Leaderboard

1. That is correct. Any ER contribution that would have otherwise been deposited must be offset by the amounts in the "suspense" account. The amounts may not be used to pay fees. 2. These are not forfeitures, even though in most, if not all, r/k systems, the suspense funds are held in the forfeiture account. EPCRS, in this case, does not say the amount is "forfeited." It says "the account balance of an employee who received an Excess Allocation is REDUCED by the Excess Allocation (adjusted for Earnings)." (emphasis, mine) Forfeitures are unvested funds that leave a participant's account for any of several reasons. The are not unvested funds, they are mistaken funds. So, you do not run afoul of the "no forfeitures to fund safe harbor" rules.

You say a partnership. What about the other owner(s)?

So the owner had to get a K-1. As long as he had active involvement in the running of the business, then he's had earned income since the LLC started. So the issue is really that he's been eligible for quite a long time and the tests haven't been accurate if he hasn't been included.

Good luck, Tom. If the worst that happens is the power going out, I'm sure you will consider yourselves very fortunate.

8:15 in Jacksonville, some rain, nothing major yet, but they have been saying the worst will be around 2. Jacksonville is spread out, I'm about 20 miles from the coast, so that makes a big difference. my house is not in any of the evacuation zones, so it really depends on the location. still, it wouldn't surprise me if power goes out in the afternoon

The statute of limitations is pretty much irrelevant for a governmental plan. Under News Release IR-1869, IRS will not attempt to tax trusts under governmental plans on their income, regardless of whether the plan is qualified. (The provisions of that News Release relating to nondiscrimination rules have been rendered obsolete by subsequent legislation, but the part relating to the taxability of the trust has not.) And of course, governmental employers are not worried about deductibility of contributions. So the issues are: Taxability of participants (both on vested contributions to the plan, and on receipt of distributions) Employment taxes of the employer And for these issues, you'd look at the SOL that applies to the participant's return or to the employer's employment tax return.

I thought it was 1 year after the last 401(k) funds left the plan. In this case, there were no 401(k) funds. Can you terminate a plan that was never qualified? What exactly goes into declaring a plan unqualified? Do you fill out a form or something? (I have never had to go through this). That said, I think terminating a plan and starting a new one would be much more costly than just filing a "blank" 5500.

Terminating and starting a new 401(k) is precluded by the successor plan rules.

Earnings. Otherwise how could you possibly make them for someone at the 415 limit?