I know in an EACA, the plan could have a provision that allows the withdrawal of deferrals within 90 of the deferrals starting.

Can that provision be used in a QACA plan?

I see a few related threads on the topic, but is there a clear answer on the following:

In its 401(k), the employer matches 100% up to 4% of compensation. For people earning above the 401(a)(17), their match is limited by the 401(a)(17) cap at under 4% of their total compensation. So if they earn $400,000 and defer $19,000, their match is capped at $11,200 ($280,000 * 0.4) whereas a match based on 4% of their total compensation would have been $16,000 ($400,000 * 0.4). 

If the "missed" amount due solely to reaching the 401(a)(17) limit ($4,800 above) is either paid in cash or is contributed (as an employer nonelective contribution) to a nonqualified plan, does that violate the contingent benefit rule?

Here we are on 10-15, 1-person MP plan has not provided contribution info, so assuming no contrib was made by 9-15. We don't even know the required contribution amount.

I think this is what to do:

If no contribution amount provided - Cannot file 5500EZ. It will be late, will need to pay a penalty through the late EZ program, and file 5330.

If contribution amount provided, but not made by 9-15 - Prepare 5500EZ for signing. Will need to show outstanding unpaid amt of contribution. Will need to file 5330.

Assuming those are correct steps, an extension for 5330 was not requested.

Curious what other practitioners have done in this situation?

How can I search for a particular user profile.  How could someone look up BG5150 without clicking on the relevant link in a thread?

I think I have read that the financial audit  (large plans) fees charged by a CPA firm can be paid from the plan each year.  However, my question is -what is a fair way to allocate those fees among the plan participants.  If the same amount is charge each participant, then some small account balances could almost be wiped out.   Most of my clients just pay it from the company and deduct it as a business expense I guess.  

For the client who insists on the plan participants paying for it - should they divide the fee based on account balance?  What are your thoughts and experiences?  Thanks

I am hoping someone can provide me with some guidance.  I have a 2006 terminated employee who died in 2007.  The employee had no spouse and left his 401k assets to his 3 year old son (under $2,000).  I have a copy of the letter that the employer wrote to the family of the deceased in 2007.  They received a phone call from the deceased employee's mother who told them to contact the sister, which they did.  There was no response.

We when took over the plan in 2017 we found out that the employee was deceased and the assets had not  been paid out.  we have sent letters with no response and  we are now well past 5 years.  So we now have a plan failure - even though the beneficiary has no idea that he is entitled to the assets?

The beneficiary is still a minor (16) and  I  have located the beneficiary on face book (I did not contact him).  I have contacted the mortuary who provided phone numbers that no longer work.   I have located the sister and sent several e-mails, she does not respond.  I cannot find a financial institution willing to accept the assets as a rollover into an in inherited IRA.  At this time, I have no idea on how to proceed.  Any suggestions/guidance would be greatly appreciated.

The expanded EPCRS correction for loans under 6.07 seems to contemplate a loan correction scenario in which the Employer would be required to make the loan payments in the case where the Employer caused a default (due to failure to withhold payment).

Has anyone had this scenario where the employer did make the loan payment? Was it self corrected or did they file a VCP?

We have a grandfathered split dollar arrangement based on a modified endowment contract (MEC).  The employer is entitled to the premiums paid (without interest) upon surrender of the contract or upon death.

At this point, the employer (which is a tax-exempt organization) would like to get out of the contract, by either taking its share as a loan or by taking a cash withdrawal of its share.  At that point, the employee would own the contract.

The issue is what the tax consequences of this would be.  Normally, distributions from an MEC are treated as coming first out of income (taxable) and only after that out of basis (nontaxable).  However, in this case, the party taking the distribution would be a tax-exempt organization.

Does anyone believe that either a) the employee would be taxed on the amount withdrawn, even though it is the employer getting the money, or b) the employer would be subject to UBIT on amount withdrawn?

Is there a deadline for the sole prop to deposit his 2018 after tax contributions?  He files schedule C on extension.  Can the 2018 after tax contribution be made on 10/15/19 when he files his return?  Assume, the 401(k) plan allows aftertax.  No other employees.  He is not over his 415 limit.  Just looking at the timing of the deposit.  I think rank and file participants would be ASAP and fall under the same umbrella as other employee contribution timing.   

Can a 401k plan limit pre-59 1/2 in-service distributions to employer matching contributions that are invested in the employer stock fund only?  

The plan currently does not allow pre-59 1/2 in-service contributions at all so there would no anti-cutback rule issues.

The sponsor is considering eliminating the employer stock fund from the plan, but would like to give participants an option to keep the stock if they wish. 

Thanks in advance for the assistance!

Hi all! We're looking at taking over a plan that is a spinoff from a MEP. The MEP allowed for Loans, but the employer does not intend to include loan provisions in the new plan. Would this be able to be treated like a plan termination offset situation for the few participants who have loans, allowing them to begin rolling funds into an IRA to replace the loan offset? Or is there some anti-cutback rule that I am not thinking of that would require the employer to allow the participants with loans to continue their payroll deductions for loan repayments into their accounts in the plan until all are repaid? 

Thanks!

