Kevin C

Also, a 1-participant plan with assets under $250,000 isn't required to file. Going back that far, it used to be a lower threshold for filing, but I don't recall off-hand when it changed. If they were required to file a 5500 for 5500-SF and did not, the filing fee for the delinquent filer program for 27 filings is the same as for 2 filings. If the forms were prepared each year and just not filed, I would be inclined to file all of the late ones under the program, just to be safe. Even if they were not prepared at the time, the fees to get the forms done if you have good records should be much less than the potential late filing penalties.

bad.1963, I suggest you contact the IRS and DOL about your issues. Employee complaints are one of the ways they select plans for audit (IRS) / investigation (DOL). If violations are found during the audit/investigation, the government can be very persuasive in getting the plan sponsor to correct the problems. https://www.irs.gov/help-resources/telephone-assistance https://www.dol.gov/agencies/ebsa/about-ebsa/about-us/regional-offices

If no contributions are made other than salary deferrals and the safe harbor contribution, why wouldn't the plan be deemed to not be top-heavy under 416(g)(4)(H)? There is nothing in the code or regs that says you must have eligible NHCEs for the year to be safe harbor.

A mid-year amendment to the match formula is prohibited under 1.401(k)-3(e)(1). The modifications to that rule in Notice 2016-16 provide that the only mid-year formula changes allowed are ones made with at least 3 months remaining in the year and that increase the safe harbor contribution. See Section D of the notice. The amendment under discussion would result in lower SH amounts for at least some individuals. So, if they do the amendment mid-year, they would fall under the rules for reducing or suspending the SH contribution under 1.401(k)-3(g) and lose the SH for the year.

Mike, I hope not. Would you care to elaborate? Compliance with section 415 is required under 401(a)(16), which I hope means the reg quoted above that applies for 401 applies for 415 as well.

The issue isn't whether the company has any assets at the time the stock is purchased, it's whether the stock is purchased for no more than fair market value. If the stock isn't worth the purchase price until after the proceeds have been received, it was purchased for more than fair market value. What Peter described is the definition of fair market value.

I ask the CPA what earned income number will be used for the SE tax calculation and whether the number given has already been adjusted for the employer contributions for the employees. Sometimes the answer you get is not what you expected.

We have a client that did this with his plan last year. He hired one of the big promoters to do the document, testing and reporting, with us just doing recordkeeping on the non-stock 401(k) assets. The promoter claimed to have special language in their document. In his case, the plan purchased stock in his existing company based on an independent third-party appraisal, so it should work if he follows their instructions. However, the typical pitch seems geared towards starting a new business using plan assets and I don't see how that works. When you have an unfunded start-up corporation, how can the fair market value of the stock at the time of purchase possibly be anywhere close to the amount the person wants to invest? If the plan pays more than fair market value for the stock, it's a PT.

The regs have a clear description of who can be excluded under the <20 hours per week exclusion. As noted in the reg, this rule conflicts with ERISA's service based participation rules. There is also an all or nothing rule in 1.403(b)-5(b)(4)(i) where if a single person who could be excluded under this exception is allowed to participate, you lose the ability to use the exception. With that kind of situation usually becoming apparent after the fact, be forewarned that it can get expensive to fix if someone messes up. Use the exclusion at your own risk.

For a self-employed person, you count the earned income or loss from all of the trades or business that have adopted the plan.

Dave, is there a way to get the Portal view to sort by the date & time of the last post in each thread instead of by when the thread was started?

There is also a timing rule for when the contribution must be deposited to be considered an annual addition for the year. Underline added since I can't change colors.

Does the plan also allow a discretionary match, or after-tax contributions?

My perspective on this is influenced by regulation changes early in my career that significantly restricted an Employer's ability to use discretion to affect what participants receive. See 1.411(d)-4, Q&A 4. Personally, I would not be comfortable using vague plan language to justify using employer discretion in determining who gets what level of match or who gets a match. I would prefer to take a different route and amend the plan to provide for a separate limit on the match that only applies to HCEs. Our VS document AA match section has a place for special limits on matching contributions that can be used to provide for the lower limit on HCE match like the one asked about in the OP.

