Participant defaults loan on 3/31. Participant turns 59 1/2 on 7/1. 1099-R is issued after end of the year. Early distribution penalty?

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I have a plan where the owner is the only one deferring. 6 staff members. She wants to max out at $54k. Plan is 3% SH with a discretionary match. We are thinking of giving her a 4% match to lower the gateway. Does she have to let the non-deferring staff know that a match is being made to the plan?

Let's say there are 2 companies, both owned by Employer [1] Company A has employees and Employer 1 is the 100% owner. Company 2 is owned 100% by Employer [1] Would this be a Controlled Group and would it have to be aggregated for testing purposes? What about the coverage test for Company B? Wouldn't it be 100% of HCEs Benefiting and 0% of NHCEs (since the denominator includes the whole NHCE population of the controlled group)?

• Employer A and B are unrelated employers who both sponsor a 401(k) Plan. Employer A purchases 100% of the stock of Employer B on December 15, 2017. However, on December 14, 2017, Employer B establishes a termination date to terminate its plan as part of the M&A agreement because Employer A does not want to assume sponsorship of that plan. ISSUE: Employer A does not want to recognize prior service with Employer B (wishes to treat the newly acquired employees as new employees) requiring them to meet the age/service conditions in the plan to participate. The excerpts below are from the ERISA Outline. The first two seem to relate to an asset transaction (not stock transaction). The third seems to back up that interpretation especially with the highlighted text.
  • IRC �414(a)(1) requires service for a "predecessor employer" to be treated as service for the current employer only if the current employer is maintaining the plan of the predecessor.
  • IRC �414(a)(2) provides that where the employer does not maintain the plan of the predecessor employer, service with the predecessor employer does not have to be counted by the new employer, except to the extent provided in regulations. Since no regulations have been issued, the IRS has generally treated the granting of service under the circumstances described in IRC �414(a)(2) to be elective on the part of the employer, provided that the granting of service does not create prohibited discrimination.
  • According to the IRS in GCM 39824, an employee generally does not have a severance from employment merely because all or a portion of the stock of the company is sold to another person. For example, if the shareholders of a corporation sell their stock to another business, or to other individuals, the change of ownership of the corporation does not cause the employees of that corporation to have a severance from employment. This is true regardless of whether the corporation maintains a plan and, if it does, whether it continues to maintain that plan after the sale. The IRS is simply recognizing here that in a stock sale, the entity itself continues. Only the owners of that entity have changed. Thus, there is no "former" employer from which the employees of the entity can have a severance from employment.
  When the employee is treated as having a severance from employment from the seller, the buyer does not have to give the employee credit for service with the prior employer. If there is no severance from employment, then the employees are treated as continuing to work for the same employer. QUESTION: Does the termination of Employer B's 401(k) plan prior to the acquisition date (12/15/2017) allow Employer A to treat the newly acquired employees as having a severance from employment and therefore no mandatory recognition of prior service is required? I have always thought the answer was YES but I am beginning to second guess this answer. Any feedback is greatly appreciated! Thank you.

Both spouses work full-time for the same ALE. Husband enrolls in family coverage and covers his spouse and children. The instructions for Form 1095-C provide that in such as case "the enrollment information should be reflected only on Form 1095-C for the employee who enrolled in the coverage. (However, it would report the other employee family members as covered individuals)." This makes sense. My question is whether a Form 1095-C needs to be completed and delivered separately for the spouse. (The Instructions also state that one Form 1095-C needs to be completed for each full-time employee.) If one does need to be completed, what codes should be used for the spouse? There's probably no requirement that a form be completed for the spouse but I have not found any guidance specifically saying so.

I have a 403b plan whose assets are invested with an Insurance Company. Have a participant who has been in the plan finally decide to start participating. He contributed $900 and the company matched $900. I've learned that the money wasn't deposited with the Insurance Property. Instead the participant opened up a SIMPLE IRA, into which the company deposited the contribution. How to proceed?

