CuseFan

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.

Assuming 50% or more owner of business he sold, he has an annual aggregated 415 limit with any other "business" he owns 50% or more - including self employment income - so without a doubt he absolutely cannot do SEP in same year on that income.

True, but those limits are the lesser of $54,000 or 100% of pay, so an employer contribution of 35% or 40% of pay would not be out of the question. HOWEVER, tax exempt entities must also pay reasonable (total) compensation and report their officers' total pay on their 990s, so a sizable employer contribution on top of significant pay for a NFP executive might draw attention for excessive compensation.

Transition rules allow coverage to be determined separately as long as the plans don't amend eligibility or benefits, so yes, 7/1/2017. Participation agreement for B should have been adopted by 7/1/2017 for 7/1/2017 effective date if B wanted its employees to be able to defer as of that date, otherwise they can't defer until it's signed as B still has no plan until then. PS for B should not be effective until 7/1/17-6/30/18 PY, the retro entry doesn't apply for the 4/2016-4/2017 YOS and a 7/1/2016 entry as B's employees were not eligible then. Remember, these are two different situations here: (1) B's required inclusion for control group coverage and nondiscrimination, and (2) B's adoption of A's plan as a participating employer.

Yes, that is exactly my point.

Are you really changing/transferring plans? Or are you really just looking to change funding vehicles/recordkeeper/vendor? When a 401(k) plan moves from Fidelity to Vanguard you don't (or shouldn't) create a new plan and do a plan to plan transfer, what makes this situation any different?

How many active HCEs are left in the DBP? It may make more sense to amend DB do that HCEs are no longer eligible and, depending on the situation, try to make them whole via enhanced profit sharing or NQDC or a combination thereof.

Agree with those opining that remaining payments go to beneficiary's estate. Note that a contingent/secondary beneficiary designation by the participant would provide for a beneficiary to the remaining payments in the the event the primary beneficiary predeceased the participant, not to be a next in line - i.e., pay P, dies, pay B1, dies, then pay B2.

I can't answer your question, but if the person was a partner then he is considered self-employed and his profit sharing contribution essentially comes out of his earned income. Unless all the receivables, buy-outs, etc. have been reconciled, couldn't the final profit sharing be accommodated with other final accounting issues? it doesn't cost the firm because it's really self-funded, and allowing could head off a legal action (whether founded or not).

No, and probably because it's difficult to win a lawsuit against poor decision-making. If there wasn't an IPS and the fiduciary(ies) lacked a process which led to the poor decision, then maybe there is more standing to sue. Or to put it bluntly - it's easier to sue (and win, or at least settle) against the unethical (conflict of interest) than the stupid. Also, since the unethical situations usually involve significantly more dollars, they draw the plaintiff attorneys and the real reason for these lawsuits - attorney fees. However, that said, these high profile lawsuits have brought attention to abuses and contributed to lower fees in the industry which means more money for people's retirement, and likely much more collectively than what the classes reap from their lawsuits.

I don't see any reason you cannot use that income for determining this person's 415 100% of comp limit, in addition to his pay from the company.

Now if you can train oompa loompas to do ADP testing...that would make everyone's life easier.