goldtpa

Thanks. I was just making sure.

plan has a safe harbor 401k using 3% NEC. ER fails to make a contribution for one of the HCEs in 2012 and 2011. I assume the plan has failed to make SH contributions for this HCE since the beginning of the plan. I assume the fix would be to make the missing contributions plus interest. Thanks.

Anyone else seen a bunch of penalty letters for late 5500s with a 12/2/13 date? Got three last week. All were filed on time with extensions.

We have also been getting calls, emails, and letters about this. It's as if my clients don't read. One client called and said he was not to happy that I did not file the 5500. I had to tell him to re-read the letter. It's no wonder why the govt has no money. They spend money to remind people to file. It's like reminding people to sleep or eat. My clients know that every year they have to file, so why waste the money? Govt at its best.

Funny. I just came on to pose the same question. Client files a 5500 on 8/8. Gets a $200 penalty notice. Three days before, the IRS sent a letter telling the client that they accepted the 5558.

I have an employee in a 401k with 100k. She wants to take a 50k loan. She also has another 401k from her other job with 120k. Can she take a second 50k from the other 401k? The two companies are not related and she is not an HCE in either company. The IRS website says, “Generally, if permitted by the plan, a participant may borrow up to 50% of his or her vested account balance up to a maximum of $50,000. The participant must reduce the $50,000 amount, above, if he or she already had an outstanding loan from the plan (or any other plan of the employer or related employer) during the 1-year period ending the day before the loan. The amount of the reduction is the participant’s highest outstanding loan balance during that period minus the outstanding balance on the date of the new loan.” Since the two 401ks are not related in anyway, it would appear that she could take two 50k loans. I am right?

Just saw an article that said more companies will be adding a Roth feature to their 401k in 2013. I have not seen this as true. Most small businesses aren't adding Roth's. anyone seeing companies adding Roth's?

This is my 5th notice in two days.

I am having an argument with a colleague about the quarterly fee disclosure for brokerage accounts. She says nothing needs to be done as the statements already disclose the fee. I say that the sales charge needs to be disclosed and shown as a dollar per thousand. In addition a description of the fee also has to be given.

I agree that the DOL has had good intentions. However the employees and employers dont care. When the stock market is up, people are fat and happy. When the markets are down, they start to care. I also think that people will be confused when they see a $71 charge on their statement, not realizing that its $71 per thousand.

Just curious as to whether clients are looking at the fee disclosures and are they taking action?

I just got off the phone with the Dept of Labor. They said that the annual notice under 404a-5 needs to be supplied to the participants by Aug 31 and then annually thereafter. The DOL rep said that the annual notice needs to be sent out every 12 months. I asked her if that meant I had to have the notices sent out every Aug 31. She said NO. She said just do it every year. She suggested after the end of the plan year. I then asked her about the John Hancock Notice and whether or not the specific fees have to be listed on the annual 404a-5 notice. She said NO. She said only the existence of the fees have to be disclosed on the annual notice. She said that the actual fees should be listed on the qrtly statements. Finally she answered my question about the bene's. The annual notice only needs to go to those bene's who spouse or family member has passed away and the bene is entitled to a payout. I hope this helps everyone.

austin-I got from John Hancock the template notice. I called and asked whether the fees had to be added. They said yes and then, just like Kathy, they sent me all of my plans with the fees. So now I am confused. I would rather not have to do all of this work. I would rather just give them the notice which tells them the existence of the fees. I just gave everyone a new TPA agreement with a 408 notice and now John Hancock seems to think that I have to disclose my fees again. I just don't know anymore.

RPG. Sorry to hijack your post. Regarding 408b2, I should have been more specific. I was trying to say that 408b2 gave the basis point fees. However according to the JH notice it seems to suggest the fees be listed. Section 2 of the JH notice says, "Your Plan incurs certain administrative and operating expenses each year. These expenses are for the following services: • Recordkeeping fee $ • Auditor Fee $ • Third Party Administration Fee$ The cost for these services fluctuates each year based on a variety of factors. Plan Sponso , at its own discretion, may elect to pay some or all of these Plan administrative expenses. To the extent these expenses are not paid by plan sponsor, the Plan may charge these expenses against your account on a [pro-rata] or [per participant] basis. These expenses would then be deducted directly from your account on a quarterly basis and will appear on your quarterly statement" Section 3 of the notice says, "Your Plan imposes additional charges if you elect to use certain services/features. These charges are imposed specifically against your account, and are not imposed on a plan-wide basis. As of August 03, 2012 the fees listed below apply if you use any of the services or features below: Fee type Amount Loan Fee $2.00 per loan, per month Guaranteed Income Feature Fee 0.35% of account (annualized) Detailed Statement Fee $1 per statement per quarter" Thus while some institutions are being more generic, it appears that JH is being more specific. And yes JH is not very good when it comes to this stuff.

