A Participant of a 401(k) plan has just brought the Plan Administrator's attention now after 8 years (completed an election form in 2008) that his/her deferral election has not been implemented. My question is; is there a statute of limitations since it has been 8 years. He's obviously seen his paycheck stub and has seen no deferrals being taken out. Not to mention the filing of his taxes and W-2 form for 8 years. The investments are semi-bundled with John Hancock so he would even has access to his account daily.

I'm thinking there is not a statute since the IRS says to "correct the plan as if the error never occured", but really? This is nuts!

If there isn't a statute of limitations, then at this point the only correction since this is going back to 2008 would be to use EPCRS "missed deferral opportunity" and file a VCP. Even though this is just one participant, it probably wouldn't fall under SCP. Around 53 participants, assets greater than $2 million and it's a safe harbor plan with Enhanced Match to boot.

Thank you!

I have a new plan, started by a 75 year old owner, in 2014. He had no account balance as of 12/31/2013, and a $2,000 account balance as of 12/31/2014. He is required to take an RMD for 2015, but can he postpone the first RMD to April 1, 2016, even though he is 76 years old in 2015 and not 70-1/2?

Employer made election in 2010 to use Market Value of Assets for PPA funding. Can employer now elect to use Average Value of Assets without any strings attached? Thanks.

This is technically a hypothetical, but when it came up I didn't have an answer:

We've all had the cases where the participant's beneficiary form is old and doesn't match the current legal beneficiary (cases of re-marriage being the most common). So let's say the plan beneficiary designation form has Spouse 1 as the beneficiary, but Spouse 2 is the current for-all-purposes-outside-the-plan legal beneficiary, and they are both less than 10 years younger than the participant. Whose DOB should be used for calculating the plan RMD?

Just curious.

Plan has a safe harbor match only - no other er contributions (other than discretionary contributions).

Have a plan with around $10,000 of "forfeitures" being generated related to a correction to Safe Harbor Match (they used comp over the a17 limit).

The IRS prohibition of using forfeitures for SH is based on the fact that the contributions needed to be 100% vested "when made." These were, as they were intended to be SH Match. Anyone have a problem using this to offset the match? The Plan is not audited, and $10,000 is about 5 years of my fees!

I would assume this has come up before, and perhaps addressed by the IRS?

What are the consequences of depositing 2016 employee deferrals into the plan in December 2015? Tax and plan years are both calendar year. We have confirmed that the 2016 W-2 will reflect these deferrals.

Thanks.

Please help set me straight. I totally confused myself with a QACA that excludes bonuses and car allowances for all contributions, including elective deferrals and the QACA basic matching contributions.

I know that compensation eligible for the deferrals must be safe harbor compensation defined in section 414(s) and 1.414(s)-1. I'm confused if the plan may use this definition of compensation and pass the 414(s) nondiscrimination test each year to determine this definition of compensation satisfies section 414(s) (under 1.414(s)-1(d)(1) or if the plan by design cannot exclude these types of compensation and can only modify the compensation under the rules in section 1.414(s)-1©.

Please confirm if the plan design to exclude these types of compensation is permitted under a QACA and performing the 414(s) test is the acceptable method to determine the definition of compensation is nondiscriminatory.

It was discovered that a few participants in a governmental defined benefit plan had compensation over the 401(a)(17) limit. Benefits were within 415 limits.

This resulted in an overpayment for a few participants who have retired but also in employer pick up contributions that were higher than they should have been. There seems to be a good amount of guidance (including last year's revenue procedure) and opinion out there on how to correct the overpayment. BUT

How can the pickups be corrected? Assume that they involve years prior to 2015. My immediate thought was that the appropriate correction would be to 'forfeit' under the plan - meaning the employee would not have credit for them - which in this case really boils down to whether contributions would be paid out to a beneficiary if the participant died before receiving annuity payments at least equal to his or her contributions. Then the "Employer", in this case the municipality, would need to make the employee whole for the deduction that was taken from pay in error. The payment to the employee would be reported on a revised W-2 for each applicable calendar year, and the employee would need to re-file taxes for those years.

Is there a better (easier) answer? Something that doesn't involve re-filing individual income tax returns?

Also, could it be possible - consistent with EPCRS principles - to offset the overpayment by the over-contributions? For example, the plan overpaid you $5000, but you overpaid the plan $2000, so you need to pay back $3000 to the plan.

Errors are very small relative to the plan size and involve only a few plan years. The intention is to self correct, not to submit under VCP. (It's understood that the plan wouldn't have reliance on the correction method without VCP compliance statement.)

If a participant must receive payments at NRA to avoid an impermissible forfeiture of their benefit (say they are hitting the high-3 415 compensation limit) must these payments be considered "annuity payments" that are taxable -OR- can these payments be considered a partial lump sum eligible for rollover (non-taxable) status ? Thanks for any opinions.

