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February 18, 2019

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ldr created a topic in Retirement Plans in General

Schedule C of Deceased: Use the Lifetime Version or the Estate Version?

Am working on the 401(k) plan of a sole proprietor who passed away in 2018. When the CPA sent the Schedule C, she made the comment that this is the Schedule C of the owner while she was alive, and that if I needed the Schedule C that is being filed by the estate, let her know. I did know these are two different things. My first thought is to use the Schedule C that applies to the period when the aowner was alive, but I'm not sure.
Number of replies posted  0 replies      Number of times viewed  28 views      Add Reply
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Belgarath created a topic in 401(k) Plans

Handling Elective Deferrals When Successor Plan Exists

Sal Tripodi has a blurb about the options for elective deferrals if a successor plan exists, and I don't quite understand what he's saying. He gives option #1 as "Transfer the deferrals to the successor plan (most commonly used option)." If a plan is terminated, participants must be given the option to have their funds distributed, either taxable or as a rollover to another plan. But a rollover is still a distribution. So what does this really mean?
Number of replies posted  3 replies      Number of times viewed  52 views      Add Reply
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austin3515 created a topic in 401(k) Plans

Idea for ACP Test When Sponsoring 401(k) Plan Plus 403(b) Plan

Check this out. If it works, I seriously want a gold star! 403b covers the HCEs. The HCEs are excluded from the 401k. Plans both have the same match formula, so one ACP test, everyone gets the same match formula. We're failing the ACP test. We also happen to be passing the ADP test because of course no HCEs are making ANY 401k contributions. How do you feel about shifting ALL of the employees deferrals into the ACP test? Pretty neat right?
Number of replies posted  5 replies      Number of times viewed  66 views      Add Reply
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erisa parrot created a topic in Plan Document Amendments

SH Matching Plan -- OK to Amend Mid-Year to Provide More Generous Eligibility?

Our company has a safe harbor matching plan. I know there are very few amendments that can be made during a plan year. Is it possible to amend the plan to allow a more generous eligibility/entry? Currently, our provisions are the maximum statutory requirement -- 21/1 YOS, semiannual entry. I would like to move to 6 months of service, quarterly entry. Can do?
Number of replies posted  2 replies      Number of times viewed  41 views      Add Reply
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Bri created a topic in Defined Benefit Plans, Including Cash Balance

Change Eligibility Requirement as Applied to Current Employees?

Client has had a DB plan for his self-employment venture he's run since 2015. And a 401(k) plan. Now he's hired some employees for the first time as of 12-1-2018. Under the plan's current adoption agreement, employees would be eligible for both plans as of 1-1-2020. (Standard 1 year, age 21, dual entry.) But there may be a request by these new employees to see if the 401(k) eligibility can be accelerated to something less than a year. We're also thinking about changing the DB eligibility, too, to 2-year at some point during 2019. Just want to make sure I don't have any weird issues.

If we do change to a two year wait, then I'd surmise (and let me know if I've messed up here, please): (1.) 401(a)(26) is fine for 2019 and 2020, because nobody else has met the DB eligibility requirements. [2] For 2019, the staff employees are otherwise excludable. So they can be tested for their DC benefits separately against the otherwise excludable HCEs (none), while the statutory employee test only consists of one HCE. So they both pass. Staff might only need a 3% THM depending on what other employer contributions are in play. [3] For 2020, the staff are no longer "otherwise excludable" even though they're still out of the DB plan. So they may need substantial DC allocations to pass 401(a)(4) against the accruals for the owner in the DB plan.

Am I missing anything?

Number of replies posted  2 replies      Number of times viewed  38 views      Add Reply
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MarciaMc created a topic in Health Plans (Including ACA, COBRA, HIPAA)

My COBRA Benefits Were Canceled -- Provider Stopped Sending Bills to Designated Automatic Payment Bank Account

In my situation, automatic payment was set up when COBRA benefits began in mid-September 2018. The payment requests were to be sent to a bank account that has overdraft protection. The first payment request, which covered three months of premiums due to coverage being backdated, hit the account and was processed and paid in full on October 2. The beneficiary used coverage for a flu shot in late September or early October and did not use the benefits for the next few months. In late December, after the deadline had passed for signing up for a new health plan, the beneficiary called the provider wit a coverage question and was informed that her benefits had been terminated in September or October for nonpayment. Knowing this could not be possible as payments were made automatically from an account with overdraft protection, she asked for a review and the matter was sent to a supervisor. She left a voicemail that day for the supervisor and called every few days to see if there was a resolution. She was told the matter should be resolved in about a week.

After numerous calls in which she was told the matter was being reviewed, on January 31 she sent an email. The email included a screenshot of the provider's website section that shows her payment history and she explained that, though this alleged payment history shows more than one payment, she reviewed her designated bank account and only one payment request ever was sent to the account so only one payment had been made in response to that single payment request. She offered to call the bank with the provider to verify that this was true and that the provider's accounting records were incorrect. She later was told that the January 31 email was treated as a review request and that the review would take about one or two weeks for January 31.

