What is the correction method if an owner has been taking his IRA RMD out of his PSP? This has been going on for a few plan years.  Amended 1099?

Company has 401k plan and an ESOP with 10/31 yearends.  Plan year is limitation year.  Age 60 Participant defers 22,000 in calendar 2015.  None recharacterized as catch up on the 10/31/15 ADP test.  $2000 of that amount was deferred in Nov and Dec 2015.  In 2016, participant defers 16,000 from 1/1/-10/31/16.  415 additions from both plans = $63,000.  How much can be called "catchup" and not be subject to 415 correction?  $6,000 or $8,000?

Employer fails to withhold salary deferrals on 2016 Christmas bonuses.

Client discovers error in 2017.

Can client use the correction method set forth in Appendix A, Section .05(9)(b) (Safe harbor correction method for Employee Elective Deferral Failures that extend beyond three months but do not extent beyond the SCP correction period for significant failures)?

The following 3 conditions must be met to use this method (which requires an employer contribution = 25% of the missed deferrals, adjusted for earnings)

1. corrective deferrals begin no later than the earlier of the first payment of compensation made on or after the last day of the second plan year following the plan year in which the failure occurred.

2. Notice of the failure is given the affected participants not later than 45 days after the correct deferrals begin.

3. Corrective allocations are made in accordance with the timing requirements under SCP for significant operational failures.

I believe we meet requirements #1 & #3.

I am hung up on #2.

Deferrals since the first payroll after the Christmas bonus have been correct.

However, more than 45 days have passed since the date “corrective deferrals” began and no notice has been provided because we did not know about the missing deferrals until recently.

It seems like we should qualify for this safe harbor treatment but I don’t think we can meet the notice requirement.

Am I misinterpreting the requirements of this safe harbor?

When are we required to put a check mark for Schedule H - Line 4i(a)?

The instruction simply states, "In column (a), place an asterisk (*) on the line of each identified person known to be a party-in-interest to the plan."

Is there a different meaning for 'a party-in-interest' to the plan when it comes to Form 5500?

Kind of an offshoot of an earlier question. Governmental non-ERISA plan (public school). Health FSA.

Suppose you have a current plan year of 7/1 to 6/30. However, due to union contract negotiations, and some legal changes at the state level mandating certain changes, there is a one-time "disconnect" with making elections, and what is really needed is an election from 1/1/18 to 6/30/18, then getting back to an annual election from 7/1/18 to 6/30/19. Of course, they already have an annual election in place for 7/1/17 to 6/30/18.

Now, this leaves you with (at least) two major choices. First, you can consider the union contract change as an allowable "change in status." I think this is a stretch, but one might argue that the new union contract represents a "commencement of employment." I don't buy it as a valid argument, but looking for any approach that might work.

Second, and I think this is more valid, the plan could be amended to change the plan year to run a short plan year from 1/1/2018 to 6/30/2018. Then amend it back to a full year effective 7/1/2018. This would create two consecutive short plan years - one in 2017 and one in 2018. While I have heard that you can't have two consecutive short plan years, I haven't found any official support for that position. What I do find, in the proposed regulations under 1.125-1, is that a short plan year is permitted for "a valid business purpose."

It seems to me that this combination of circumstances would certainly constitute valid businesses purposes, as the purpose is most definitely not to "circumvent the rules of Section 125 or these regulations." So this is the approach that I would say is reasonable, and SHOULD be defensible.

I'd appreciate any and all thoughts. Any special holes/pitfalls I'm failing to consider? Etc.? Thanks.

Self employed person with no employees has a 401k and a DB Plan. Sched C income minus 1/2 SE tax is $120k in 2017. Required minimum DB plan contribution is $200k for 2017. If the only retirement plan contribution he makes for 2017 is the $200k contribution to DB Plan, I understand he can deduct only $120k of it in 2017, and will have a carryover of $80k deduction, which he can deduct in future year(s) if he has sufficient compensation in future.

can a sub s still adopt sep till 1/31/2018 with hurricane extension

Are fiduciary standards adhered to when a plan decides not to offer a Roth Deferral Alternative?

"Employer did not withhold elective deferrals from 2016 Christmas bonus. Deferrals since the 2016 bonus have been correct (as far as we know). I am wondering whether employer can use Rev Proc 2016-51 Appendix, section .05(9) to correct. My concern is the notice requirement that requires notice be given not later than 45 days after the date on which correct deferrals begin. In my case, is 'the date on which correct deferrals begin' the first payroll after the bonus? If so, then we missed the 45 day deadline. Am I reading this correctly?"

(This topic was deleted accidentally. Could anybody repost the answers that were added to this topic before it was deleted, or chime in with other answers? Thanks!)

We recently took over as investment advisor on a 403(b) plan with TIAA-CREF. The client is telling us that, although the plan is bundled, TIAA-CREF will not prepare the 5500. They have provided schedules indicating all of the information that needs to go on the form, but will not prepare the actual form.

Is that typical of TIAA-CREF -- or is the client misunderstanding something?

Hi, I am relatively new to this site and if I am asking the wrong question in the wrong place, I hope someone will say so!  I thought I posted this question yesterday and it seems to have disappeared.

