What are the implications and/or penalties to the company, if a plan adminstrator does not get the Sarbanes-Oxley Letter mailed to participants within the required timeframe (e.g., 30 days from the freeze date)?

We have an old MPP effective in the early 1970's. It has always contained a provision as follows:

"Each employee who is eligible to participate and who desires to participate shall contribute 9% of his compensation for each plan year...." The Employer matches the Employee contribution.

For the first time ever, the Employer has an employee (a re-hire who formerly participated) state he does not wish to participate. The Employee was paid out when he terminated a couple of years ago.

Is it permissable for this employee to choose not to participate? Even though this is an MPP, does this bring into play the opt-out provision in the 401(k) regs?

Any thoughts are appreciated.

Note: These are after-tax mandatory employee contribuitons.

John & Mary Smith are getting divorced. John has 600k old 401k and 175k in new 401k and he earns approximately 115k a year while Mary will earn 25k in 2014. Their attorneys mutually agreed along with the Smith's that John should cash out his 600k 401k to pay off the house for Mrs Smith (370K). I came onto the seen after John removed 600k from his retirement without a QDRO (Qualified Domestic Relations Order). I have put the breaks on this Ill-advised scheme. However, the custodian withheld 120k for taxes and penalties. Is there any way to get this withholding returned quickly? They now have 45 days to correct this IRS disaster. Mind you that the effective tax rate on 740k is 53% fed, State, and penalty. Apparently neither attorney considered the sheer tax onslaught this would lead to (400/hr doesn't by much these days). Nor did they consider the alternatives (72T to pay the mortgage over time). However, this 120k withholding will still kick their combined effective tax rate up considerably if it cannot be put into an IRA within 60 days!!! The Smiths are still legally married so this occurred before divorce was finalized (dumb). Any advice, direction would be great. I'm at a loss...

Background: Sally worked for ABC, ABC adopted XYZ 401k Multiple Employer plan. Sally then opens her own business and adopts the same XYZ 401k Multiple Employer 401k plan. Sally and three employees, to my knowledge, never termed, who knows. Sally and three employees assets are moved from one participating employer to another. No distribution was processed because of the MEP, so no rollover coding on the assets. Sally's assets are substantial, and of course the plan appears to be top heavy for the first year and subsequent years. The plan has since been moved to an individual 401k platform.

Plan document reads:

2.7 Transfer to/from a participating employer. The transfer of a Participant from one Participating Employer to another Participating Employer under the Plan shall not affect his rights under the Plan, and all amounts credited under his accounts described in Article 8, year(s) of Service and Credited Service accumulated under the Plan and other rights and benefits he is entitled to under the Plan shall continue to his credit after such transfer. The transferred Participant will carry with him to his new Participating Employer's Plan his accumulated account balances, vesting and eligibility service, and no termination of employment or One-Year Break in service shall occur as a result of the transfer. However, such transfer shall constitute a termination of employment from the prior Participating Employer only for purposes of ceasing Elective Contributions, Roth Elective Contributions, Nondeductible Voluntary Contributions and Participating Employer contributions for the transferred Participant. Matching Contributions and Non-Matching Contributions for the Plan Year of the transfer, if based on Compensation, shall be determined using the Participant's Compensation with each Participating Employer.

I was not employed at the time this transaction took place......

For top heavy reasons, I would have preferred to have a distributable event so the funds could have been rolled in to exclude the assets from being calculated in top heavy calculation. Under the MEP, the assets just get moved from one employer to another. (See above)

Is this plan just hosed in regards to top heavy? Of course, the TPA, didn't know Sally was owner, so the plan hasn't been top heavy yet.

Anyone see any wiggle room to have the assets excluded from the top heavy calc?

Thanks

Mr Bagwell

Can anyone provide a link to something that makes it clear that the K-1 an S-Corp owner gets isn't considered compensation? Just not having any luck putting my finger (or mouse) on it. Thanks!

Working through a census, we found compensation for someone who was terminated two years ago. We asked the client if it was a rehire, and they said that this was a commission from a long-term job that just completed; their policy is to not pay commissions until the job is completed, including for employees who have left before it was done (presumably they pro rate it or something, I probably don't really need to know about that part).

So this employee was terminated in 2011 - clearly, by any sane definition of "post-severance compensation", this is past the timing period. Following the document would exclude this compensation. Is there anything that I need to be concerned about - excessive delay of payment or anything like that that could come back to haunt me later?

Thanks.

A non-5% owner who is retiring in March 2014 and turn 70 1/2 in June of 2014 would have a required beginning date of April 1, 2015. It's my understanding that the RMD amount would be calculated based on his balance at December 31, 2013. We informed the participant that he could take the first RMD in 2014 or wait and take one by April 2015 and take a 2nd by December 2015. The participant is requesting that, upon retirement, his entire account balance be rolled over to an IRA in 2014 and then he will take the RMD from the IRA by April 2015. I don't think this would be allowed, correct?

My hesitation though is that as of the date of retirement he has not turned 70 1/2; would it be possible for him to rollover the value before he turns 70 1/2?

