MjInvestments

@Lou S. @BG5150 My question was more about the ability of this person to sponsor a plan without active income or any intention of putting money earned from the business in the plan, as there would be no earned income to put in. The roth conversion question would not be done inside this plan, they would be the traditional Roth conversions (Non deductible IRA --> Roth) using income earned from another business

So actually, it appears the client has W-2 wages, just from a different business they work at. So Backdoor Roth would be with earned income, but it is unrelated earned income. So not relevant to a potential plan here. Thanks for all the info so far! I am going to work with our company's tax consultant to come up with a recommendation.

I was under the impression there was some rule that a plan had to have at least the intention of being funded in order to be qualified? You couldnt just have a plan out there with no intention of ever funding it. I'm not sure where I read that.

Hi - a colleague of mine (RIA Firm) asked me this question. I read through some QKA materials but I didn't find anything. Colleague has a client whose income is from real estate holdings, so all passive income, but wants to start a Solo 401(k). The client knows they cannot contribute to a 401(k) because they have no W-2 income/earned income. But they want to start a Solo 401(k) to roll large IRA's into the plan so they can begin doing backdoor Roth's on their personal money and dont have to deal with aggregation rules of the large IRA's. My initial reaction is they cant start a 401(k) as they never have any intention of making personal or employer contributions to the plan (outside of rollovers), as they will not have any earned income to use. I'm not sure where that thought comes from or what I read that leads me to believe it, but curious on other peoples thoughts.

We have a client who owns a small business. The small business operates a SIMPLE IRA with the 5305-SIMPLE form being the governing document. She wants to move her account to our firm to manage the investments, but not force the other partners & employees to move their accounts. Obviously this would mean amending the plan to be governed by a 5304 document. Can she amend the plan to be a 5304 whenever, or would it be subject to the 11/2 (60 Day) notices? Are there any other issues I am not thinking of that could be of concern? I thought about the two year rule, but this is SIMPLE IRA to SIMPLE IRA so we are good and I think her account is older than 2 years.

Nope - was going to reach out and ask.

I recently had another Investment professional mention to me they are using Index funds because of DOL guidance that any deviation from Index funds should be documented in terms of reasons why you are not using Index funds. Has anyone seen any guidance like this? I cannot find any guidance except for ESG guidance. Is there any specific investment guidance from the DOL regarding which funds should be used? TIA

I am helping a Non-Profit Terminate their 401(k) and start a SIMPLE IRA. They only have two employees, admin costs of a 401(k) didn't make much sense. Is there any way around the 2-year rule for rolling money into the SIMPLE? I guess Ii don't really understand why people are prohibited from rolling money into a SIMPLE IRA for two years. Are there any penalties for rolling money in before the plan has existed for two years? Would it simply be considered a taxable distribution? Thanks!

Those are great thoughts - appreciate the time. I have good relationships with several good TPA's in the area and I've learned alot from them, its just kinda hit and miss as they have time and questions come up that I'm dealing with. Does anyone have a link to where some Intro to ERISA webinars would be? I cannot find anything on ASPPA's website.

I am currently an associate for an RIA in our Retirement Plan Division. I joined the division last year, and have spent the year "learning by listening". All my energy outisde work on focused on finishing up the CFA. I recently became a charterholder, and I have the AIF designation as well. I am extremely confident of my understanding of markets and investments, where I am lacking is understanding ERISA rules, how to design plans to best benefit our clients, how rules affect certain things etc. I was wondering if anyone here could provide some insight on where I should focus my energies. I will be working as a 3(38) Investment Manager to plans - would it best to focus my energy on obtaining the QKA? or would the CPFA better serve me. Or maybe there is something else I should be focusing on. I have some insights from my boss - I want to seek out other opinions though - thanks!

Employer was not updating participants deferral changes they made on the Recordkeeper website. The plan is 3% Safe harbor, so no matching to worry about. So if a plan missed updating a deferral for all of 2016 and 2017, do they to do any corrective remedies? Participant believed they were deferring 8% Roth, but the payroll was only deferring 7%. Basically $15 per pay period difference. Is the link below relevant, or does it not apply because these are Roth contributions? https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-correcting-a-failure-to-effect-employee-deferral-elections

We have a client who established a SEP with Schwab in 2007 using their protoype documents. In 2016 they opened SEP IRA accounts with TDA and transferred all their Schwab dollars to TDA. They also made a contribution in 2016 directly to the TDA accounts. They did not update the documents of the plan. Is there a problem with using Schwab protoype documents, but opening and contributing directly to TDA accounts without re-stating the plan?

