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ERISA requires the plan to maintain records for as long as necessary to determine benefits payable to participants. If this participant had a balance, the plan had an obligation to maintain records (breach number 1). A statute of limitations under ERISA usually only begins to run when the relationship ends. If this person had a balance in the plan, the relationship never ended and the statute hasn't even begun to run. I agree with Belgarath - keep plan records forever.... When I advise plan sponsors about contracts with service providers, I always advise them to include provisions that say 1) the records belong to the plan; 2) the service provider can NEVER purge them without plan sponsor consent; and 3) that in the event of the termination of the relationship, the service provider MUST transfer the records to the successor in their entirety or agree to preserve them FOREVER. Time for counsel to get involved....

This is why when clients ask, "How long should I keep plan records?" I tell them forever. Was it over $5,000 so that it couldn't be cashed out without consent, or was it small enough so that it might be reasonable to think it was cashed out? How old is this person now? Has the plan been through several TPA's before it came to you (seems like that's the way it usually works...) SSA's ever filed? I really don't have any bright ideas on this. Hopefully someone else can provide you with something constructive.

Found one. I'll bet there's more. Good luck to plan sponsors who aren't worrying about 20 years from now. I hope they read BenefitsLink and get the message.

Sounds like no donuts for me. Nonetheless, because of the deduction for 1/2 FICA a 50/50 split will violate 415 based on 90/10 profit split. Here's an example at $200,000. Split profit sharing of 20% of net profits 50/50 when K-1's are split 90/10. Gross profit 200000 A B Profit distribution 180000 20000 FICA 9757.34 1412.96 Net 170242.7 18587.04 Net limited 170242.7 18587.04 Profit sharing 37765.94 18882.97 18882.97 Note that B's profit sharing exceeds 100% of net pay. Whoever came up with this concept needs to sharpen their pencils.

when in doubt, look at the 1099r instructions, and well, decide for yourself what they mean! Losses. If a corrective distribution of an excess deferral is made in a year after the year of deferral and a net loss has been allocated to the excess deferral, report the corrective distribution amount in boxes 1 and 2a of Form 1099-R for the year of the distribution with the appropriate distribution code in box 7. If the excess deferrals consist of designated Roth contributions, report the corrective distribution amount in box 1, 0 (zero) in box 2a, and the appropriate distribution code in box 7. However, taxpayers must include the total amount of the excess deferral (unadjusted for loss) in income in the year of deferral (I think that statement must only apply to non-Roth) , and they may (apparently you have an option? which year to report this?) )report a loss on the tax return for the year the corrective distribution is made. Publication 525 (2015) adds the following Excess distributed to you. If you take out the excess after the year of the deferral and you receive the corrective distribution by April 15 of the following year, do not include it in income again in the year you receive it. If you receive it later, you must include it in income in both the year of the deferral and the year you receive it. Any income on the excess deferral taken out is taxable in the tax year in which you take it out. If you take out part of the excess deferral and the income on it, allocate the distribution proportionately between the excess deferral and the income. You should receive a Form 1099-R for the year in which the excess deferral is distributed to you. Use the following rules to report a corrective distribution shown on Form 1099-R for 2015. If the distribution was for a 2015 excess deferral, your Form 1099-R should have the code “8” in box 7. Add the excess deferral amount to your wages on your 2015 tax return. If the distribution was for a 2015 excess deferral to a designated Roth account, your Form 1099-R should have code “B” in box 7. Do not add this amount to your wages on your 2015 return Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution.” edited to add comments from publication 525

$30K in 1993? So, the potential exposure here is probably $75K or more. The plan sponsor should engage counsel to strategize; that's the cost which needs to be borne as a result of the failure to keep good records.

Guess I'd start with the employer and see if they have a copy of an account statement showing the payout, or maybe a copy of the 1099. Would the IRS have a copy of a long-ago 1099? Just some ideas. Good luck. And besides keeping plan records forever, plan sponsors need to be vigilant in requesting (for their own files) copies of documents they may need 20 years from now.

The client adopted a simplified plan. It was inexpensive. Live with the results or pay some money to get a more flexible plan.

Sorry, no can do.

... and the Plan should not take sides.

I think the IRS answer "It is a document interpretation issue certainly leaves things open. there is nothing, as far as I know, that says "I must run the ADP test before making a profit sharing contribution" the language in EPCRS section 6.06 says.... If an Excess Allocation resulting from a violation of § 415 consists of annual additions attributable to both employer contributions and elective deferrals or after-tax employee contributions, then the correction of the Excess Allocation is completed by first distributing the unmatched employee’s after-tax contributions (adjusted for Earnings) and then the unmatched employee’s elective deferrals (adjusted for Earnings) that seems to imply I could play 'games'. I know my ADP failure is going to be 510.37 so I will 'over contribute' 510.37 in violation of the 415 limit... a bit aggressive for me but... of course, that example might only work for when you have 1 HCE as the amount refunded doesn't necessarily tie into the person causing the plan to fail ADP. now if the document language is such (as the IRS hints it could be) that it says deferrals (and match) are counted first then you figure what profit sharing can be made up to the 415 limit, then no I would say you can't play games. but, if for instance I was giving everyone 12.75% of pay and that caused a 415 violation I wouldn't have so much a problem with it. but those are my ramblings, and as someone once said in response to a post by someone named 'blink the three eyed fish', "Yes but can I do it and will it be ok if I tell the IRS Blinky said so" I'm not sure my name carries much more weight. aside from trying to include the cite for any comments I may make!

If the deferral provision was not yet effective, I don't think you have any choice but to refund them.