We are testing 2 plans in a control group. One plan has a match. The other plan is deferrals only, no match. Pretty large population - about 1200 people total (after using otherwise excludable rule).

The Ratio Percentage test fails any way we test it. ADP/ACP for the plan with the match both pass. ADP for plan without the match fails and refunds have already been issued. Had the ADP/ACP testing been done on a permissive aggregation basis, the whole testing would have failed and even more refunds would have been necessary.

BRF testing passes. The Average Benefits Percentage test fails.

Now I am somewhat stumped...How do I determine how to correct for the test failure? Is the answer to give a match to the employees of the plan without a match? to give a higher match to the nonHCEs in the plan with a match?

Thanks. any thoughts are appreciated:)

When a parent dies, and is divorced, and the minor child is the beneficiary, is there something we should be requesting to "prove" that the surviving parent should receive the money on their behalf?

Suffice it to say that the deceased's family is "concerned" that perhaps the surving parent will not use the money in the best interests of the child. So we want to make sure we dot i's and cross t's.

I have heard the term Financial Guardian before - is that something we should be requesting even with respect to the parent?

Based on my understanding, when I made an extension payment through EFTPS online system, I automatically got a 6 month extension to file my taxes. (Since I'm expecting a refund anyhow, it does not really matter).

And my understanding is that since I have an extension to file my taxes until today Oct 15, I can file my Form 5500 today without any problems.

Thoughts?

Does anyone know if fidelity bonds with inflation guard have any caveats, exclusions, etc. regarding non-qualifying plan assets?

So a plan has $1,000,000 but has $300,000 of real estate. Will the bond be $300,000 or still just $100,000?

I am afraid that plans using inflation guard might be lulled into a false conclusion that they are all set when in fact they are not.

Probably a less interesting example is a plan with $1,000,000 and $600,000 of real estate. I think that is more clear that the bond covers just $500,000 as most of these bonds indicate a "not to exceed $500,000" parameter.

Anyway I wasn't sure if anyone had already looked into this as it seems to be a potential hole in the bonding requirement for the small plan audit waiver.

Employer has an automatic contribution arrangement (ACA- but not an EACA or a QACA) and wishes to change the default deferral percentage mid-year. Assuming that the employer will provide 30 days notice and option to opt out, is there any concern that the arrangement will fail to meet the ERISA preemption requirements under 514(e) because the annual notice will not have specified the new deferral percentage? In other words, the annual notice will become inaccurate as of the date of the change- is this cured by the 30 day notice, or will the employer have to wait to make the change until the beginning of the plan year?

I've been asked something I've never been asked before ... "can we limit the employer contributions for the HCE's?"

The client is a medical facility that is owned by investors (none of which are employed by the facility). They have two HCE's who want to max their 401(k) deferrals. Rest of the employees don't defer well, so several years ago we adopted safe harbor 401(k) plan with basic match.

They are looking to reduce the amount of the match for the two HCE's for budgetary purposes. My off-the-cuff thought is as follows:

• amend plan for 2015 to exclude HCE's from basic match
• include a discretionary match that only the HCE's are eligible to receive
• automatically satisfy ADP test due to basic match for HNCE's
• need to perform ACP test (which will hopefully pass because the formula for HCE's is not as beneficial as safe harbor basic match --- essentially, I will have to tell them what level of match will satisfy ACP and that will be their discretionary match)

The plan is not top-heavy, so we don't have that issue (as we wouldn't meet top-heavy exemption for safe harbor plans). I won't have 410(b) issues as the two matching contributions are aggregated to run that test.

Am I not thinking of something?

Thanks.

Non-calendar premium-conversion-only cafeteria plan wants to change to calendar year to accomodate employees wanting to go on Medicare during Medicare open enrollment (I realize Notice 2014-55 is a solution for employees wanting to go on Marketplace coverage).

Is creating a short cafeteria plan year routine or are there land mines I need to worry about?

We withheld loan payments from a participant's pay but didn't timely remit them to the plan. Now we are going to get them in the plan, but the loan is paid off. How do we get the loan payments in the plan? How do we classify them?

I had opened 3 Self-Employed 401K plans - Fidelity, T.Rowe price and E-Trade.

I never put any money in E-Trade and they closed account after a couple of years due to inactivity. Do I need to file 5500 for this account now?

I put some money in T. Rowe and after a couple of years, I transferred all funds to Fidelity 401k account. Do I need to file 5500 for this account as well?

At each stage, the total assets were less than 250K combined.

Thanks,

Which form to file for a self-employed solo 401k plan with one participant (assets over the limit) - Form 5500-SF online OR Paper Form 5500-EZ to avoid public inspection?

Previously it was thought that Form 5500-EZ avoided public inspection. But instructions for Form 5500-EZ states that this form is open for public inspection.

Would prefer that contact information does not get public. What are my options?

Have looked at several posts but have yet to see a definitive answer.

Thanks for your help.

