Rai401k

Thanks Lou. I think you're right. I called the IRS just to make sure....of course they didn't know. The agent told me that she wasn't even aware of the new forms She said the only answer she has for me is if i don't want to redo the submission on the new forms to send in what i have and if they don't accept it they would contact me to send in the new ones .

Just got an email from benefitlinks and noticed it said something about VCP Submission documents. When I clicked on the link it took me to the IRS website and i see they have new VCP forms. Form 14568 is the Appendix C Part I - Model VCP Submission Compliance Statement. I just received a signed submission back from the client and I am about to put in the mail when i saw this. The forms i used which i probably downloaded from the IRS website about a month ago did not have a form number. Does anyone know if it's ok to continue to submit using the old forms or do we have start using these new ones right away??

I have to find out for sure, but assuming there is that would allow us to treat as one employer correct? We had another plan that was a dentist group, no like ownership but i believe they were affiliated employers so we were told it was ok to have them adopt one plan.

I'm sorry i should have explained it better. Company A didn't buy 100% of company B only partial. The other 4 are the existing owners that now have a smaller share of the company. i don't have the exact % at this moment but let's say Company A owns 50% of company B and the 4 existing owners now only own 12.5%. I think this causes another problem for me. This may not be considered a controlled group and i could not have them adopt one plan document correct? It would be considered a Multiple Employer Plan? Maybe should do a separate post for that .

ok this may be retirement plans 101 but for some reason we can't seem to figure out the answer. Two examples: 1. Company A sponsors a plan, they buy Company B. Company B doesn't have an existing plan and adopts Company A's plan. Let's assume the Company A is owned by one owner (100%) but company b is owned by 5 owners - owner of company A included. For plan purposes when we are determining ownership do we look at the other 4 owners of company B to determine for example if they have to take an RMD. In other words do we look at what the ownership is of Company B even though Company A sponsors the plan. 2. Same as above but let's say Company A and Company B are affiliated employers. Company A sponsors the plan and Company B adopts company A's plan. No like ownership but they are an affiliated service group. Do we look at the owners of company A and B for plan purposes or only A since they are the sponsoring employers.

1. A participant didn’t have deferrals deducted from a commission paycheck in March 2013 (commissions are part of the definition of comp). However, if he did he would have exceeded the deferral limit. He wound up contributing $17,500. Does he still get the 50% QNEC and earnings for it? 2. Another participant had a couple of pay periods that deferrals weren’t deducted in 2013. However, if she did she would have exceeded the deferral limit. $1,444.48 should have been deducted, but that would put her $658.01 over the deferral limit. Does she get the 50% QNEC and missed earnings for the entire missed deferral or just the amount that would bring her to the limit?

You're right, ugh! I don't know why I didn't think of that. Thank you!

Plan has integrated profit sharing, first time they have decided to fund a PS contribution. The Plan Year 1/1/2014-12/31/2014 (calendar) but the company's fiscal year ends 6/30/14. Is it ok for the employer to pre-fund the profit sharing contribution now (before 6/30/14) to receive a deduction and have it sit in a fake/forf account and allocate it to the participants at the end of the year 2014.

Background: Daily valued plans, participants statements include all required language as well as fee information and vesting. Quarterly ones are sent electronically but annual participant statements are sent on paper. Is this the norm? We should know the answer by now..... but our understanding is the only way for us to be able to do the quarterly ones electronically is to at least send the annual ones on paper...just wanted to see what ever one else has been doing.

Great thank you, I realized that code Q doesn't apply to 401ks.

We have a participant that is taking an in-service distribution from her 401k designated roth account. She has attained age 59 1/2 and her roth monies have been in the account for 5 years. Is it code Q?

That's exactly what we didn't do. We are trying to figure out how to correct something like this....I'm not sure if EPCRS is available for FSA plans. We are still doing our research.

Bill that's exactly where we were mistaken. Thank you for clearing that up. Grace Period VS. Run Out Period. We thought it was the same thing. The document clearly states that there is a grace period that ends 3/15 and now that you've stated "run out" period I see that that ends 90 days after the plan year. We will make sure that the money has been forfeited. Thank you!

The plan document does allow for a grace period. That's the problem the documents isn't clear to us as exactly how it works. The way we were reading it was based on my initial understanding that the claims but have incurred during the plan year but can be continued to be submitted until 3/15 of the next year. However based on what we have read on the IRS website and under different research guides the term grace period means that they can continue to incur the costs in to the new plan year up until 3/15 and use up the prior years elected amount. This is what I need to confirm. Also if we misinformed the participants about the grace period what happens to those forfeited amounts that are still sitting in the acct from prior years.

