MGOAdmin
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Everything posted by MGOAdmin
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(5) Spouse An individual shall be considered as owning stock in a corporation owned, directly or indirectly, by or for his spouse (other than a spouse who is legally separated from the individual under a decree of divorce whether interlocutory or final, or a decree of separate maintenance), except in the case of a corporation with respect to which each of the following conditions is satisfied for its taxable year— (A) The individual does not, at any time during such taxable year, own directly any stock in such corporation;
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I have a potential Client that has a possible controlled group issue. Facts: 2 business with the ownership as follows Co. A Co. B Husband 55% 55% Wife 35% 0% Unrelated Partner 10% 45% Are Co. A & Co. B part of a controlled group given the wife owns 0% of Co. B? It seems like the same 5 or fewer do not own 80% since the wife owns 0% of Co. B but I didn't know if the husband and wife are considered to be a single entitiy. Thanks
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I have client that is planning on terminating their cash balance plan. If participants in a cash balance plan accrue the benefit after 1000 hours, and the plan terminates 9 months into the year, are they only entited to 9/12 of a benefit? If so, we will wait until Decemebr 31 to terminate, if not we will start the process now. I know for profit sharing plans, if the plan terminates 9 months into the year, the max profit sharing of $52,000 is reduced to 9/12 or $39,000. Thanks
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Benefit Accrual - Different Methods
MGOAdmin replied to MGOAdmin's topic in Defined Benefit Plans, Including Cash Balance
Not sure if this changes anyone's answer, but the reason I posted this question is that the client is over age 62. He wants to contribute to the plan, then roll it out into his IRA. The way the document is written, it seems like he would need to wait until the end of the year instead of after 1000 hours. Given the document says he does not accrue the benefit until 12/31, does he need to wait until 12/31 before he can take a distribution (assuming we do not want to amend the plan)? -
I have a potential client who's plan document is written as such that the cash benefit is accrued as of the last day of the year (12/31). I was under the impression it could not be accrued on the last day, but had to be before then. (I normally see accrued after 1000 hours, or accrued monthly). Are you permited to accrue a benefit on the last day of the year for a defined benefit plan?
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When calculatiing the maximum benefit a participant can recieve when a Cash Balance plan has an offset feature, is the maximum benefit (the 415 limit say $2.6 Million) before or after the offset? If the Offsetting profit sharing plan for example has $2 million. Is the lump sum beneif only $600k or is it still $2.6 million, which would make the full benefit $4.6 Million? Thanks
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Can you aggregate a SEP and Cash Balance plan together?
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If for the past 2 years, a client has been making 401(k) deferral contributions on behalf of an employee on leave out of post-tax payments that are not allowed to be used for 401(k). The employee has no other income from the client to make 401(k), and therefore should not have contributed anything. What is the correction method? Are there multiple ways to correct? Do you have to file anything with the IRS or can you self correct? My experience with excess 401(k) contributions is to refund the money and earnings as ordinary income, but that was for contributions over the $17,500 limit. I am not sure if it is different if all of the 401(k) contributions are disallowed, and if it spans multiple years.
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If for the past 2 years, a client has been making 401(k) deferral contributions on behalf of an employee on leave out of post-tax payments that are not allowed to be used for 401(k). The employee has no other income from the client to make 401(k), and therefore should not have contributed anything. What is the correction method? Are there multiple ways to correct? Do you have to file anything with the IRS or can you self correct? My experience with excess 401(k) contributions is to refund the money and earnings as ordinary income, but that was for contributions over the $17,500 limit. I am not sure if it is different if all of the 401(k) contributions are disallowed, and if it spans multiple years.
