Kevin C

I suggest you consult with an ERISA attorney before you complete the Form 5500-SF. From your questions, you appear to be looking for ways to minimize the appearance of the PT. There is a chance that trying to help your client could backfire on you. With our client who is working his way out of a similar situation, their former TPA first attempted to remake the withdrawals into a participant loan for the owner. Then, when the withdrawals exceeded $50,000, the former TPA came up with another creative way to avoid calling it a PT. The timeline from the DOL's criminal investigation says the conspiracy to hide the embezzlement, that included both the client and the former TPA, started with the attempt to turn the PTs into a participant loan. Even if they are able to convince the DOL to not press charges, I'm sure they are spending a significant amount on attorney fees. A frequent ASPPA speaker uses an appropriate phrase. Don't make the client's problem your problem. In case you are wondering, the Forms 5500-SF we prepared for our client listed the total amount withdrawn, plus accrued lost income as a PT each year through and including the year everything was repaid. The only "problem" we have with this case is the extra time we've spent. We bill by the hour for that, so I don't consider that much of a problem. You mentioned possibly treating most of the withdrawal as a distribution. Was a 2012 Form 1099-R filed reporting it?

You have to consider 415, but maybe not the way you think.

I agree, although I would change your last statement to adopted before February 1, 2014. Of course, agent reviewing the filing ultimately decides what the filing fee is. My experience under 2008-50 was that determination of the fee was not consistent between agents. (I'm trying to be nice).

You are confusing "remedial amendment period" with "remedial amendment period" as extended by Rev. Proc. 2007-44. The remedial amendment period ends on the due date for the amendment. If you don't adopt the amendment by then, it is late. The extended remedial amendment period comes from Section 5.03 of Rev. Proc. 2007-44 and is the end of the 5 or 6 year cycle the amendment due date falls in. If you timely adopt the required amendment, you have until the end of the extended remedial amendment period to correct any problems with the previously adopted amendment. 6.05(3)(a) tells you when you qualify for the $375 fee. Rev. Proc. 2008-50 had different wording for when you qualifed for the $375 filing fee. The first couple of them I filed, we were able to correct for late amendments all the way back two or three restatement periods for the $375. Then, the IRS changed their interpretation and started saying if you had a late amendment that was not adopted by the end of the cycle in which it was due, you did not qualify for the $375 fee. The updated Rev. Proc. incorporated that restriction. Schedule 1 is for the $375 filing. If you have a late amendment that has to go on Schedule 2, you will have to pay a higher fee. Clear as mud yet?

1) Yes. 2) Appendix C Schedule 1. You would use Schedule 2 if a late amendment was adopted after the end of the cycle that included the due date for the amendment. The end of that cycle is the end of your extended remedial amendment period. The $375 fee applies if you can file only using Schedule 1.

If the plan uses compensation from date of entry, you'll also want to be careful with the mid-year entrants. Their TH minimum is 3% of full year comp.

The Participant did not exceed the 415 dollar limit, he exceeded the 415 100% of pay limit. Given the serious nature of the examples of egregious failures, I doubt a failure caused by an incorrect estimate of compensation would cause this to be considered egregious. There may still be a problem with eligibility for SCP. Rev. Proc. 2013-12 added a clarification to Section 4.04. To me, it isn't clear cut whether SCP would apply. I would present the options and let the client decide between SCP and VCP.

Not all states automatically assume the first marriage is the valid one. Here is a link to a decision regarding Douglas, Ann and Rita from Example 2. Starting at the bottom of page 6 is a discussion of the differences between Michigan and Ohio law. http://www.ca6.uscourts.gov/opinions.pdf/06a0181p-06.pdf Here is an passage from page 8. Rita is wife #2 and Ann is wife #1.

Yes, it's 72 hours for the 3 year cycle, but no less than 16 in any full year. At least 2 of the 16+ each year must be ethics hours. The hours are pro-rated if your initial enrollment cycle is less than three full years. http://www.irs.gov/Tax-Professionals/Enrolled-Retirement-Plan-Agent-Frequently-Asked-Questions#ce

Here is the consumer assistance page from the DOL /EBSA website. They have a toll free number, an e-mail link and a link to find and contact your local office. They can be slow, but they do check into participant complaints. My advice is to contact them (from home) with the information you've provided. http://www.dol.gov/ebsa/contactEBSA/consumerassistance.html

We've had a few clients with multiple owners split their businesses. One of the "new" businesses generally adopts the old plan as a successor sponsor. I can't recall a instance where the plan was terminated under that situation. The biggest advantage is that it is much less work (i.e. much less expensive) to have them adopt an existing plan than it is to terminate one and then install a new plan. When a client sells their business, it is more common to terminate the old plan and start a new one. Although sometimes the new owner will adopt the old plan as a successor sponsor.

I thought following the terms of the plan document was the "conservative" option. Ignoring the document language and following the article's advice could be viewed as an operational failure. To me, it's very similar to the other situation Austin referenced. The IRS is now saying forfeitures can't be used for SH contributions, but there are many documents that say forfeitures reduce the SH contribution. Isn't this kind of problem one of the reasons documents are submitted for opinion or determination letters? If "affected employees" is defined, I can't find it.

The Rev. Ruling itself has a pretty good description of what the Code and Regs say. Our VS documents mirror the code language saying that affected participants become 100% vested. I can't think of any scenario where a termination not initiated by the employer would be someone affected by the partial plan termination. Given the choice between following the language in our IRS approved document or following the article advice, I think I'll pick the document.

