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  2. Because of the issue with the investment house, it was still impossible for someone to defer. therefore, while every intent to start the thing may have been there, it simply was impossible. years ago at an ASPPA conference, the question was posed "A safe harbor notice was provided (3% shnec) but the plan was never amended for safe harbor. now what? the IRS response was there is no 3% due under the terms of the document. you may be on the hook for 3% via the DOL but that is a different issue. This may be similar, you told people they could defer, but in reality they couldn't. So are you 'on the hook' for making QNECs to make up for missed deferrals, and if so how much? in addition, it was not indicated above what employees were told...e.g. if there would be a delay, etc.
  3. Today
  4. That is a function of if the only participants are owners and the amount of assets in the plan. Its history doesn't matter so there is no need to terminate the old plan and start a new one. You might get some letters from the IRS asking where the next Form 5500 is if after years of filing them you stopped. Maybe someone who has gone through that can give you insight how big of a pain it was or wasn't to get the IRS to understand. I for one would file a Form 5500-EZ if I was in that position regardless to start a statute of limitation. That is just me.
  5. Don't you have a operational failure here for not giving participants the opportunity to make 401k contributions? I certainly think so. I'm assuming the failure was longer than 3 months and as such the QNEC would be 25% of missed deferrals and 100% of the match. Interesting question is, 25% of what? Perhaps 25% of the election the ultimately made? Perhaps 25% of 3% (even though EPCRS is clear that it is based on current year activity). But 25% of zero hardly seems appropriate.
  6. Some of this is incredibly incorrect. 1) You would not rollover the assets to the "new plan", you would roll them over to the new account at the new Custodian/Trustee. 2) I just checked the first document I had from a very large brokerage and after-tax are most certainly allowed. 3) 1099-R's???????? All I have time to comment on.
  7. That's a great point about existing custodians for solo 401K plans not supporting the after-tax provision. Thanks for stating that. No one ever said anything about the sponsor administering their own plan. If you have names of administrators you like and think are well suited to such a trivial plan, I would love to get referrals.
  8. Yesterday
  9. A solo 401K with assets under $250K has no requirement for filing a form 5500 and also has no stress test requirement. So I assume the objective is increased simplicity and reduced cost to manage a trivial plan structure.
  10. IMHO, report that person as "retiree receiving benefits".
  11. I am working on the termination of a DB plan. There is one participant who is active and receiving a benefit. On the Form 500, would he be counted as an active or as a retiree? Thanks for any responses!
  12. Suppose you have a sole proprietor who adopts a regular non-prototype SEP (I believe form 5305 SEP). They have no employees. Now several years later he is also a 50% partner in another non-related entity. No controlled group, no affiliated service group. The partnership provides him with a K-1 with earned income. Does he automatically include that K-1 income along with his net schedule C profit when determining the SEP contribution? Or does the partnership need to somehow also adopt the SEP? Thanks.
  13. these employees would not be statutorily excluded, even if the plan had that exclusion, but that doesn't mean you can't exclude them specifically in document language provided it doesn't create coverage problems. saves the complexity of trying to pay them out later, especially after they've left the country.
  14. yes, i actually did this myself years ago - had to provide a little extra documentation to my rollover custodian that the check from me was for the loan amount being rolled, agree that this must be done within 60 days of the distribution/offset, and that it would be cleaner and easier, but likely slower, to simply repay the loan first. as qdrophile notes, this is different from rolling over the note/debt, which would generally not be permitted - could do a direct rollover or transfer of a loan to another q-plan if both plans allowed for such.
  15. Keep in mind, once you transition to current year testing, you are stuck with it for at least 5 years.
  16. I'm with the Orange man (or woman).
  17. Respectfully disagree Tom. If under the terms of the plan as legally adopted deferrals could have been made, the issues with failing to have the proper administration in place are irrelevant.
  18. and to be clear, the 60 days starts when the loan is offset, not when the 1099-R is received. The original language in the question leads to this cautionary statement.
  19. "These" $10,000 have to be replaced with some "real" dollars, which is the economic equivalent of paying the loan before the distribution. If the question includes the proposition that the debt be maintained in the recipient arrangement, the answer is different.
