I was told an EA conference speaker mentioned that when applying the 31% deduction limit for a combo plan, that you can only use the participant's compensation if they are receiving an employer contribution in either plan. For example, I have a plan that is not Top-Heavy and they are not giving the HCEs an employer contribution in either plan but they are able to contribute 401(k). He is saying I would not be able to include their compensation when calculating the deduction limits. I wanted to use the 6% limit on the profit sharing contribution. The HCEs are not excluded they are just in their own class and get 0%. Would I not be able to use their compensation in calculating the maximum deductible contribution?

Plan sponsor matched on HCE's full comp for 2014 and probably prior years. Resulted in excess of $4536 in 2014. Should this have occurred in prior plan years would SCP be allowed? There are really only family members in the plan. Would corporate tax returns need to be amended?

Thanks

Excuse me...not 401(a)17 but 408(p)(2). Does comp limit apply to SIMPLE IRA match or just Non-elective?

Does anyone have experience in regards to filing under the DFVCP due to a late top-hat filing. In a DOL FAQ (http://www.dol.gov/ebsa/faqs/faq_DFVC.html) it states that the 5500 can be filed either electronically or on paper. However, later on in Q18 it states that "the Form 5500 prepared for DFVCP purposes should not be filed with EFAST2." How do you submit it electronically, if you cannot use EFAST2? Thank you for your assistance.

Plan allows safe harbor hardship.

The participant is in the process of building a primary residence.

Can he request a hardship for the building of the home. Does the "purchase of a primary residence include building a home?

Thanks

Maybe I'm just too nitpicky, but I got two QDRO's in one week (both from Oklahoma, I think there is a connection here!) where the award is worded as follows:

"50% of benefits accrued during the marriage, plus or minus any gain or loss on the award up to the date of distribution..."

To which I responded to the attorneys, "That's just cooky. If you meant to say 50% of the account balance as of a date, you would have just said that."

So what does this language even mean? For example, It seems to me that I would need to add back any distributions because the award is 50% of the BENEFITS ACCRUED adjusted only by gains/losses.

Oh, and what happens if I don't catch a break, and they were married AFTER participation in the Plan began. That would be buckets of fun.

Is this an Oklahoma thing? I've been reviewing QDRO's for a long time and its first time I've seen this language.

I imagine this question must have come up before, but I cannot seem to find an answer. Plan passes ADP testing (by virtue of reclassifying Excess Contributions as Catch-up), but plan also fails ACP testing (document has fixed match calculated annually). Document does not have verbiage to reduce match to HCE's in order to pass the ACP testing. The match will not actually be deposited until after March 15th. Do I have to wait until after it's deposited to process the refund - hence the client incurring the 10% penalty?? It's a fixed match, so they definitely have to and will be funding the match. It's accrued in each employee's account balance as of 12/31/14, so does that make it part of the participant's account balance to the extent we can refund it out of the participant's non-accrued money?

Hello,

I need some guidance. I began working for a company in November 2006. I received my first ESOP statement in 2008 for 12/31/2007. I had 40k in the account on the statement. For period ending 12/31/2008, I had 44k. I was let go in June 2012 due to layoffs. The company was not financially sound. They did not file for bankruptcy. They restructured internally. No loans assumed.

Since the 12/31/2008 statements were released, the ESOP has not released statements to any of the participants.

I have managed to locate the 5500 filed annually with the DOL and the ESOP does still exist. It is not abandoned. So I started emailing my previous employer asking for the 2009-2013 statements on a very regular basis. They finally mailed me 2010-2012 statements just this week.

Herein are the problems I have aside from ESOP participants still not getting information, annual statements, or plan summary descriptions following ERISA.

1.) They have not supplied me my 2009 statement.

2.) The 2010 statement shows I have a beginning balance of shares. The statement also shows the value of those shares is zero.

3.) The 2011 statement shows I have over 2000 shares still yet the value of those shares is zero.

4.) The 2012 statement shows I have over 2000 shares still yet the value of those shares is zero.

5.) The 2012 statement also shows my vesting percentage as zero which is not correct. The previous statements show my vesting percentage as 100% which is correct.

6.) I've also requested summary plan descriptions/annual reports for the years 2009-2013.

7.) What occurred during the year of 2009 where my account dropped from 44k to zero?

8.) I do recall when I worked for the company that one of the owners withdrew $1,000,000 out of the bank on 12/31. I suspect he may have drawn retained earnings down to zero so the company had no cash or equity.

I've spoken briefly with the DOL, they will investigate, I just have to give them a copy of my email threads requesting the docs and a copy of my statements. I've also spoken to one of the VP's (an old friend who is still there). He said I should nail their butts to the wall. He had over 100k in the ESOP. Given all the info above, my gut feeling is there may be criminal negligence here but I really have no idea. At a minimum fiduciary responsibilities appear to have been side stepped.

Do you folks have any suggestions other than to say I'm up a creek here without a paddle? What would cause my account value to drop 44k to zero within one years time?

I have a balance forward plan with pooled accounts at LPL Financial. Each participant receives their own statement. When forfeitures occur, instead of having a separate forfeiture account, they put the money into the owner's account. I have tried convincing them they need a separate forfeiture account to no avail. They don't want to pay for an account that isn't active. Isn't this a problem for the plan? Forfeitures are supposed to be allocated yearly. Is there regulation I can quote to convince them to have a separate forfeiture account?

Thanks in advance.

Hypothetically speaking, with names changed to protect the innocent, I find myself somewhat befuddled by an RMD quandry. Say Sally Strothers is a "5% Owner" of Company A. Since she has turned age 70.5 in 2014, she must receive her first RMD before 4/15/2015 from her account under the Comapny A 401(k) Plan.