Today she received the following statement from the provider: "First and foremost my apologies. I recently conveyed to you the reason for the cancellation of your COBRA plan was due to a chargeback. That information was incorrect. The reason for the cancellation is because the last payment we received for your COBRA was in November 2018. We have not received a payment since then and unfortunately it is too late to pay back any missed premiums that may be due."

As explained, there was no November payment. The only payment was made on October 2 in response to the only payment request the provider ever was sent to the account for COBRA benefits. If automatic payment has been set up and a payment is properly processed, is it unreasonable to assume that the provider will continue to send payment requests to the designated account for subsequent periods of coverage? Can the beneficiary's benefits be canceled and the provider refuse to reinstate the benefits under these circumstances? Even if coverage could be backdated to the date of cancellation, can coverage be reinstated now and cover the beneficiary going forward?

Number of replies posted  1 reply      Number of times viewed  31 views      Add Reply
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Tax Cowboy created a topic in Employee Stock Ownership Plans (ESOPs)

TE/GE Audit of ESOP -- Extending Statute of Limitation?

Client's ESOP has been under audit for close to 2 years for plan year 2015. It's been extended a few times and I'm not exactly sure why. I believe one reason was that due to the hurricane in 2017 because client is based in FL and the Miami TEGE office is handling the matter. I'm currently reviewing whether or not to come on board to assist. The current client rep will most likely be terminated for a number of reasons.

I believe the main sticky issue has to do with leased employees. I don't have all the info just yet and not sure if soon-to-be-terminated rep will be helpful. I'm hoping the TE/GE auditor will at least provide the sticky issues to me when I'm clients POA/2848 rep. [1] For practitioners who handle TE/GE ESOP plan audits do you normally sign the SOL extensions? I'm usually of the opinion that signing once or twice is in clients best interest. But I've never had the situation where there is a third request. [2] What is the worse case scenario? TE/GE issues its determination immediately? Then client has to be prepared to file admin appeal? Then possibly Tax Court petition?

Number of replies posted  0 replies      Number of times viewed  20 views      Add Reply
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Flyboyjohn created a topic in Defined Benefit Plans, Including Cash Balance

Deduct 2 Years' DB Plan Contributions in Only 1 Tax Year?

Taxpayer needed large 2017 tax deduction and was advised to adopt a DB plan in November 2017 with a November 30 plan year-end. Taxpayer funded PYE 11/30/17 in November 2017, funded PYE 11/30/18 in early December 2017 and claimed deduction for both contributions on 2017 calendar year tax return. Smells fishy to me. Is this allowable?
Number of replies posted  3 replies      Number of times viewed  48 views      Add Reply
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Gilmore created a topic in ERPA (Enrolled Retirement Plan Agent)

Renewal Period for ERPA Designation

My ERPA expiration date is 9/30/2019. Is April 1, 2019 the earliest I can complete the online renewal process? And this would cover my calendar year CE credits for 2016, 2017, and 2018?
Number of replies posted  1 reply      Number of times viewed  20 views      Add Reply
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Belgarath created a topic in Distributions and Loans, Other than QDROs

PPA Distribution Notice: Show Total Balance and Vested Balance?

Under PPA (or anything else for that matter) must a distribution notice to a participant in a DC Plan (non-QJSA) provide the dollar amount of the total account balance and the vested account balance? Now, this seems like a ridiculous question, I know, but in response to some fraudulent distribution requests, we are considering what possible options might be available to combat this. Among the questions/ideas floated was not putting these amounts on the distribution statement that is initially/automatically sent to the "participant," and somehow adjusting procedures to require the participants to contact the Plan Administrator/Trustee to obtain this specific information. Not saying whether this is good, bad, or indifferent, because we haven't yet begun to explore the ramifications -- risk/reward, expense, quality/timeliness of service, what various platforms will/won't do/handle, etc. -- only starting to determine if it is even possible. And not looking into any other changes (at this point anyway) so all other PPA requirements are NOT open to discussion right now.

It appears to me that this information would be required for a DB plan -- (accrued and vested benefit) but I'm not necessarily finding anything requiring it for DC plan. Of course, the statement must provide the verbiage re the effects of delaying distribution, QOSA if applicable, etc., but that's another matter. Anyone have any thoughts on this?

Number of replies posted  1 reply      Number of times viewed  23 views      Add Reply
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msmith created a topic in 401(k) Plans

Safe Harbor Match Not Deposited for Calendar Year 2017

There were no other employer contributions for the 2017 Plan Year. The Plan was top-heavy for 2017. Do they have a loss of the top-heavy "exemption" for an untimely deposit? We intend to have them correct under VCP.
Number of replies posted  2 replies      Number of times viewed  35 views      Add Reply
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