  20. OP, I am assuming that you are a plan sponsor, and not a TPA, etc..., from the only other thread you have posted in about after-tax contributions. What are you trying to do? Are you really looking for "simplicity" or saving on the administrative cost by moving to a one-participant 401k provider? If all you are trying to do is move to a no cost plan at Fidelity, Vanguard, TD Ameritrade, etc.. there is no need to terminate the plan. Once you have no eligible employees, amend the plan to the new custodian and possibly trustee, and rollover the assets to the new plan. You can name yourself as administrator, but your prior posts do not lend themselves to a high degree of confidence. I would suggest that you at least hire a professional to make sure you do the transition correctly and to at least make sure you do things properly for this and next year. If your goal is to make after-tax contributions, the above is not going to work. I am not aware of any custodian provided plan that allows after-tax contributions in their adoption agreement. This is going to require an independent plan document and a TPA to administer and properly follow the IRS' new guidelines in Notice 2014-54. Some large corporate plans are still confused about the proper procedures. This is not going to be free, but the yearly administrative costs and filing fees for the 1099-R(s) are likely to be less than the administrative burdens of a plan with employees and the yearly Form 5500 even when the plan balance was < $250K The good news is that as a one-participant plan, you don't have to worry about ACP testing.
  21. arguably, if there was no possible way for someone to defer the first year, then the 401k 'feature' didn't exist. (despite best intentions) this would be no different than creating a plan in 2016 with profit sharing only and adding a 401k feature in 2017.
  22. We took a plan over as of 4/1/16. They had immediate eligibility but wanted to change it to 1 year as of 1/1/16. As I'm beginning the year-end testing, I realized that they never specified whether they wanted everyone who was eligible under the immediate provision to continue to participate or whether they wanted to just start anew. It would've have been an issue except someone that started 3/1/16 actually started contributing. We didn't take it over until 4/1/16. Restated the document as of that date but the 1 year requirement was done to start 1/1/16. Trying to figure out how to handle.
  23. no retroactive applicability, anyone in the plan will stay in the plan even if they don't meet the new eligibility.
  24. Hi, Silly question but what do you mean by prospective?
  25. Non-safe harbor 401k plan legally began 10/1/2016 (plan document shows that as the effective date). Due to issues w/ getting the investments going, no salary deferrals were withheld during 2016 from any paychecks. No employer contributions planned for 2016. Company plans to file a short year first plan year 5500, showing no contributions or assets, for 2016. Salary deferrals were begun during 2017. Question: the Plan was set up for prior year ADP testing. For ADP testing, is 2016, or 2017 considered the first plan year? It seems that 2016 would be the "first" year, thus causing the prior year deferral % for 2017 too be zero, which would mean the HCE's could not salary defer. Remedy would be to recommend amending the plan document for current year testing, to allow the HCE's to contribute. Any better ideas? Would prefer that 2017 be the "first" year, but not sure there is an legal basis for doing so under the circumstances. Thanks for any assistance.
  26. It has been a long time and I might be getting excess contributions and excess deferrals mixed up. But there is a code P for the 1099-R that goes a years. Code P on the 2017 instructions says you use this code to report excess contributions taxable in 2016. An 8 is excess taxable in 2017. I have a vague memory that says if you had an off calendar year you could get the code P and it was because you had to take the excess contributions from the first dollars. I might have the wrong type of excess as I am out of the 4k business and I was never a 1099-R expert. I just always remembered you could have to send to people a 1099-R in Jan 2017 that told them they had a taxable distributions in 2016 and it was some kind of FIFO rule that caused it. Back at one of my old 4k TPA firms we had a whole letter explaining to people how to do their taxes when it kind of rare facts set came up. So happy to be told I am wrong or it doesn't apply.
  27. pone55, "solo 401(k)" is a marketing term, nothing more. As Bill notes, when you have a single participant in a 401(k) plan, you have a "solo 401(k)," if that's what you want to call it. What is it you want a new plan to do that the old plan can't?
  28. Our company is considering selling to a buyer that will continue to use the Union workers and continue paying into all Union Benefit plans. Can the company (current shareholder) sell it's shares to this buyer without liability to ERISA's Pension program involving "Withdrawal Liability"? The company has been incorporated for many years. Thank you - Don
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