Pammie57

Thanks!

Company A (a LLC 1065) is owned by Owner 1& 2 from January 1 through August 31 of 2018. They have one other employee. Company B is owned by Owner 1 and two other unrelated people from January 1 through August 31. They have 20 employees. As of September 1, Owner 2 buys shares in Company B. At September 1, the ownership of both companies is as follows: Company A: Owner 1 - 49% Owner 2 - 51% Company B: Owner 1 - 51% Owner 2 - 40% Other unrelated owners- 9% So as of September 1 - they are a controlled group - correct? Ok if so, the other question Company A has is " Can they make a SEP contribution for the period Jan 1 through August 31 - just for their employees of Company A? " Any feedback, documentation, cites, etc would be greatly welcomed. Thanks!

A former employee/participant requested a rollover be made to their new plan at Great West. They filled out the paperwork with the address/etc at GW. However, when the former "platform" John Hancock issued the rollover check, they mailed it to the former employer. They in turn immediately sent the check to the participant. It was all done in a period of less than 3 weeks. The former participant is now "up in arms" about the check not be sent directly to the rollover address. She is hounding the former employer about it. Someone told her that it should be spelled out in the SPD. I thought that was an administrative call. Any thoughts?

The Plan Sponsor called me about making a distribution for a deceased participant. Her boyfriend, who is listed on her DOB as the primary beneficiary, has been arrested and charged with her murder. He is in custody awaiting his trial. The deceased participant's family is asking about getting a distribution to help with funeral expenses. . I do know there are secondary beneficiaries, but I don't know who they are at this point. Common sense would tell me that no distribution should be made until the boyfriend is either proven guilty or non-guilty. If guilty, surely he would forfeit his right to the funds?? However, I am not a lawyer, so would love to hear from any of you who have dealt with a similar situation.

Oops - the $1333 is "indirect compensation."

I am looking at information for "completing Form 5500 Schedule C - I am trying to decide if I need to complete it. There is Direct compensation paid of $110 to one service provider and $1333 paid to another. That is all. Since neither is over $5000 - does Schedule C need to be prepared? Thanks.

Thanks all. The box checked is "any eligible employee...." the "former employees" box is unchecked so I'm going with No a terminated participant cannot roll money in.

The participant has terminated her employment with the company. The company l maintains a 401k Plan and she has a balance.... However, they just terminated a cash balance plan apparently, and she wants to roll her cash balance money into the 401k Plan. As I said, she is terminated. Her balance is less than $5000 in the 401k and can be rolled over to an IRA without her consent I believe. She wants to move her cash balance money into the 401k - which would put it over $5000. Her goal is to leave it all in the 401k Plan. I have no idea why. My opinion, and would love some feedback: Since she is terminated, she cannot roll any money into the plan. Even though the plans are with the same company - they are separately treated for distribution purposes. She needs to open an IRA and roll her 401k into it. Thoughts?? Can she co-mingle the cash balance money with her 401k money in a rollover IRA without issue? Thanks!

The client sponsoring the 401k Plan is a partnership. Throughout the year, the partners deferred on their draw and calculated the 3% safe harbor calculations. They put in the maximum of $24,000 (both over age 50) ....However, when I received their K-1s - box 14a only had $24,000 as self employment earnings and there is Section 179 deduction of $2035. So I see a problem.... Am I wrong in using box 14a (Schedule K-1, Form 1065)....They had draws of 192,000 and $108,000 so their 3% was calculated by their payroll dept. based on the draws.... Any insights or comments on how to fix this would be welcome......

The original post was concerning a person who is very high risk for breast cancer. I am not sure how detailed the plan sponsor can get with inquiries - HIPAA violations and all are always a concern.

Whew good! I thought so, but then doubted myself Thanks.

