Kevin C

Are you talking about a late amender? Or, a plan that was timely updated, but doesn't allow catch-ups?

The safe harbor rules limit discretionary matches to no more than 4% of comp. That limit doesn't apply to a fixed SH match.

I think you would have a very difficult time convincing the IRS that a non-owner employee elected to not be eligible for plan contributions without receiving some sort of compensation in return. Making a choice between plan benefits and a taxable amount makes it a CODA, which as Mike mentioned, affects testing. The amount involved would also be subject to the deferral limit. I don't think a revocable election allowed by the terms of a plan would automatically disqualify the plan, but I would expect it to be likely to violate something in the 401(k) rules. Hopefully, the real situation is that he elected to not defer as K2 mentions.

My first question is what does the plan say? I haven't seen a pre-approved document, including VS, in a long time that allowed anything other than an irrevocable election meeting the requirements of 1.401(k)-1(a)(3)(v). As hinted at above, the problem with a revocable opt out is that it runs the risk of being considered a cash or deferred election under 1.401(k)-1(a)(3)(v). The current regs were effective 1/1/2006, so they predate the 2008 opt out under discussion. If the opt out was not irrevocable, what did the doctor receive in exchange for opting out?

Noting that the IRS has had difficulty promptly adjusting their records to recognize that a Form 5558 has been filed, there should be no problem to solve. Timely filing a Form 5558 to extend the filing deadline for the 5500 and the 8955-SSA is all it takes. IRS approval is not required. If the Form 5558 is completed properly and submitted on time, the IRS has ceded all authority to reject such a filing. I'm guessing you haven't had the IRS send a letter to some of your clients claiming a Form 5500 was filed late and a penalty will apply because the IRS did not process the 5558 timely. We had one client receive two of those letters in a four year period. After getting a power of attorney signed and wasting time on hold, the matter was quickly resolved once I was able to speak to a live person at the IRS. I don't enjoy extra non-billable work and having clients think we missed a deadline that we did not miss just because the IRS waited until November to process some extensions filed in July after they sent out late filing notices in October.

There's another good proposed change on page 133. The IRS wants to have an electronic version of Form 5558 that would be processed through EFAST2. Hopefully, that will end the 3+ months processing time we've had in prior years for the 2.5 month extensions.

Sorry to be blunt, but Client needs to find an adviser who knows more about 401(k) plans. First of all, a self employed person can be covered by a 401(k) plan. If multiple trades or businesses are involved, the only earned income considered is that from the trades or businesses that adopt the plan (IRC 401(d)). There are rules for 401(k) plans covering self employed persons in 1.401(k)-1(a)(6). But, before they get to that point, they need to provide ownership information for the 3 partnerships mentioned and any other closely held companies the partners have an ownership interest in to someone qualified to review the situation to see how the controlled group/affiliated service group rules apply. The adviser also needs to know which of the entities have employees (including common-law and leased). It's likely additional information will also be needed. All of that affects coverage testing that will determine if they can have the plan cover only those they want covered. "Solo 401(k)" is a marketing term describing a 401(k) plan intended to cover only owners. The terms of each "Solo 401(k)" plan document will determine if they are able to use that document. If there are employees, then there is discrimination testing ...

If you are referring to section 16.02, my quick read of it was that it is referring to the third submission window for document providers to submit pre-approved defined contribution plans for approval. The deadline for document providers to submit pre-approved 403(b) documents was 4/30/2015. So, I don't see that section as applying to 403(b) documents. I'm sure there will be articles coming out soon after people have a chance to digest what's in the Rev. Proc.

The normal way would have been to mark the 2013 return indicating that an audit is not attached because it will be attached to the 2014 return. Then, the audit attached to the 2014 return would be for the period 1/1/2013-1/1/2014. This exception is described in the 5500 instructions. I don't recall if it had enough flexibility to do what you are thinking about. You could amend the 2013 return and refile it without an audit, get the audit modified to cover one more day and file it with the final 2014 return. But, I would compare the cost of that versus having a one day audit done.

You should take another look at the plan's provisions regarding amendments. I've never seen a document that allowed the Trustee to amend the plan. The same person may represent the Employer and also be Trustee, but they will be wearing their Employer hat when they sign the amendment. Typically, a Trustee can resign, or may be removed by the Employer. The details will be in the plan document.

Sorry, but I don't understand your first paragraph. The timing rules for catch-ups determine when amounts become classified as catch-up.

ASC sent out an update for their clients last month. Their guesstimated approval timeframe is early 2017.

If the plan was audit size, you could use the rule for plan years less than 7 months and file a combined audit for the last full year and the one day plan year with the final filing.

