CuseFan

exactly. discretionary amendments can be adopted any time until the end of the PY provided they do not cut back benefits. the 8/1 amendment could have (should have) been made effective 1/1.

Does the tax-exempt board (not this lone director) have any say over the for-profit entities? I assume no. Do any of the for-profit entities have the ability to appoint 80% or more of the tax-exempt directors? My guess is also no, unless this main director/F-P owner has such control over the tax-exempt that he can appoint all or most of the other directors. if, and only if in my opinion, that is the case would there be a control group. Whether the organizations have anything to do with each other is, as you know, irrelevant when determining a control group. if I'm 100% owner of a car dealership and also run/100% control a tax exempt foundation, still a control group. However, check out the Qualified Separate Lines Of Business rules - those might help.

The Dr's participation in the PEO plan is as a participating employer in a multiple employer plan, correct? Yes, you should be able to aggregate her PS plan with CB for testing (must have same PY) and yes, allocate the necessary PS in the PEO plan to pass as if a single employer plan. I would feel more comfortable with the arrangement having the control over both plans - i.e., starting a separate single employer PS-K, but if the PEO document has the necessary flexibility (which it appears to have) and that plan has a quality service provider, then why move?

If the plan terms require commencement at NRD, that truly is the issue at hand. The plan should (1) be sending benefit commencement paperwork to participants 3-6 months in advance of their NRD and (2) if completed forms are not received by NRD (also the ASD) then they should be commenced in the normal form. Typically plans also allow deferral to RBD, some requiring a written election, others making that the default election if an affirmative election to commence is not made. You need to verify plan provisions and follow them, otherwise you have an operational defect - and DOL is becoming very cognizant of this issue of plans not commencing deferred participants timely at NRD. If deferral is the default election then you follow the above steps with respect to the RBD rather than NRD. There is no enticing needed - you send forms with a due date and explicitly tell them if not returned with a valid election by X date then they will automatically be commenced as of Y date in the plans normal form Z, and then you follow through. If participants are missing, that's a different story, but if benefits are payable under the terms of the plan you are not held hostage by unresponsive participants.

You are correct. 403(b) Answer Book - Seymon-Hirsch and Anderson-Briggs,Q 11:9,Is an arrangement that provides employer contributions subject to ERISA? Last Updated: 7/2017 Yes. DOL Regulations Section 2510.3-2(f) (see Q 11:2), which sets forth narrow criteria exempting a Section 403(b) arrangement from ERISA, permits an employer to collect salary reduction contributions and forward them to the funding agent. An arrangement that provides any contributions other than salary reduction contributions creates employer involvement beyond what is permitted by the exemption. Such an arrangement would be subject to ERISA unless the employer was otherwise exempt as a governmental or church plan sponsor. Employer matching contributions to a separate plan that are made by the employer on the condition that an employee makes voluntary contributions to a Section 403(b) arrangement would also cause the Section 403(b) arrangement to fail to satisfy the safe harbor. A Section 403(b) plan does not fail to comply with the safe harbor merely because the employer also maintains a qualified Code Section 401(a) plan. However, DOL Advisory Opinion 2012-02A clarifies the DOL view that conditioning employer contributions to the separate plan on the employee making voluntary salary reduction contributions to the Section 403(b) plan would be inconsistent with the limited employer involvement permitted by DOL Regulations Section 2510.3-2(f) (see Q 11:2) and would also conflict with the requirement in DOL Regulations Section 2510.3-2(f) that employee participation in the Section 403(b) arrangement be completely voluntary.

For a small CBP, which I assume has not been around for ages, I agree that having a SSN shouldn't even be questioned, but that doesn't guarantee you can find someone, or that an insurance company will write an annuity contract. However, I've seen "ancient" DB plans that have very aged TVR benefits tied to a first initial and last name and nothing else - and it boggles my mind. Anyway, even though not a PBGC plan, is their missing participant program a possibility? Heck, they'll take missing DC participants now so why not non-PBGC DB/CB plan participants?

