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Message Boards Digest

September 19, 2018

Here are the most recently added topics on the BenefitsLink Message Boards:

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visionaryinsight created a topic in Defined Benefit Plans, Including Cash Balance

Excess Contributions Due to Failure to Net Losses Against Profits

Plan is about 7 years old (alcohol maker in the South). Business is a single entity (LLC) but the operations are split between a Schedule C (alcohol production) and a Schedule F (farming operations). Every year there is a significant profit on the Schedule C and a loss on the Schedule F. Schedule F has never been included in the numbers reported to the actuary until this year. In looking back, it appears as though there are going to be significant excess contributions when the losses on Schedule F are subtracted from the profits on Schedule C. What should be done about this error?
Number of replies posted  4 replies      Number of times viewed  64 views      Add Reply
 
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BG5150 created a topic in Retirement Plans in General

Gap Period Earnings for 415 Excesses

Did gap period earnings get removed for 415 excesses? If so, when?
Number of replies posted  1 reply      Number of times viewed  22 views      Add Reply
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mariemonroe created a topic in 409A Issues

OK to Amend Formula in NQDC Plan?

Is there any prohibition on amending a benefit formula in a NQDC plan subject to 409A?
Number of replies posted  1 reply      Number of times viewed  17 views      Add Reply
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MarZDoates created a topic in 401(k) Plans

Amend Entry Date from Quarterly to Semi-Annual: Retroactive to 1/1/2018?

Plan sponsor wants to amend its current non-safe harbor 401(k) plan to change from quarterly entry dates to semi annual. Can this be done for 2018? Or would it need to be done effective 1/1/19? It doesn't "feel" right to me that it would be permitted this late in the year. I would think that if they have employees that have met the age/service to enter 10/1/18, they wouldn't be able to make them wait until 1/1/19.
Number of replies posted  6 replies      Number of times viewed  68 views      Add Reply
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LM created a topic in Defined Benefit Plans, Including Cash Balance

Elimination of the 5 Year Remedial Cycle

Can anyone explain the rules moving forward in plain English (after the elimination of the 5 year remedial cycle)? When is it necessary to restate?
Number of replies posted  1 reply      Number of times viewed  25 views      Add Reply
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52626 created a topic in 401(k) Plans

Eligible Loan Rollover -- Effect of New Guidance

Section 13613 of the TCJA amended Section 402(c)(3) of the Code to provide an extended rollover deadline for qualified plan loan offset amounts (as defined in Section 402(c)(3)(C)(ii)). Any portion of a qualified plan loan offset amount (up to the entire qualified plan loan offset amount) may be rolled over into an eligible retirement plan by the individual's tax filing due date (including extensions) for the taxable year in which the offset occurs. Am I correct in saying the new guidance extends the time participant can rollover the value of the offset loan? The participant is not rolling over the actual loan to the new retirement plan and making loan payments? Core assets rolled over: $40,000 (paid 9/18/2018). Offset Loan: $10,000. Participant would have until 4/15/2019 to deposit $10,000 to the account. This would be earmarked as a rollover.
Number of replies posted  1 reply      Number of times viewed  29 views      Add Reply
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Lawrence created a topic in 401(k) Plans

Section 318 Family Attribution from Parent to Three Adult Children

A daycare is solely owned by a single parent (100% ownership of its corporate stock). It sponsors a 401k plan that allows for deferrals and profit sharing with immediate eligibility. She hires her three children, ages 23, 21, 19, who immediately begin deferring salary. Do the Section 318 stock attribution rules apply from the parent to all three children such that all three children are Key Employees as well as the parent? Or can the parent's 100% ownership of the stock only be attributed to one child?
Number of replies posted  2 replies      Number of times viewed  31 views      Add Reply
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Michaeldean created a topic in 401(k) Plans

Question About Repayment of My 401k Loan

I have a 401k loan for $15,000. I have $25,000 left in my 401k. I just got laid off from my job.. I called and asked what to do and how to repay the loan, but they were not very helpful and I still have questions. They mailed me a letter that says I can repay it by November 20, or December 20. If I repay in December it is an extra $100. Obviously I can't afford that right now. My question to them was, what if I can't repay it by December 20? I was told me they would report the earnings to the IRS and that I would have to pay the taxes. Does that mean that for my income tax I would have to pay the $15,000 plus the tax? OR does that mean they will include the $15,000 as income I earned on the income tax, but I would only have to pay the taxes?
Number of replies posted  4 replies      Number of times viewed  50 views      Add Reply
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C. B. Zeller created a topic in Form 5500

Delinquent EZ and SF -- Which to File First?

The plan has never filed Form 5500 in the past. The plan started in 2005 and covered just the owner and his wife. The balance was over $250,000 due to a large rollover contribution in the first year. It continued to cover just the owner and his wife until 2012, when an employee became eligible. So we have late 5500-EZ filings for 2005 through 2011, correctable under Rev. Proc. 2015‑32, and late 5500-SF filings for 2012 through today, correctable under DVFCP. However, we are still waiting for the client to find the end of year account balances for 2005 through 2007. Without that info we cannot prepare the EZs for those years. Should we do the DFVCP filings now in order to close the door on the DOL penalties, at the risk of potentially alerting the IRS to missing past EZs? Or should we wait until the client is able to find their old account statements, and do both submissions at the same time, hoping that neither the DOL nor the IRS come knocking at their door before then? Has anyone had a similar situation in the past? Am I just paranoid thinking that the IRS will see a "First return/report" with an opening balance greater than $250,000 and immediately come looking for the past EZs?
Number of replies posted  2 replies      Number of times viewed  19 views      Add Reply
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BT created a topic in Distributions and Loans, Other than QDROs

In-Service Distribution from Solo 401k to SEP IRA

PSP terminated April 2018. PSP assets were directly rolled over to a Individual 401k created April 2018. I401k Summary Plan Description states: "Can I withdraw money from the Plan while I am still employed? You will be able to take certain distributions from the Plan while you are still working for your Employer, as indicated below. In-Service Distributions -- You may request a distribution of your rollover and transfer contributions at any time." Can I do a direct rollover of a portion of the assets in the I401k to my SEP IRA? Will this trigger the 10% tax penalty? Anything I should be aware of?
Number of replies posted  0 replies      Number of times viewed  13 views      Add Reply
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