We typically merge existing plans on 12/31 to avoid the issue. We have had a couple of times where the receiving plan was a new plan established on 1/1, where we had the merger effective 1/1. In those cases, we filed a short year final 5500 for the 1 day final plan year. That was before my recent experience with the IRS challenging a final 5500 for a small plan where everyone was paid in December, but one participant's payment was returned in January. The agent was going to force us to amend the 12/31 final return to show the funds returned and then file a final 5500 for the following year showing it distributed again. Fortunately, her manager got involved and overruled her. With the IRS working on two year old filings, it would have forced us into the DOL's delinquent filer program for the later return. Back to your question, I would rather spend a little extra time doing a 5500 for the one day year, than have a small risk of a significant non-billable headache later on if the IRS or DOL decides to question the filing.

Look in the document for provisions allowing a transfer of assets. If it is there, it should let you transfer this participant's entire balance from Plan A to Plan B. Our VS document allows this type of transfer if Trustees of both plans agree to the transfer. If the plans have different provisions, there may be some features of the transferred funds that have to be maintained after the transfer. Giving service credit for service with an unrelated entity can be done. Any pre-approved document should have that as an option.

Interesting. It turns out our VS document allows the same option. I never noticed it before. The Base Document says:

Are you saying the SH Match is offset (reduced) by the amount of their Prevailing Wage Contribution? or the other way around? I don't work with Prevailing Wage plans, but your comment makes me curious.

This is what DOL told me as well, for the 2015 filing. I may try "kicking it upstairs" when I call back again. If they don't fix this nonsense, we have several plans that will be in the same situation in a couple of years. Have you pointed out to the DOL that filing a final 5500 for the old plan name would include falsely indicating that a resolution to terminate the plan has been adopted, falsely indicating that the plan has no participants and no assets at year end and falsely indicating that all assets were transferred to another plan? The 5500 is signed under penalty of perjury. In most cases, I would comply with whatever nonsense the DOL or IRS representative wants just to get the matter closed. But, not with something like this.

If you are the TPA trying to help close out the plan, I suggest you call your local DOL regional office and ask for their abandoned plans person. They can also assist with closing a plan outside of their abandoned plans program, without a QTA. Explain the situation and ask for help outside of the program. It may be a pain getting them to agree to help, but they can. I don't know if they have to get the national office involved, but for the one I worked on, the regional office referred me to the national abandoned plans coordinator, who at the end of our discussion, referred me back to the local regional office. Good luck.

I disagree. I read 1.416-1 T-6 as saying the determination of which companies are in the required aggregation group is made as of the "determination date", which is the date used for the TH calculation. The EOB says while not expressly stated in the regulations, it is assumed the required aggregation group is determined as of the determination date and says the IRS agreed with this interpretation at the 2011 ASPPA annual conference Q&As. It also has an example (4.a) with an acquired group being added to a controlled group in 4. Related Employers under the definition of Required Aggregation Group. It has a stock purchase of a company with a plan happening in 2013 and says for 2013, the TH status is determined separately for each plan since the companies were not related on the 12/31/2012 determination date used for the 2013 year. For 2014, they are part of a required aggregation group and are tested together. If you don't agree with that interpretation, treating both plans as being part of a required aggregation group would also require including both plans in the TH test to determine TH status.

You also need to make sure the timing of the amendment doesn't make it discriminatory. For example, is the only person affected by the amendment the spouse of the owner? See 1.401(a)(4)-1(b)(4) and 1.401(a)(4)-5(a).

Why wouldn't the 401(a) plan be considered an alternative defined contribution plan? Under the reg you cite, I don't think they can distribute to current employees, which basically forces them to merge the 401(k) into the new 401(a). Seems like they would have reached the same result with less trouble by freezing the 401(k) portion of the old 401(k) plan and using it as their 401(a) plan.

A SH plan termination in connection with a 410(b)(6)© transaction is one of the exceptions allowed a final short SH plan year. See §1.401(k)-3(e)(4)(ii) cited above. If you don't meet that exception, you are under (i), which requires 30 day advanced notice and ADP/ACP testing, i.e not SH.

We used a similar fix, but switched to ASC. Now, if we have issues with a filing, we contact ASC and they quickly respond with info on how to fix the filing. If you can't figure it out on your own, it's probably time for an incident report. Good luck.

So, if they consent to an immediate pension, they get extra years of service credit, but if they defer the distribution, they don't get the extra service credit? I don't see how that could be anything but a significant detriment to someone who does not consent to immediate payment. It's been a long time since I dealt with an early retirement window, but from what I recall, termination of employment within a certain date range was all that was required to receive the extra service.