IRS Provides Help with Rollovers
If you receive a distribution check and fail to roll over the payment to an IRA or other plan within 60 days, you may be in luck. The IRS has provided a self-certification procedure for those who inadvertently fail to complete a rollover within 60 days. Revenue Procedure 2016-47 provides a sample self-certification letter that a taxpayer can use to notify an IRA or other institution that he qualifies for a waiver of the 60-day rollover requirement. The waiver applies if one or more of 11 circumstances apply, including:
- Check was misplaced and not cashed
- Taxpayer’s home was severely damaged
- A family member died
- Taxpayer or family member was seriously ill
- Taxpayer was in jail
- Postal error
Form 5500
There were a number of new compliance and other questions on the 2015 Form 5500 for which answers were optional. The IRS hoped to make answers required for 2016. Under pressure from industry groups and others, they have relented and said never mind, answering these questions is still optional for 2016.
Year End Housekeeping Reminders
If you have retirement plans with a December 31 year end, you may have just filed your 2015 Form 5500 and said your goodbyes to the plan auditors. Now is a good time to:
- Organize plan files and documents.
- Ensure that 2015 Summary Annual Reports were delivered to participants and beneficiaries.
- Ensure that participants, including new participants, have a copy of the most recent Summary Plan Description.
- Remind participants to complete or update beneficiary forms.
- Check your plan’s fidelity bond coverage – that’s the required coverage that names the Plan as the insured party, with no deductible. Generally coverage must be for 10% of assets, with a maximum coverage of $500,000 for a plan ($1 million maximum for plans holding employer securities).
- Ensure distributions, including required minimum distributions, are being handled.
- Force out small balances if your plan states that balances under a certain amount can be paid if a participant fails to consent to distribution. Don’t assume that the daily record keeper for your 401(k) plan will automatically force our small balances.
- For all plans especially Section 401(k) plans, ensure that the balances in forfeiture suspense accounts are being used in the manner indicated by the plan document. The IRS has made it clear that forfeiture suspense accounts cannot just roll forward from year to year without being used. Don’t assume that your 401(k) daily record keeper will remind you to use forfeiture funds.
- Consider the possible impact to your plan from new overtime rules that take effect on December 1, 2016.
- If you signed up for ESOPConnection, post your October 2016 ESOP month special event and celebration pictures!
New Plan Limits for 2017
On October 27, 2016, the IRS announced cost of living adjustments affecting qualified retirement plans.
Selected Limits
| 2017 | 2016 | |
| 401(k) Elective Deferrals | $18,000 | $18,000 |
| 401(k) Catch Up Deferrals | $6,000 | $6,000 |
| Annual Defined Contribution Limit | $54,000 | $53,000 |
| (Section 415)* | ||
| Annual Compensation Limit ** | $270,000 | $265,000 |
| Highly Compensated Employees | $120,000 | $120,000 |
| (look-back year calculation)** | ||
| Key Employee – Officer Threshold* | $175,000 | $170,000 |
| Social Security Wage Base | $127,200 | $118,500 |
| ESOP Threshold Balance for | ||
| lengthening the 5-year installment | ||
| period | $1,080,000 | $1,070,000 |
| Amount for lengthening the 5-year | ||
| ESOP installment period | $215,000 | $210,000 |
*Effective for limitation years ending in calendar year
**Effective for plan years beginning in the calendar year
The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $62,000 for married couples filing jointly, up from $61,500; $46,500 for heads of household, up from $46,125; and $31,000 for married individuals filing separately and for singles, up from $30,750.
