Larry Starr

PR pension law is different; I am an ERISA expert. In the few cases over the years where this came up, we opted not to be involved. Years ago I knew someone who did a lot of PR retirement plan work and referred a couple of cases his way. I would suggest you look for a firm that does do PR retirement work; it's highly unlikely that it could be worth your time or resources to try to learn PR rules just to handle one plan. FWIW.

Reminder: there is no (ERISA) legal requirement that the participant's agree to the order (or sign it). In any case, if the judge wants a signature (which might be the case), then your solution sounds just fine since it has no legal effect on the processing under ERISA.

The easy way to remember this is that there is no DOUBLE ATTRIBUTION.

I'd be interested in knowing WHY the counsel thinks that California matters in this issue.

Free advice is worth every penny! Hire an expert who will look at the specifics to determine the answer to your questions. This is not the venue for a question such as this.

I've been studying this at great length and depth. I believe CRUTs and CRATs will be an important tool for those who ALSO have a strong charitable desire. I fear that it is going to be oversold to those who don't have a true charitable desire and that will end up being just another problem. This is an area that will be for the estate planning attorney and competent accountant to run numbers and explain to the client how this will all work. There are other tools that will be put into play as well (sequential Roth conversions of smaller amounts that the total accounts, for example).

I would have to read and parse the specific language in the document. I would NOT want a plan document that included compensation from other entities in a controlled group that we might not even know about; I think that is just bad language. For example, you can have a German parent company that owns two US companies but the two US companies don't even know that they are connected (I had just such a case many years ago). You obviously know you have testing issues with regard to the multiple members of the controlled group, but as to compensation, I would absolutely want to read the specific words in the document and if the language is as you suggest, get rid of that document! Also, I would discuss with the client WHY he had employees moving back and forth between the two entities. We might accomplish that (if absoulutely necessary) by NOT having two separate W-2s. FWIW.

Not enough info; WHY did they say an amendment is needed? For what purpose? And if you didn't get that info in the webcast, then I think you need to ask THEM first and then post on this board what they said and then we can comment as to whether we agree or not. Having said that, you ALWAYS need an amendment to terminate a plan, even if it is just to TERMINATE the plan!

Love the grown ups reference! ?

Glad we could help. But if you post in the future, PLEASE include the actual situation which you kept secret until your response posting. Makes it much easier to respond with answers that you could really apply to your situation. What we do is very fact specific and the more we have the real facts, the better the responses will be to your situation.

There is a difference between willfully and stupidly. They aren't smart enough to do it willfully!

As if often the case, the wrong questions are being asked. Instead, the questions asked should be "what does the client want to do" with regard to the time it was a sole prop. Normally, the sole prop (which is still in existence; it NEVER goes away legally until the sole prop dies) would adopt the plan and all predecessor activity would count. When the 401(k) plan was adopted, a competent consulting firm would have worked with the employer to make SURE that the plan accurately reflected the desire by making sure the plan is properly designed from the beginning. So, the question is: what was done about this when the plan was adopted? Was a professional, competent firm involved in advising the client, and if not, why not? You are looking for answers now as to what the plan document that was adopted calls for, and we have no idea since we don't have a copy of the document, but more important is that the plan should have been set up to correctly reflect the employer objectives, and if that wasn't done, that is the mistake that needs to be fixed. And it almost definitely can still be fixed at this date; are you working with a competent admin firm? If not, that is what you need to do.

Maybe I don't understand the question. You know a loan repayment is NOT an employer or employee CONTRIBUTION to the plan. It is the replacement of one asset (loan receivable amount) with another (cash). Now, I don't really care how the "fundholder" shows anything so long as it has nothing to do with how the plan is administered and how that loan payment is properly accounted for in the plan records/record-keeping. I guess I would prefer that they properly reflect it if they can, but otherwise we will adjust for their poor explanation.

In my experience (45 years) I would suggest that a "normal" 5500 for the first time when previously a short form was appropriately used does NOT itself increase the chance of either a DOL or IRS audit. The issue is always what is on the form that might interest the regulators, not what they did last year. In any case, it is always a crap shoot as to who is going to get audited on a random basis.

Perfect answer!

Agreed; QCDs can be made only from traditional IRAs and traditional inherited IRAs. If making a QCD from an inherited IRA, the client would still need to be age 70½ to qualify. Thanks for the clarification.

No. Any traditional IRA owner or beneficiary who is at least 70½ years old can use the qualified charitable distribution (QCD) rule to exempt their required minimum distributions (RMDs) from taxation. The age limit here applies to the exact date on which the IRA owner turns age 70½. For example, if an IRA owner turns 70 on February 15, he or she cannot make a QCD until August 15. Roth IRA owners are also allowed to use the QCD rule, although they will not see any benefit from doing so as their distributions are already tax-free.

No. Here is a list of some items that are fringe benefits: Examples of taxable fringe benefits include: Bonuses. The value of the personal use of an employer-provided vehicle. Group-term life insurance in excess of $50,000. Vacation expenses. Frequent-flyer miles earned during business use, converted to cash. Amounts paid to employees for relocation in excess of actual expenses.\ You can exclude the S corp taxable health insurance premium specifically, and assuming all who have such income are HCEs and no NHCEs are involved, it will meet the 414(s) definition without any testing.

Aha! Brain surgery, self taught! You need to find a competent professional who can guide you through the complexities and answer your questions; that is the OPPOSITE definition of "the internet". This is not for self teaching, IMVHO. Good luck.

