My company has a frozen ESOP plan and since it's been frozen we've been paying the retirees by buying back the company's stock annually and have been retiring the Company stock at that time. Because it's an equity transaction within the Company (and not the ESOP), we haven't been taking a tax deduction for this "contribution." We were told at some point in time that the ESOP couldn't make a "contribution" to the ESOP because it was frozen, so we've been retiring the stock. Although our plan is frozen, can our Company still make a contribution of cash to the ESOP to pay the retirees? We would take a tax deduction and the shares the ESOP bought back I assume would be re-allocated (and not retired) among the remaining participants. Can you point me to any particular IRS guidance? We are fresh out of NOL carryforwards. It doesn't make sense that, although frozen, a Company paying retirees can't contribute cash to the ESOP to pay retirees and take a tax deduction. We're generating a sizable taxable gain due to selling assets to pay the retirees, so our past position doesn't make any sense to me.

Plan is as follows: 401(k) -- 1 month of service and monthly entry Profit Sharing -- Age 21 -- 1 YOS -- Quarterly entry. The plan is top heavy. [1] Can I use the comp while a participant in the profit sharing portion of the plan for the minimum gateway testing (both 414(s) and 415) even though people not eligible for the profit sharing are receiving a TH min on the full year comp? [2] For Relius users: If the answer to Q1 is yes for the comp while a participant, does Relius define the compensation for the gateway testing properly or does it have to be overridden? [3] If I have a person hired on 11/14/2016, he is not eligible for the profit sharing (until 1/1/2018 so he has no eligible profit sharing compensation for 2017), but he gets the TH min; what is his compensation for purposes of the gateway test? [4] Related to Q3 above: At this point, I am using full year comp because I don't have any comp while a ptp in the profit sharing portion. FYI -- They are in my stat employee group because I am using the plan entry option as I need the younger people to help pass the rate group testing. (If I used the stat entry method, the younger group would be put in the OEE group and the test would fail.)

A few of the plans I'm servicing have received a letter from EBSA notifying them of the VFCP corrections process because the plans reported late deposits on their Forms 5500. The plans caught the error early and made the lost earnings deposits (i.e., they attempted to self-correct). Do other TPAs typically respond to this letter? I called EBSA, and was told the letter's intent is to notify the plan only, and that the plans need not respond unless they decide to use VFCP.

An employer acting as Plan Administrator learns of a pending divorce of a participant and that a potential domestic relations order may be completed as part of the property settlement. To date an order has not been received and the Plan Administrator is not sure whether the divorce has been finalized. The participant is requesting a distribution from the plan, which he's entitled to receive under the terms of the plan. Is the Plan Administrator required to inquire about the potential Order prior to issuing a distribution? Must the plan administrator "pump the brakes" on the distribution?

I have seen scant mention of plans within the Republican tax bills to discontinue recharacterizations of Roth IRA conversions. I have made liberal use of these in recent years to lower impending RMD while controlling my taxable income to levels below undesirable breakpoints. Do they really expect to increase revenue significantly by making this change?

An employee has reached the $270K salary cap but not the $18K deferral limit so deductions are still taking place. Are the deferrals still exempt from the applicable taxes even though the salary limit has been reached? Or does the tax savings stop since the $270k limit has been reached?

Owner is the last one paid out. He makes small contribution to hit his 415 limit for his rollover. Subsequently a trailing dividend posts to the account. Plan does not provide for reallocation of excess assets to participants. Can you treat that as intrinsic to the assets transferred to his IRA and roll it over or do you have to/would you transfer it to the PS Plan and allocate there as excess DB assets?

A 15-year old has a specific fishing license in Alaska that allows him to make earned income from fishing. He receives a Form 1099 as a sole proprietor. CPA confirms he is not an employee. Can a 15-year old obtain a business EIN and then set up a 401(k) plan based on net earned income, or is there some minimum age needed to be able to do this?

My client (plan sponsor) received a letter from TPA saying Millennium Trust will handle the plan's automatic rollovers effective next year and inquiring whether the plan sponsor would like to reduce the automatic cash-out threshold from $1,000 to $0. Would that mean that all terminated participants who did not make an election and have a balance below $5,000 automatically would have their accounts rolled over to Millennium, rather than being distributed as a lump sum? Can that be done?