Controlled group.  Two different plans.  Must be tested together due to coverage.

Plan 1:  Discretionary match:  100% up to 4%

Plan 2:  Discretionary match:  0.00%

Do I have to test this for coverage? 

BRF?  will zero discretionary match fail one or both current/effective availability?

A 401k plan has decided to terminate on 1/1/2020, the company is closing.  There are only 3 participants, one is terminated.  The terminated participant submitted distribution paperwork on 10/31/2019 to move his account to an IRA, but the 401k provider froze the plan as soon as they were notified of a plan termination.  The other two participants are also submitting paper work to roll their money out (one is a part owner).  Does the 401k provider have the right to freeze the plan ?  When can the participants expect to roll their money over, after 1/1/2020.

Plan started in 2018.  Only the owners deferred.

Obviously:  ADP failed.  

Refunds done.

Obviously:  Plan is TH for '18 & '19.  Owners stopped deferring for 2019.  Not sure if any were made, but let's call it zero.

Question:  Is there any way around the $40,000 Top Heavy contribution that is due for 2018 given this fact pattern?  (No TH for 2019, as no deferrals for keys)

[I thought, aggressively, we could have  had the refunds as 12/31/18 liabilities and accrued it back and thus have EOY '18 palace of zero.  But one key was over 50, and some of his deferrals were considered catch-up and stayed in the plan....) ]

Background:

Our office was engaged to review prior administration for a 3 year period (2016, 2017 & 2018).  After proper determination of highly compensated employees, it has been found excess contributions were overstated by a significant amount to one highly compensated employee for 2 of the 3 years.  (overstated by $13k 2017 and $10k 2018)

I have not found any specific guidance on the correction for the improper distribution of excess contributions.  Has anyone had this type of correction?

Can a US citizen working in the UK as a sole trade (their version on sole proprietor) set up a 401k or SEP based on his UK income?

Per the US/UK totalization agreement, the income is not subject to Social Security, but is reported on Sch.C  of his 1040.

I know we only use wages that are subject to social security but this is an odd situation.

A participant died in 2016 without a beneficiary designation on file. As a result, her son is the beneficiary on her $4,600 account. He doesn't want the money. Even if I had his SSN and address, he probably wouldn't cash the check. Also an RMD will be required for 2020. The plan sponsor hasn't been much help, but I did learn that she has a brother. 

What options are available to distribute the funds?

Reviewing the fund lineup of a retirement plan.  One of the funds is a CIT with an expense ratio of 25 bps.  100% of the CIT is invested in a single Vanguard Fund with an expense ratio of 8 bps.  Why would someone create a CIT to only hold one mutual fund and then increase the fees of the fund?

Some help is greatly appreciated: I am considering an individual 401(k) plan that I believes has a profit sharing component to it. I am getting really frustrated and am wondering if I am getting my chain yanked.

Company 1 is saying they have a "QRP". They say is it not a Solo-K, but everything they talk about screams "401(k)". They tell me that a Solo-K does not fall under ERISA (which I agree with based on everything I have read), but their QRP does. They say it has judgement protection from creditors and falls under ERISA.  My questions:

1) How can any plan with only one participant (the owner...me) fall under ERISA and receive protection from creditors? I thought ERISA was intended to protect participants in employer plans?? If it does fall under ERISA, is it because the plan has profit sharing as well?

2) While clear with their marketing, what would/could make a "QRP" of Solo-K fall under ERISA and have asset protection?

3) An obvious question...my understanding that a plan that falls under ERISA would file an annual report to the DOL? Would I have an exemption to this requirement?

Any assistance is appreciated. To me it is the difference between spending $3,000 on this "QRP" vs a much lower fee for a Solo-K. Again, the promoters are saying it is NOT a 401(k)...but I am a big believer that is it looks, smells and acts like a 401(k)...it is a 401(k).

Thanks for any and all responses, in advance. 

We took over a plan from another TPA who had done a PPA restatement effective 2015.  The restatement was COMPLETELY wrong (some of the terms didn't even make sense).  All valuations from 2015 on have been done consistently as I expect the prior TPA intended, but not in compliance with the restated documents.

At this point, what is the best way to proceed?  We need documents that agree with the valuations.  Is there a good way for us to correct this situation or do we have to use one of the EPCRS programs?

We are setting up Auto Enrollment (4%) plan with Auto Escalation (1% annually up to 10%).  When we looked at plan demographics we noticed that close to 40% of participants have elected flat dollar deferral elections instead of percentages. How would administrator auto escalate someone with flat dollar deferral election? Here are a few options we have considered.  

1. Divide pay period deferrals by the pay period comp and increase the flat dollar amount by calculated 1% if needed.  This approach would potentially hurt folks with variable comp through the year, who want to ensure max deferral (402g limit) and not losing any match (match is calculated with per pay period comp).
2. Exclude anyone who has elected flat dollar deferrals from Auto Escalation.  Wondering if that would be considered definitely determinable in accordance with Regulation §1.401-1(b)(1)(ii) and uniform for EACA rules.  Currently Top choice if prior sentence holds.  
3. Only apply Auto Escalation for participants who have not made any affirmative elections.  However, that would only limit this entire plan provision to the future new hires, who never make elections.