The ASPPA code of conduct reads in part as below.  Let's say someone hasn't paid for the 2018 val, am I obligated to provide it?  If not, am I obligated to provide, say, the 2017 val (which was sent to the client already)...the plan document (also sent to the client already)?  I asked the question about "work product" once and was told that is notes and calcs and stuff that are just in our files.

"B. When a Principal has given consent for a new or additional professional to consult with a Member with respect to a matter for which the Member is providing or has provided Professional Services, the Member shall cooperate in assembling and transmitting pertinent data and documents, subject to receiving reasonable compensation for the work required to do so.  In accordance with Circular 230, the Member shall promptly, at the request of the Principal, return any and all records of the Principal that are necessary for the Principal to comply with federal tax Law, even if the Member is not subject to Circular 230. The existence of a fee dispute generally does not relieve the Member of this responsibility except to the extent permitted by applicable state Law.   The Member need not provide any items of a proprietary nature or work product for which the Member has not been compensated."

In a controlled group where they handle payroll internally, an HCE under age 50 was allowed to defer from multiple companies and ended up with $29K deferred for 2018.  This plan also happens to fail the ADP test (partially because I had to include all those deferrals), and he will need to get an ADP Test refund that exceeds the amount of the 402g violation (yes, I'm only getting the information to do this today)... until I apply the earnings allocation, which is actually a loss for 2018, which brings it back to less than the 402g excess.

So what comes first here?  If I apply the net $10,000 ADP refund, then there's still a $500 402g issue.  What about taxation - 402g violations not corrected by 4/15/19 are double-taxed, so running them through as an ADP correction seems as if it would not make that clear.

Thanks for the last-minute advice...

Unless there is a controlled group issue - is there any reason why an owner/highly compensated employee/key employee  cannot max out his deferrals in each company's plan - as well as  maxing out in each plan in total. (56,000 total for 2019)?  

Not sure which message board to post this. 

Client is purchasing life insurance [contractual protection insurance?] from a Lloyds specialty broker to provide coverage to key executives above what is available in group plan. Client will be owner and pay premiums, but executive will be able to name beneficiary. 

Can the client impute income to executives based on Table I rates, and then the benefits paid would be received tax free? Or does the full premium amount need to be included as taxable income like a 162 bonus plan? Or will death proceeds be taxable to estate, or as income in respect of a decedent, or taxable to the beneficiary? 

Not sure which message board to post this. 

Client is purchasing life insurance [contractual protection insurance?] from a Lloyds specialty broker to provide coverage to key executives above what is available in group plan. Client will be owner and pay premiums, but executive will be able to name beneficiary. 

Can the client impute income to executives based on Table I rates, and then the benefits paid would be received tax free? Or does the full premium amount need to be included as taxable income like a 162 bonus plan? Or will death proceeds be taxable to estate, or as income in respect of a decedent, or taxable to the beneficiary? 

I anticipate the answer is yes but I am wondering if any one can point me toward a citation that states this. I know the form 5500 instructions require plan sponsor to provide accurate information, but I cant find anything that states it has an affirmative obligation to correct a previously filed 5500 that is inaccurate. 

An employee whited out the date next to her signature and the plan sponsor’s signature on a distribution form.  The plan sponsor’s signature was not accurate because this plan sponsor left.  This alerted the investment company who alert the plan sponsor.  The employee did not know there was anything wrong with this.  She was doing it for convenience. She thought that if there was something wrong with this then the investment company would say something.  The employe was fired.  The employee said that she was falsifying a document and she committed fraud.  When the employee challenged these allegations the employer then said it was not them who were alleging fraud but the investment company.  The investment company is denying that they alleged fraud.  They said that the only alerted the employer that the plan sponsor’s signature was not on their approved list so should they proceed with the withdrawal.  The employer said no.  The investment company said they are strictly record keepers.  Did this employee break any laws, rules, or regulations?

Section 457(f)(2)(E) contains an exception to the normal rules under section 457 for "a qualified governmental excess benefit arrangement described in section 415(m)."  Among the requirements of section 415(m) is that the plan "is maintained solely for the purpose of providing to participants in the plan that part of the participant’s annual benefit otherwise payable under the terms of the plan that exceeds the limitations on benefits imposed by this section."  Given that "this section" is section 415, it appears that a qualified governmental excess plan can provide only benefits in excess of the 415 limits, not benefits that are cut back due to the limitations on compensation in section 401(a)(17).

However, a governmental 401(a) plan is not bound by the rules against discriminating in favor of highly compensated employees.  Would it therefore be possible to say that for everyone except one individual, the benefit is for example 2% of compensation times years of service, but that for a specified individual, the benefit is for example 4% of compensation times years of service?  The 4% would likely be developed in order that the individual's benefit would be the same percentage of total compensation as everyone else's, but it would not directly reference compensation over the 401(a)(17) cap.  At that point, all benefits not in excess of the 415 limit could be provided by the qualified plan, while those above that limit could be provided by the excess plan.

Alternatively, has anyone seen any flexibility on the part of the IRS to allow an excess plan to deal with the compensation limits as well as the 415 limits?

Anyone else attending ASPPA Annual the 19th-23rd? I'll be there as co-chairman and this will be my fifth (and last) year on the committee. We're looking forward to it. Please feel free to come say hello if you see me wandering around.