I have a client ALE who has not offered coverage to any of its FTEs or FTE equivalents. Of course they have now received a 226-J letter for 2016 because 8 employees have received a PTC on the Exchange. Their argument is that they could not afford to offer coverage because 2018 is the first year they turned a profit (they took over a company in 2015 and never offered coverage). Has anyone successfully made a hardship argument on behalf of a client that's never offered coverage to their employees? Of course I am requesting W-2s from the client to make sure the IRS did not mistakenly offer the PTC to these employees, but I'm afraid they're going to get hit with penalties for the past 3 years and likely go out of business.

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Company A sponsors a MEP with unrelated company B adopting. During 2018, participant X, who is a non-owner employee of company A and over age 70.5, transfers to company B -- for example, they're terminated from company A and hired by company B. Is this person required to take an RMD by 4/1/2019?

Does the primary beneficiary requirement that a spouse must be named unless spousal consent is provided also apply to "common law marriage"? The particular participant resides in CA as does the plan.

Would you be permitted to have two matches where the first match would go to everyone but the second one would only go to employees employed on the last day (meaning the active employees would get both matches). I'm trying to think of any discrimination issues.

Company ABC is acquiring Company 123 in an asset acquisition. Company 123 currently sponsors a 401(k) plan. There will be a few weeks after the acquisition date during which the employees remain on Company 123's payroll. They'll be leased to Company ABC during that time. Company 123's 401(k) plan will be terminated. The employees will participate in Company ABC's plan. My inclination is that Company 123's plan should be terminated prior to the acquisition date. However, if Company 123 continues the plan for the few weeks that the employees are leased to Company ABC, is there then a potential successor plan issue? My inclination is yes, the "leased" employees are really common law employees of Company ABC at acquisition.

I apologize in advance if I've missed something in my cursory research of this, but here goes. Also, for simplicity I am assuming the employer in question only has DC plans, but I don't think that makes a difference.

Clearly, to determine whether a plan is top-heavy for a "plan year" you use account balances as of the "determination date," which also quite clearly is the last day of the plan year preceding the plan year for which the determination of top-heaviness, or not, is being made. E.g., to determine whether a plan is top-heavy for a calendar year 2019 plan year, you use balances as of 12/31/2018. There are potentially also certain addbacks to determination date account balances of keys and nonkeys for distributions that were made during the plan year preceding the year for which the top-heavy determination is made (i.e., in my example, during 2018 for the 2019 top-heaviness determination), or potentially during a 5-year period in the case of some distributions. See IRC secs. 416(g)(1), (3), and (4)(C). And of course you have aggregation rules.

So the above gives you your key and non-key participant balances for purposes of determining whether more than 60% belong to keys. But then you have to figure out whether those balances belong to keys or non-keys. IRC sec. 416(I)(1) [Note: the "I" in 416(I)(1) should be lower-case, but I can't make that happen; sorry] tells you that the keys are the folks who meet certain requirements, e.g. percentage of ownership of the employer, "at any time during the plan year." Just looking at 416(I)(1) [see previous note], it would seem that the "plan year" being referred to for identifying keys is the current plan year, i.e. the year for which you are making the top-heavy determination, i.e. 2019 in my example. At least, that's what I think, because 416(g)(1) tells you that a plan is top-heavy "with respect to any plan year," and to me, when 416(I)(1) says "during the plan year," they are talking about the same plan year. So it seems to me that based on the statutory language you would use ownership and compensation in 2019 to determine who are your keys and non-keys, and then you would go back to 12/31/2018 to see what those folks' determined to be keys based on their 2019 facts had in the plan for purposes of the "more than 60%" test.

But Treas. reg. 1.416-1, T-12 seems to say pretty clearly that the "plan year" being referred to in 416(I)(1) is not the plan year for which you are making the determination (i.e., 2019 in my example), but rather 2018. It does this by adding "containing the determination date" to 416(I)(1)'s simpler "plan year." I guess when, before EGTRRA, you looked back 5 years to determine who were your keys (i.e., the keys were participants who at any time during "the plan year or any of the 4 preceding plan years" met one of the status tests), and under pre-EGTRRA Section 416(g) you were also dragging back in all distributions made during the 5 plan years ending on the determination date, it may have made sense for the IRS to want the same 5 year period for both purposes, i.e., the IRS may have been trying to simplify. But if that was the reason for departing from what otherwise seems the very plain statutory language of 416(I)(1), it no longer seems valid, since using balances as of the end of the previous year, and status as of any time in the current year, seems just as easy to do now.

Has anyone else had an issue with this? To anyone's knowledge, has the IRS ever commented on this, formally or informally?

Client has a DB plan that has a DC component under which certain participants have plan accounts. Is it possible for those participants to receive an in-service distribution from the DC component? Would this be prohibited because it would be from a DB plan?

Plan allows for 1 loan at a time. Participant has a loan, which he took out in 2014 with a weekly payment of $31.38. In August 2017, the Participant contacts the Investment Company, pays off the loan and requests a new loan. New payment amount is $140.53. The TPA approves the loan and it is then approved by the Plan Sponsor. The entire process is done electronically. Participant is not married so there is no spousal consent and thus no physical paperwork is generated for the request until the loan is approved and the IC sends a confirmation report to the participant which contains the terms of the loan. This is a standard procedure. TPA and IC notify the client that the first loan was paid off and provide the amortization schedule with the new payment amount to be implemented via payroll. Payments are being made but the IC/TPA do not provide loan monitoring for this particular client. Fast forward to October 2018 during the 5500 audit, the auditor picks up this loan for his sample and discovers that while payments were made timely, the amount was incorrect. How does this get corrected? Would this loan be considered in default, even though payments have been made timely just in the wrong amount? Does the plan need to file under VCP? Can the loan be re-amortized so that the loan is paid off by the end of 5 years?