Larry Starr

Hey! I'm floating in the north Atlantic so I'm allowed duhs! I never check your math anyway so didn't see that you were being cheeky!

I don't think it is going to be subject to ACP testing. It is a profit sharing contribution I believe, so we are just dealing with regular non-discrim and since the employee is an NHCE, no problem.

I clearly see an issue here. Fact is that when the participant died, he was not married. The plan provisions (in this instance) provide zero death benefits. Now, a judge is trying to ex-post facto increase the liability of the plan. To me, that is a clear ERISA issue (that is, a FEDERAL issue). Can a state judge do this? The plan needs to hire an atty who will challenge this in federal court. I don't know if the judge has the authority to increase the liability of the retirement plan; but it sure will be interesting to follow this case. And Mike, ,I don't see how the plan could have paid out anything under the QDRO since the benefits under the plan after his death and being unmarried was zero. Seems to me they didn't have the option to pay out anything.

Did you try googling them? I did. They have a website. You can read all about them. https://studentloangenius.com/ There is even an article about them and how it all works at https://lendedu.com/blog/student-loan-genius-work/ Hope this helps.

This question is not appropriate for this forum. You need your own lawyer; we don't answer for Judge's behavior.

Once again, I asked you to define what a QDRO application is and you did NOT! What the heck is a QDRO application?????? Are you talking about a proposed QDRO from a lawyer? If the plan is being asked to review a proposed QDRO, the plan should do it and provide guidance to the lawyer. And that is something the DB plan will have to pay for; the alternative is to refuse to review the draft, wait for the signed order, and then review it and reject it if it is bad and everyone will be upset and you will still have to pay for the review and maybe several times until they get it right! Again, there is no QDRO application; and until the DR'O is signed by the judge and approved by the plan, there can be no payout under the QDRO. Are you being provided a signed order by the judge or not?????

You follow the rules for business deductions. Did the co make the contributions during it's fiscal year? If so, then whatever they contributed is deductible. So, if all of the 2017 (yes, 2017!) contribution was contributed in the fiscal year ending 9/30/18, that is your deduction. If none of the 2018 contribution was contributed by 9/30, no deduction for the 2018 contribution. If they contributed all of the 2017 contribution during the 9/30/18 fiscal year and SOME of the 2018 year contribution as well, then you deduct the sum. Does that help?

Partnership income is deemed earned on the last day of the year. Unless there has been a removal of a partner during the year, if that partner has earned income for the year he is employed at the end of the year for these purposes. Remember, in a 401(k) he could defer right until 12/31.

YOU still haven't answered my original questions because I do not know what a QDRO Application is. Who is charging the fee to whom for what service? If this is something involving processing a distribution that is charged to the plan by a third party provider, then the answer is YES, it is a normal fee expense of the DB plan. Did I hit it?

The answer is "yes they can" but they should realize they should replace it as soon as they can. As far as the IRS is concerned, it's still a fine plan document.

Are they using safe harbor hardship rules (I bet they are). Let's assume that is the case. The employee has a RIGHT to the hardship distribution under the terms of the plan. Adding another provision is a violation of their ERISA rights. So the answer is NO, they cannot require it. Now, for a non-safe harbor, I think the answer is still the same, but I'm not sure that they couldn't write the provision into the plan's hardship provision (non-safe harbor). But I would surely NOT do so and I don't think it is a good idea. What does financial wellness have to do with buying a house? Or unreimbursed medical expenses? etc?

Agree with Bill. There is no 7 day period IF you have not met the the 7 day rule. Therefore, you are back to NO safe harbor and pay date is most appropriate.

No. There is no "account" in a DB plan from which such a fee can be taken and the benefit reduced. The exception noted is for a DC plan, in which there is no agreement necessary since the account is just debited for the fee.

First time in 40 years I've ever seen a client do something stupid! :-)

The question you asked was: I was just wondering if there might be any guidance somewhere which says an S-Corporation is not a "corporation" for purposes of the exemption that excludes corporations (other than PCs) from the definition of an FSO. The answer to that (as I said) is NO. There is no rule that says an S Corp is NOT a corp for this purpose. You are looking for something that does not exist and is not a fact. You will not find "guidance" on something that does not exist and is not contemplated in the current rules. Hope that helps. PS: just landed in Amsterdam after an all night flight; in the hotel for a few hours of shuteye!

While I agree with Effen's comment, I'm not clear on the question. What "application" would be prepared that would require a fee? Are we talking about a plan fee for handling a distribution (that's not an application)? What is the fee actually for? The application for the benefit by the alternate payee is basically "pay me my benefit now". What else is being contemplated?

