I know that the maximum dollar penalty on any size tax housegold for not having MEC for all months in 2014 is $295 (3 x $95)

I also know that the cap on the 1% of excess income side of the penalty calculation is the national average Bronze premium.

I know I saw it somewhere but now can't find what that maximum is.

Thanks

Participating employer ceased participation in safe harbor 401(k) earlier this year and wants to set up own 401(k) Plan mirroring all aspects of the prior plan. Would 401(k) Plan set up by now non-participating employer into which non-participating employer's employee/participants' assets will be transferred be considered a new plan or an amendment and restatement of the original 401(k) plan? Which way would be better --- consider it an amendment and restatement of the prior plan for purposes of the non-participating employer or consider it a new plan? Would seem practically speaking to be better to treat as amendment and restatement of the former participating employer's "portion" of the prior plan. Thanks for any guidance.

Should the controlling health plan be the wrap plan or the major medical plan that is wrapped into the wrap plan (along with other health plans such as vision and dental)?

One man plan with assets exceeding 250K, so 5500EZ is being filed. If the plan document does not allow for participant directed accounts, would investing in collecibles trigger distributions? For practical purposes this is the same as an individually directed account since the only individual participant is the trustee.

I am preparing a VFCP filing and this particular employer has a check date that is seven days after the payroll end date. For purposes of the both the 7 day safe harbor and lost earnings calculations should we use the check date as the starting point or the payroll end date? I'm pretty sure it is the check date based on §2510.3-102(a)(2) -- "...or the 7th business day following the day on which such amount would otherwise have been payable to the participant in cash."

I've filed several VFCP's apps before and always used check date. I have never been questioned on it, but as far as I can recall the check date has alwasy been within a day or two of the payroll end date. It has been awhile since I've seen this much time lag between payroll end and check date.

Thanks in advance for any guidance.

I have a plan that had deferrals taken from an ineligible compensation (overtime).

One correction under consideration is refunding the overages (plus investment experience). This would be considered an excess deferral. This happened in 2013.

If not an excess deferral, what correction is it then? It's either an excess deferral (as defined by the code or a plan limit) or what?

We were thinking of being aggressive going down the "ineligible participant" route, in that deferrals were taken from an ineligible source of income. This would allow us to forfeit the contributions and make the participants whole outside the plan and also avoid the onerous tax consequences.

Some people in my office just think we should correct moving forward, let the participants know what happened and move on.

I'd like to self-correct, as this plan has over 1,000 people and the cost of VCP is 15,000 just to submit. This affects 80 out of 1200-1300 active participants, and the amount in involved is miniscule compared to total deferrals.

Have you ever come across any restrictions using the same prototype document for a plan that is being spun off from a multiple employer? The spin off will have it's own plan obviously, but using the same prototype sponsor. These are 401(k)'s. Would you check with the document provider to ensure there are no issues?

This is a plan for a plan sponsor who has union employees, but they are an excluded class. There are several employees who were participants while they were non-union and now have moved to be in the union.

I'm fine with the plan not having to give them a top heavy minimum allocation now that they are not in an eligible class (and 416(i)(4) supports this - assuming that retirement benefits were collectively bargained). But are their balances included in the TH determination? They are still active employees, so I'm leaning towards "yes".

Thanks.

Let's say a year ago a Plan purchases an annuity contract from a life insurance company for a monthly pension that exceeds the PBGC guaranteed benefit. Now, the Plan is terminating in a distress situation and the PBGC takes over.

How or does the PBGC work with the insurer to reduce benefits and receive compensation?

We are having difficulties with an accountant on Accountant's Opinion and Schedule H for calendar year 2013 plan year.

Basically, the last payroll date with contributions was 12/20/2013. These deferrals were physically deposited in early January. (Question is not on deposit timing.) These deferral were reported on 2013 W-2 Forms. Obviously, these contributions are reported on the 2013 Schedule H, which we prepare on an accrual basis. That is not the problem.