What is the deadline is for setting up a new multiemployer defined benefit plan? Example: Plan is intended to be effective July 1, 2017, and to be a calendar year plan. The employers all have fiscal years ending June 30. The plan is not finalized until January 20, 2018. The IRS 401(k) resource guide says, "The plan may not be made effective earlier than the first day of the employer's tax year in which the plan was adopted. In other words, an employer may adopt the plan document on the last day of its tax year, with an effective date retroactive to the first day of that tax year, but not any earlier." https://www.irs.gov/retirement-plans/plan-sponsor/401k-resource-guide-plan-sponsors-starting-up-your-plan If this applies to multiemployer defined benefit plans, it would mean that the plan could be retroactive to July 1, 2017, even if the plan itself has a calendar year. It would seem odd to make the deadline for adoption of a multiemployer plan the employer's fiscal year. What if the employers had different fiscal years? A more reasonable approach would seem to be to have the deadline relate to the plan year--meaning that the plan could be adopted in January of 2018 retroactive to July 1, 2017 only if the plan adopted a plan year that ended between January 31 and June 30. Anyone aware of guidance on this issue?

Plan Sponsor with a safe harbor 401(k) plan (basic safe harbor match) has learned that for 2017 the payroll company did not apply deferral elections to bonuses paid during the year. Plan document doesn't exclude bonuses for any plan purposes. Match is allocated at year-end. In reading through the IRS 401k fix-it guide, Example 2 under Mistake 3 (didn't use the plan's definition of comp) would require a QNEC of 50% of the deferrals that would have been made from the bonuses had the elections been applied, plus earnings, plus applicable match. But the example further says that with respect to the missed deferrals, "other correction methods may be acceptable to fix that part of this mistake", and refers to Mistake 6, which describes corrections for situations in which "Eligible employees weren't given the opportunity to make an elective deferral election (exclusion of eligible employees)." The plan sponsor discovered the error when putting together the year-end census data. They will ensure that elections are applied to 2018 bonuses. Based on the reference to Mistake 6, it seems to me that the QNEC can be limited to 25% of the missed deferral, assuming the QNEC will be made in 2018. Agree?

Let's say a plan has 2 participants. Participant A is an HCE because of ownership. He owns 100% of the company; salary is $50,000. Participant B is an NHCE and earns $100,000. I understand that the company can make the same dollar Profit Sharing amount contribution to everybody. Let's say that contribution is $5,000 each. So that's 10% to HCE and 5% to NHCE. My administration software says the General Test fails! What to do? Not include the General Test at all in the reports, because the same dollar amount to everybody is a Safe Harbor definition?

A 401(k) plan limits participants to one outstanding plan loan at any given time. Last year a participant took out 2 plan loans. Is this an operational failure? How is this corrected? VCP?

A Tribal Governmental K-12 Public School wishes to establish a 401(k) plan. I don't believe they can. PPA 2006 expanded the definition of governmental plans to include a plan established or maintained by an Indian Tribal government for its employee's performing 'governmental functions', but not to include those employees performing commercial activities (e.g., workers in a hotel, casino, or convenience store). Essential governmental functions would be considered those functions customarily performed by state and local governments if: [1] There are numerous State and local governments with general taxing powers that have been conducting the activity and financing it with tax-exempt governmental bonds, [2] State and local governments with general taxing powers have been conducting the activity and financing it with tax-exempt governmental bonds for many years, and [3] the activity is not a commercial or industrial activity. Tribal governments can establish a money purchase plan or profit sharing plan for its 'commercial' employees, not a 401(k), enabling it to comply with the applicable qualification rules under Code Section 401(a) for plans applicable to nongovernmental plans. An Indian Tribal Government is considered a 'State' for 403(b) purposes, per Code Section 7871(a)(6)B), that they can offer a 403(b) program but only to employees of their educational institutions. Is my assessment correct?

Back in 2008 a pension plan was terminated and some of the participants elected to roll over their balance to the 401(k) plan. Now it's determined that the 401(k) plan document doesn't provide for rollovers. How to fix?