These things also make my head spin! We are setting up a 401k for a company that was formerly under a PEO plan. 

This company owns a chain of restaurants. I am waiting to find out what exactly the ownership percentages and who owns what.

When they were under the PEO, only management and the people who worked at headquarters were in the plan.

Now they want to open this new plan to the restaurant owners and possibly all of their employees. They want to include some restaurants and not others.They also want to set up one match for management and one match for everyone else.

Could they do a separate plan for management and a separate plan for the rest of the employees? Each having their own plan provisions.Can they choose to include some but not others?

Large plan has ACA and excludes Part time and temp employees from plan (if they work the 1000 hours, that changes them, but that is not the case here for this question).  Six P/T ees were allowed in the plan in 2015 in error, but were stopped.  Seven people were allowed in the plan in 2016 but were stopped.  What is the correction?  Some of these people are terminated from this employer and dollar amount range from about $4 to about $100.

Employer has organized a weight loss challenge.  Participants pay a $25 registration fee to participate.  The winner takes the pot.  No employer money is involved.  Are the winnings taxable to the recipient? 

Thanks.

Interesting situation - self employed individual makes deferrals based on a "draw" during the year, then discovers after end of year that earned income is zero. So deferrals have to be refunded as an excess.

Now, in a more "normal" situation, where there is, say, an ADP failure, I know the IRS position is that those deferrals count toward determining allocation rate to the Key, even though they are subsequently refunded. However, it seems a stretch to apply this to someone who is ultimately determined to have zero compensation, so I'd argue that no top heavy minimum would be due for the NHC's.

Any other thoughts/opinions? 

Hello,

My wife and I own a business with no other employees. We each have a SEP IRA set up and employer contributions for 2017 have been made. I now realize I should have set up solo 401 K accounts.

It looks like I can still set up a solo 401k account and make the $18,000 contribution for 2017 if my SEP is not a 5305. I set up the SEP IRA's at Vanguard and don't remember filling out a 5305 form and they have no record. How would I know if I have a 5305 and if I do is it possible to change that? 

Thank you. 

Have a pending Cycle E2 determination letter application for an individually-designed plan.  I am in the middle of the Employee Plans Specialist's review and there will likely be a Closing Agreement matter relating to a missing interim amendment for a prototype plan that was merged into the plan a few years ago.  The sponsor knew of same, and it was noted in the cover letter.  Nonetheless, there will be some sort of sanction to fix, and I am OK with that.

A few days ago, the sponsor indicated that it had not adopted a discretionary amendment to the individually-designed plan that added a Roth feature to the plan in mid-2016.  The Roth feature has been implemented, but no adopted amendment to date.  I could fix this via a separate VCP filing and pay the VCP fee, because, per the determination letter rules, the plan is not "under examination" re this item.

But, would it be possible to save a buck or two and voluntarily raise this new issue with the Specialist and deal with it with the pending other nonamender failure . . . with the hope that the sanction will be baked into same, say the VCP fee of $10,000 or so as the CAP sanction.

Or, should I just wait a few weeks, get the determination letter/closing agreement, and then file a VCP application to fix the new issue?

Thanks.

Is a 403(b) plan sponsored by a non QCCO 414(e) religious organization subject to Code Section 414(s) testing?

Wording has changed a little bit in the Revenue Procedure 2016-51 from prior Rev. Proc. - it is a bit less explicit regarding the following.

So, let's say you have a SIMPLE-IRA to which you have contributed during 2017, then you established a 401(k) and contributed to that as well. Whoops. So, when it comes to correcting, can you file VCP and count the SIMPLE as an "Excess Contribution" and refund it? Can you still have the option under the VCP to retain it in the SIMPLE, but pay the 10% excise tax on the retained amounts (but apparently get no deduction for it, so probably not a savory option anyway?) Other wonderful options?

I tend to favor refunding, particularly when fairly early in the year where participant can have time to make it up anyway under the 401(k).

Appreciate any opinions/thoughts. P.S. - anyone recently submitted one one way or the other, and if so, with what results?