There can still be criminal charges even if the amounts are repaid with lost income. Our client repaid everything and the DOL is still calling it embezzlement. It might have gone easier on him if he had come to us for help before the DOL got involved, but maybe not. I'm sure he has spent a sizable amount on attorney fees over this, not to mention the excise taxes and our fees. Not reporting the PT on the 5500 makes it worse and can get the form preparer involved. Did I mention that he didn't hire us until after the DOL came to visit?

I have. We picked up a client a few years ago in a similar situation after the DOL came to visit. We worked out a correction and had it approved by the DOL. About 6-8 months after everything had been repaid, there was a criminal investigation and grand jury. He was offered basically deferred adjudication and his attorney was trying to get the matter closed without it. Many months go by and it seemed the attorney was successful. Then, a new prosecutor was assigned and is seeking criminal charges again. The Forms 5500 are one of the issues involved. The prior TPA prepared Forms 5500 showing no PT and the client signed them and filed them. Apparently, the prior TPA is being considered a co-conspirator. My suggestion is to correct the PT ASAP and pay the excise taxes. Report it properly on the Forms 5500 for all affected years. Then, tell the client to hope it doesn't become a criminal matter. And, charge by the hour!

If by "has acquired" you mean a stock purchase that has already happened, 1.401(k)-1(d)(4)(i) will likely prevent termination of Plan B from being a distributable event. A merger is probably the best option. Moving the assets of Plan B to Plan A will require maintaining protected features of Plan B for the transferred funds. The participants don't get a choice about where their balances go. Don't forget the blackout notice. If you were referring to an asset purchase, we will need more information.

The examples in §2520.104-46 determine the necessary bond amount for a year by referring to the market value of non-qualifying assets as of the end of the prior year. The paragraph above the examples has the rule for determining the bond amount.

Another issue that goes with setting in-service eligiblity is vesting. When a partially vested participant receives a distribution, the plan document will tell you what formula is used to determine the remaining vested balance in future years. It's loads of fun when that formula gives you a negative vested balance. Yes, I've had that happen. Our document has a provision that allows you to restrict in-service distributions to accounts that are fully vested. I use that now when I do an amendment to add in-service distributions. If that isn't available, a participation requirement can be used to make sure most are 100% vested by the time they are eligible for an in-service.

SCP is available to correct significant operational failures for a limited time period. You should still be within the correction period under Rev. Proc. 2013-12, Section 9.02 to fix the SHNEC. The corrective contribution counts against the 415 limit for the year being corrected (Section 6.02(4)(b)), but the normal deduction rules apply. I don't know if you would be able to do the same with the 2011 PS contribution. I would start with Rev. Proc. 2013-12 to see if it has anything that helps you.

It depends on the document language. Our current VS document has an option on the adoption agreement where after providing a conditional notice, providing the supplemental notice triggers the 3% SHNEC contribution. I've seen other documents where an amendment is required to implement the SHNEC.

You won't find the 5500-EZ on the EFAST2 website since it's only used for single participant plans that are not covered by ERISA. You can get the current form and prior year forms on the IRS website. It looks like they have fillable pdf forms back to at least 1997. They have forms and instructions back to 1990, but some are not fillable. Are you taking into account that plans with assets less than $100,000 were not required to file 5500-EZ through 2006 and plans with assets less than $250,000 were not required to file starting in 2007? The instructions for each year will have the details.

What part of 1.401(m)-3(j) are you reading as requiring the safe harbor match to satisfy 1.401(m)-2? The only references to 1.401(m)-2 I see in that paragraph are (3) saying the early participation rules of 1.401(m)-2 don't apply to make the otherwise excludible portion of the plan SH unless it actually is SH and (6) noting the ACP test still applies with respect to after-tax employee contributions. The term employee contributions is defined in 1.401(m)-5.

As mentioned, the disproportionate match rules are part of the ACP test. You are talking about a safe harbor match. The applicable rules on the safe harbor match formula are in 1.401(k)-3© and 1.401(m)-3(d). You also left off part of the disproportionate match rule. In your example with a 200% match on deferrals not in excess of 3% of comp, as long as at least half of the eligible NHCEs who deferred receive the match, it won't be disproportionate because of (3).

I probably should have been more clear in my post #8. I don't think there is a requirement that all non-key HCE's receive the SH to be top heavy exempt. It's not mentioned in Code Section 416(g)(4)(H) or Rev. Ruling 2004-13. It was also not mentioned in the 2010 Q&A item dealing with the TH exemption for SH plans. This thread was the first time I've seen or heard anyone say there is such a requirement. There is always the chance I've overlooked something which is why I asked where this requirement can be found, if it indeed exists. We don't limit the SH to only NHCEs very often, but we have a few plans that do.

Where might we find information on this requirement that non-Key HCEs must receive the SH to be Top-Heavy exempt? My understanding of the rule is based on Rev. Ruling 2004-13, situation 4 and a similar Q&A question at the 2010 ASPPA Annual Conference (bottom of page 10 of the handout). Both specify that all eligible NHCEs in the entire plan must receive the SH to be TH exempt, but neither mentions Non-Key HCEs having to receive the SH. The Q&A response does caution that if the TH plan only provides the SH to those 21 & 1yr, all non-Keys get the TH-minimum, not just those in the otherwise excludable group.