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Found 11 results

  1. I have a combo 401(k) PS/CB. Owner died unexpectedly in December 2022 while in his 50's. He has no spouse, children, or completed beneficiary forms. His parents (in their late 70's) are the beneficiaries for both plans. There was some up in the air, but now both plans are being terminated. My question is on RMDs. Are the parents required to take RMDs from the plans due to their ages or not since the owner was not of RMD age? The plans should be paid out by the end of 2023 or early 2024. There will be required payments from the inherited IRAs, but that is outside the plans. I am more concerned that while the plans are open, the RMD rules are being followed.
  2. The Internal Revenue Manual directs an Employee Plans examiner not to challenge a plan for failing to meet § 401(a)(9) if the plan’s administrator could not locate the distributee after a diligent search that included IRS-specified steps. IRM 4.71.1.4(15)(d) https://www.irs.gov/irm/part4/irm_04-071-001 But that direction does not speak to a situation in which an individual-account (defined-contribution) retirement plan paid no involuntary minimum distribution because the plan’s administrator did not know the participant died. Should the IRS relax strict adherence to § 401(a)(9) if the plan’s administrator shows it followed reasonable procedures to detect participants’ deaths? What should those procedures be? How often does it happen that no one has filed a claim within ten or eleven years after a participant’s death?
  3. Hi to All, We just got a phone call from HR lady of our client to say that a certain participant who has a participant loan is in the process of dying of pancreatic cancer and has been out on medical leave for the last 6 months. He's not really expected to ever come back to work, but she hasn't really officially declared him to be terminated, either. The participant took out a participant loan on 12/18/2018 in the amount of $11,650.00. He made two bi-weekly payments of $119.40 on 01/14/2019 and 01/22/2019. He went out on medical leave at that point and has not made any more payments. This quarter ending June 30 is his cure period and so far he hasn't made a payment. HR lady wants to know what his options are. Can he make some little tiny payment like $100 and get another cure period running July 1 to September 30th? Could he do that twice and thereby keep his loan from going into default in 2019? I think she's asking if he can just keep this thing running until he actually passes away and then it becomes someone else's issue at that point. All the situations I have seen so far were "all or nothing" - the person was either making payments, or stopped. I don't know what happens when someone pays a little something but not enough to bring a loan up to date. Of course I know that the loan is supposed to be paid within 5 years of the loan initiation date, but does it get re-amortized each quarter, with higher payments, such that it would still be paid off theoretically within the original 5 year period? Is that even permissible? He could, of course, just let it default and pay the taxes on the deemed distribution at the end of 2019 if he's still alive and has the money to pay them. Any of your thoughts and experiences will be appreciated. Thanks in advance!
  4. Good morning to all, Today we are working on the 401(k) plan of a sole proprietor who passed away in 2018. When the CPA sent the Schedule C, she made the comment that this is the Schedule C of the owner while she was alive, and that if I needed the Schedule C that is being filed with the estate, let her know and she will provide me with a copy. I wouldn't have even known that these are two different things, if the CPA hadn't brought it up, and while my first inclination tells me that the Schedule C while the owner was alive is the one I need, I don't know that for a fact. Does anyone else have any experience with this? Which of the two should I be using for 2018? Thanks in advance, as always.
  5. Good morning to all. A client passed away last fall, and her sister popped up recently claiming to be the executrix of the estate and heir to all of the client's assets. We as the TPA do not keep beneficiary forms on file for any of our clients. We inform them at the moment of engagement that they must be responsible for keeping up with the forms in their own offices in the employees' personnel files or something similar.. The sister of the deceased says she has not found a beneficiary form. She says the deceased was divorced and that the ex-husband is deceased, and that they had no children. So far all she has provided to us is a death certificate for the deceased and a "Letters Testamentary" document with one sentence naming her as the personal representative of the estate of the deceased. She is now pushing to have the deceased client's assets transferred to her. The account balance of the client is held in an individually directed brokerage account with a well-known national brokerage house. The plan document says that in the absence of a beneficiary form, the assets go first to the spouse, and if none, to the children, and if none, "such other heirs, or the executor or administrator of the estate, as the Plan Administrator shall select." Bear in mind that the Plan Administrator was the client, who is dead. 1. To what extent are we as the TPA responsible for determining that the spouse is indeed an ex spouse, that he is indeed deceased, and that they had no children? 2. Is more paperwork required that just this one liner naming this woman as the personal representative of the estate required to establish her as the executrix/personal representative? 3. Is this our problem or the brokerage house's problem that holds the funds? 4. Do we have to worry about being sued later if she lied to us and there is a current spouse/children? 5. Can the account be rolled directly to her without passing through the estate in this circumstance? This is a first for us, so any experiences you can share/advice you can give will be greatly appreciated. Thanks in advance.
