From 2006 - 2014 I was an indepent outside sales rep that conducted business as an S-Corp. During this time period I have made auto draft monthly contributions to a SEP Account. In 2013 I took a job with a company, but kept my S-Corp in business because I was still owed quite a bit of commissions from the company tha I represented. During 2014 I was still owed over $20,000 so I continued to keep it open, but did not pay a payroll to myself and therefore do not have a W-2 for 2014. However, not realizing this was a problem, I continued to pay into my SEP account ($3,600 for 2014). The company that handles my SEP Account has already sent in my Form 5498 to the IRS. I filed an tax extension for 2014 and have not yet filed. Now my accountant is working on my taxes and has told me of the problem. How can this be fixed? Since I have not filed my taxes yet, can my investment firm not just send in a form 5498 with a correction and pay me back the amount invested? Then the earnings would be considered ordinary income and taxed just like the original investment? Wouldn't this also exclude me from having to pay the 10% penalty for pulling the money out of the SEP? Again remember, I have not filed my 2014 income taxes yet...

Must all mutual funds held in a large plan during the year be reported on Schedule C with their tax ID? How does the $5,000 requirement come into play? For instance, let's say the participants within a plan hold 30 different mutual funds throughout the year. The TPA received, let's say $100,000 in management fees for the entire year. Should all of the 30 mutual funds be listed on Schedule C?

I'm not able to search the forums. When I click the search icon, I just get "Did you mean benefitslink.com?" It happens no matter if I am searching within a forum or across all forums.

We work with a plan that has very low NHCE participation and is currently safe harbor. They are making safe harbor contributions for a large number of employees, and want to see if there is any cheaper way to go. They want to remove the safe harbor provision and just fail and process refunds each year. We've told them that failing is technically an operational error, but their point is if they correct it by processing refunds why can't they go that way? I should mention they have zero interest in plan health or participant retirement readiness, they basically only offer a 401k in order to attract employees.

The following has been proposed:

Corporation A and Corporation B are both owned by Mr. Big. Corporation A sponsors a non-safe harbor 401(k) plan, and Corporation B, as a member of the controlled group, participates. Calendar plan and fiscal years.

Now they have just gone over 120 participants, so Corporation B wants to spin off and have their own plan, effective July 1, so both plans can avoid audit. The new corporation B plan will be identical in every respect to the Corporation A plan, other than having a different census, so as long as both have the same plan year, I don't see any issues with permissively aggregating for coverage/nondiscrimination.

Am I missing something? Some trap for the unwary? Anytime something seems relatively straightforward, then when I start to worry...

Thanks.

P.S. In such a spinoff, would you have the Plan # be 001 or 002?

Participant gets to keep 100% of his Plan Account. However, they are planning on having a QDRO indicate that the Participant's only distribution option when he becomes eligible for a distribution is to roll his or her account to an IRA. I cannot explain the rationale, but there it is in black and white in the divorce agreement.

Is it possible to have a QDRO simply state that the participant keeps all the money, but that his only distribution option is a rollover to an IRA? I sure hope not, as that means the plan sponsor needs to remember this in 15 years (potentially).

Value of Real Estate in plan is 650K. To meet the waiver the bond needs to be at least 650K even though the 412 bonding requirement max is 500k?

The Plan document states the Safe Harbor Match will be 100% of the first 4% and 50% of the next 2%. This is the amount the Employer contributes each pay period.

The Safe Harbor Notice generated by the TPA and distributed to the participants states the Safe Harbor Match is 100% of the first 6% of compensation.

What happens in this case? Participants were provided incorrect information. Some of which may have made their deferral election based on receiving a match of 100% of 6%.

Does the plan document govern and the employer just needs to provide an amended safe harbor notice?

Thanks for your input.

Does the sale of timber that is clear cut from land owned by the 401(k) plan present any issues with UBTI or anything else I might be missing?

One of the requirements to qualify for the 50-99 mid-size penalty delay to 2016 is maintaining the same level of coverage that was offered on 2/9/2014.

What if the mid-size employer was not offering any coverage on 2/9/2014, can they still qualify for the relief or did they have to be offering "something" on the magic date?

I have a question about how to apply the weeks-worked equivalence rule for purposes of determining an employer's status as an ALE in months which have only 3 full weeks.

Under the ACA, an ALE is an employer which averaged at least 50 full-time employees per month in the preceding calendar year.

"Full-time employee" is defined as one who is "employed an average of at least 30 hours per week" and 130 hours of service in a month is treated as the equivalent of at least 30 hours of service per week.

For purposes of counting an employee's hours in a month, an employer is required to use the monthly measurement method. Under this method, an employer counts an employee's hours on a month-by-month basis (instead of, for example, averaging an employee's hours over a year and applying the average to each month).

The employer may make its month-by-month count on the basis the actual number of hours to which an employee is entitled to payment (and in the case of hourly employees, is required to make the determination on that basis).

However, in the case of non-hourly employees the employer is also permitted to use either of two equivalencies--the days-worked equivalency, under which an employee is credited with 8 hours of service for each day in which the employee performs an hour of service, and the weeks-worked equivalency, under which an employee is credited with 40 hours of service for each week in which the employee performs an hour of service.

