austin3515

This is what we have been doing. GMK, I don;t have to tell you I'm sure that there are just 24 hours in a day and nothing that sounds simple ever turns out to be simple. Every simple project takes time.

The challenge for those of us who work with multiple providers is that it is hard enough to track the fees charged by the plan, let alone charged by outsiders. That;'s the dilemma...

No, it's an auto rollover to a terminated employee with less than $5,000 but more than $1,000. They just did not return their paperwork.

So including the fees charged by the IRA custodian to establish the account? I'm not going argue with that as being the best policy believe me, but where does it indicate that it is a requirement to disclose those fees? I have never heard of such a requirement to disclose the fee arrangement on the default IRA's before. I think that the distinction between best practice and a legal requirement is a very important distinction.

I'm not following. RK/TPA fees total $75, these are the fees paid by the Plan. The IRA custdodian charges $100 to open the account. Where are you disclosing these specific fees (it would help if you referenced the indicated dollar amounts to eliminate any confusion). What notice? These statements seem contradictory?

What obligation does a plan sponsor have to disclose the fees that will be charged by the IRA provider in order to open the default IRA account? So recordkeeper charges $75 to process a distribution, but the IRA provider charges $100 to open the account. This fee mind you is assessed from the IRA - it is not paid by the plan. What are people doing here?

I know the feeling!! With respect to whether or not a reasonable business classification is someone's employment status, I look to the examples provided. So for example if the definition of business classification is exemplified by things like salaried/hourly, or geographic location, we should look for common threads. Is it a business criteria to treat salaried/hourly people separately? Yes it is (and not just because the regs say so). It is also because the desired benefit structure may well be entirely different for these potentially vastly different audiences. Same w/ California vs Oregon. Perhaps in order to compete in Oregon the benefits need to be greater than those in California. That is a business criteria. Excluding terminated employees does not satisfy a business need in nearly the same way. To me, it is merely a policy. At any rate, I have never seen the value of not just including the last/1,000 hour rule if that is what you want to do. Even before I considered the availability of Average Benefits I had already ruled it out merely because of the term with break exclusion. Here is another good reason to include the last day rule: Johnny gets canned on 12/15/2014 and is expecting his profit sharing. He is mortified when he learns the employer is not giving his 15% of pay contribution. He demands an explanation (he is of course still bitter for being fired), he insists that he be shown where in the document his employment on the last day of the plan year is a pre-condition. What do you tell Johnny? The fact that you are technically correct is rarely a consolation to people.

Wow Tom, you just blew my mind... Would never have thought of that... The issue here is that you're not using a reasonable business classification to determine who gets a contribution. That's a coverage issue and if you're not using reasonable business classification you can't use Avg Ben for coverage. You can for RG Testing of course. That's a lot different than some get 3% some get 5% some get 10%.

They want to switch the first 5% to profit sharing so they can do cross-tested/profit sharing. ACP Testing I do not think will be an issue as the participation is very very good.

What do I need to watch out for with a match that says the first 5% will not be matched, but then the match is dollar for dollar for 5% through 10% (i.e., the max match is 5% of pay, if you contribute 10%). Same match formula applies to everyone. Is it just an effective availability test? Everyone in the organization is pretty highly paid.

Pretty much what Corbel said in terms of yay or nay, but you're explanation was very helpful. I agree with the logic you're using...

Thanks Calavera - that link was very helpful!

Oy vey.

OK, here is what is bothering me. I have never had an actuary tell me "here is what the owner needs to deduct on page 1 of 1040." Are there actuaries out there who can attest to whether or not they provide that information? I think I would have seen it by now.

Sorry, so does that mean the portion of the DB contributions contributed to the plan that is allocable to the owner (allocated based on normal cost) is deducted on page 1 of 1040?

Except that you cannot differentiate what is on behalf of the owner versus everyone else.

Doing an SE calc for a Schedule C / 401k Plan, but they also sponsor a cash balance Plan. How are the contributions to the plan deducted? I assume they are NOT deducted the same way as the 401k employer contriubtions (i.e., on page 1 of 1040) but rather as a business expense to arrive at net income? Can someone confirm?

I've always been bothered by posts that place a higher expectation on people than is really reasonable. Perhapsh you'll be horrified by this comment, but for most partners they don't spend a lot of considering such things. They're just putting money in their 401k based on the assumption that because they've always been able to participate the same should be true this year. Therefore, I personally think no less of them when they find themselves in this situation. I actually sympathize with them because if they had been paid via w-2 wages for the "profitable" part of the year they would not be in this situation.

Any thoughts pon the mistake of fact approach to get it returned to the employer?

QDRO Phile, are you suggesting that partners in all cases should know that the last half of the year they will lose money? I think you're asking a bit much of mere mortals who haven't got the ability to see into the future. In many cases the margin between money making and losing is narrow too by the way. Not all partners make $100K.

So you think if they deposit that "projected" amount to the forfeiture account they could deduct it? It doesn't seem right. Even if it was a to a pooled account it doesn't seem right.

I think it needs to go to the forfeiture account. I actually think refunding it to the employer as a mistake of fact is not a bad option either though, but one would need to do some research. I think if you look up the criteria for mistake of fact refunds to the employer this might hit all the criteria.

This is not a 415 failure. These were not eligible deferrals. They had no comp, so they were not eligible to defer. That's how I see it anyway.

I just read through it again and I don't think I did. Short version: Deposit 100% of 12/31/2014 contributions on 1/31/2015 Deposit 100% of PROJECTED 12/31/2015 contributions on 3/25/2015. BOTH are deducted on the 3/31/2015 corporate return. Does NOT exceed the max deductible 25% limit.

3/31 Fiscal year end with a 12/31 plan year end. Client has lots of extra income for the 3/31/2015 plan year and is looking for lots of deductions. What they want to do is max out heir 12/31/2014 contributions, and then contribute/deduct the 2015 maximum in the first quarter of 2015. I know that one of the requirements for deducting contributions made AFTER the end of the year is that it must be allocated as of a date within the fiscal year. Is the same true for contributions made/deductible before the end of the year? Safe Harbor 3%, funded each pay-period. I don't think anyone would have a problem deducting this on the 3/31/2015 return. Full profit sharing. There are 3 other employees. The client essentially wants to fund 100% of the projected 12/31/2015 contributions in the first quarter. There are NO Allocation conditions. Any way to make that work?