From Relius VS language. It's only non-spouse beneficiaries that are limited to IRAs. With respect to distributions made after December 31, 2001, an eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), (other than an endowment contract), a qualified defined contribution plan described in Code Section 401(a) that accepts the distributee's rollover distribution, an annuity plan described in Code Section 403(a), an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), and an annuity contract described in Code Section 403(b), that accepts the distributee's eligible rollover distribution. The definition of "eligible retirement plan" shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Code Section 414(p). In the case of "distributee" who is a nonspouse designated beneficiary, (1) the direct rollover may be made only to an individual retirement account described in Code Section 408(a) or annuity described in Code Section 408(b) ("IRA") that is established on behalf of the designated beneficiary and that will be treated as an inherited IRA pursuant to the provisions of Code Section 402(c)(11), and (2) the determination of any required minimum distribution required under Code Section 401(a)(9) that is ineligible for rollover shall be made in accordance with Notice 2007-7, Q&A 17 and 18.

Two issues in play: formal written salary reduction election for 2016 for partner should have been executed no later than 12/31/2016 and elective deferral deposit clock started ticking when partner's K-1 was issued, so 4/15 or earlier. http://ebrworld.com/deferral-election-and-deposit-rules-for-the-self-employed/ I don't do 5500's any more (thankfully!) so I don't know if you would report as late on the 2016 or 2017 return. I would call this a "contingent event" which I'm not sure you have to report, like if the employer adopted a resolution to terminate in 2017 before the 2016 return was filed - I don't think that gets reported. However, if the plan has an audit, I believe the auditors must report contingent events, or at least those that are material, maybe a audit aficionado can chime in here.

I believe the lump sum is no longer restricted once value drops below 1% of current liability. Person elects the lump sum, but then it gets paid in life annuity amount installments until no longer restricted, correct? Do not elect annuity because you cannot then offer a lump sum prior to plan termination. This presentation shows a similar question, but no answer, but does state that an escrow account can be dissolved once the benefit falls below 1% CL - so what's the difference? http://asppa-net.org/Portals/2/PDFs/Conferences/LAPC/Workshop 1.pdf

Agree about the immateriality for sure, but I've seen similar issues on multiple $4,000-$5,000 checks on larger plans so the discussion about proper tax treatment and 5500 reporting is worth having - the right answer applies to all situations, large and small, does it not?

Gatorcane! Claiming dibs on the movie naming rights now! Much better than sharknado.

https://www.aicpa.org/InterestAreas/Tax/Resources/Compliance/DownloadableDocuments/Due-Dates-Summary-Chart.pdf here's a great summary chart from AICPA

Here is an Answer Book excerpt. Note that 65 & 5 is considered uniform. I would defer to Tom for further clarification but expect that he may be unavailable dealing with Irma. So in your 65/65 & 5, or 62/62 & 5 examples, I think your "& 5" would be your testing age as I read it. Interested in hearing other opinions. Thanks for the Friday brain teaser! Coverage and Nondiscrimination Answer Book - Poje, Bitzer and Topazio,Q 8:8,How is the testing age for purposes of the general test determined? Last Updated: 6/2017 Most plans have a uniform normal retirement age, so that is the testing age. (A retirement age of "65 and 5" is considered to be uniform, but see below how this is to be interpreted.) If the plan provides for different uniform normal retirement ages for different groups of employees, then the testing is the latest normal retirement age for any of the groups, no matter which normal retirement age actually applies to that employee. If the plan does not provide for a normal retirement age, the testing age is 65. For example, a plan’s normal retirement might be the plan valuation date nearest age 65. In a calendar-year plan, participants born in the first half of the year would actually be age 64 at retirement, while those born in the second half of the year would be age 65. This is a non-uniform retirement age, and therefore the testing age for all employees is age 65. If an individual has continued in employment past the normal retirement age, the testing age for that individual is his or her current age. [ Treas. Reg. § 1.401(a)(4)-12 Definition: testing age] By definition, normal retirement age is the: 1. Earlier of the definition specified in the plan document, or 2. The later of: a. Age 65 b. The 5th anniversary of the date the participant began participation in the plan. [ I.R.C. § 411(8) ] Be aware, the Code does not say five years of plan participation—this is a common mistake many people make. It is simply the 5th anniversary after the date of entry into the plan!

