We have self-directed SEP-IRA plans with Wells Fargo, under the PMA plan (100 free trades a year per account). I am convinced that with our higher income this year, and the fact that we are both turning 50 this year, we should convert our two SEP-IRA plans to two Solo 401k plans. We are sole proprietors as husband/wife, filing Schedule C income.

I called Wells Fargo and they can open Solo 401k plans for us no problem, and then roll over the SEP-IRA investments into the new plans, all under the same PMA account. So that's good. The only problem...

In order to open the Solo 401K, Wells Fargo needs a Third Party Administrator (TPA) to provide the plan. The best I could find online are companies who will set up the plan for a fee (or not), and then also charge an annual flat fee to administer the account.

Does anyone have any recommendation for where to find a TPA with a good low-cost plan? We have a CPA and do our own investing, so we don't need any other tax or investment advice - just the plan documents, and to keep everything legal etc.

(The cheapest I've found is $195 a year for both owner&spouse, with no setup fee, at MySolo401k.net.

PenServe also looks interesting, though I can't find prices on their website.)

At some point when we slow down into early retirement we might just continue with the SEPs and close the 401k, since we'll be saving a lot less then. So if we do rollover now to a Solo 401k, can we later roll it back to a SEP?

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If we can't find a good plan, an alternative we are considering is continuing to make EmployER contributions ONLY to our SEP-IRA (as we like the mix of funds that WF offers), and ONLY making EmployEE salary deferrals + catchup contributions to a new Vanguard Solo 401k. (The Vanguard Solo 401k is a plain vanilla plan offering 100 Vanguard mutual funds, but it only costs $20 a year.)

I've read all I can on these forums about the danger of mixing both a SEP and a Solo 401k, and having to amend the SEP form with Wells Fargo to indicate that any excessive employer contributions should be deducted from the SEP. I imagine they will think I'm a nutcase if I ask them for a prototype SEP plan, so if anyone has any more tips on exactly what language I need to insert to be legal, I'm all ears. (The Vanguard concierge told me I could NOT have both a SEP and a Solo 401k, by the way.)

Sorry for all the questions, and thanks in advance. This seems to be a very knowledge board.

PS. The deficit commission has put forward the proposal to cap the combined contributions to $20K or 20% of income anyway, so the huge benefit of the Solo 401k vs. the SEP may disappear if that recommendation is ever adopted.

I currently use EBIA as my 125 reference manual. My manager is wanting to know if there are any others available. Does anyone recommend anything other that the EBIA manual?

A 403b plan is exempt from ERISA because it is a church plan. The plan document excludes a few classes of employees. The company wants to write a separate 403b plan to cover one of the excluded classes, but the provisions will be different from Plan #1.

Do you see any issues with them doing this?

Under ERISA Section 104, a plan is generally required to provide a copy of the plan's SPD upon a participant's request. If the plan provides a copy to the participant must the plan (at a later time) also provide a copy to the participant's authorized representative if the representative makes a request?

(Assume that the participant is still living and that there is no presumable reason why the representative can't get the document from the participant.)

Traditional 401 (k) Plan. Is it possible to add a comp exclusion mid-year? The participants would have the ability to change their deferral elections, but the client doesn't want to bother with the process of collecting enrollment changes. Can this be done? Thanks.

401(k)/PS plan is new comp. 6/30 PYE 6 different groups based on shareholder percentage and comp. and non-shareholder and comp. An employee has been a shareholder for years...effective 10/1/10 he is no longer a shareholder, I know he is still considered an HCE & Key, but for the PS, do I calc. him as a shareholde since he was for a portion of the plan year??? The doc. doesn't say you must be a shareholder as of the end of the plan year or anything.

Clarification of §1.401(a)-20 Q24

Scenario: Plan requires spousal consent for loans. Participant balance is $2,000 deferrals, $4,000 Match. Total Account Balance is $6,000. Match is 40% vested therefore vested account balance is $3,600. Loan has been requested for $1,800.

Is spousal consent REQUIRED because the the total account balance is $6,000. Or is spousal consent NOT REQUIRED because the the total vested account balance is $3,600.

Sidebar: So does "total accrued benefit" mean total balance in account or total vested balance.

§1.401(a)-20. Requirements of qualified joint and survivor annuity and qualified preretirement survivor annuity

Q-24: What are the rules under sections 401(a)(11) and 417 applicable to plan loans?

A-24: (a) Consent rules. (1) A plan does not satisfy the survivor annuity requirements of sections 401(a)(11) and 417 unless the plan provides that, at the time the participant's accrued benefit is used as security for a loan, spousal consent to such use is obtained. Consent is required even if the accrued benefit is not the primary security for the loan. No spousal consent is necessary if, at the time the loan is secured, no consent would be required for a distribution under section 417(a)(2)(B). Spousal consent is not required if the plan or the participant is not subject to section 401(a)(11) at the time the accrued benefit is used as security, or if the total accrued benefit subject to the security is not in excess of the cash-out limit in effect under §1.411(a)-11T©(3)(ii). The spousal consent must be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent is subject to the requirements of section 417(a)(2). Therefore, the consent must be in writing, must acknowledge the effect of the loan and must be witnessed by a plan representative or a notary public.