I can't seem to find anything on this so maybe there is no limit. We are working on a correction to a plan that goes back to 2005. We are going to file for a VCP on the correction. The question came up about the 5500s. I was thinking you couldn't amend them after 3 years like many of tax returns but I can't find that in writing so I am thinking I am just plain wrong.

So I guess the questions is can you amend 5500s that old or are those years closed?

Hello. We just took over the document responsibility for over 120 clients of an investment firm.

The investment firm was the document provider using an Relius Standardized Prototype In review of the EGTRRA restatements done by the investment house, there are very few Final 415, HEART, WRERA amendments and no PPA amendments in the files. The Investment Firm indicated that they did not adopt any amendments on behalf of their clients, but each were to sign the amendment. Needless to say that did not always happen.

So, we are in the process os submitting all of the plans of the clients of the investment firm under VCP using a Group Submission. Has anyone done this lately? If so, can you provide an estimate of the time the process took and what you might have charged for the submission work?

As part of the submission you are required to notify all plan sponsors who adopted the plans, that the plans are being submitted to VCP. Does anyone have a sample letter that they have used to inform the plan sponsors of the Group Submission.

Thanks for any guidance you can provide.

Last year, my company burned through their 100+ employee grace period with the SIMPLE IRA. This year, around January 10th, (5 days before our first paycheck of the year), we were informed that the company could no longer offer the SIMPLE program. This sounds a lot like the employer is breaking several rules.

1. Operating a SIMPLE IRA with over 100+ employees (as of January 9th, of this year, employees knew nothing of the situation)

2. Terminating the SIMPLE plan without giving employees 60 days notice

3. Terminating the SIMPLE plan mid year

My employer claims to be searching for a 401k program, and hopes to have one available within the next few months. Several employees are considering leaving this employer and would like to know if anyone has thoughts / ideas as to what may be done to handle this situation from the employee's perspective.

Employer has a 401k and a 403b plan, deferrals and match only. May and/or must the plans be combined for 410b testing. Also, not sure what to ask about ADP and ACP testing since no ADP testing for 403b plans. Any help would be greatly appreciated. Thanks.

Plan sponsor is using the default under 409A for determining specified employees. With respect to participants hired midyear, for purposes of calculating compensation for a specified employee, does the plan sponsor consider the actual amount paid (i.e. W-2 income) or does the plan sponsor take the compensation at year end and convert this to an annualized number?

Owner of Company A purchased 100% of Company B creating a controlled group. Both companies have their own separate 401(k) plans. Can Company A do ADP testing for its 401(k) plan separately from Company B's 401(k) plan?

I seem to recall some guidance or a regulation that permits separate ADP testing, but cannot locate it.

Thanks.

Client has SARSEP and allows employees to defer up to 25% of compensation and client makes annual employer contributions = 4% of compensation.

Client has been determining all contributions based on gross wages.

Client uses model IRS Form 5305A-SEP which to me seems to say the term "compensation" is w-2 wages excluding employer contributions and elective deferrals.

Which means that for purposes of calculating employer contributions means that the 4% should be applied to the employee's wages less elective deferrals.

Anyone have any thoughts?

Client's Profit-Sharing Plan was last updated for GUST using a proto-type document.

I have prepared all amendments required to have been made since then including an EGTRRA restatement.

I think I need to use Appendix C, Part II, Schedule 2.

My problem is I can't figure out which box to check.

Do I check the box for Cumulative List for Cycle E individually designed plan (EIN ends in 5)? This seems wrong because the last time the plan was restated it was done so with a prototype document.

Or do I check "Other" and list each individual amendments along with EGTRRA restatement?

Any assistance is appreciated.

Brand new SH 401(k), effective date 1/1/14. The person who enrolled the employees did not check eligibility. Deferrals have been withheld for 8 ineligibles, no HCE's. All were hired in 2013 and have not met the 1 year wait. Will follow the EPCRS procedure for amendment. I was originally thinking I would word it so that anyone employed on 1/1/14 is eligible, but since it states that it should change the entry date only for the specific employees, do I include their names in the amendment?

Have not yet submitted document for LOD. Is this amendment going to cause a problem?

Have a client who signed a Auto Rollover Agreement for balances between $1k and $5k. For "lost" participants, we normally send them to "search" to locate a good address for them. In the past, we have charged the $25.00 fee to the participants account and if moved to an IRA, a fee of $30.00 to set the account up. Are these participant fees allowable to charged against the participant account?

Thanks.

We timely filed a determination letter application but forgot to attach the user fee. What is IRS policy? Will it be treated as not timely filed? Or will they contact us with an opportunity to send the user fee?

Safe harbor plan is satisfying the ADP safe harbor by making the 3% non-elective contribution. The plan also has a discretionary match formula of 0-7% deferred=0% match; 7-8% deferred= 100% of 1% match (participant will receive 1% of compensation as match if they defer more than 7%).

The ACP test will be performed since this formula exceeds the 6% limit but my question/concern is related to the rate of match increasing as the rate of deferrals increase. Since the ACP test is going to be done, is this tiered match acceptable if we can satisfy the BRF test?

Any guidance would be greatly appreciated.

QNPG

Help! My brokerage firm didn't process my request for a distribution from my IRA last year (its not a minimum required distribution). The firm processed it this year despite my instructions. Is there any way to appeal to the IRS since it's not my fault?