austin3515

To say the least I have mixed emotions... We have spent an exorbitant amount of time writing efast credential instructions, efiling mailings, and setting up our web client efiling portal with all custom language, etc. One of the owners of my firm wants to can all this and do it the "new way" to avoid the "support" calls with clients and potential frustration, even though I think it will be very very easy to have them efile with relius' web client. But absolutely, the number one reason NOT to do this is the public disclosure of your signature. Hmmm, what could a criminal do with that I wonder? I'm very hopeful that we'll end up at least trying the efiling/web client thing in the beginning and see how it goes... It's certainly a LOT easier on us that way, assuming (as expected) that clients are going to be able to follow simple instructions to do this.

The EBSA today announced that the EFAST2 electronic filing system for Forms 5500 and 5500-SF employee benefit plan annual reports has a new e-signature option. This option is designed to simplify the electronic filing process, especially for small businesses that use service providers to complete and file their annual reports. Effective Jan. 1, 2010, retirement and welfare plans required to file an annual Form 5500 or 5500-SF must file electronically using the department’s new EFAST2 electronic filing system. More than one million Form 5500 reports are filed each year to satisfy annual reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. EFAST2 is designed to improve the receipt and processing of the Forms 5500 and 5500-SF. Under the new e-signature option, service providers that manage the filing process for plans can get their own signing credentials and submit the electronic Form 5500 or 5500-SF for the plan. The service provider must confirm that it has specific written authorization from the plan administrator to submit the plan’s electronic filing. In addition, the administrator must manually sign a paper copy of the completed filing, and the service provider must attach a PDF copy of the manually signed Form 5500 or 5500-SF as an attachment to the electronic filing submitted to EFAST2. 　 The service provider must communicate to the plan administrator any inquiries received from EFAST2, the Department of Labor, the Internal Revenue Service or the Pension Benefit Guaranty Corp. regarding the filing, and inform the plan administrator that, by electing to use this option, the image of the plan administrator’s manual signature will be included with the rest of the annual return/report posted by the Labor Department on the Internet for public disclosure. 　 The additional e-signature option will be available in the government-sponsored IFILE application beginning May 13, 2010. Filers using EFAST2 approved software to complete and file the Form 5500 or Form 5500-SF should contact their software vendors for information regarding availability of this new e-signature option as part of their software. The current EFAST2 frequently asked questions have been updated, and a new fact sheet and set of frequently asked questions have been developed to help small businesses understand this new option. Those materials are available through http://www.efast.dol.gov. Assistance with the EFAST2 system and the Forms 5500 and 5500-SF is also available toll-free at 866-463-3278. # # #

It happens to be a Corbel document, and Corbel said, and I quote, "there is nothing in the document that would self destruct upon the change in TPA's" But they did have all the same caveats of course regarding the individually designed status.

This is what I thought as well... So if we take over a plan, we really should restate it once we take it over, does everyone agree? Without question, if we don't restate it onto ours, we need to have the client sign any amendments.

We just took over a plan and the prior tpa sent us a letter saying that the plan document is null and void after termination of services. My understanding is that this is not the case. Can someone point me to somethign in a revenue procedure or whatever that addresses this?

The sad truth is you really can't terminate, or at least you probably shouldn't. I have an old MP plan that we're not terminating for one reason - the surrender charges are obnoxious. And since it's one contract, you can't divvy it up in IRA's. So you either pay the surrender charge, or keep going. IT would be inteesting to know if you could "terminate" the plan, allowing peoipl to close out everything other than the GIC. My plan had only the GIC in it...

OJ, Assuming the document provides that the loan is due immeidatley on termination of employment (which most documents do), then apply what I said. We have one plan out of hundreds that's written that particular way, because really, who wants to collect loan payments from terminated empoloyees.

When somoen incurs a distributable event, like termination of employment, the loan is offset. That means is treated exactly like a real distribution from the plan. It's reported as a real distribution on a 1099 (NO Code L), and it's reported as a distribuion on the 5500 (not a deemed distrbution). The loan is considered repaid, because the participant's account was reduced (i.e., offset) by their outstanding loan balance. Remember, the participant loan is part of their account balance, so making the loan go down to zero does mean something. Think of the pooled accounting days when the loan was just a part of the pool of assets. Johnny had a statement saying he had $50,000 in the Plan, and Johnny also had a loan out for $5,000, which was not broken out separately on his statement. The $5,000 loan was an investment under the plan just the same as any other mutual fund. So when he terminated, and his account was reduced (i.e., offset) by $5,000, and he only got paid $45,000, it's a lot easier to see how this is considered repaying the loan. A loan deemed distribution is a loan that was treated as distributed for tax purposes only. So for example, a $60,000 loan would be a deemed distribution. The loan is still outstanding, and must still be repaid, even though the entire amount was taxable. Also, the 60K will continue to be counted in future a max loan calculations. Compare this with above, where if the participant was rehired, the "old" loan would be ignored.

I WISH I had head a full head of gray hairs (preferrable to no hairs on my half way balded head...) I know, my avatar can be misleading...

At the risk of splitting hairs, he met the eligiblity requirements as of the end of the 12 consecutive months following his rehire. He ENTERS the Plan on 4/21/10.

