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K2retire created a topic in Nonqualified Deferred Compensation
I am a TPA working at a financial services firm. I do not work on any non qualified plans. My boss seems to think that I should be able to provide him with a sample of boilerplate language for a COLI plan. In the qualified plan area, I can't imagine anyone being willing to share that for free. Is it something that might be available for a non qualified plan?
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HCE created a topic in Defined Benefit Plans, Including Cash Balance
We have an Early Retirement Window for our pension plan going into effect. We crafted the eligibility requirements and are comfortable that they are fine. However, today, we discovered that four people at a key position at the company might want to participate. There are only 4 people in this position company-wide, and having them all leave at the same time would be devastating. Can we state in the eligibility section that, for this specific position, only two can participate, and the people with the longest service at the company have first dibs?
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TaxLawyer1978 created a topic in Retirement Plans in General
Client has 3 plans: a DC plan, DB plan and a TDA plan. They paid legal invoices related to all three plans out of one of the plans' unallocated account. All plans cover same employees. Is this a prohibited transaction?
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EBECatty created a topic in Distributions and Loans, Other than QDROs
A PS plan holds a life insurance policy. The participant was properly taxed on the cost of insurance each year. Cash value is $100,000 and death benefit is $1,000,000. The plan is the beneficiary of the policy. I understand under Internal Code Section 72(m)(3) that if the participant dies the plan gets the $1,000,000 death benefit and pays it to the participant's PS plan beneficiary. The tax-free distribution to the beneficiary is $900,000 ($1,000,000 in proceeds less $100,000 in cash value). If the participant buys the policy from the plan while the participant is alive, and the values are the same as above at the insured's death, does the life insurance beneficiary get all $1,000,000 in proceeds tax-free under 101(a)? Or do you still need to exclude the cash value from the tax-free portion because the policy originally was purchased by a qualified plan? In other words, is the only
relevant variable policy ownership at the time of death? The $100,000 of (taxable) cash value within the plan in the first scenario is being "replaced" with the $100,000 of cash the participant uses to buy the policy in the second scenario, so there is still a taxable distribution from the plan of $100,000. But there would only be one "bucket" of $100,000 that is potentially taxable ($100,000 from the plan) instead of two (one of $100,000 in cash value within the plan taxable upon distribution; another separate $100,000 that could have been used to buy the policy and potentially taxable upon death). Estate tax is by no means my strong (or semi-strong) suit, so I may be missing something here, but it seems like you get a slight benefit by buying the policy out of the plan.
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Belgarath created a topic in 401(k) Plans
The old different match rates conundrum has come up again. Employer wants to keep existing match level for all current employees but use a lower match rate for all new employees. Passes current availability testing just fine (for now) but because current employees include ALL of the HC, I don't see any way for this to pass effective availability. Anyone have any ideas?
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TaxLawyer1978 created a topic in Retirement Plans in General
Client had a non-ERISA TDA (403(b)) plan. The plan did not/does not offer loans. The client converted the plan to an ERISA plan in 2009. An employee who is a participant in the plan applied for a loan with MetLife. MetLife sent the client a form to sign as the plan administrator. The form relates to the private loan (outside the plan), which MetLife says it will not approve for the employee if she has a loan in a current plan with the client because she is still employed with them. Can client sign the form as the plan administrator of the current TDA plan and say the employee does not have loans? Or will this invalidate the MOA non-ERISA status?
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Karoline Curran created a topic in 401(k) Plans
I have a participant in the plan who has moved back to Italy -- he was a resident alien while he was in the USA. He wants to roll his money over to an IRA (or the equivalent) in Italy, or take a lump sum distribution. How would the tax withholding work if he took a cash distribution? He has been gone for a couple of years now.
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Purplemandinga created a topic in 401(k) Plans
A Canadian citizen has a 100% ownership interest in a C-Corp which has a 25% ownership in an LLC (taxed as a partnership). The Canadian citizen does not receive a W-2 from the C-corp for wages performed. The C-Corp and the LLC would most likely be an affiliated service group. Could this Canadian citizen participate in the 401(k) plan offered to employees of the LLC? My thinking is no because Canadian citizen would have no wages to defer. If they somehow received a W-2 from the C-Corp then they might possibly be able to participate. Correct? Would the C-Corp be disregarded and I then would calculate earned income from the LLC earnings to determine eligible compensation?
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cpc0506 created a topic in 403(b) Plans, Accounts or Annuities
A prospective client is running two 403(b) plans: a non-ERISA plan that is a deferral-only plan and an ERISA plan that holds only the employer contributions. Has anyone ever encountered this before? Does it matter if the employer contributions are non-elective versus matching contributions?
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CLE401kGuy created a topic in 401(k) Plans
The payroll company was calculating elective withholding including unpaid time off which in turn has caused employees' deferral rates to be off. For example, if a participant worked 32 hours for the week, and then had 8 hours of unpaid vacation. the payroll company was taking 40 hours multiplied by $10 an hour multiplied by 5% to equal $20 of withholding. However, the participant was only paid $320 and correct withholding would have been $16. $20 of $320 of comp is actually 6.25% withheld, not 5%. So the withholding election was technically not followed based on what the person was actually paid. This has been happening since 2014. Since it's unpaid vacation it's not a huge amount of money, but what correction is to be made?
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Bumppo23 created a topic in Distributions and Loans, Other than QDROs
Does any only rely on the account balance as of the latest valuation, or does one add in outstanding loans to said amount?
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L_Ann_F created a topic in Form 5500
Does anyone know if the hurricane extension applies to a TPA firm that is preparing the 5500 if they are in the declared disaster area?
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