I would like to hear your thoughts and comments.  Are there any other approaches you have seen that you would like to share?

Thanks! 

I am working with an ESOP to get their problems cleaned up.  We need to file an amended Form 5500 for the a 10/1/2014 to 9/30/2015 plan year.   We can't access the 2014 form on FT Williams.  

I don't do really old forms like this very often but something in the back of my mind says after so many years EFAST2 requires you to submit very old 5500 on the current year's form.  So I am thinking this is right.  Seems very unlikely FT Williams would get this wrong also 

But can someone confirm this for me? 

Thanks

Hi, A Terminated employee was in the DB Plan with zero benefits. This is because the DC plan balance offset his DB Benefit (offset plan). During the 1/1/2018 -12/31/2018 plan year, this terminated employee received his DC Balance (this offset his DB benefit and therefore he did not receive a benefit from the DB Plan). Therefore, he was not included in the 2018 DB Val Report.  The valuation date for the DB Plan is 1/1/2018 (BOY Valuation date) there any way to justify removing this employee from the 2018 DB Valuation (as he received his benefit during 2018, however, it was during the 2018 year, after the 1/1/2018 val date)? Either way the Report numbers are all the same , since he did not accrue benefits under the DB Plan, the only issue is the participant count.----Thank you.

I'm sure this is obvious but want to ask anyway:

Client has discovered deferral contributions that were made late in 2018 and 2018 5500-SF has already been filed. 

Can I assume that they should now file an amended 2018 return indicating the late contributions?

Hi, guys.

I'm pretty sure I know the answer to this question, but just want to be absolutely certain. Is the max contribution to an IRA limit for the calendar year or the tax year? Since you're allowed to contribute in the following year, 2020, up to the tax deadline, that's another calendar year, but it's the same tax year, if it is to apply to the 2019 tax year. In short, can you contribute the max amount by the end of 2019 and then more or even the max again till April 15, 2020, to be applied to the 2019 tax year? I'd imagine not, but I appreciate your confirmation.

Let me tell you the reason I'm asking, in case it makes any difference and such a payment is treated in a different way, which is doubtful, but you never know. I was just laid off and I'll be getting a severance payment. I don't know yet exactly when I'll get it, but it'll be very unfortunate if it happens to be before the end of 2019.

Ugly IRA excess contribution situation over 18 years and potential $400K excise taxes.

Is there a person or department at IRS we could approach to make an anonymous VCP-type application proposing corrective action?

Thanks

We have two MEPs that are merging/terminating. I use both words because that is my question. The MEP sponsor is merging the plans into a larger MEP at another record keeper. There are a few adopting employers who are going to merge into another MEP and one or two who are going to spin off to their own plans. The prior TPA that we inherited this MEP mess from set up each adopting employer with their own plan document and not a regular MEP document with each AE signing a Joinder Agreement.  It has been my understanding that an adopting employer has limited choices when leaving a MEP: spin of and continue the plan, spin off and terminate the plan, or merge into another plan. There are the option because you cannot terminate the MEP. The MEP has a few "orphans"  (i.e. inactive employer) are not transferring to the new MEP. Can the MEP be terminated just like a regular plan termination or do the "orphans" have to be spun off and terminated?  

Hello:

I have a 401(k) Plan sponsored by a Sole Proprietorship that terminated on 12/31/2018.  As part of the process to get all of the participants paid out, it was determined that none of the owner's 2017 401k deferrals were deposited to the Trust.  The owner deducted $24,000 on their individual tax return, and it was reported as a contribution on the 5500 form (and included in all of the necessary testing).  The accountant is asking whether it is still deductible on the 2017 tax return if the deposit is made today (2019).  I'm thinking, from the plan's standpoint, this will be treated as a late contribution and applicable earnings will be deposited along with the $24,000 and the tax return stands as is.  His other option is to amend his 2017 tax return to remove the $24,000 deferral.  Any thoughts?  Let me know if you need more details to provide your feedback.    

I have a plan that uses prior year testing.  Eligibility is 2 month with monthly entry.

For 2018 I tested without statutory exclusions.  I passed the testing for 2018.

I am running a projected test for 2019.  The plans fail the adp/acp test.  In Relius I can select the statutory exclusion " test separately"  box.

Are there any rules for switching between statutory exclusion from one year to another? 

Appreciate your help!

My record keeps is telling me Relius doesn't do coupon loans.  Does the program have the ability to generate a book?

I'm trying to talk a client (a big client) out of having coupon loans.  They don't want to take on the responsibility of taking money out of people's paychecks.

I'm trying to go the "you need to be reasonably sure these loans will actually get paid off, and coupon loans makes this job very difficult" route.

Any other thoughts?