The client has an initial plan year of 9/1/2017 through 12/31/2017; are the participant deferrals prorated at all. Or if they defer $18,000 in the 4 months - are they ok since it's an annual limit per participant? Thanks

We have a client who has operated their plan as a safe harbor using/with a QACA match since 2011. At some point- when the document was restated in 2016, the attorney doing the restatement checked Sh 3% - maybe election as the option. The SH notice from 2011-2016 stated QACA but the 2017 one had 3%... As I said, the client has always calculated and funded the basic QACA match....How in the world can this be fixed? Scriviner's error or major deal with IRS filings?

Thanks!

Does anybody know if there is a problem taking a hardship for elective surgery aka cosmetic surgery. We have a participant who wants a hardship withdrawal for surgery that is classified as cosmetic. However, after hearing the facts - it really is more preventive. They have submitted the surgeon's estimate as proof of the amount requested. Thoughts/comments appreciated. Thanks

Thanks I will refer to our ERISA attorney - in the meantime I found out she will be working at the dental clinic as the resident dentist so I am thinking AFSG is a likelihood.

Thanks Mike - so if the dental clinic is totally separate and isn't associated with her practice on a regular basis in performing services for third person - do you think it could pass the AFG tests? On the other hand, if she associates herself with the clinic on a regular basis - then do you see that as an AFG ( I get confused about A org and B org or is this something an attorney needs to review and bless before she purchases the clinic?

A dentist owns 100% of her PLLC; this company currently has a solo 401k Plan. She also owns 50% of an LLC with two other people. Neither of the other two people are related to the dentist. There are no employees in this LLC The issue is that the LLC is going to purchase a Dental Clinic with employees. Is this a controlled group, and would she now have to offer the 401k to the dental clinic employees? The LLC will own 100% of it.

Participant is terminating next week and has an unpaid loan from the plan. How long does she have to pay it off now before it is considered taxable to her? I though it was 60 days after date of term, but did the new tax law change that? Thanks!

Thanks.

If a participant in a 401k Plan has both a pre-tax deferral account and a ROTH - when they take a cash distribution - are two 1099Rs required to report the pretax distribution & the Roth?

A participant took a cash distribution from their 401(k) plan mid year 2017. The participant accounts are held in individual brokerage accounts, and even though the broker has been working with 401(k) accounts for years, they did not withhold the 20% tax. They did not consult with us, and paid the entire vested balance to the participant. The withholding is almost 10,000. We are supposed to do a 1099R for this. Who is responsible for paying the tax that was not withheld? The participant has already spent the cash and part of the distribution represented an unpaid loan to boot. Should we do the 1099R showing NO withholding or with the correct 20% amount, and tell the brokerage firm they owe the tax to the employer? I need suggestions, etc on who pays the taxes - or if the participant is just liable for them based on their total tax liability for 2017.

A client who currently owns 50% of a C Corporation (which maintains a safe harbor 401(k) plan...just mentioned that he and an unrelated party own a separate business - which is basically inactive. They apparently maintained a SEP and a profit sharing plan for the "inactive" business. The business has not been terminated; apparently the plans have not been officially terminated either. They do have account balances still just sitting there. He does not want to roll them into the current plan. His question is "can I just roll the old profit sharing account into my SEP and be done with it?" I don't know, but I assume the first step would be to officially terminate the old profit sharing plan. It never had enough funds to file a 5500 according to him. Thoughts, suggestions would be most welcome. Thanks!

So far they are insisting on doing a 1099R....arrggghhh Thank you so much for your replies. It helps me with my argument...

They are a professional service corporation. The doctor puts in the $24,000 every year. There were deposits of $20,000 into the correct 401k account with the SAME brokerage firm they have used for many year, and somebody got lax at the broker's office, and accidentally deposited the $4000 into an OLD IRA. It seems like a simple fix on the front end, but apparently someone else's mistake is causing the doctor to have to possibly amend his 2016 1040; etc As I mentioned above, The broker's "back office" wants to show a rollover from the IRA to the plan. Is there no self correction program to avoid doing 1099Rs; amended tax returns, etc? Frustrating to say the least when it was the broker's error and they were supposed to have fixed it a year and a half ago. I only noticed it when I was doing the plan's year end work that it was still outstanding to the 401k Plan. It took the broker a long time to even find the $4000. Fun times.