Bird

I think I'd first confirm exactly who owns the account. I've seen plenty of accounts titled in the name of the company that were really meant to be plan accounts, and vice versa, so look at the tax id number as well as the titling and, especially if there are inconsistencies, you might consider the intent when the account was opened (e.g. they might have put "plan" in the account name just to indicate that it was to be escrowed "for" the plan even though it wasn't really a plan account. Just a thought...

Given what appears to have happened, this might be the best course of action. What should have happened is the plan should have submitted the withholding under the electronic funds transfer payment system under its ID, and then reconciled it later under Form 945. What apparently happened is that the withholding was (effectively) submitted as a taxpayer estimated tax payment (even though it was done by the company, if the first post is accurate). Utterly wrong, but the reporting should reflect what happened, not what should have happened.

I dunno, I guess when in doubt we'll do one, and if we miss something will just do the filing in the next year. I refuse to care very much about a "late" 8955-SSA filing. I wonder how many high-level meetings it took to decide that the 5500 series does not need a signature for an extension but the SSA does? I mean, as if matters when the SSA gets their info!? They could have just made the due date 9 1/2 months after year-end.

I tried the ASPPA/LinkedIn group and was disappointed in the layout as well as the content. Too many links to self-serving articles with limited value which generates yammering between the self-serving parties.

We have a company, USA, that is based here. There is a parent company in Germany that has based a German national here for two years. He is really an employee of the German co., but is paid by the US co through what they are calling a shadow payroll - basically, he is added to the USA payroll and the USA co invoices the German co for the wages. Since he's showing up on the USA payroll, the Q arises as to whether he is eligible for the USA plan. If I had to answer, I'd say "no" because they are just using the USA payroll as a convenience. (I think I've seen related companies that are not necessarily controlled groups using one company as a common paymaster and just because someone shows up on a payroll report doesn't make them an employee.) Any thoughts? P.S. He's not a nonresident alien who would be excluded under the plan terms; has too many days of residence.

I think that second sentence there is your answer; how could it mean anything other than "no true-up"? Payroll companies write plans to fit their payroll systems and make their work as push-button as possible - they can't be bothered to calculate a true-up contribution.

That's definitely true. And I didn't think that you could accomplish the same thing just by pre-paying the surrender charges as an "expense" (and wasn't aware that any carriers would even let you do it). But what do I know?

I agree. Just make sure you have an election form on file saying they don't want to contribute.

Someone, perhaps you, needs to take charge and just tell him no to all of this nonsense.

Using "W-2 comp" for your comp definition does not mean that comp has to be reported on a W-2 to be plan comp; self-employment income counts.

Set up one plan and have all companies adopt it. He can make 401(k) contributions from his self-employment income and she can make 401(k) contributions if she takes a bonus. Plus 25% of compensation as an employer profit sharing; I think they could each max out at $49K if they really wanted to. (Might have to show some of the profits as comp.; one has to wonder if comp is unreasonably low anyway, and if it's a regular C corp I doubt they want to leave the profits in anyway.)

IMO accrued contribution is an asset and needs no special treatment; this participant shares in the loss (or gain). To do otherwise would not only be wrong (unless the document has special language, which I doubt it does), but unwieldy, to say the least.

I thought I had another semi-intelligent post but it seems to have disappeared; it went something like this... I agree with you (rblum) and see nothing wrong with how your answered. The attorney claiming that answering that question "no" on the 5500 somehow invalidates the claim is just blowing smoke. But the client is going to have a hard time proving that instructions to invest "conservatively" weren't followed is going to have a tough time proving it.

Yup. Not that I have time for this but I saw a letter in the WSJ a couple of days ago that concluded something to the effect of "we need people with new ideas." We don't need new ideas, we just need people with spine to match revenues and spending. There is mass delusion that there is an easy fix to our massive deficit problem, if only someone is brilliant enough to think of it.

Do you make a special point to say anything about that box versus the skeighty eight other boxes?

I agree with you. I believe that the "fraud and dishonesty" losses they are talking about are, in layman's terms, some kind of theft, not failure to follow investment instructions. Claiming that failure to check that box makes the case invalid is incredibly weak. Not that it's easy to prove that investment instructions weren't followed either.

I don't claim expertise on tax filings but I believe (and a quick check of the forms seems to confirm) that there is no separate line for reporting guaranteed income on a K-1 that is filed with an 1120-S. A K-1 for a 1065 (partnership return) does have a separate line. Ultimately, if income is not subject to SS/Medicare taxes then it is not "earned income" and not eligible plan compensation. You can't have your cake and eat it too.

Also, read the document. Mine explicitly say the Plan Administrator (generally the employer) will not charge for services.

I decided to give the IRS letter forwarding program for lost participants a shot; I had a plan with 5 such participants and wasn't making any progress. Mailed the letter on May 24, 2011...just received confirmation, dated December 16, that they were forwarding the letters. So don't be holding your breath if you try this.

It's a bad idea and most likely a PT. You could conceivably have the plan pay someone directly for plan services, but IMO the costs of doing so wouldn't be nearly worth it. As noted, there's no way someone should be taking that long on plan admin functions.

It's not clear from your post if the prototype amendment was to be signed by the plan sponsor (but wasn't or it can't be found) or if it was amended by the prototype sponsor and a copy was simply given to the plan sponsor (but can't be found). If it was to be signed and wasn't, then you're stuck. I don't know much about the sanctions but what you quoted seems high. If it was just a copy of something executed by the prototype sponsor, and they can't find a cover letter from the prototype sponsor telling them the plan was amended, then that's just silly; the agent needs to be educated by his or her supervisor.

Like you, I would prefer to think that if they are not being paid on a 1099 then they are not independent contractors for reporting purposes. (Of course, reporting errors are usually the other way around, true employees being reporting as independent contractors.) But, I think it is possible that they really aren't functioning as employees, and the comp should be ignored. I'm pretty sure that it makes no difference on the tax side since partners pay their own SE taxes just like an IC. So, I think I'd accept their determination that these people are not employees if that's what they told me. I'd caveat it by telling them that it's likely to raise questions on audit and it would be a lot simpler if they just reported them as ICs. Just guessing, but I'm thinking that the accountant had these people in their system as partners and figures it doesn't really matter and can't be bothered to change it.

Depending on your document and/or document provider, you might need an amendment just to keep the status quo. And there are other amendments required for 2011 anyway (Roth in-plan rollovers and HEART).

That's a shame (that you did any research on this). Nutty stuff like this, you need to ask the person making the claim to provide the cite.

I think any Circular 230 practitioner has to include a disclaimer on any and all correspondence. I couldn't tell you exactly where but the authority/cite s/b in Circular 230.