effects, the employer institutes an HRA. Is the employer required to offer COBRA coverage on the HRA to this participant for the remainder of the COBRA period established as of the original date of termination of employment? I don't work with COBRA, but I wasn't able to find a definitive answer in a reasonable amount of time, and wondered if others had dealt with this issue. Thanks! P.S. - FWIW, as I looked at some of the regulations, it seemed to me that under a "common sense" approach and looking at 54.4980B-3, it seems like since the "similarly situated" employees receive the HRA coverage, the COBRA participants with the same health coverage should also be able to be covered under the HRA... P.P.S. - while looking at it a bit more, perhaps a more appropriate reference might be 54.4980B-5, Q-4(c). Anyway, it does seem to point in the direction of, in this type of circumstance, requiring a COBRA election for the HRA to made available to the former employee - in this circumstance, all employees were allowed to choose among several health plan options, and the HRA was offered in conjunction with these health plan changes.