We recently received a census from a client where she indicated that all of the terminated employees had separated from service. No deaths, no disabilities, no retirement. She reconfirmed this by phone. At least in her mind, nobody was retired. However, one person who quit fit the parameters to be considered "retired." He is over age 65 and had 5 years of service. Our computer software is picking him up as retired instead of just separated from service. In this plan, he will be eligible for a match and a profit sharing contribution that he would not otherwise have received. Does it make any difference that the employer considers him to be a person who merely quit? Is it correct that once a person has satisfied the age 65 and 5 years of service this plan requires, and then leaves, that he is "retired," regardless of the circumstances surrounding his termination of employment?

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We have a municipal pension plan that requires employees to make mandatory pre-tax contributions to the Plan. If a participant terminates prior to vesting, the mandatory contributions are paid out in the year of separation. I was told the "prior person" said the code on the 1099-R should always be 7 (normal) or 2 (exception), but no explanation was given. In reading the Form 1099-R instructions Code 2 does not seem to apply to this distribution, although intuitively it seems to, i.e. participant was automatically enrolled (mandatory contribution) and is now forced to take the withdrawal. But Code section 414(w)(1)(B) seems to only address section 401(k) plans with automatic enrollment. Thoughts?

Safe harbor plan with a 3% SHNEC. 3 month eligibility. Definition of compensation is shown as follows: 16. Pay Before Participation [ X ] Exclude pay earned before participation in the Plan from definition of Compensation for the following purposes: a. [ ] Matching Contributions b. [ X ] Non-Elective Contributions NOTE: If selected, Compensation shall include only that compensation which is actually paid to the Participant during that part of the Plan Year the Participant is eligible to participate in the Plan. If not selected, Compensation shall include that compensation which is actually paid to the Participant during the period specified in A.13b. To calculate the SHNEC, do I use the whole year's compensation for someone who enters during the year or do I base it on the above election?

Client pays employees commissions out of which comes the 401k elective deferrals. At year-end, it's discovered that deferrals were never taken out of those commissions. Under Revenue Procedure 2015-28, would the QNEC be 50% -- or 25% -- of the missed deferral because it was discovered at the end of the plan year? Also, the payroll company has said they might be able to re-do the W-2's of the employees involved if the employees wish to make up the difference between the client's QNEC and the amount of the missed deferrals. This would involve the employee actually giving back some of the money that he earned. Worth doing?

Money purchase plan provides a contribution of "X%" ONLY if you defer at least 3% in 403(b). I'm nearly certain I remember that in such a situation, the MP contribution is treated as a matching contribution subject to ACP testing.

Employee works at 2 different division within a company. At Division A, he earns $10,000 for the year. At Division B, he earns $20,000 for the year. He's already met the plan's eligibility/entry date requirements. The plan document excludes Division A from the plan. The company makes a 3% Safe Harbor Profit Sharing and a 2% Profit Sharing contribution. What compensation would be counted for these contribution percentages? The whole $30,000, or just the $20,000 from Division B? The plan document is unclear.

Does anyone have experience with 1099-R coding when old post-tax contributions are cashed out of a qualified retirement plan? I've thought no code applies and hence Box 7 should be left blank, adding the post-tax contribution amount in Box 5, and hence the taxable field would be $0.