goldtpa

Hate to bring up this old thread again, however I have the same problem with a twist. Plan doc says match to be made on a percentage of comp on a per payroll basis. However like the old thread the client makes the match annually. The twist is this, they have calculated the match on a percentage of the deferral since the plan started which was 2002. The second twist, is that the plan is a "check the box" prototype and no formula was checked. The matching section was left blank. Can you self correct and reallocate all of the matching contributions? I would assume that you would have to provide interest to those employees who might have been shorted. Do you have to file a 5330? I would tend to think that this is not an insignificant operational error, as some employees have quit and were already paid out. Thus VCP might be the best method for correction? Any thoughts?

The plan was cross tested, passed the gateway test, 410(b), and yes the plan is Top Heavy. We were going to amend the plan and submit to the IRS for a LOD. Just wanted to make sure that we would get one since our doc system did not allow for this. thanks for the reply.

Doing some wotk for a new DB plan. Plan is cross tested. Normal Retirement Benefit is % of Avg Mo Comp multiplied by Yrs of Serv limited to a max of 10 yrs. The problem we are having is that each employee has a stated %. NCHE1 gets 0% of Avg Mo Comp NHCE2 gets 2% of Avg Mo Comp NHCE3 gets 6% of Avg Mo Comp HCE1 gets 6% of Avg Mo Comp HCE 2&3 get 0% of Avg Mo Comp Can you state a different percentage for each ee? We usually do it by classification (i.e all owners get x% all NCHEs get y%)

Picked up a new client. Client hasn't filed 5500s or PBGC Forms since 2001. I know that client can go under the DOL Deliquent program for the 5500s. Does the PBGC have something similiar? What would be the fines be for not paying PBGC premiums and not filing with the PBGC?

could be me maybe not, yes actuary signed off on it and it was his idea as a fix to the problem. Company has no money and was underfunded. It was the only way to make sure the NHCE got 100% of her benefit. i just wanted to thank everyone for helping out. your inut is greatly appreciated.

Effen There was no contribution. I failed to mention that the plan was frozen in the prior year. The plan is going to be terminated and that's the reason why he forfeited a portion of his benefit. thanks

One of our clients has an underfunded DB plan with funding deficiencies They have been filing the 5330s and paying the tax. In 2004 the HCE forfeited enough of his benefit to make sure the NHCE received 100% of her vested benefit. The IRS claims that eventhough the HCE waived a portion of his benefit, they still must file the 5330 and pay the tax. Our position is that the HCE waived a portion of his benefit, effectively freezing the benefit, therefore the plan is no longer underfunded and no need to file a 5330. The IRS is looking for some regs to back up our position. Any help is greatly appreciated.

I have a few clients that are considering the ROTH 401(k). I know that extra admin is required. I was wondering what other people were going to be charging. I was thinking of a per participant charge instead of a flat fee. I was just curious as to what others are doing. In addition an attorney told me that his clients would not pay for the cost. He wanted the participants to pay the extra cost. Does anyone know if the DOL would allow this to be charged to the employee?

Thanks for all of the input. A big help!!

The owners are the trustees of the plan. Husband and Wife. The broker said that he could move the 401(k) money to the IRA since the law allows for in-service distributions. Owner said it was ok, if the law allows it. Broker obviously benefited to the tune of commissions. They are attorneys, they apparently give all of their life insurance business to this guy. So yes he did to this to get more business from them. He does control the money so that makes him a fiduciary. Uunfortunately he is the friend of the owner. They want broker's firm to cough up dough. Unfortunately he did this for the 2003 and 2004 plan year. He moved all of the money into the IRA, eventhough she is still employed. Plan never allowed for in-service distributions. Their attorney said that they have to use the VCP to get a letter so the plan remains qualified and that the IRA doesn't become taxable. So if this is an operational defect, VCP is a go and line 4d is "NO". Thanks for all of the input.

Owner over the age of 50, contributed 16,000 to the 401(k). Owner's financial advisor moved the 16,000 to her IRA. Claimed that the law allows for in-service distributions. Her plan does not allow for them. No other accounts were affected. In filling out the Sched I, should I answer line 4d as yes "were there any non-exempt transactions with any party in interest" Do I also have to file a 5330? The client's CPA is telling me that I don't. I am pretty sure that I do. I hate when CPAs make you second guess yourself. Client is preparing to go through VCP once they figure out if financial advisor is going to pay the cost.

