Vlad401k

Let's say a participant dies and has no beneficiary form. According to our documents, the death benefits should go to the surviving spouse. However, let's say the surviving spouse chooses to distribute the funds into the deceased participant's trust instead of distributing the funds to himself. Is that allowed? Can a beneficiary elect to have the distribution made out to someone else other than himself, including a trust of the deceased participant?

We have 2 plans that were previously part of a control group, but that have now been merged together. After doing some research, it appears that 1099-Rs are not required for plan that was merged into the other plan. Would you agree with that? Also, should the merged assets be listed as "benefits paid" on the final Form 5500?

Let's say a participant is 60 years old, but has the funds in the Roth account for only 2 years when he requests a distribution. Two questions: 1. The 10% penalty doesn't apply and the 1099-R code is simply "B", correct? The participant simply pays taxes on earnings because it's not a qualified Roth distribution... 2. Let's say the participant is actually 40 years old. In that case codes "B1" are used. However, does the 10% penalty apply to the WHOLE distribution amount or just the taxable (earnings) amount?

Probably a very simple question here, but I couldn't find too much guidance on the IRS site. If the plan was terminated in 2014 and all the distributions were done by, let's say September 10th, should the ending date on the Form 5500 be reported as 9/10/2014 or should it be the end of the month in which the distributions happened, so 9/30/2014? The end result is the same as the filing is due 7 months after the month of last distribution. Just wanted to see if there's a requirement to do it one way or the other.

Let's say the Form 5500 is prepared on accrual rather than cash basis for a 401k plan. If a recordkeeping invoice (that was payable for 2014) is paid from forfeitures after year end (in 2015), should that amount be counted in ending balance for 2014? Basically, let's say the ending balance on cash basis is $1,000,000 and the invoice for 2014 that was paid from forfeitures (with the actual payment date in 2015) is $10,000. Should the ending balance be $1,000,000 or $990,000?

We have a plan that failed the ADP test. Corrective distributions have been done and everything is wrapped up at this point. Now, we hear from one of the participants (an NHCE) and he's telling us that he exceeded the 402(g) limit for the year, due to the fact that he switched companies and did not track the fact that he exceeded the yearly $17,500 deferral limit. Now, we have to do an excess deferral distribution for him and forfeit the match for that portion of the deferrals. Question: how does this affect testing? Does it reduce his ADR/ACR?

We have a participant in the plan who just turned 70 1/2 earlier this month, so he's required to take an RMD for 2015 year (by April 1st, 2016). However, he requested to rollover the entire account balance to an IRA. My thinking is that we must issue an RMD and then rollover the remainder into the IRA. However, would it be possible to rollover the entire amount and have the Rollover Institution do a distribution? We could send them the balance as of 12/31/2014 to calculate the RMD. What do you think? Is that allowed?

Buffys, Actually, the keys never contributed to the plan since it was set up. What you're saying does make sense though. Since they were never given the chance to participate, it's too late now to amend the document and include them in the 2014 ADP test.

Buffys Redrum, Yes, that's exactly the situation. Key employees did not defer anything and with them included in the ADP test, it would pass. Kevin, Thanks for providing that section. However, it is my understanding that the part you highlighted does not really relate to the issue at hand. There are no "additional allocations or accruals" to be tested, as there were none made to the key employees. The way I look at it is that it's not a material modification, so I don't see why it can't be made retroactively. Am I missing something?

I'm running testing right now for one of our plans and it specifically states in the document that it excludes key employees from participation (there are 3 key employees). However, because we're excluding these employees from testing, the ADP test is failing. If they were included in testing, the ADP test would pass because there would be 3 extra participants with 0% ADR which would lower the HCE ADP. Question: can the document be amended retroactively (for 2014 plan year) to not exclude the key employees?

We have a plan that is considered a Davis Bacon plan. The company made QNECs as part of the prevailing wage arrangement some HCEs and NHCEs. I understand that up to 10% of compensation can be used for NHCEs in the ADP and ACP tests, however, do the QNECs for HCEs have to counted in either of those tests as well or can the HCE QNECs be ignored for testing purposes?

How should the reporting be done on a 1099-R when the participant takes a distribution of corrective deferrals (over the 402g limit) after 12/31 and the deferrals had a net loss? I understand that only one 1099-R is issued and that the total amount (net of losses) is distributed to the participant with a separate statement noting that the participant will be taxed on the entire excess deferral amount in the previous year and he can take a tax deducation for the losses for the year in which distributed. However, which code should be used on the form? Should it just be code "P"? It doesn't make sense to me because the amount taxable in the previous year (which is the excess deferral amount) is greater than the amount actually distributed. Could someone please clarify?

Thanks Tom. But do you know if it's mandatory to use code B and 7 together when the participant is over 59 1/2. Could you just use code B by itself?

The participant is over 59 1/2, but has not met the 5 year rule for Roth distributions. So, earnings are taxable. Should code "B" alone be used or are codes "B" and "7" used together for this distribution?

What code should be used for a distribution from a 401k plan into a Roth IRA with the participant requesting 20% federal tax withholding? I realize that if the participant does not request any withholdings, we use code G and indicate that the distribution amount is taxable. However, the issue that I have is that when a participant requests a 20% withholding, shouldn't that 20% amount be considered a distribution (early or otherwise, depending on age)? And if so, it does not seem like it would be possible to send only one 1099-R request with those instructions since code G cannot be used with code 1 (or 7, again depending on age). Should there be two 1099-R requests filed?

Just a quick question... I remember reading something about this, but don't remember the source. Can you take a loan out from the rollover source (rollover contribution is made prior to becoming a participant) before meeting the eligibility reqirements? So let's say the company requires you to be employed for 1 year before becoming eligible, can you do a rollover contribution and take a loan from that source, before completing the 1 year of service?

In one of our plans, we have a distribution pending for a U.S. citizen who's currently living abroad, but is planning to return to U.S. at some point in time. She requested a direct distribution. Should the federal withholding be 20% or 30%. I know's it's 30% for non-resident aliens, but since she's technically a U.S. citizen, should it be just 20%?