For someone with no experience getting into TPA service, what would you recommend as educational sources? Specifically on designing 401k plans and obtaining approved safe harbor agreements?.

Defined benefit plan has a provision that says that if a participant dies before retirement, his/her beneficiary can elect an alternate death benefit instead of a Qualified Pre-Retirement Survivor Annuity.  The alternate death benefit is a lump sum payment of 100% of the contributions made to the Plan on the participant's behalf.

If a beneficiary chooses the alternate death benefit, is the plan's administrator required to withhold any taxes on the payment?  If so, how much?

Thanks.

Client thought employee Y was not eligible to participate in plan because they considered her a part-time employee.  Entry is immediate for deferrals (and 1 YOS for match with semi-annual entry dates) but Plan does have a part-time employee exclusion, but that exclusion no longer applies once an employee works 1000 hours in the computation period.

Employee Y was hired on 2/11/11 as a part-time employee.  At the end of the 2011 plan year, we learned that she had worked 1000 hours.  What would you consider her entry date into the plan?

Since the plan has an automatic 2% contribution rate, should we be calculating the missed deferral opportunity at 2% or do we rely on the ADP test results and use the average rate of the NHECs?

Please advise.

Controlled groups give me a headache; anyone have an opinion on this (BTW, I think it is a controlled group)?

Individual A owns 100% of X LLC which has no employees. X owns 50% of Company B which has employees. The other 50% of Company B is owned by another individual.

Can Individual A make contributions to a 401k which is under X LLC without any obligation to employees of Company B?
 

An owner takes out a loan in Oct 2016 with monthly scheduled payments.  He doesn't make a payment by the time we notice in May 2017.  Is there anything that can be done to make it so the loan is not in default?

After all, if he had taken out the loan with quarterly scheduled payments, the first missed payment wouldn't have occurred until Jan, and the loan wouldn't have defaulted until June 30th. 

But there is a catch here.  It is the fiancée's house.  She lives with the fiancée but the mortgage is not in her name.

The distribution at the most broad level is to prevent the eviction.

"(4) Payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence;"

Based on a literal interpretation of the regs it seems to me she would qualify.

We are instructing our new solo k clients that they should file a Form 5500-SF instead of the Form 5500-EZ.  Do the same rules apply for the asset level that requires a filing? In order words, is it correct that even a Form 5500-SF is not required for a solo k until the assets exceed $250,000?

I have a participant wanting a hardship withdrawal to purchase a primary residence.  I have been looking for what is not allowed in the closing cost.  For example can they be reimbursed for the down payment they already made or for the amount going into escrow for property tax and homeowners insurance which would be part of the monthly mortgage payments.  My thought is that these are not "immediate and heavy financial needs"  is there something in writing that I can send other than "immediate and heavy financial needs"

An employee that was eligible for the plan sends the employer a note stating that she wants to start having $20 deducted from her pay for the 401k plan. He never givers her an enrollment form to complete.He sets up the deduction on payroll. The first deduction went into the plan. After that, for some reason, the deductions got stopped on the payroll system.

Now she has terminated her employment and wants to take her money out. Her account balance shows $20. She thinks that she has at least $400 because she thinks the $20 had been coming out of her account each week. There's a $75 processing fee so she can't even get her $20 out.

What can/should be done?

My client has received a letter from her former employer requesting a payment of excess match contribution related to 2007 and 2008 plus interest thereon. The 401K had been rolled over in to her IRA about 4 years ago. Is she required to pay this amount given it was an error by her old employer made many years ago? If she has to make this payment, can it be taken out of her IRA tax free? Thank you for your help. 

My father in law passed away, leaving his IRA to the 4 children. Three of them have taken it and it is in their name. The remaing sibling did not take theirs, it was left in my father in laws name. My question is are the other siblings entitled to dividends that have been earned since the disbursement? thanks 

I ran across a new term today and am puzzled as to what it is. What is a "TEFRA CARD" and how does it apply to plans?

Thanks