Other than possibly a few cents from rounding, I don't see how anyone can get less of a match with a year-to-date true-up than they would under the same match formula applied on a payroll-by-payroll basis. As the OP points out, some will get more match with a true-up. You can amend during the year to make a contribution more generous retroactive to the beginning of the year. As BG mentions, you can't amend to retroactively reduce a contribution someone has already earned. I don't see 411(d)(6) being a problem here unless for some strange reason you tried to reduce the match allocated for periods prior to the amendment. I don't read the OP as saying they want to reduce anything.

Before you go to the expense of a lawyer, I'd suggest having your mother file a claim for benefits. As part of the claims process, they are required to determine what she is eligible for and notify her of the results. If they decide she is not entitled to anything, they are required to explain why and refer to applicable sections of the plan document. Help your mom write a letter addressed to the plan that specifically says it is a claim for benefits and ask for the her benefits to be paid. Attach a copy of the divorce paperwork. I would also ask for a copy of the SPD and the plan's QDRO procedure. Then, let us know what their response is. I would also keep in mind that the wording of the assignment will make a big difference in how much the benefit is worth now. Typically, the QDROs we see assign an amount or percentage as of a date and it is adjusted for income going forward. Every once in a while, we see one that specifies a dollar amount with no adjustments. With this going back to 1991, that can be a big difference.

You have an excess allocation that can be corrected under EPCRS. 401(a)(17) failures are addressed in Rev. Proc. 2016-51, Appendix B 2.06, which sends you to Section 6.06(2). If this is from 2016, you should be able to correct under SCP.

The QNEC gets allocated the way the plan document says it is allocated. That will probably vary based on the document provider.

It's not too late for an -11(g) amendment. You may have a problem satisfying the discrimination requirements under -11(g), but it's worth looking at. That's 1.401(a)(4)-11(g). If it doesn't work, you can still change it for 2017 and forward.

Rev. Proc. 2016-51, Section 6.02 says you have to make a full correction with respect to all participants. In 6.02 (3), there is a consistency requirement. I don't think amending to only allow those let in early who elected to defer is going to satisfy those requirements. You are correct that it is one of the few things you are allowed to correct under SCP using a plan amendment See Section 4.05(2). It also mentions that the amendment is to conform the document to the plan's prior operation. If some ineligibles were given the opportunity to defer, even if they chose not to, that is part of how the plan was operated.

Matching contributions are under 401(m). If you are looking for something that specifically says the match can be discretionary, look at the definition of matching contributions in 1.401(m)-1(a)(2)

You are close. Look at 1.402A-1 again. Q&A 5 says a distribution from a designated Roth account can be rolled directly into another designated Roth account. As you mention, Designated Roth account is defined in Q&A 1 as a separate account to which Roth deferrals are permitted to be made (and satisfies certain other requirements). If the plan doesn't allow Roth deferrals, it doesn't have a designated Roth account.

Since you are not sure, the best way would be to include language that is specific enough to make it clear what the initial entry dates are supposed to be. Our PPA VS documents have places for "other" provisions and special effective date sections that allow additional language for unusual situations. I would expect other documents to have the same types of options.

Even in a 401(k) plan, a spousal waiver would have to be witnessed by either a notary or a plan representative before it is valid. If you haven't done that and you were married for at least a year, you are his beneficiary. If you were married less than a year, the plan document will determine if you are treated as a surviving spouse or not. My suggestion is to send the plan sponsor a letter telling them you are his surviving spouse and that your letter is a claim for the death benefits from his account. Include a copy of your marriage license, if you have it available. If they think you are not entitled to receive the benefits, they are supposed to explain why, including cites to appropriate sections of the plan document.

What is the vesting schedule for the match? I'm thinking of 410(a)(1)(B)(i). And, what are the allocation conditions for the match?