I have a situation which I hope everyone can help me with. Client starts a 401(k) in 2003. Contributes 12,000 to mutual fund A. Client not happy with broker, switches to a new broker. New Broker transfer the 12,000 into an existsing IRA. In 2004 client contributes 13,000. Broker moves employee deferral to the exsisting IRA, claiming the law allows for in service distributions. The Employee in question is the owner of the company and had no idea the new broker had done this. The plan does not allow for in-service distrbutions. Client is approx early 50's. The accounts of all the other employees in the 401(K) seem to be fine. Can you move the money back to the 401(k), claiming it was a mistake?? Any thoughts on what to do???

Employee takes a hardship dist in 9/04 to purchase primary residence. ER does not suspend deferrals. I believe that you are to distribute the deferrals plus interest back to the employee. 1. How do you code the 1099-R? 2. Do you have to reduce deferrals? I will add a third question. Told client that they may have to return money to ee. Client doesn't want to return money to ee. Suggestions? Thanks

Thanks. One more question. Did you charge per return or charge by the hour?

Have picked up a new client, self employed doctor. Plan has been in exsistence since 1992. Doc never filed a 5500 because he thought if the assets were under 100,000 he didn't have to file. Problem is that he has other employees. One part-timer who works less than 800 hours a week. And a full time nurse. Everything else, like plan documents, seem to be in order. We have recalculated the plan's assets to give the nurse a benefit. I think that we would have to go to thru DVFC. How far back can you file 5500s?

Stupid question. I have a 401(k) that covers union and non-union. Only one union group covered. Eligibility is 6 mo for deferrals and match. Do I have to test separately, union and non-union. Or can I test the whole thing as a single plan? I seem to remember something in an old pension answer book, that says a company may but is not required to treat the plan as separate plan. Does that only apply to minimum participation? Thanks in advance.

thanks for all of the replies. I spoke with the broker today who said," that to open up an account at his firm they need to use their prototype." He also said that," he knows that its stupid to have two documents, but that is what they require." While on the phone with him I asked to speak to his trust dept. The trust dept said that they need a plan document, it does not have to be the brokerage firms' prototype. To which this self proclaimed pension expert said, "Well you learn something everyday." Scary to think that this guy is running around giving pension advice. thanks for all of your help.

This is one that I have never heard of. A broker for one of the major brokerage firms wants to set up a psp. I told him that we would use a volume submitter. He said that in order to set up the account at the brokerage firm, he has to complete the brokerage firm's prototype and that the prototype mirrors the volume submitter. I asked why I cant give them a fully executed plan document to set up the account. He said that's the way that they do it. I explained the problems that two plan documents could cause and probably didn't even scratch the surface. Any heard of this???

A SIMPLE IRA may not be established if the employer mainatins another qualified plan. However a SIMPLE IRA can be etablished if the other qualified plan only covers union employees and the SIMPLE excludes union ee's.

thanks for the advice.

I have a 401(k) with a limited partnership as an investment. The LP was sold by the broker who works for one of the big investment houses. I wasn't sure if the LP was considered Unrelated Business Income reportable on 990-T?

Tom Thanks for responding. I know that the $15 is a rather small amount. I agree with Pax, the 402(g) was exceeded and therefore give the $15 back. Didn't seem like a big deal to me. However the $15 was apart of a larger amount of money than was never deposted. Approx $500 was withheld from the NHCEs pay and never deposited. Of the $500, $15 belonged to the HCE.

Client gave me w-2s for 2003. One of the HCEs had 2 w-2s. When I added them together the 401(k) contribution was $15 over the limit. I told them to refund the $15 to the HCE. Then I found out that they had withheld money from the employees paychecks, that was never sent to the mutual fund. The $15 over contribution was part of the money that was withheld but never contributed. I told them to go to the VFCP or self correct using the method set forth by the VFCP. They found another TPA do do the work. He/she gave them a different answer. Don't know what that answer was. Was I wrong in my advice? If I was please let me know so I don't make the same miztake twice.

Thanks. I thought that was the case but i wanted to be sure.

A client with a Safe Harbor 401(k) is going out of business. They use the basic match ($4$ up to 3% and 50% on the next 2% of comp). No other contributions have been made to the plan other than the match. If the company provides everyone with a notice that the plan is terminating, I think the company has to do the ADP/ACP test. Since they have gotten a free ride on the top heavy issue, do they now have to make a 3% top heavy contribution?