For a solo or self employed 401k plan with only 1 participant (sole proprietor), what are the Plan Characteristic Codes that need to be entered in the form?

Seems out of - 2E, 2J, 3B, 3D, 3E

Any thoughts?

Thanks,

I just took over a plan and noticed that there is a note to a non participant who has not made any payments. When does it go in default and who would receive the 1099 on the defaulted loan?

Assume employer awarded restricted stock units (RSUs) that by their terms required the shares to be awarded immediately upon vesting of the RSUs. Ordinarily this would be a short-term deferral program exempt from 409A. Suppose, however, that in fact the employer never transferred the shares, not even before the end of the 2-1/2 stub period. Is there any way to "fix" the 409A problem? Assume the statute of limitations for the tax year in which the RSUs vested is still open.

Two of the "conditions" established in 1.401(a)(4)-11(g)(3)(vi) for doing a correcitve amendment are:

(A) that it not be part of a pattern of amendments to correct repeated failures; and

(B) that the correction remain in effect until the end of the first plan year after "the date of the amendment."

With respect to (A), at what point does it become a pattern?

With respect to (B), what is the date of the amendment - its effective date or the adoption date? It seems to me that depending on how you answer that, the amendment would remain in effect for either 2 years or 3 years (e.g., in 2013, a corrective amendment is timely adopted with respect to the 2012 plan year; if that "date of the amendment" is the date it is effective, it would have to remain in effect for 2012 and 2013, and if it's the date adopted, it would have to remain in effect for 2012, 2013 and 2014).

One of the plans that I have is a sole prop and his extension is tomorrow. the plan is a 401k Profit Sharing plan with a SHNEC feature also. Today he is asking me the following:

Is there a big penalty if the [profit sharing] money goes in a bit late? We have a big chunk of change coming in at the end of the month.

I had told him that if he's going to deduct the PS on his 2013 return, then it needs to be deposited by tomorrow. I did find something in the EOB that talks about mailing the deposit and having it postmarked tomorrow.

I don't think he is going to go this route, but what are the penalties if he makes this deposit late? I am assuming that this would come to light in an audit. The plan consists of himself and 2 staff members.

An HCE (currently a participant) desires to be permanently excluded by name from the PSP. He was a key employee up until this current year; now is a non-key employee. The Plan is top-heavy.

Is this exclusion permitted, and may the amendment be effective for this current year or must it be prospective?

Thanks.

The CEO of a company is owed $100,000 per year. In 2012 and 2013 the company was struggling so the CEO didn't take compensation. He didn't waive it either, he just didn't take it those years thinking he'd take it later when the company was doing better.

In 2014 the CEO waived his right to the $200,000 salary for 2012 and 2013 in exchange for a $1 million loan from the company.

1) It seems to me the CEO impermissibly deferred his 2012 and 2013 compensation to 2014. There was no agreement deferring it to a permissible trigger date under 409A. Is there any way to categorize this as anything other than a deferral under 409A?

2) The company was struggling but probably not to the extent that paying the CEO would have risked the company's ability to continue as a going concern, so I can't get out of 409A that way. Is there any other argument to get out of 409A?

3) Since this only dates back to 2012, I can use the correction procedure under Notice 2008-113. Part of that correction procedure says the company must pay the distribution to the employee and cannot compensate him (interest, etc.) for the late payment. So are we going to have issues since we traded the $200,000 for a $1 million loan?

Any help is appreciated.

Wow, it has been a long time since I've looked at one of these. Trying to refresh my memory. They want to amend/restate MP plan to a PS plan.

Calendar year MP plan, with a 1,000 hour AND last day requirement.

The 204(h) notice has to be given (large plan) at least 45 days prior to the effective date of the amendment.

So, let's say they want to avoid a MP contribution for 2015. As long as the "effective date" of the amendment is, say, March 1, so that no one can have reached 1,000 hours, is there any problem? They haven't "accrued" anything under the MP plan at that point. (Actually, as far as that goes, the amendment should be allowable up to December 30, 2015, as long as the Notice is provided at least 45 days prior to that, right?)

Hi - I have not been able to find any source that affirmatively states that make up 401k deferrals for the period of military service must come from current year compensation. So for example - employee is on military duty in 2012 and 2013 and returns in 2014, He would like to make up $50,000. So his compensation for 2014 will be $40,000. Can he submit a check for $50,000 OR does the $50,000 have to come from current compensation, which in effect will equate to 100% of compensation and he can only defer $40,000.

I have heard there was a technical correction to USERRA that requires the missed deferrals come from current compensation - so that the employer is not on the hook for huge amounts of match from prior years.

Any help would be great!!

What happens if (intended) employer contribution to SEP IRA account was listed by broker as "Regular Contribution Tax Year 14" (appears to be a mistake on their part)? The account is set up for a sole proprietorship. Previous years contributions were correctly listed as "SEP Employer Contribution".

Can I simply indicate this amount as employer contribution on 2014 tax return? Or should I get the brokerage to reclassify it correctly?