The "actual hours of service" method of determining an employee's hours is straightforward, if sometimes not useful in the case of non-hourly employees.

Applying the days-worked equivalency within the context of the monthly measurement method is also straightforward enough.

However, the weeks-worked equivalency cannot be applied directly where a month has fewer than 4 full weeks. Four full weeks would put the count under the weeks-worked equivalency at 160 hours, and would therefore qualify an employee as a full-time employee without regard to any partial weeks. But there are months which contain only 3 full weeks. For those weeks, the weeks-worked equivalency (considering only full weeks of work) would put an employee's hours worked at only 120 hours.

For example, suppose a 30 day month began on the fifth day of the week. In that case, the month would end on the fifth day of the fourth week. In the case of a 31 day month, the month would end on the sixth day of the fourth week. In either case, an employee who worked an hour in each full week of the month would be credited with only 120 hrs. based upon the complete weeks contained by the month.

In the above example, how are the days worked in the short first week of the month (the first four days of that week) and the short last week of the month (the first five or six days of that week) added to the number of hours worked determined under the weekly-equivalency method (120)? Does one count 40 hours for each of the short weeks or take into account some fewer number of hours proportionate to the lengths of the short weeks?

The Treasury Regulations appear to be silent on the issue. There are rules for how to conform partial weeks to the monthly measurement method in the case of tabulating hours to determine full-time employee status for purposes of identifying the employee to whom an employer has a duty to offer health insurance coverage, but those rules specifically do not apply to ALE determinations. Further, the Treasury Regulations appear to rule out some easy fixes. For example, it does not appear to be permissible to mix-and-match the days-worked equivalency and the weeks-worked equivalency, and the selection of one or the other equivalency appears to be binding for a year (as does an employer's definition of "week" and "month").

Should 40 hours be counted for each partial week? Instead, should a percentage of the weekly equivalency amount be used? In the latter case, should the percentage take into account all 7 days in a week or just the work days?

Your thoughts would be appreciated. If I have missed something in the regs that covers this, feel free to point it out.

PS prototype plan, Dr. & 4 participants, $715k total pooled assets, Dr's portion is $700k. No contributions in a few years. Dr. wants to use $600k of plan assets plus some personal assets to form an LLC with a partner and then the LLC will buy a local strip mall. Partner's funds for LLC will come from his IRA. Dr. and partner are looking for income from the mall, of course. Okay to do? Good idea/bad idea? Small plan audit issues? Thanks for any and all comments/suggestions.

We were the filing signer for one of our former clients that we no longer do any work for. So they signed the paper form and we did the signature. The DOL just emailed us saying they compared their records between years and found no filing for 2013.

Anyway, this was a dramatic change from the standard letter from the IRS so I decided to share. Not sure what it means but I am concerned that technically the DFVC program might not be available to this former client.

If they decide to take us back we will try the DFVC program of course.

If a DB plan believed that all assets were paid out after termination and later discovered additional assets but had been operating as if terminated for a few years (no 5500 filings) are the eligible for a correction program or will they be subject to an excise tax? Any thoughts would be appreciated.

ACA Notice was not sent prior to the 1/1/15 plan year. What would be the corrective measures I should take?

My client has found several participants who were previously considered “lost”. Each of these participants is well past age 70 ½ and each has not taken an RMD. In accordance with the terms of the plan, some of these lost participants’ benefits were forfeited.

My client has asked whether this defined benefit plan must pay these newly found participants a benefit that is actuarially adjusted for the period beyond age 70 ½. In some cases the initial benefit was around $100/mo and now with the actuarial adjustments, the benefit will be a lump sum of over $500,000 (the plan is terminating). In some situations the participant is dead, and the surviving spouse or beneficiaries will receive the benefit. In each case, the participant was searched for and determined “lost” when the participant reached age 70 ½.

The client's actuary is suggesting that the benefit should only be adjusted to age 70 ½. Has anyone else encountered a similar situation?

It is my understanding that the participant must receive 100% of the actuarially adjusted benefit to the current date (not age 70 ½).

Has a Trust EIN, but used his SSN for TIN on plan document. Apply for EIN using SS-4 for 5500 purposes?

Participant borrows $30,000 of after-tax contributions only from DB plan. A month later, the participant elects to cancel the loan. Is this a deemed distribution? If yes, what are the tax consequences to the participant?

Husband/wife 401(k) exceeded $250000 in dec 2013. According to Section 4 of the pilot program, they are eligible for relief. They did not file a 2013 Form 5500-EZ timely.

Can someone confirm this. If you are not subject to Title 1 of ERISA, which you are not until your assets are over $250,000, but once you have reached that threshold you are subject to Title 1 of ERISA but you are not eligible for the program. Where am I confused?

We have a calendar year plan with 10 partners, and lets say all 10 have equal ownership in the business (10% each). The business entity is a partnership. A 3% safe harbor employer contribution exists; there is also an additional profit sharing contribution.

On February 1st, two of the partners leave and their ownership shares are divided equally among the remaining 8 owners, such that 8 owners now own 12.5% of the business.

At year end, for purposes of determining the total employer contribution, the self-employment calculation must be performed in order to determine the amount of contribution to the employees and the owners. The ownership percentage for each owner is a factor in this determination. How is this determined when the ownership changes in during the year?

Thanks