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Company B employees become Company A employees on May 15. The Plan document requires the new company to adopt the plan - it does not automatically bring everyone in. My main concern is directing the client the to code section that best explains this situation. Thanks for the input
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Company A acquires Company B through a stock purchase. Company A’s plan requires 1 year of service and as quarterly entry dates (1/1, 4/1, 7/1, 10/1). Company A acquired this company on May 1, 2014. Am I correct in my thinking that the employees of Company B that have been there 1 year would all enter the plan on 7/1/2014? What code section supports this conclusion? My guess it is somewhere in the controlled group regs. Is there a private letter ruling possibly on the subject? I am trying to give the client an example to support my
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If the IRS disqualifies a prviously qualified plan: 1. If a participant was an NHCE then bcame and HCE only in the last year, is his full benefit taxable? 2. Of the taxable distribution, is he required to pay a 10% penalty is he is under age 50?
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They have thought about it, but as a last resort.
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I have a client that allows loans for harships only. One of their employees (an NHCE) is in some financial trouble, but not for any of the hardship reasons (primary residence, medical, funeral etc.) The client would like to help out this employee but does not want to open the floodgates to the other employees, so I have a few questions: 1. What kind of evidence for the hardship is required by IRS/DOL (not by the plan)? Can we take the employee on their word only? 2. Can we amend the plan to allow for loans specifically naming this employee? 3. Can we amend the plan to allow for non-hardship loans for a specific period, say 5/1-5/31? 4. The loan is for a car - can we amend the plan to only allow loans for harship and transportation to and from work? The bottom line is the client wants to help put their employee, but not does want all the other employees to start taking loans for "non-hardship" reasons. Let me know what you think. Thanks
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I have a client that fails the ACP test and is required to refund match to two HCEs. One of the HCE is not fully vested in the match contriubution. How is the refund handled in this case - does he still receive the full refund, or is part of it forfeited?
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The initial year for the new PS would be 2013 (1/1 - 12/31)
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I have a potential client that has a 401k profit sharing plan (Company A). The owner’s wife owned her own company (Company B) with a Simple plan (no kids so no controlled group issues). The wife died and now the husband owns Company B and so now they are part of a controlled group. The husband merged the plans and the money from the Simple plan was rolled into the 401k plan of Company A. Here are my questions: What is the way to correct the rollover – simply distribute the funds out back to the participants? What if the Simple is disqualified? Does this “taint” the 401k profit sharing plan and cause it to be disqualified? How can you correct Simple money that are rolled into a 401k plan? Can Simple money ever be rolled into a 401k?
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I have a client that has a cash balance plan. In May of 2013, he froze his benefit because he did not think he would be able to afford it. After year-end. he realized he could afford it. If we amend the plan to unfreeze his benefit and reinstate the benefit he was getting in prior years, is that considered discriminitory since we are not increasing the NHCE benefits in the amendment (the NHCE beneft was NOT frozen in May)? If tested with the plan, it passes, but if just the amendment was tested, it clearly would not pass since we are giving an HCE an allocation with no NHCE allocation. Are all amendments after year-end considered corrective amendments?
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I have a client that has a safe harbor match with profit sharing. For 2013, the profit sharing allocation is pro-rata. Is it possible to amend the 2013 plan to make each participant that own group? Will this cause the plan to lose it's safe harbor status and possibly effect the ADP test? Are all amendments after year end considered corrective amendments? I know I could set up a seperate profit sharing plan and just merge the two plans next year, but this is a last resort option.
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He is an individual partner in the firm. He became a parter, about 2 years ago. The settle he received was for a case that went back 4 years.
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I have a potential client who is a 1/3 owner of a law practice in which he works part-time. He also is a sole proprietor and works on separate cases outside the firm. He recently won a large case (outside the firm) that was started 4 years ago (before he was a 1/3 owner in the firm). Is he able to set up a plan just for himself, outside the firm, with the dollars earned from outside cases and not affect the plan inside the firm? Are there any affiliated service group issues?
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A participant in a 401(k) plan is receiving disability from his/her employer (paid for by his/her employer). Since this income is considered taxable, can a portion of these payments be contributed to the plan (assuming they do not violate the 415 limits) as employee deferrals?