"I'm not an accountant, so I don't know how OK that is..." It's NOT OK at all! He's ignoring the law and, if he's signing the tax return, he is in violation of his professional ethics and can be censured or even removed from practice. You don't get to pick and choose the rules you will follow. If this were my situation, I would have to contact the client and let him know the problem and let him decide what to tell the accountant. In either case, I'm going to want something in writing from the client telling me to add the appropriate amount to the reported comp or not add it, and then it's his problem. And I would certainly point out the danger of what you note in your last sentence (first paragraph): what I do know is that there are some participants whose "compensation" is significantly affected by this, and are now receiving a few thousand less in profit sharing.

Ed, when I read this response, I was expecting a smiley face at the end, but it's not there! So am I to take it that you are actually serious? Allowing qualified plans to be adopted after the year is over (the same rule as for IRAs or SEPs) has been a long time coming, and is very much welcome and makes perfect sense. And at least, Congress agreed with that. So we no longer have to say "no, you can't do that" and I think that is a much better answer than "we can backdate the document" (BIG SMILEY FACE HERE) of the correct answer of "no you can't". The 5500 issue is trivial and will most likely be resolved in IRS guidance. FWIW.

Yes, the late 5500 issue will be an issue, but the hope is that the IRS will provide some sort of exception for plans that are adopted under the new SECURE rules but after the first 5500 would normally be due. It is illogical that Congress would provide such a new option but maintain a "gotcha" that makes you violate other rules just by using this rule. We will be watching for IRS guidance for sure, but a special first year due date when a plan is adopted in the extended due date period will probably be the solution. Stay tuned.....

Teatree, you really are asking fundamental questions that does show you are a newbie and the issues surrounding your fact pattern are substantive and complicated. Yes, your understanding (the penultimate sentence above) is significantly off base. While a safe harbor 401(k) plan can be established for just one member of a controlled group, you still will have to deal with coverage issues and discrimination testing if you have HCEs in your plan and you don't have the employees of the other members of the controlled group covered. What is your involvement with this situation? What is your position/job/background? This belongs with a competent service provider who can guide the clients; no offense is intended, but it clearly sounds like providing competent consulting is not yet something you can do and you can't really learn all the ins and outs on this bulletin board system. The issue is significantly technical and to keep the client out of trouble, the client needs guidance from well educated providers. This is not something that a "newbie" should be attempting to figure out just by reading some stuff. What is your background? Have you taken any courses (such as ASPPA education courses)? Do you have any designations? etc. etc. Not a knock on your desire to learn (that's good), but a great concern for your client that you probably don't have the depth of knowledge necessary to advise this client (at least, not at this point in your career) and you are not going to get what you need from posting here. Of course, we really don't know much about you other than your self described newbie status, but the questions asked are enough to make it clear you have much to learn, and you can't learn on real live clients. All, just, FWIW.

SECURE did NOT create a new in service distribution RIGHT; it created a new OPTION to allow distributions for this purpose, which you seem to understand above but then I don't understand your "significant issue to resolve". What is the issue you are concerned with? If you add it to a plan, it is NOT a disqualifying provision (since it is legally permitted as of 1/1/20). So what exactly is the problem you have? We definitely need guidance as there are a bunch of unknown issues (the repayment issue is problematic in my mind, as there is apparently no time limit on the repayment, which means it could be YEARS later). We definitely will need IRS guidance on a bunch of issues with this type of benefit. I think it is unlikely we will be adding it to many plans.

They probably can't, and it probably isn't worth trying to mandate it. But they can offer them the option of direct deposit if they have that capability. They can offer existing retirees the same deal. But in either case, it will be at the option of the participant. There is a federal law that can allow it, but the states mostly override that. Here is some info on the issue: The Electronic Fund Transfer Act (EFTA), also known as federal Regulation E, permits employers to make direct deposit mandatory, as long as the employee is able to choose the bank that his or her wages will be deposited into. Alternatively, employers can choose the bank that employees must use for direct deposit. But in that case, the employer must also provide employees another means of payment, such as cash or paper check. The employee can then decide whether to go with direct deposit at the bank of the employer’s choosing or with the other means of payment. State Law In some states, an employer can make direct deposit mandatory, provided certain stipulations are met. For instance, employers in Kansas, Indiana, Texas, Missouri and South Carolina can require employees to accept direct deposit, but the employer must provide another payroll payment method — such as payroll card, cash or check — to employees who do not have a bank account. In many states — including California, New York, New Jersey, Florida, Vermont and Illinois — employers must obtain written permission from employees in order to pay them by direct deposit. A good rule of thumb is to require written authorization from the employee, even if state law doesn’t say to. In some states that allow employers to require direct deposit, the rules are very specific. For example, in Utah, an employee cannot refuse payment of wages via direct deposit if: In the prior year, the employer’s annual federal payroll tax deposits amounted to at least $250,000, and; At least two-thirds of the employer’s workers are being paid by direct deposit. At the very least, the state may adopt the provisions of Regulation E. If the state extends additional protections to employees, the employer must use the law offering the employee the most benefits. And if the state does not have laws on direct deposit, federal law applies. You can determine your state’s stance on this by examining its wage payment statutes, which may also require that you give employees a pay stub each time they are paid — whether by direct deposit, check, cash or payroll card. Here is a link to a chart of state by state rules (as of 2017 it appears): http://www.hrknowledge.com/wp-content/uploads/2017/08/Direct-Deposit-State-DD-Laws.pdf