austin3515

Independent Contractors can participate in a 457b. I thought I would find 100 articles about why it is great to have a 457b for Board Members paid as independent contractors but I found none. Am I missing something? It seems like an obvious use of this feature. Are people doing this?

"Failure to make any installment payment when due" That seems to include an installment due 12 months after a leave begins!

Participant was out on disability and hi loan payments were suspended for a year. The year was up 3/15/2015. Does the loan become incurable on 3/15/2015, or 6/30/2015 (i.e., the last day of the quarter following the quarter)?

Classic Derrin Watson: "Nobody owns the stock of a nonexistent corporation... It would be like marrying someone who died 5 years ago." Love it!! THANKS FOR POSTING!

no because it needs to be for expenses related to education received in the "next 12 months."

Key line from the PLR: I don't know why but I am still leery of this. I guess it is because it is "just" a PLR and the example is so vastly different than the one presented above. I guess the example above makes me wonder if this really is the same "concern" if not the same legal entity even though the two businesses might be in different industries.

ok, case closed, but that RMD means your participant is 104! Tell him to take the money and buy a new car, he deserves it!

Didn't seem very enlightening. I keep coming back to, "boy, if you're wrong..." I would be extremely uncomfortable without something in black and white. I sure would love to see what pages 183-187 of Derrin's who's the employer book has to say... But the poster did not tell us, nor did Derrin. Until then, I advise extreme caution!

Why isn't "within the plan year" a reasonable definition of the applicable time frame? Here is an example of the potential implications of not recognizing a controlled group. These employees have 5 years of service with old co. Old Co (a bowling alley) closes down, and now New Co (a pizza restaurant) is opened 3 months later and these 5 are hired. Are they all ineligible for the plan because the law does not require their service to be recognized? Are they all zero percent vested in any employer contributions? Are the old HCE's from old co now considered NHCE's? It would seem odd if the answers were all yes since they all work for the same guy.

Where does it say that?

Without a specific exception it sounds dangerous to conclude this is not a controlled group. I can't think of which criteria in the controlled group definition is not met merely because of a timing issue. Was there something in particular you were thinking of Belgarath?

The RMD is ineligible for rollover. The amount is not permitted to go to an IRA. So her account is $100,000. $97,500 can be rolled over and her RMD of 2,500 (no I did not look up the factor) is paid as a cash distribution. She may or may not be eligible to make a traditional IRA contribution in the amount of $2,500. Perhaps that will get you where you want to be.

correct, "sole plan of the employer" for the calendar year must be the SIMPLE. Employer is defined based on controlled group rules. So this is the same employer. But the original SIMPLE should still be in tact so keep using it. Your "new" employer is eligbile for that plan because the SIMPLE document incorporates that controlled group definition of employer. You're actually forbidden from even having 2 SIMPLE's in the plan year, so don't set up a new SIMPLE.

yes, the RMD is required. The RMD is delayed until the year of retirement., Now that the day has come she is longer exempt. The explanation is that she is due to take a 2015 RMD. If she rolls to the IRA without taking the RMD first, she will never take her 2015 RMD because the IRA RMD is determined (as in the 401k plan) based on the 12/31/2014 balance. And that figure in the IRA was zero.

of course scriveners error is where I was going. Thoughts on that?

401k Plan includes ONLY SH Match. The document provider compelted an amendment in November 2014 (effective 1/1/2015) to exclude bonus from calculating the match (calendar year plan). The Safe Harbor Notice correctly disclosed that bonus would be excluded. Come to find out that instead of checking the box in the Safe Harbor Match column, they check it in the Discretionary Match column. As noted there is no Discretionary match. I'm curious to know what the thoughts are in terms of issuing a clarifying amendment. I am struck by the notion that this is a discretionary amendment, so perhaps I have until the end of the year to perfect the amendment (i.e., move the checkmark)? If there was ever a case for a scriverner's error positon, I would have to assume this is it.

I'm sorry, the newest plan document they can find is from the 1980's? Yikes!

I don't see why you can't make him eligible solely for profit sharing for 2014, and then only again when and if he satisfies eligibility. Participation is not a protected benefit.

I don;t think so either. Look at the compliance questions. "during the plan year." Those questions apply and would be unanswerable if the "one participant plan" box was checked. The instructions do not include the words "for the whole year" though when listing out the requirements for one-participant-plan status (ie., it only says "plan covers only owners" -- it does not say "plan covers only owners for the whole year"). But I think that because the form covers the whole year, the exceptions from filing as an ERISA plan would not apply if not met for the whole year. For example, if there were late deposits, those should be reported on the compliance questions. Similarly, if this was a pooled a plan, and participant assets were invested in the owners vacation house, the prohibited transaction should be disclosed on G. So you would have to file the regular 5500 due to the real estate. You can do an EZ/SF one-participant-plan next year.

I might have said the same thing, except that I have found auditors more likely to call it a transfer in transit, because the trust itself that comprises the plan did not possess the assets.

Plan B is merging into Plan A. The legal documents say merger is as of 12/31/2014. The assets do not move until 1/15/2015. We're reporting the transfer in on the 2014 income statement in the appropriate section, but where do we put it on the 2014 balance sheet? Other receivable? [We did this effective 12/31 to avoid a 1 day audit for Plan B].

An internal email I just sent that I decided to share with my BL Buddies! When you are processing lost interest for a lot of people, the hard way is to calculate the total interest and then use a somewhat complicated formula to prorate based on total interest and total 401k. Here is an easier way. Enter the loss amount as $100,000. Whatever the interest is can easily be converted to a percent. So if the interest comes out to be 6,472.32, the interest rate (or "factor" to be more precise) is 6.47232% which ought to be precise enough to get us within a penny or two of what interest ought to be. So just multiply each person’s 401k by 6.47232%. No calculator required for that conversion, just pretend the comma is the decimal point. If you are using this technique, I would still calculate what the total interest is supposed to be (i.e., enter the actual loss amount with the same dates) so you can prove you did it correctly. I guess it will only work with one loss date at a time. I hope you like it...

I think it is extremely clever! Great idea! It addresses the clients objectives and avoids refunds! It is completely and totally wrong but who cares, the client is happy! I can pretty much guarantee you they owe the HCE's the full match. The TPA "Stole" money from them. The test might fail, but they get the match money back (assuming they are vested).

You're saying the existing match is 100% vested and you want to add the new match with a vesting schedule (let's assume it is an annual match with allocation conditions)? Wow, for me that seems to be over the line. What happens if one day get rid of the 100% vested pay-period match, and then later on you amend your Vesting Scheduled Match to each pay-period? I wouldn't do it personally!

you know what we need is a decision tree for corrections of missed deferrals. IF this then that. Has anyone heard of anyone putting one together? Maybe I'll email Relius... I think that would be bookmarked along with the rollover charts and the cola limits!