Atila

I have been researching the treatment of plan assets upon termination of a SIMPLE IRA. Although I agree that the "plan assets" are already in participants' IRAs, and it makes sense that distribution of plan assets upon termination of the plan would be unnecessary, I am not able to find guidance to this effect. Does anyone have IRS guidance that states that plan assets do not need to be distributed when the SIMPLE IRA plan is terminated?

I have a client who would like to adopt a nonqualified plan that will act to allow highly compensated employees to defer an amount equal to the excess contribution refund that the employee will receive from the employer's qualified 401(k) when the plan fails its ADP/ACP testing. I understand that 409A requires that the employee make an irrevocable election to defer compensation on or before the last day of the year prior to the year during which compensation is earned. Under the contemplated nonqualified plan, the amount deferred under the nonqualified plan would only be equal to the amount that the employee receives as a refund from the 401(k) plan. However, the deferral would be taken from current year wages and the refund would be refunded to the participant and reported on Form 1099-R. Does anyone know if it is acceptble under 409A to allow the highly compensated employee defer an amount equal to the refunded excess contribution on or before December 31 (the last day of the prior service year) when the employee does not yet know who much the excess contribution refund will be? I guess I am concerned that the dollar amount of the election is not certain at the time the deferral is made. On the other hand, if the deferral is equal to 100% of some formula/amount, then this seems like a "determinable amount". Any direction would be greatly apprecaited! Thanks!

Hello, Did you find a soluntion to your plan loan policy failure question? Did you retroactively amend the plan? Did you determine whether you were able to self-correct? Thanks!

My client has found several participants who were previously considered “lost”. Each of these participants is well past age 70 ½ and each has not taken an RMD. In accordance with the terms of the plan, some of these lost participants’ benefits were forfeited. My client has asked whether this defined benefit plan must pay these newly found participants a benefit that is actuarially adjusted for the period beyond age 70 ½. In some cases the initial benefit was around $100/mo and now with the actuarial adjustments, the benefit will be a lump sum of over $500,000 (the plan is terminating). In some situations the participant is dead, and the surviving spouse or beneficiaries will receive the benefit. In each case, the participant was searched for and determined “lost” when the participant reached age 70 ½. The client's actuary is suggesting that the benefit should only be adjusted to age 70 ½. Has anyone else encountered a similar situation? It is my understanding that the participant must receive 100% of the actuarially adjusted benefit to the current date (not age 70 ½).

May an employer impose a minimum balance requirement on the amount that an employee/participant may carryover from year to year in an FSA? For example, can an employer require that to carryover a remaining balance at the end of year 1 into year 2 the employee must have a minimum carryover balance of $10? I have reviewed Notice 2013-71 and other guidance- there appears not to be a direct answer on this. Any thoughts would be appreciated.

Does anyone know if there has been further guidance on the "toaster" exemptions as they apply (or do not apply) to qualified plans, including 401(k) plans. I am particularly interested in benefits provided to plan participants.

1. If the "defective" rollover is paid back to the original plan (in the example, Plan A) by the employee, does the employee have taxable income? It would seem that the employee should not have taxable income because he is not keeping the distributed amount; rather, the distribution (or part thereof) that was not an eligible distribution is being distributed by Plan B to the employee and then the employee is repaying this amount to the plan. I know that the employee can waive out of he 10% withholding; but I'd like to figure out the proper tax treatment to the employee. Assume all transactions occured within the same year (plan and calander year). 2. Should Plab B issue a 1099-R for the corrective distribution? 3. Would the result differ if Plan A made the defective rollover distribution to an IRA (rather than another 401(a) qualified plan)? Thanks!

Did Mass Mutual end up issuing a corrected 1099-R for 2012? Do you know if this was the proper treatment? Do you know if the participant rolled the distribution into an IRA? How was the reporting corrected with respect to the IRA?

If a 401(k) plan document requires that funds received as a result of a demutualization are distributed to the participants as of the record date, but proceeds are paid out much later, how hard must the fiduciary look to determine who was a participant as of the record date?

Thanks! Your collective comments have confirmed my reading of the insturctions.

When an traditional IRA is transfered between trustees, which trustee (transforor or transforee-or are both) is required to file Form 5498? The instructions to Form 5498 state "File form 5498, IRA Contribution Information, with the IRS by June 2, 2013 for each person for whom in 2013 you maintained any individual reirement arrangement..." However, the reporting is based on the FMV on December 31, 2013. If the transferor trustee no longer holds the IRA it would not know the FMV at the end of the calander year. I understand that Form 5498 need not be filed upon transfer; but what about at the end of the calander year? If the transforor trustee is required to report, then how should it obtain the value infomration required? Any direction would be much appreciated!