  6. Good morning to all! We have a plan where there are two Key employees as identified by our software and they both surprise us in how they were handled. The first one was already HCE in 2016 but not Key, by virtue of his salary. He does not own any stock in the company. In 2017 he became the President of the company. The software identifies him as a Key employee in 2017 and we thought it would be 2018 before he would be considered a Key employee. The second employee was Key already but died in 2017 and his account balance was distributed before 12/31/2017. The software put his distribution in the account balance column as a negative number and subtracted it from the President's account balance to get a net difference for the Key employees' balances for the year. To be clear: President has let's say $200,000 which is considered a Key balance, to our surprise, and deceased person's distribution of his $10,000 account balance is picked up as a negative number in the test, so the net Key balances on the Top Heavy Test are $190,000. Does this seem normal to any of you? Thanks in advance for any advice.
  7. A governmental plan requires employees to contribute to the Plan post tax. The monthly benefit reflects both the taxable and non-taxable portions and are reported appropriately. If a retiree dies before receiving benefits equal to his or her contributions (plus interest at the plan's rate), then his or her beneficiary receives a refund equal to the difference between the total benefit received and the retiree's post-tax contributions (plus interest). Is this refund taxable? How is the refund reported to the beneficiary?
  8. I have a deceased participant, no designated beneficiary, and no spouse/child/parent. We have been making RMD payments to the Estate for several years, and the participant’s brother is the executor (and plan trustee), so he gets the RMD checks and deposits to an estate account. I should probably say this is for a qualified retirement plan, not an IRA. The Plan is now terminating, so the financial advisor is looking to help him roll over the full balance , but is having trouble with what type of rollover account is acceptable (his own firm is questioning). Most literature indicates that non-spousal beneficiaries may only roll to inherited IRA. How does one establish an "inherited" IRA when no designated beneficiaries exist in the first place? Thanks for any input!
  9. Can you please let us know how you handle late reported deaths concerning 1099-R tax reporting? Example: Annuitant dies in 2013, benefits are paid by direct deposit, spousal beneficiary never reports the death to the pension group until 2017. (SSA master file did not have death) All the time the pension group was reporting the income for 2013 through 2016 under the deceased person. Would you issue corrected 1099's all the way back to the member's death year, and then issue new 1099's from that point forward under the survivor's tin for each specific year? Or, report the whole amount received from the death forward on a current year 1099? (with keeping constructive receipt in mind) Can the tax withholdings from the prior years be "transferred" from the deceased person to the surviving spouse for 1099 purposes? What about 2013 being a closed tax year, or if the death was many years prior? It would be hard to understand how their tax returns would accurate. Unfortunately this happens more frequently than one would think. (an issue with direct deposit being too automated and occasional dishonesty) We haven't been able to find much guidance on how to proceed for the tax reporting. Thank you!
  10. For deceased participant who died before receiving benefits, if a plan has a default beneficiary for an unmarried participant for children under 21, am I correct in thinking that this refers to the age of the child at the time of the participant's death? If so, where is the support for that?
  11. My husband was the alternate payee as a result of a QDRO from his first marriage, from a Defined Benefit plan/ Separate Interest. At the time the divorce was finalized (1985), he assigned his sister as his beneficiary, long before we met and married. He could commence receiving his pension when the ex reached her minimum retirement age, which would be Dec 2014, he requested the documents to start the process to receive payments, but he died last month (sept), the documents arrived 2 days after his death, he didn't get a chance to sign them and assign me as his beneficiary. Since he never withdrew his portion of the contributions plus interest, there is a balance. As I read through the documents, it says that if less than three years of benefits have been paid out, his beneficiary will receive the remainder of the contribution and interests in the event of his death. We married in 2002.A couple of times he contacted the pension plan to add my name as a beneficiary but was told he couldn't do it until he started receiving benefits. it was his wish that I should be his sole beneficiary, not his sister. Will that initial QDRO assignment of beneficiary pose a problem for me to claim this balance? Where do I stand now? Please help. Thanks
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