Funny. I was just going to post a question about this topic. The notices under 408b2 are more of an explanation that fees exist not the amounts of the fees. I believe that there is an annual notice requirement under 404a-5 which seems to list the fees including the asset based fees, TPA fees, accounting fees, etc. Then there is also the requirement that the qrtly statements have the fee listed. Some financial institutions are listing the dollar amount on the statement while some I hear are listing an amount per thousand. John Hancock is making people logon to their website and download the notice. Then the sponsor has to add all of the fees that they pay to the notice. The form seems to suggest that all fees should be listed whether the plan pays for them or not. The form's language suggests that the sponsor has the right to pay for the admin fees or have them deducted from the assets. Thus since the sponsor has the right to pay it or have the plan pay it, it seems that JH is suggesting that all the fees be listed. However I have a question about the bene's. Does this refer to all of the bene's in the plan? Or does this only apply to those ee's who have passed away and their bene's have to receive the 404a-5 notice? Thanks.

austin3515-I am just telling you what the DOL rep told me.

I called the DOl to find out the answer to some questions. I wanted to know if the $1,000, was per calendar year, fiscal year, or the lifetime of the plan. The DOL rep said that they just had a training on that issue. The DOL stated to me that it was not made clear to them whether it was yearly or for the lifetime of the plan. However she stated that her best guess was that the $1,000 was per plan year.

Your insurance policy requires you to notify the insurance company of anything that could give rise to a claim. If you don't notify them and there is a claim, they will not pay it. The word is "could". An audit could lead to a claim. Thus the insurance company would try to deny you coverage based on the fact that you did not notify them of a potential issue.

Thanks all. Client always filed on time. He moved his admin to one of the big payroll firms. He tells me that they did the 5500 but it was never e-filed and now he has an IRS notice. I explain that I could prepare the 5500 for submission through DFVC. He says fine. I check with efast site to pull off the prior yr return and find out that in April the 2010 was already filed. Crazy.

Client has a 401k. The client files 5500s for 2008 and 2009. 2010 5500 is filed on 4/5/12. IRS sends letter stating you owe us money. Can he amend the 2010 5500 and mark the box for DFVC and pay the 750?

I just picked a client that used a big payroll company. When they were with the payroll company they used the per payroll method for making safe harbor matching contributions. The problem is that the owners made their max 401k contribution within the first 3 payroll periods. Thus they only recvd the safe harbor match for those 3 payroll periods. The question is whether to do a true-up match? Section 3.1.2 of the Plan document prepared by this payroll company says, “matching contributions will only be made if Elective deferrals are made.” Thus it appears that no true-up is required. However, Section 1.1.17 states that, “Compensation shall mean wages defined in Code 3401.” However the last sentence of Section 1.1.17 also states that, “If a contribution under the plan is made on a periodic basis, compensation used to calculate the contribution shall be the compensation for the period in question.” I believe that the plan does not explicitly define compensation as on per payroll basis to match the terms of the contribution per payroll method. Thus one could argue that a true-up should be made, based on the reference to 3401. Any thoughts???

Jim, yes 3 excluded ee's recvd a psp contribution for several years. I just found out that 1 even recvd a distribution of a benefit he was not entitled to. 12ax7, I dont know what the plan says. This is a new client for me and I have not recvd the plan docs yet. However I believe that since they allowed excluded employees to recv a psp contribution, I believe they have to now give a psp contribution to the 2 excluded ee's. Is that right? I just need the regs to show them. Thanks.

Employer has 5 ee's who were supposed to be excluded. Plan passes all of the testing. Unfortunately 3 of the excluded employees, were included. What do you do? Do the 3 employees who were included forfeit their benefit? Or do the 2 employees who were excluded now get included? Thanks. Please provide regs if you can.

A participant in a 401k has passed away. Her spouse, the bene, rolls her 401k into a brand new IRA. Upon advice from his broker, he now wants to transfer her 401k money (which is now in his IRA) to his 401k. His 401k allows for rollovers. The question is, since he is older than 70 1/2, does he have to take his 2011 RMD from the IRA he created with her 401k money? Or can he transfer 100% of her 401k money to his 401k without having to take the RMD for 2011? Thanks.

I have an IRS agent from the bklyn NY office who is doing two audits with me. One is a pizzeria and the other business is a bigger company with 50 ees. The audits are for the 2009 years. The auditor asked to see the 2008 5500 for the pizzeria. The 5500 showed that they lost 30% on the money. She said that she is now going to open the 2008 year for the audit because she wants to make sure that the HCEs did not take any money from the plan and use it for their personal use. I asked her if she even remembered 08 and that it was the worst financial downturn since the 30's. I told her that people lost more than 30%. She said that she just want to check. The bigger company uses Ascensus. I printed out the 09 annual statement which does not have the Ascensus logo on it. Thus she is also going to open up 08 as she also stated that she wants to make sure this is not another Bernie Madoff situation. On the bigger plan she is also doing trust accounting to make sure that all contributions are timely deposited and nothing was stolen. Times are bad and the IRS is trying to catch those HCEs who might be taking money from the 401k. In order to do so it appears that everyone is guilty until proven innocent!!!!!!!!!!!!!!!