We have a payroll period the runs from 12/23/2013 to 1/3/2014. These contributions will be reported on 2014 Form W-2. It is this period that we are having trouble with the accountant. Accountant believes that since a portion of this pay period was in 2013, we must include on 2013 Schedule H!

As I recall from ASPPA Exams, ect.. this was long settled as you use the amounts for the year in which Form W-2 records these contribution. In effect, none of this period is reported in 2013. Reporting is in 2014. Does anyone have a cite or reference that I can use for this purpose?

Thanks in advance for assistance!

I have a plan that had deferrals taken from an ineligible compensation (overtime).

One correction under consideration is refunding the overages (plus investment experience). This would be considered an excess deferral. This happened in 2013.

Because we are past April 15, how is the distribution taxed? Is it earnings in 2014 and excess in 2013 AND 2014?

Or did things change and everything is taxable in 2014?

When an uncashed participant distribution check is returned to the plan and placed in the forfeiture account, Where should that be shown on the 5500?

I have a client that has operated a Simple IRA plan for the past 14 years. He would like to take advantage of larger deferral opportunities and other perks of a Safe Harbor 401(k).

Can the simple IRA be converted to a Safe Harbor Plan?

Can dollars currently held if the Simple IRA be rolled over to the SH Plan without restrictions (since it's been in operation for 14 years)?

Can the safe harbor plan start at any point or is there a deadline?

Thanks in advance!

In the new world of age-based rates for each individual covered by a small group plan does anyone disagree with the proposition that the employer violates ADEA if it says "I'll pay $XXX/month towards your premium and you pay the balance" (a so-called defined contribution approach)?

I know that ADEA permits the employer to pay a percentage of the age-based premium, it just prohibits the employer from paying a fixed amount.

Thanks

Hello.

A new client has come to us. The client has a 401k plan and a 403b plan. The 401k plan was established in 1999 and was funded until the employer got its

501 © (3) designation at which point it established a 403b plan and just stopped contributions to the 401k plan. The cleint is telling us that the 401k plan is 'frozen'. I have not heard this term used for a 401k plan.

The client told us that they wanted to terminate the 401k plan. My question is: can we not just merge the 401k plan into the 403b plan? What issues would arise? I would suggest that merging the plans will eliminate the need to restate the 401k plan for PPA.

Employee's child is being incarcerated so employee wants to drop child from coverage. Jail is located within plan service area.

Would you consider this a qualifying event and allow the employee to drop the dependent's coverage? While sympathetic, I'm not sure I see it...

Our client filed an extension back in July, but just discovered that they mistakenly requested an extension until 9-15-14 instead of 10-15-14 like they intended.

Now they're technically 9 days late. Any ideas how they need to rectify this? Can they 'amend' their 5558?

the employer will provide notification to the participants that the SIMPLE IRA will cease effective January 1.

Effective January 1, they will implement a 401(k) Plan. Many of the SIMPLE IRA participants have more than 2 years participation and will roll their funds to the 401(k) Plan.

If a participant only has 1 year as of 12/31/2014 could he roll this SIMPLE IRA to the 401(k) after 12/31/2015 - that would be two years in the SIMPLE PLAN? Or since the plan is terminated, participants with less than 2 years will NEVER be able to roll to the 401(k)??

Thank You

We've assisted an employer with a VCP submission for his Safe Harbor 401(k) plan. He's made his employees whole and we're hoping the IRS will say good job, you're done. But of course, no one can assume that. We suggested that the employer not terminate the plan until the IRS review is done. We haven't even received the Acknowledgement Letter yet, so we're a long way from the end. In the submission, we've asked the IRS to allow the employer to only make a Safe Harbor contribution for half of 2014. I've explained to the employer that that might not get approved, but we had to at least ask. The employer really wants to terminate the plan now. I suppose if the IRS requires adjustments, we could get it done somehow even with a terminated plan, but I'd rather not. What would you do? Allow him to terminate, or make him wait?