mbozek

If OP is going to claim SEP contribution for 2015 will it contradict any statement he made to SEP custodian that it was a contribution for 2014? On the 1040 only the total contribution to the employer plan is listed. Contribution can be made from a SEP, SIMPLE or a qualified plan. I recollect that a taxpayer has until April 15th to make a contribution to a qualified plan even though the tax return claiming the deduction is filed on an earlier date. There is a similar rule for IRAs which allows a taxpayer to claim an anticipated tax refund as a tax deductible IRA contribution for the same tax year as long as the IRA custodian receives the refund by April 15. If there is no reporting of SEP contribution being made in 2014 it is unlikely that IRS will figure out what happened within the 3 year audit period. IRS only audits 1% of tax returns with $200,000 or less income.

Employees can stop working and continue to be employed for several reasons such as taking all vacation days after last day of work before termination occurs. As Indicated above there is no IRS requirement that an employee is deemed retired on the last day of work. Its up to the employer to decide when the employee retired. Under the gray book the determination of the employees last day of work is based on facts and circumstances based on the employers practice of what constitutes the last day of work. For example an employee can be terminated on May 25 and paid for that day but severance pay will not begin until May 26. Employees last day of work is May 25.

Austin: I don't know what the actuaries tell the owner of the business about how his her contribution to a DB plan is determined and that he enters it on line 28. I have a better question - what do actuaries tell the owner/tax preparer about the amount of the DB contribution for employees deducted on the Sked C and the portion of the contribution for the owner that is deducted on line 28? I don't think the actuaries tell the owner that his contribution could be limited to his net earnings from SE or any of the limitations listed in Pub 560.

I thought there is an exception that allowed a deduction if the contribution was allocated by the date the tax return had to be filed by the employer with extensions but it has been years Since I looked at this issue.

Line 28 is the only place where the self employed owner can deduct pension contributions for himself on the 1040. Contributions for common law employees are deducted on the sked C as a business expense. The amount of the line 28 deduction is subject to the additional limits described in Pub 560 P15 and 23 which can reduce the deduction to less than what would be permitted if the owner was a common law employee.

For self employed owner See IRS Pub 560 for IRS rules for deducting contributions on P 15 and 23. Contribution for owner is deducted on line 28 of the 1040. Contributions for the employees are deducted on Sked C and reduce the net earnings from self employment of the owner which can reduce contributions for the owner. Self employed owner cannot make contributions for himself in year if he has a net loss from self employment even if he contributes for common law employees based on their compensation.

Q did the plan issue a 1099R for 2014? As I understand it is up to the employer to determine the date of retirement. Why is it wrong to say that employees first day of retirement is the day after the last day worked or paid for, since employee cannot be both employed and retired on the same day.

I don't know what the answer is. What I do know is the courts will look to the specific language of how the interest rate is to be determined under your contract for payment of deferred compensation. You may need to retain counsel or a deferred compensation consultant. The question is what discretion is granted under the contract to the employer to determine the discount rate. What I do know is that disputes over the amount of non qualified deferred comp plans can be brought in federal court under ERISA.

Taxpayer can claim tax deduction for IRA contribution on tax return filed before contribution is made. Only requirement is that contribution must be made by April 15. Taxpayer who extends filing date of tax return to Oct 15 must make IRA contribution by April 15.

short answer to this question- Since almost all govt employees are covered by a collective bargaining agreement, review the agreement to determine if the employee can opt out of being paid a raise if it is contributed to a 457b plan. Most govt CBA mandate that employees must receive the raise in their paycheck. However, employee could elect to defer the raise as a 457b contribution. whether the employer can give an additional 1% if employee elects to defer raise is a matter covered under state labor law.

Is been a while but I thought the rule for active participation in a DC plan was whether a contribution was made to employee's account in the tax year not whether he was eligible to participate under the plan. Why not just change the w-2 for 2014?

All qualified plans can permit rollovers under IRC 402©. Never seen anything to contrary issued by IRS. Don't know why a rollover could be a contribution since IRC 415 regs have always stated that a rollover is not a contribution. Complexity of language in transfers is due to many different ways congress authorizes funds to be moved tax free- rollovers, trustee to trustee transfers, conversions, recharacterizations, redesignation of IRAs, etc and limitations on use of each, e.g, direct vs indirect rollover. Transfer from a 401k plan to a Roth IRA is both a rollover and a conversion. Cannot use trustee to trustee transfer of employee accounts upon termination of a plan because IRS requires that plan distribute participants benefits upon termination of the plan.

Just where is the plan admin responsible for hunting down participants and start paying benefits if the participant has not kept the plan admin apprised of his current address? Many participants with vested benefits die before attaining NRA without letting beneficiaries know about their benefits. Its not the plans fault. Others disappear and change their identities or forget that they that have accrued a benefit. Neither SS or the IRS provide a service for plans to locate missing participants. Participants have a duty to keep the plan admin advised of their current address. In addition when a participant begins SS benefits which will usually be before 65, SS will notify the participant of any vested benefits that the participant was entitled to from a qualified retirement plan. The participant can contact the plan to receive the benefits. An employee can always ask SS to send a statement of deferred vested benefits before SS benefits begin. As for a plan having to find a participant to make sure that benefits commence by NRD or 70 1/2, IRS reg. 1.411(b)(6) provides that a vested benefit that is payable is not treated as forfeitable merely on account of the inability of the plan to find the participant or beneficiary to whom payment is due, if the plan provides for reinstatement of the benefit if a claim is made by the participant or beneficiary for the forfeited benefit. In other words the plan can suspend any obligation to commence benefits of a missing participant until the participant or beneficiary claims the benefits. This provision should be included in qualified plans and under Reorganization Plan #4 of 1978 also applies to the Vesting rules under ERISA. Under the IRS reg a plan admin could pay a locator service to find a missing participant and suspend payment if the participant cannot be located. As long as the plan will restore the benefit of a missing participant when the participant claims the benefit it is legally complying with the applicable law and does not need to defend its actions.