Can someone explain how the Grace Period works under a FSA plan? And how to correct monies that have been forfeited if the prior years forfeitures were never used due to employer misunderstanding of the grace period. - My understanding was if you made an election for example of $2,500 under Health for 2012. You can submit claims until March 15th of 2013 BUT the claims would have to be dated during the 2012 plan year. In other words you still have time after the close of the plan year to submit but the bills/claims must be attributable to 2012. I now understand this is incorrect.... - Under the grace period if your election was $2,500 in 2012 and you only submitted $1,500 in claims, you still have $1,000 BUT you can have claims which are dated in the new year (2013) until 3/15 which can use up the $1,000. Is this the correct??? We were allowing employees to use up any amount that was left as of 12.31 until 3/15 of the next year however we informed them that the claims have occurred during the plan year it applied too. If this is incorrect what do we do with the monies that were forfeited from the prior plan year? Can we pay it out to the participants?

I don't think this is correct but someone told us that it is possible to have loan repayments less frequently than quarterly. This comes back to a loan problem we had where the participants amortization schedule was set up annually for a home loan. Is there any difference for a home loan from a 401k, the period can be longer than 5 years because it is a home loan but the repayment must be quarterly correct?

Erisatoolkit - thank you! BG5150 - always full of good ideas. They are putting in a HUGE PS contribution. So I don't think the admin fee is going to be a problem for this client. They are looking to add a vesting schedule forgot to mention that. Current vesting for profit sharing is immediate! If we can talk them out of the vesting schedule then the QNEC may be a good idea. THANKS!

So we have a safe harbor matching 401k plan with discretionary profit sharing language. Client has been funding the safe harbor match for year and never utilized the profit sharing until now. The current profit sharing provision state the allocation is comp to comp, no last day rule. Of course they want to fund a profit sharing but do not want to do a % of comp and do not want to fund to terminated employees for 2013. No way we can amend this document 1 - it's safe harbor and 2 - participant have already accrued the benefit of the profit sharing. So that's that. HOWEVER we read somewhere that one way of solving this problem is to start a new profit sharing plan for the year. (no 401k provision) Has anyone done something like this? Client is really insistent about putting in this contribution for 2013 and not giving it to term as well as doing a per capita allocation.

ESOP Guy - Ouch!! But I 100% agree. BG5150 - Thank you so much - very helpful!

rcline46 - yes relius got it thanks! BG5150 - believe it or not we have never had to submit to VCP. Is there a checklist that we can use to make sure we are submitting correctly. Where can I find the rules. EPCRS??

We have a participant that applied for a loan in early 2012 (March), somehow he was able to apply for a home loan (30 year) on our website with ANNUAL repayments. (Glitch that we haven't figured out yet). Unfortunately the mistake was not caught until now. This means he is in default because loan repayments should be at least quarterly. Since the amortization schedule was set up on an annual basis he has had only 2 payments since March 2012. Any idea how to fix this? We are being told that we have to submit to VCP?

We have a client that currently has a 401(k) plan with a 3% safe harbor with us. They are interested in setting up a separate ESOP Plan. Unfortunately we do not administer ESOP plans so they will be setting up the ESOP plan with a different TPA effective 1/1/2014 and leaving the 401k with us. Here's the question, they want to fund the 3% safe harbor non-elective contribution to the ESOP plan instead of the 401(k) (starting 2014 and going forward). Is this permissible?? and if so will this still exclude the 401(k) from non-discrimination testing and count towards a top heavy contribution for the 401k if applicable?

We know that plans have protection under QDIA when a participant doesn't choose investment elections for future contributions under a plan. However does the same apply during a “conversion” from one provider to another? In other words do you have the same protection under QDIA if you invest participants money (due to the transfer of assets) in to a default fund. Is it considered a 404© transaction? I guess what I am saying is in lieu of mapping.

We have a plan Company A that just purchased Company B through an asset sale effective 7/1/2013, the decision during the purchase was that Company B's plan would be merged in to Company A's plan. Company B's plan year is 6/1/2012-5/31/2013. Company A is calendar year. Company B's plan was merged in to Company A's plan effective 7/1/2013. Company B wants to fund a Profit Sharing Contribution to their plan for the calendar year ending 5/31/2013 prior to the assets being merged in to Company A's plan. Is there anything wrong with this? Also does this affect the contribution limits for the year? I know we have to take in to consideration Company B deferrals for all employees from 1/1-5/31/2013 but what about the PS contribution. I do believe we have to take it in to consideration since they are funding a contribution to the old plan and it is prior to the merger.

Agreed, I spoke to someone the first time that had no idea and wouldn't give me a straight answer, called back again after I submitted the question and received an answer right away. No schedule A needed for their Stable Value Fund. Thank you for your reply. Case closed