Absolutely!

I don't think the participant's failure to timely cash the check changes the time frame in which it is taxable - if I get a distribution check in December 2016 but wait to cash it in February 2017 that doesn't make it taxable in 2017. As this was not a missing participant, administrative error, wrong address issue, but apparently simple inaction by the participant, I would continue to treat this as a 2016 distribution - at least that is the position that I believe IRS would take, unless it is a known fact the participant never received the first check (but not sure if that really matters). However, I know the DOL would say those are still plan assets until the check is ultimately cashed. I don't know if that position extends to 5500 reporting, or how it reconciles with the IRS position, or if it merely relates to the fiduciary responsibility for ensuring the participant receives their payment. What is impressive to me here is that the financial institution actually cancelled stale check and re-issued in 6-month time frame. Lots of trustees/custodians out there are more lax in that area.

6 months is the length of a valid tax return extension. Regardless, if you're dealing with a calendar year DB plan, remember that your ERISA minimum required contribution is due 9/15, irrespective of tax return due dates, extensions, or which day of the week 9/15 falls upon.

My two cents are with My 2 cents.

Exactly - not only do we have a plan compliance issue, there is a potential labor relations issue. Thanks M & M

Sorry, I misunderstood - so the plan's terms limit any A/P's benefit options. If it's only the J&S options then absolutely, because, as I said, the plan shouldn't permit ultimately paying out on three life expectancies (and every DB QDRO I've seen prohibits that anyway). If it limits options further - like saying the A/P has to take a lump sum - then I would tend to agree that might be an issue.

Thanks. Unfortunately, this is a fairly complex DBP that covers two different unions plus non-union (merged along the way).

What you can't do is allow a form that is not permitted by the plan. In this case, if you allow the A/P to select any joint and survivor option, you are now paying a total benefit from the plan that is based on three life expectancies rather than two - the participant, the A/P and the A/P's contingent annuitant. I have not seen any plan permit this. All DB QDROs I have seen prohibit the A/P from any J&S option. On another front, you seem to be confusing the plan document provisions - the subject of the favorable DL - with the QDRO's provisions, which is a separate document for the specific purpose of dividing marital pension benefits and is mutually exclusive from the DL. I don't think the QDRO must provide for all the plan's options (other than J&S) but I'm not sure. I have not seen a plan with language that prohibits certain payment forms related to QDROs, usually the reference is to timing.

We have taken over a plan under which some, but not all participants are covered by collective bargaining agreements. Some, but not all, of the bargained benefit changes have been incorporated into the document, either by amendment or as part of a restatement. For example, a benefit increase for one union and a benefit freeze for another union are nowhere to be found in any version of the document or amendment. We have also scoured the document and nowhere does it incorporate by reference any of the CBAs. We think this is a problem while an in-house attorney for the former actuary/document provider says it's not a big deal because the CBAs "trump the plan document". We think the IRS would disagree with that assertion. I found an article that referenced inconsistencies between document and CBA being a compliance failure, at least in the multiemployer plan context, but I don't see a difference (our plan is not multiemployer). http://www.unitedactuarial.com/research/pdf/2009_36.pdf We have advised the client that we think a VCP submission is in order for this (in addition to other administrative/operational failures). Does anyone have direct experience with IRS looking at a plan where the document and CBA do not jibe? Any other thoughts?

i don't think so - the corrective distribution would be taxable in year received, so 2017, and going back to adjust 2016 payroll does not accommodate that. However, doing reverse payroll entries for any 2017 errors, if any, I think would be reasonable and permissible.

Agree with E and I think the wording, albeit a little vague/confusing, was saying that only for hardship were gains excluded, at least that's how I interpreted.

No issue, and that is most efficient manner to handle. There is no need to switch to a different plan and no sense in having a second plan unless of course you have significantly more income now and adding a defined benefit plan to increase deductions makes sense.