There are many plans that provide model DROs with standard language and all of the available options listed where the parties can fill in the amount/option selected and who will receive the payment. Some come with instructions to minimize mistakes by divorce counsel. This doesn't stop counsel who will insist on using a non conforming DRO that the attorney believes to be better but is not acceptable to the plan. Plan admin will usually use flat for review where there is a model DRO.

taking out funds to pay the owner's comp within 90 days before the employer declares bankruptcy is a voidable preference.

Don't know why any record keeper or TPA would want to expose itself to fiduciary risk under ERISA for the thankless and financially underpaid task of approving QDROs. Most that I could see is record-keeper or TPA approving a form QDRO for names and addresses SS, or other ministerial duties which do not entail exercising discretion as a fiduciary under the plan. Any third party who agrees to act in a fiduciary capacity for QDRO will open itself to risk of co fiduciary liability for any other administrative tasks delegated to other fiducaries which can result in big bucks liability. A few years ago a financial advisor for a retail brokerage company who was acting in a fiduciary capacity providing investment advice to a 401k plan was held to be a co fiduciary to the plan for administrative duties after the plan administrator/trustee embezzled several million $ from the plan and then disappeared. The court held the broker to be a co fiduciary liable for the loss of the funds because the broker received all the reports from the plan showing plan investments, payments and contributions which would have made the broker aware of the embezzlement if the broker had reviewed the cash flow reports even though the broker was not responsible for making payments from the plan. I don't know whether a TPA or record-keeper could purchase fiduciary liability insurance to cover such risk at an economically affordable premium.

I don't know how a PLR can be issued because there is no adverse tax consequence due to the failure to transfer the funds to a Roth IRA in 2014. It is a non taxable event for which there is no remedy under the IRC. Under the IRC a Roth conversion is taxed in the year the funds are distributed from the Traditional IRA. Failure of the custodian to transfer the TIRA funds in 2014 cannot be corrected by restating a 2015 transfer as having occurred in 2014. IRS cannot waive a magic wand and deem the transfer to have occurred in 2014 because it has no authority to change the tax law. By failure to perform the conversion do you mean the custodian failed to transfer the funds to the Roth IRA or do you mean that the custodian made the conversion but failed to document the transfer on the records of the Roth IRA account?

And what happens if the plan owes UBIT? Does the trustee of the plan pay it or is it ignored. I know that K1s are sent to custodians of IRAs who calculate the UBIT on the 990 form and then pay it from the IRA.

not exactly. MLP is required to send k-1 to all limited partners and report all items of income including negative income in box 1 which is passive activity loss . PAL is accumulated each year in investors account and is used to reduce ordinary income subject to ubit. Its complicated. Very few investors understand the complexities of taxation of MLPs especially when the MLP is held in a retirement plan.

Qualified plans and IRAs are subject to paying UBIT if the UBTI exceeds $1000 per investment fund. UBTI can occur in certain types of alternative investments such as master limited partnerships and mortgage reits. UBIT is paid by the plan by filing form 990. See IRS pub 598 P2. Risk of having to pay UBIT is one reason self directed 401k plans do not permit participants to invest in funds that generate UBTI. Investment Limited partnerships that issue K1 are required to distribute the forms to all limited partners who have an investment in the fund. I have received several k1 for my individual accounts, none of which are retirement plans. Why do you think qualified plans are exempt from UBIT?

I never heard of a mep in a 403b plan. One peculiar feature of a 403b plan is that there is no requirement that the plan be limited only to employees of the sponsoring employer. As I recollect the language of the regs refers to 403b contracts. Need to check the 403b regs to confirm that 403b plan can include employees of different employers.

Its unlikely that making more calls will have any results since over 100 have been made. Problem is that no one at Siemens wants to perform the due diligence needed to discover where the benefits are located. Fastest way to get plan admin to perform due diligence is to file a claim for benefits under ERISA which the plan cannot ignore. If plan denies benefit its must give a reason and inability to find records of benefits is not one of them. Only valid reason to deny benefit claim is to produce evidence that benefits were paid. I have represented participants who have filed claims for missing benefits where the Plan administrator has produced cancelled checks for payment. The information is there, probably in an Iron Mountain warehouse. The Plan admin just has to be motivated to find it.

DB was purchased by Siemens in 2007. There are two possibilities regarding the DB retirement plan. 1. Plan was terminated and all accrued benefits were distributed to participants and beneficiaries. Free ERISA should be able to tell you if plan was terminated. If L had a benefit under the DB plan PBGC will have a record of it which can be accessed by contacting the PBGC website. L can collect benefit from PBGC. 2. DB plan was merged with siemens retirement plan and L's benefit became payable from the Siemens plan. Its possible that Siemens doesn't know about L's QDRO or that the DB QDRO records are somewhere in storage which no one wants to look for. L should ask her attorney to send all of the documents including the QDRO to Siemens and ask Siemens to determine the amount of her benefit. If Siemens claims that it has no record of L's benefit then the attorney should file a claim for benefits with the Siemens DB plan under ERISA. Siemens will have to respond to the claim and either approve her claim or deny it. If it is denied the plan will have to give a reason for the denial. Plan has maximum of 180 days after claim is filed to either approve or deny claim in writing.

According to one link IRAs are exempt from creditors claims in MA.

You need to contact the IRA custodian who is holding the IRA and arrange to rollover the IRA to your new employers 401k plan. Only pre tax IRA funds can be rolled over to a 401k plan. If your funds were rolled over to an IRA there will be no income tax due.