Hi,

I'm reviewing a plan for possible Benefits Rights and Features testing with respect to vesting. For the general population, per amendment effective 1/1/07, vesting is a 3 year cliff (0 after 2 years and 100% after 3). Prior to that, vesting was at a 5 year cliff. In addition, the plan had transferred balances for certain populations as of 12/31/2006 which remianed on the old vesting schedules, i.e., 5 year cliff and 6 year graded vesting schedules. Does anyone know if Benefits Rights and Features testing would be applicable for the differences in pre/post 1/1/07 vesting schedules vs. the current vesting schedule (3 year cliff)? I am assuming that since the regs treat the 6 year graded as equivilant to the 3 year cliff, there would not be a BRF test required for that scenario. However, for the 5 year cliff, I am not so confident. Any thoughts, documentation that would assist in my research?

For those participant populations mentioned above that went from a 6 year graded to a 3 year cliff, they went to a 3 year cliff where after 2 years they were 20% vested and after 3 years they were 100% vested. I am assuming that this vesting schedule is equivilant to a 3 year cliff where particpants are 0% vested after 2 years and 100% vested after 3 years for purposes of determining whether the pre 1/1/07 vesting, i.e., 6 year graded, is equivilant to the current vesting schedule, i.e., 3 year cliff.

Also, since there are currently different vesting schedules for certain populations for active employer contributions, i.e., (0% after 2 years and 100% after 3 years), 20% after 2 years and 100% after 3 years), (20% after 1 year, 40% after 2 Years and 100% after 3 years), and (25% after 1 year, 50% after 2 years, and 100% after 3 Years), it appears that BRF testing would be required unless these deferrent vesting schedules are considered equivilant. However, I have yet to confirm. Does anyone know the answere or can anyone lead me to documentation that can help me with my research?

Thanks

I have a 457 account and would likde to take a distribution and pay the taxes on the the money. The plan administrator said he needs to withold 20% for taxes. Isn't it better to pay the taxes with outside after tax money? How can I do this?

My understanding is that hardship Distributions from deferrals are not eligible for rollover and are subject to voluntary withholding. What do you all think of an administrative policy (not in 401(k) documents) that mandates 20% withholding because it is " so much easier to explain and process". There have been some long conversations with an employee about how much should she have withheld. What do you all think?

Didn't we have a day that was 22/7 last year, too? Something about pizza as I recall.

I was glad to see Brian Graff's statement in response to the Gang of Six Plan for deficit reduction. Wish we had a way of backing him up!

Would love to hear other's comments.

http://www.asppanews.org/2011/07/21/gang-o...-on-fuzzy-math/

Historically when I am working on a plan term for a one participant plan that has excess assets I amend the plan to increase the formula enough to absorb the excess assets and avoid the surplus. This of course is assuming they are not at the 415 limits.

Another service provider takes the approach for a one participant plan that if the assets exceed the value of plan benefits, but the assets are less than the 415 lump sum benefit, they just ditribute all plan assets as a plan distribution since it is not greater than 415 benefit limit.

Is there any prescribed reg or code section that allows for such a distribution without a plan formula increase amendment or does the plan formula need to be amended?

I personally am not aware of authority to distribute the excess assets as a plan distribution without explicitly amending the plan formula.

thanks

An employer incorrectly calculated participants' safe harbor match contributions for 2 1/2 years, contributing too much to the plan. When the employer takes the money out of the plan, besides amending 5500s, what reporting will have to be done? Any taxation?

Any other suggestions you have for dealing with this?

Thanks!

Does anyone know what the IRS Notice 87-20 is? We are possibly taking over a DB plan and the current actuary speaks of this notice. We cannot find any information as to what this notice is or where we can find it. Thanks

When adjusting the 415 $ limit for benefits commencing before age 62, do you use the 417(e) mortality table and 5% or do you use the plan's actuarial equivalence assumptions and the limit is the lesser of the two? 1.415(b)-1(d)(1)(i) states in part "However, if the plan has an immediately commencing straight life annuity payable both at age 62 and the age of benefit commencement, . . ." What does that mean and does it affect the 415 calculation?

One of our clients discovered a completed employee deferral election for an employee that was filled out way back in 2002. Somehow this was over looked by both the plan sponsor and employee and money has never been withheld from the employee's paycheck. I understand the calculation of the QNEC in order to fix this error, but my question is does anyone know whether this can this be fixed via self correction (SCP) or must they file through the VCP since this dates back more than 2 years? Thank you for any insight!

Small closely held S-Corp has an ESOP plan. Common stock of plan sponsor is not publically traded.

What is the tax consequence of answering “NO” to question #12 on Schedule R-Form 5500, “Does ESOP hold stock not readily tradable on established securities market?”

Thank you.

DPSRich

I have a participant who worked here in the US for a US company and has a balance in the 401(k) plan. He has terminated employment, is moving to Puerto Rico, and would like to roll the funds over to an IRA there. Does the plan have to withhold the mandatory 20% in federal taxes before rolling his money over to a Puerto Rican IRA?

Any info/references/or experiences you can share about this topic would be greatly appreciated, thanks!!

Any thoughts on whether a participating employer is legally required to continue contributions to a multiemployer health fund during a strike or a lockout. It appears to me that it will depend on the terms of the CBA. In a single employer plan, I believe an employer could cut benefits that have not accrued prior to the strike, assuming there is no contrary provision in the cba.

Any thoughts? Any relevant case citations?