In the middle of 2014, the Company A of which she is a minority owner (> 5% though) is sold to Company B under an asset purchase. Sally elects to have her monies rolled into the 401(k) plan of Company B.

During 2014, before any RMD is paid to her, Sally's entire account is transferred to the Company B 401(k) Plan. It should be noted that all of the Company A 401(k) Plan is liquidated before 12/31/2014, and we were not involved in that processing.

Clearly the RMD Monies should never have been rolled into the Company B 401(k) Plan, but they were. To "correct" this problem we are having the RMD paid from the Company B 401(k) Plan before 4/15/2015.

The question is, since Sally is NOT a 5% Owner of Company B (she is just an employee), and she is not terminated from the service of Company B, does she need to receive additional RMDs from the Company B 401(k) Plan.

I believe the answer is no since she is not a 5% Owner under the new plan, and her status is active employee, so no RMD is required. Of course, the RMD that should have been paid from the Company A 401(k) Plan needs to be paid. Does a 2015 RMD need to be paid?

Thanks for your insights!!!

Is a salary reduction only plan required to have a SPD, plan document, etc?

If a plan decides to make the safe harbor match to HCEs, must they make them to all HCE?

Employee 1: 20% owner

wife of Employee 1: 20% owner

brother of employee 1: 20% owner

wife of brother: 20% owner

mother of Employee 1: 20% owner

This is a C-Corp, with 1 employee (20% owner) as the only W2 employee. None of the 4 other owners participate in the 401k nor do they draw any pay. Use form 5500 or 5500ez?

Any reason why a 403b plan cannot contribute more than the max deductible? So two people make $100,000 each. Can they each get $50,000 in profit sharing? That's 50% of comp.

I'm inclined to say no because, duh, they are not deducting anything. But the closest I can come to guidance is through the process of elimination. I want something more concrete, like a McCay Hochman article or an IRS FAQ. Anyone?

(assume reasonable comp is not an issue as that is a matter for the CPA to address and not me!).

Controlled Group A (a controlled group with 3 companies X, Y, and Z is downsizing) and sells the assets of company X to Employee M who is employed by CG A but has no ownership in any of X, Y or Z. This happens December 2013.

Employee M starts a new Company B where he is 100% owner and hires all of the employees of company X on 1/1/14.

Company B establishes a plan 1/1/14 with identical provisions of Plan A and grants past service with CG A to all employees for eligibility and vesting.

Controlled Group A spins off the employees of company X in Plan A into Plan B.

No employee in Company B earned over the comp limit in 2013 to be an HCE of Company B in 2014 but several who were hired by Company B on 1/1/14 earned over the comp limit in CG A in 2013 and would have been HCEs in CG A but for the asset sale and transfer to Company B.

Both plans A & B and all tax payers B, X, Y & Z are on the calendar year.

Am I correct that Employee M is the only HCE of Company B in 2014? There are no other more than 5% owners employed by B.

We have a 0% MPP where the 2 owners were the only eligible employees and filing 5500-EZ. Few employees would become eligible in 2016. Can the plan be amended to only cover the 2 owners and exclude everyone else. I don't think it is a cutback and I don't think there is a coverage issue but I am looking for others' opinion. Also must such an amendment be prospective or can it be retroactive? Thanks!

Employer maintains a Simple IRA for 2015.

Effective 3/1/2015 the employer will be acquired by Company B. Company B maintains a 401(k) Plan.

Employer has not "ownership" in Company B.

Can Company B terminated the Simple IRA effective 3/1/2015 and begin participating in Company B's 401(k) Plan?

if so, the contributions made to the Simple IRA are counted towards the 402(g) limit, correct.

Thanks

Hello!

I have taken a 5-week leave of absence in mid-2014. After I returned, the payment on the remained of my 401k loan was adjusted so I figured the loan was re-amortized. Sometime in October, the loan was paid off. However, in November I received a check from the provider for $308. Thinking I have overpaid, I cashed the check without looking too closely at the paperwork.

Well, it turns out, my loan went into default in the amount of $308 (the check that they sent me). Sure, the repercussions aren't dire (taxes + 10% on the defaulted amount will be about $130) but I'm still a bit upset because it's MY $130 and THEIR fault (or at least deep in my heart, I feel it's their fault ).

Is there anything I can do to rectify this? Can I paid that $308 back before April 15, 2015 and not pay taxes on it?

Also, since the existing loan shows in default state, I'm barred from taking out another until I pay it off in which case I'd be paying taxes on this money twice. Yikes!

Any input appreciated!

tomasz.

medium size 401(k)(preapproved document..no fdl) had two operational errors in 2014:

1.)allowed one person(nhce) to defer before eligible...appears that the rev proc

allows an amendment to bring the person in for the applicable time period..would

it be reasonable to also return the deferral with earnings and 1099R the person.in this case is the person in the 2014 adp test or not and would the 1099r be 2014 or 2015?

2.)active nhce rolled over his deferral account(self directed brokerage account).. . what would be a reasonable attempt to get this money back into the plan ..give the ee 60 days and then issue a 1099r for a taxable premature distribution if not returned? Seems to me there has to be some penalty to the employee ..i.e., cannot just..notify the ee and then do nothing if no response..

any comments are appreciated...

Terminated participant takes direct rollover distribution from 401(k) plan to IRA in year in which she attains age 70-1/2. Amount rolled over is net after RMD from plan, which is distributed to her in cash. Does she then have to take an RMD from the IRA for the year in which she took the RMD from the plan?

Have a client who terminated the company 401(k) Plan and all assets were distributed by September of 2013. From pressure from his employees, he would like to now start a 401(k) plan back up again. Is there a time limitation as to how long he has to wait until he can start a 401(k) again?