Disregarding service under the rule of parity applies to PARTICIPANTS only, not employees. Check the language on disregarding service, you'll note that it specidcially talks about disregarding the service of a Participant. So the service would NOT be disregarded. Everything else PlanMan says is on the money. The Corbel document says (I believie because it is required) that you must work 1,000 hours in 12 consective months. That is all it says. Very common confusion, in fact I had this question come up just lack week. I looked it up in the EOB and what PlanMan and I say is waht Sal says. This is not an opinion - it is a fact Not sure who wins the bet, but congratulations to one of you!

Does depositing the Safe Harbor after 12 months plus interest preserve the top-heavy exemption?

More specifically, you're looking for amounts in Box 14A of the K-1.

I think it should be shifted over to elective deferrals. 401k over 402g is post-tax money in a qualified plan, same as Roth (i.e., because it was not deducted on the 1040). When withdrawn that money is taxed 2x. There shouldn't be a special exception to doulbe taxation for the Roth money. The only way to make sure the participant pays their fair share of taxes twice (ha ha) is to transfer it to 401(k).

Do the relative value disclosures apply to money purchase plans?

Have you been hacking into my network and reading my self employed deferral election form? Don't forget my favorite one, "just enough 401(k) such that the plan WON'T be considered top-heavy" But yes, formulas are 100% acceptable.

There's a third kind of Affilliated Service Grooup called Management Group, which you should look into as well then. I don;t think that one applies either, but just to be thorough. Regardless, you're question is really a tax/legal question, not a retirement plan question. Is Person A the common law employee of Corporation B? If so, then he must get a w-2, and pay payroll taxes on his pay from Corp B (as does Corp B). This situation of course supports that no ASG exists. I would assume this is the most correct treatment. That being said, there are lots of situations where these "management" corps are set up just as your describing (i.e., Pay A's comp through Corp A). Why they are able to avoid the payroll tax issue that I've described above is a legal/tax question. If anyone knows the answer, I would be intrigued.

If A just happened to have a consulting gig with a client, and that service is totally unrelated to the staffing service and there's really no connection, than there wouldn't be an ASG--at least not an "A-Org". It could also be a "B-Org" if for example the two employees are answering A's phones and preparing A's bills, etc., but that doesn't seem likely (because it seems like a simple consulting gig).

One would hope that would have come up in the OP...

Unless it's an Affiliated Service Group, no. So for example, if Person A is a Doctor, and Corp B is owned 50% by Person B (the other Dr.) and the the two B employees are the nurses working for Dr.'s A and B, and Corp B pays Corp A for Person A's services then you probably have an ASG. Of course, the ASG rules for attribution are a little tricky but I would assume that under my theoretical fact pattern you would have an ASG. And the 50% threshhold is relevant only for 415 limitation purposes. Interestingly, as long as you don't cross into the CG/ASG rules, even if you went over 50%, contributions to a simple IRA would not count towards the 415 limit. From the EOB: Note that IRC §415(k)(1) does not include a SIMPLE-IRA plan as a defined contribution plan which is subject to §415, so contributions to a SIMPLE-IRA are not annual additions and are not limited by the defined contribution compensation limit. That's actually a great plan-design tip for this situation in the right circumstances...

I too have a hard time finding fault with two plans (both of which satisfy coverage) applying a 414(s) definition of compensation and have that be treated as not satisfying 414(s). I get where you're going with this but based on the logic I've set forth, I have a hard time believing anyone could find fault. I was intrigued to learn in an earlier post regarding depositing SH beyond 12 months after the end of the plan year that a SH plan CANNOT apply the ADP test. Those provisions were removed. The ADP requirements in a SH Plan are to be satisfied through the SH contribution. Anything that goes wrong is an operational failure. To apply the ADP test would require a retroactive amendment to plan and would need a VCP submission. In your case, if you failed coverage, you would correct that failure through a -11(g) amendment and provide QNECS, etc to correct. Here's the link... http://benefitslink.com/boards/index.php?showtopic=45280

You couldn't do it permissively,it would have to be mandatorily (if that's even a word)... OF course the outocme is the same (I'm being a little facetious) but the point is you are required to disaggragate (SP??) the usion / nonunion folks. Also, because both plans cover a key employee you are required to aggregate both plans together for top-heavy testing, incluidng the union portion of the plan. So for top-heavy you mandatory AGGREGATION. Presumably, this is a good thing...

As an aside, if funded more than 12 months after the end of the plan year, are you including lost interest on the amount until funded?

When should the trustee prohibit a participant from taking a distribution? Trustee knows an employee is about to be divorced, but no QDRO has been received, etc. OBviouly, participants who know a divorce is coming would have a significant incentive to close their accounts before a divorce...

This paragraph of the reg specifically says it will NOT be taken into account. I would read that to mean if it was funded late, it is assumed not to be made. Out of curiosity does anyone else come to the conclusion that no ADP test is required? (h) Additional rules —(1) Contributions taken into account. A contribution is taken into account for purposes of this section for a plan year if and only if the contribution would be taken into account for such plan year under the rules of §1.401(k)–2(a) or 1.401(m)–2(a). Thus, for example, a safe harbor matching contribution must be made within 12 months of the end of the plan year. Similarly, an elective contribution that would be taken into account for a plan year under §1.401(k)–2(a)(4)(i)(B)( 2 ) must be taken into account for such plan year for purposes of this section, even if the compensation would have been received after the close of the plan year.