Maybe you should have even checked the plan language first; I bet it's even right there in your SPD! Mine says (among the hardship allowances): Tuition, related educational fees, and room and board expenses for the next twelve (12) months of post-secondary education for yourself, your spouse, your dependent or your beneficiary. (emphasis added) What does your SPD say?

I'm having trouble understanding what the problem is. This is an EX employee who is bugging her former company? Fine; she calls and says "I got the check instead of it being sent directly to Great West". Assuming the check is made out to Great West, the answer from the former employer is (and only once): "Oops! Sorry. They sent it to you by mistake, so now you should send it to Great West. Nothing we can do about it but it's not a tax problem because the check is made out to Great West and will be reported as a rollover. Have a nice life!" If she calls again berating the HR department; the answer this time is: "Still sorry; we told you what to do. Do it or not, but now it's in your hands to make it happen. Don't call again."

The answer is NO; there is no such guidance because there is no such rule.

First, Dan Jock has given you a PDF of the absolute best explanation of how this works. Good job Dan! Now, just to deal with some of the specific things you say above, let me add some more to that great piece that Dan gave you. You ARE allowed to terminate a SIMPLE-IRA mid year; if you set up any qualified plan during the year, you have made the SIMPLE a COMPLEX (a name given by the author of the SIMPLE, SEP and SARSEP Answer Book and my co-author). By adopting the new plan, you have made the SIMPLE no longer allowable; effectively, you've terminated it. If you had contributions that had already been made, you'd have to deal with them. In the stated case, no contributions made so no fixing to do. Just go ahead and set up your new plan and you have NO PROBLEMS. The answers to your 1, 2 and 4 numbered questions above is: NO EFFECT AT ALL. As to number 3, see the posted PDF for how that can be dealt with. I've set up MANY plans during the year when there was an existing SIMPLE or SEP. Just thread the needle with regard to already made contributions and you will be just fine.

You're over thinking (I think). Using your example: assume he will defer $1,500 per month. What you left out is how much he earns per month, so let's make it $4,500. Now, they make the deferral 1/3 into the month, at which point he has earned $1,500 (1/3 of $4,500) and the deferral does not exceed 100% of his income earned at that point so it is just fine. There's nothing that says the deferral for the month has to be pro-rata during the month. This is a one man business; he could certainly say his deferral rate is 100% of his income until a monthly maximum of $1500 is reached. Does that help?

While I think it is just plain stupid to set it up this way (for a one man business they can't make the deferral deposit on or after the paycheck is cut????), more than likely it would be ok. Here's the caveat. Since he is being paid only at the end of the month, on the 20th he has already provided 2/3 of the month's service. As long as his 2/3 of the month's income is LESS than the monthly deferral, it is hard to see where anybody will make a fuss. The contribution cannot (generally) precede SERVICES; that is not the same as not preceding the payroll check. The large 401(k) company noted above has the same situation since they are depositing the check AFTER the service has been rendered, even though that is before the date on the paycheck. Both cases will be arguably ok, but it might require some 'splainin to an uninformed auditor. FWIW.

The QDRO controls; you say it says "plus investment gains". You don't tell us if it has already been signed by the judge. If the judge signed it, then that's the order. If the order is not signed, and you are sure that such language is not in line with your divorce decree, then your lawyer should be involved until the issue is resolved. BTW, I would suggest it is UNLIKELY that your belief is what will be upheld unless it was a very unusual divorce property agreement. You are correct that your ex is not responsible for your processing fee of the QDRO.

The real question is "why are you worried about it". That isn't clear to me. Are you aware that you don't have to do anything in 2018? You could just finish out the 2018 year and handle it just like the 2017 year. Then, you can spin off to a new plan in 2019 if that's what you want. The following is from Derrin Watson's book Who's The Employer: The Code sets up a grace period, called the “coverage transition rule” of more than one year during which a plan automatically passes Code §410(b) and Code §401(a)(26), the minimum participation and coverage requirements. The grace period begins when the group’s membership changes. It ends at the end of the first plan year beginning after the change, or, if sooner, when there is a significant change in coverage or benefits. [Code §§410(b)(6)(C), 401(a)(26)(F); Rev. Rul. 2004-11]

I couldn't find the 90 day reference; this is what IRS says on it's own website: PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued. A treatise on a law firm website said this: A redacted version of every Private Letter Ruling is published within a few months of being issued, and these become very important for tax lawyers to study, to note and identify trends in the law and how the IRS addresses certain circumstances.