Hi,

I am trying to upload a year-end report form American Funds. American Funds doesn't help as they say that they don;t work with FT. Williams. FT Williams gave me an outdated link and finally asked that I give them updated instructions when I figure out which report it is.

Does anyone know which report is used for FT. Williams?

Thank you.

Co. A owned 100% by Person Z. W,X & Y are the employees. Co. A sponsors a 401(k) plan.

Person Z (90% ownership) partners with Person Y (10% onwership) to form Co. B. There are not any employees other than Y & Z. Co. B does not adopt Co. A's plan.

It is my understanding that Person Y is an hce in the Co. A 401(k) plan because of his ownership in Co. B and the fact that Co. B is not a participating employer does not change that determination.

Am I missing anything?

Thanks for any guidance.

The plan is a safe harbor match, with on going safe harbor matching contributions.

The plan inadvertently miss calculated the match for 5 participants IE the five participant received to much safe harbor match.

Is the proper way to correct the excess match to forfeit the excess match to the plans forfeiture account (calculate gains/losses). The forfeiture safe harbor match can only be used to offset plans expenses going forward.

Participants deferred a significant amount from deferred comp payouts that was ineligible for contributions during 2015.

We have done the "pay the distributions in 2016" to correct this sort of thing when the correction was a few hundred dollars or maybe $1,500. This will be almost $10,000. Does that option get pulled off of the table in that scenario?

Can a majority owner that is in-service and past NRA and elects to receive a monthly annuity, or alternatively elects a LS but only receives the allowable monthly annuity due to the 110% restriction, then after commencement of the monthly payments waive that benefit in order to make the plan sufficient for termination? This is a PBGC covered plan.

We have a 457(b) plan where we match 10% of an employee's elective deferral.

I know that the 457(b) employee contribution is state taxable in PA but what about the 457(b) employer match?

The match is 100% vested immediately; we match each pay period

Thanks

Lexy

I have a client who sold his dental practice in September but is continuing on with his Corporation for two more years in order to fully accrue his benefits in a defined benefit plan. This client also maintains a cross tested safe harbor 401(k) Plan and an additional straight comp to comp Profit Sharing Plan.

Now that we are at the end of the year I am not sure how to allocate benefits. All active employees (except for one who terminated a few days prior to the sale) continued employment with the new owner so they all have the same termination date with my client. At the very least we have a partial termination and everyone is 100% vested. That is the straightforward part.....

Now for the tough part....the 401(k) Plan has a last day of the year rule along with 1000 hours in order to get a contribution. Is there any way to justify allocating a contribution to all employees employed on the date of the sale? If I do that then I guess I would also need to prorate the hours requirement for the "short" plan year. There is no fail/safe for 410(b) since we aggregate all three Plans for testing with the general test.

The Profit Sharing Plan and the DB Plan do not have a last day of the year rule so they do not really present a problem. However, if I allocate a contribution to employees in the 401(k) Plan using the "short" plan year theory then I guess I would simply prorate hours in the PSP and DB Plan in order to determine who is eligible for benefits.

Also, the Plans are Top Heavy (of course) so should I be concerned with providing top heavy for all employed on the date of the sale.

Does anyone have any suggestions!

I own a small (< $200K annual), non-producing TPA firm that only has DC plans in its inventory. After over 20 years in the business I am certain of a career change in the next year.

I have a couple of potential local buyers who I am gauging interest in and it will include a potential package sale with my employee involved.

I am interested in knowing others(buyers/sellers) experience with such transactions. How was the sale structured e.g. 25% of plan revenue over 4 years? 50% over 2?

Thanks in advance for any info.

I just found out that a sole-proprietor who sponsors a defined benefit plan died in 2015 accruing 1,000 hours. The plan was effective in 2014.

Can the executor of the decesased sponsor waive the minimum funding requirement in the year of death of the plan sponsor?

I was wondering if anyone had an opinion on an individual (i.e. Account Representative of a TPA) signing as plan administrator for a 3(16) defined contribution plan. I understand that under these circumstances that only the signature of the plan administrator is required. However, if the TPA is not a fiduciary for all aspects of the plan (i.e. payroll, personnel) but day to day functions (QDRO review, hardship approval) can the individual signing be open to personal liability should suit be brought against the plan sponsor and their fiduciaries? What does the IRS definition of being a 3(16) encompass? Should the employer still be required to sign as the plan sponsor?

I have a client whose participants all have individual accounts at Matson Money/Trust Company of America. They receive statements that say "xxxx 401k Retirement Plan FBO Participant Name." The plan does not exclude ANYONE from participating. One participant has no ID (he moved from another state and has not gotten a current state ID). The company hired him based on his social security card and previous ID. Trust Company of America refuses to open an account for him citing The Patriot Act. They returned his deferral money and matching contribtuions. Now the plan is in violation of the plan document. Anyone ever come across this?

Thanks in advance.