If a client's 2016 corporate tax return is on extension from March 15th of 2017 to September 15th of 2017, normally speaking, the client would have until September 14th of 2017 to make the final 2016 contribution deposits such as match, profit sharing and Safe Harbor.  Now, with Hurricane Irma relief, the client's corporate return does not have to be filed until January 31st, 2018.  Does that mean that the client now has up until January 30, 2018 to make his final 2016 contribution deposits?  Thanks in advance for any advice!

I have several clients in the IRMA affected area. The IRS release grants relief wrt to the otherwise applicable mrc timing (i.e. 8.5 months after the close of the plan year) to 1/31/2018 and likewise for the 9/30/2017 AFTAP certification. I assume though, that the discounting of contributions to the relevant valuation date would still be from the date the contribution is made (i.e.  ,9/15/17-1/31/2018) is not a interest discounting free zone). Anyone disagree?

Hello All -

I was hoping to get some insights from this group on daily benefit's reading.  Specifically, I'm looking for the best sites to go to ensure I am getting the most up to date information on any benefit changes (mainly DB, DC, but also touch on health and welfare plans and exec. comp.).  I then dig deeper depending on the information provided.  On a daily basis, I am only reviewing the news links on this page and the IRS and DOL news pages.  Are there others you could recommend...other recommended blog sites, etc.?  Thank you for your time!

Plan failed the ACP Test for the 2015 Plan Year and corrective distributions were made before 03/15/2016. The Plan also failed the ACP Test for the 2016 Plan Year and corrective distributions were made before 03/15/2017. For both Plan Years, the Prior Year Testing Method was used.

While reconciling the Match contribution for 2016, it was discovered that 1 Match deposit was actually for the 2015 Plan Year. I have re-run the 2015 ACP Test and 1 HCE needs more distributed and the other HCE had too much distributed. The revised 2015 test also changed my NHCE Prior Year percentage - used for the 2016 Test.

The final corrective results, over the 2 Plan Years, show that 1 HCE's net result is that he had too much distributed. The other HCE did not require a correction for 2016 - but did not have enough corrected for the 2015 revised Test.

Is EPCRS the only remedy available? The total "net" correction still due is less than $25.00. 

1.  If a plan sponsor makes a QNEC to make up for missed deferrals that is equal to 100% of missed deferral opportunity instead of 50%, is that ok?

2.  If a plan sponsor makes QNECs of 50% missed deferrals to correct one type of error (incorrect definition of compensation) and QNECs of 100% missed deferrals to correct a different error (failure to correctly implement election due to incorrect application of deferral limits), is that ok?

Plan sponsor made corrections to 401k plan in Dec 2016 to correct for incorrect definition of compensation. Some employees received 50% QNECs to make up for missed deferrals, others received distributions of excess amounts.

In March 2017 sponsor realized the Dec distributions resulted in several highly paid participants deferring an amount less than the statutory limit when they would have deferred the statutory limit if the errors had not ocurred. i.e. Person A elected to contribute 10% of pay. His contributions were stopped in July when he hit $18,000. In Dec, correction was made for inclusion of ineligible comp in those deferrals and he received a distribution of $1,500. No adjustment was made for his contributions being "turned off" in July due to limit, thus his total contributions for 2016 were $16,500.  However, if his election had been implemented correctly he would have continued deferring until he hit $18,000. Sponsor made a QNEC of $1,500 in March 2017 to correct.

The question is whether there is a issue with the 100% QNEC made in March (small number of more highly paid) being inconsistent with the 50% QNECs for most participants, and if so, what should be done?

Those who have remarked on some investigators’ unsupported assertions about which methods and how much effort a plan’s administrator ought to use in searching for a missing or unresponsive participant might want to read this American Benefits Council letter.

https://www.americanbenefitscouncil.org/pub/?id=d68a50ca-908c-9e37-d53d-3111689f91ff

https://www.irs.gov/pub/irs-drop/n-17-60.pdf

  new hire entered safe harbor 403(b) 8/1/17 and filled out the salary redirection form in August for 6%. He failed to enroll in the plan online and plan sponsor inadvertently filed his form without setting him up (it was an oversight on sponsors part but they were waiting on him to enroll before they added his contribution amount into ADP). He’s now requesting that they take the extra two months out of his next check and would like the enhanced SH match (100% up to 6%). 

I am of the opinion the sponsor has to make a QNEC of 25% of what his deferral would have been along with SH match and any earnings under SCP.    Is this the proper correction?

How do you count hours for a leased employee who works for 4 different employers that are not related?  One provider employer is the employer of the employees and 3 other recipient employers lease the employees.  There is a contract that states that the provider employer employs the staff and the 3 other recipient employers pay 1/4 of the employees salaries and benefits.  When determining whether the 3 recipient employers have leased employees, do you count all of the hours worked for the 4 entities (they are unrelated)?  Or are the employees credited with 1/4 of their hours for each employer?

I see that the proposed regs, that were withdrawn, somewhat addressed these questions, but since those weren't enacted, and Notice 84-11 does not address these questions, how do we handle these leased employees?

If October 13 falls on Friday the 13th, you have good luck and your deadline is extended until Monday the 16th.

Now there is a comforting thought!