2017

I work for a Wealth Management firm, and I have dealt a bit with SIMPLE IRA's, SEP's, and Solo 401(k)'s. I have read alot of the IRS Materials on these plans and have executed these plans, but I would like some formal education/guidance on these plans. Are there any educational webinars or exams I could take that would deepen my knowledge of the issues surrounding these plans? I plan on taking the QKA next year at some point, not sure if that material is covered. I know its a small topic but my worst feeling is when I tell a client something and I end up not painting a full picture or making them aware of issues or simply being wrong. I did look at the recorded presentations here and could not find anything - let me know if i missed something.

Yes thanks for clarifying better than I can - this is essentially what occured. Important to note that Fidelity does not track the difference between employee and employer contributions, so basically they are just holding the assets.

I am a financial advisor who dabbles in 401(k) so I dont know a ton. I have a client who owns a business and has a Solo 401(K) custodied at Fidelity. So no real recordkeeper. She put $18k in as an "employee contribution" in April. She filed taxes yesterday and mistakenly tried to put in $27K as Employee and employer contribution ($9k employer contribution) and Fidelity rejected it because she didn't have enough cash in her account. She should have just requested $9k, but she forgot about her earlier $18k deposit. Because she already filed taxes $9k this year is listed as Employer dollars. Because Fidelity doesnt track Employee/Employer dollar differences in these type of accounts can I just basically say the half of the $18k deposit in April was employer dollars and request $9k be pulled today for another employee deposit? Would that cause any problems?

Does anyone know if State Retirement Plans are required to file 5500's? Like I'm trying to find a 5500 for the Missouri State Employee Retirement System (MOSERS) and I can't find anything. I did find their annual report on their website which gives me most information. Just seeing if they would have a 5500. Someone at my work is asking about it - I have no idea why....

Got ya - I guess a situation like that never crossed my mind, cause the firms I've worked for would never do anything like that. But yeah I can see why if allowed you would be tempted too. Thanks!

So I work for an RIA - we are the investment advisor on retirement plans. We have created risk-based models for our clients to invest in (Conservative, Moderate, Aggressive, Etc.) Every time we present to employees on education or do trustee meetings, we present a sheet showing those models performance the last 1,3,5,10 years. We have begun changing how those models are constructed, for example like 10% of our models is in US Small Cap Funds, we are moving from a Fidelity Fund to a Vanguard Fund. For the investment performance presentations we give EE/Trustee, it would be easiest for me to just show the 1,3,5,10 year performance of the updated model allocation, disregarding the old models. My boss claims that according to ERISA - we need to show how the plan models actually performed, so I need to track when each plan switches their funds within the model, and calculate the actual performance. (Much like how GIPS would require past performance to be presented). I'm new to retirement plans - this sounds crazy to me - does ERISA require actual historical performance of models to be shown, or can I show the returns of our models once their plan switches?

For some reason he doesn't like the 401(k). I've mentioned this to him. I didn't ask how he was making the contributions. Obviously I don't want to become a tax expert. Just telling him he can't refuse a SHNE contribution and to talk with his tax guy to review his options. Yeah I don't know what his plan is. I'm just going to get him to a tax expert and of my back. Thanks for all the help!

I have a 401k participant who came out of retirement to do some work. While he was retired he was saving $6,500 in his IRA and getting the full deduction. Now - he is covered by a retirement plan because he is receiving employer SHNE and Profit sharing dollars, and is only getting about $1.5k worth of deduction for his $6,500 IRA contribution each year. 1st - Can he refuse employer dollars? 2nd - if he can refuse employer dolalrs and he does - would he still be considered covered by retirement plan? Or would he not be covered because he doesn't receive any dollars from employer?

I have a plan we are taking over (It is a 403b ERISA) for a Jesuit School High school. The plan is currently at TIAA-CREF (I know, hard conversion anyways). But I was looking at the investments and it looks like the funds are held within CREF Variable Annuities instead of CREF Mutual Funds. (Example: https://www.tiaa.org/public/pdf/ffs/194408407.pdf) Thus the 6-letter tickers for the funds. Does anyone have experience pulling a plan out of funds like this and into a regular Vanguard/Fidelity mutual fund lineup? Any fees associated with exiting these funds like surrender charges? I would appreciate any insight. I'm obviously not listed as advisor yet for client. I cant be an advisor at TIAA. I moved to ERISA space after several years or personal wealth management, I've never seen anything like this before. Thanks for any help.

HI I am working on closing a 401(K) plan as two companies merge and move to a single plan. In the plan that is closing there are two life insurance policies owned by the plan on one of the employees. The employee, who is retired, wants to take the cash surrender value of the insurance and receive it and then invest with his financial advisor. Who pays the taxes on the insurance policies as they are distributed - the insured (Retired Employee) or the plan who owns the policy but is liquidating it and sending to the employee.

I just got into the retirement plan space, so I've never been asked anything like this. I have a client who is looking for the regulation that states a Plan year can be different from the company Fiscal Year. Is there a regulation that states this is allowed or a DOL/IRS ruling or guidance I can point to?