Bird

In my opinion, the filing of the corporate and plan returns does not lock in those contributions. That is, if the employer does not make the contribution then the returns can/must be amended.

There's the rub. I don't think there's an alternative to that; if there were, then they (Lexis Nexis) wouldn't last very long.

Right. I think it stems from a court case involving plan language that absolved the trustee from having to collect contributions (but how does the trustee know the contributions are there to collect?). If I'm right about this, it was addressed in asap 09-23.

My experience with IRA providers is they will NOT return money without reporting it as a distribution in some way shape or form. You are not allowed to make mistakes with IRAs and just ask for money back. (I can't say I have a lot of sympathy anyway for that reasoning in this instance.)

Valid point. Again, maybe not a concern in the case of a restatement of an ongoing/long-time plan. I think it (this 0% MP business) is a case where the IRS wouldn't likely pose a challenge and we are collectively being too clever by half.

I thought the "problem" with not making substantial and recurring contributions was 100% vesting due to the plan being deemed partially terminated. Which isn't much of a problem in the cases in question.

True, brokerage accounts don't have do a lot of the comparison stuff (chart, etc.). They have to disclose the fees associated with the brokerage account and we're trying to get the brokers to do that (snicker). I agree that eligibles must get the notices/info. Austin, the disclosures don't have to be all in the same place and I'd be surprised if your SPDs don't include loan fees.

I seriously doubt it - privacy matters and all that. Just the fact that it would make things easier for us makes it unlikely.

I think we have a responsibility to say "you can't do this anymore - go on a platform or pay us or someone else exorbitant amounts to comply, or take your chances but sign this acknowledgement that I warned you." Make lemonade - I'm hoping to use it as a hammer to get some of those cobbled-together messes under control.

I'm operating on the premise that the platforms will provide the necessary disclosures. I've specifically talked to AF and reviewed their correspondence and believe that what they're doing will be ok. We have some self-directed brokerage account plans and are trying to push the burden off to the brokers; I think the key there is "just" making sure the brokerage account fees themselves are disclosed. The problem cases will be non-platforms that are limited in their selections - e.g. I have an old grandfathered AF plan with old-fashioned retail accounts in A shares. Someone could probably cobble together the charts and whatnot from info that is available but I don't want it to be me, even if I get paid for it.

I think I'd keep the 2011 document and not worry too much about the motivations for the restatement (although if I'm providing administrative services I'd want to know if there were any changes and would review the doc).

I don't see the need for such a restriction and in fact I think it would be pretty awful ("worst practice") to deem a designation void just because it involves a minor. (Why is it considered a problem?) Our plans say this, and I'd guess even if they didn't state law would say something similar to allow payouts without too much hassle: If a distribution is to be made to an individual who is either a minor or legally incompetent, the Plan Administrator may direct that such distribution be paid to the legal guardian. If a distribution is to be made to such person and there is no legal guardian, payment may be made to: (i) a parent, (ii) a person holding a power of attorney; (iii) a person authorized to act on behalf of such person under state law, or (iv) the custodian for such person under the Uniform Transfer to Minors Act, if such is permitted by the laws of the state in which such minor resides. Such payment shall fully discharge the Trustee, Plan Administrator, Trust Fund, and the Employer from further liability on account thereof.

VS is pretty much just as easy to spit out as a prototype, with a little bit of flexibility. We are 100% VS or nearly so. I used to use standardized prototypes for tiny employers who would have to make contributions anyway for terms over 500 hours but got stuck one too many times and found the decision-making time on that to be unproductive.

You are correct; insurance CVs s/b included on the balance sheet. Auditors (and others) get confused b/c certain insurance company products that provide guaranteed benefits are not so included, but regular insurance policies aren't in that category.

The plan actually hard-wires the forfeitures to reduce matching contributions? Ours say they can be used to reinstate forfeitures OR reduce contributions OR pay expenses. Anyway, I agree it's not 100% clear but I think "no contribution" can mean "no contribution, period" and no one is entitled to anything yet.

I see what you're saying, that the catch-up for 2010 must be determined as of the end of 2010. But I don't necessarily agree. I'm looking in the EOB and it starts by saying that "first" some limit must be exceeded in order for deferrals to be deemed catch-ups, which might imply that in a 415 limit scenario the PS money has to be in first, but then it goes on to cite IRS speakers at ABA and ASPPA Q&As approving the retroactive designation of catch-up money based on discretionary contributions being made after year-end (in a calendar-year situation), so that's not an issue. (Maybe that's going off on a tangent that doesn't need to be gone on.) Looking at it your way, I guess you would say the $49,000 PS would have to be limited to $43,500? Because you're determining that on 12/31/10 the $5,500 was a legit "regular" deferral and then PS s/b restricted?

I can't say I'm looking at the code or regs and may be missing something obvious, but I'm inclined to think it's ok. You have a 2010 deferral of $5500. At 6/30/11, you run a 415 test and determine that it is in excess of the 415 limit. The deferral was made in 2010, and the catch-up wasn't used, so I see it as being available for use as a 2010 catchup. The fact that it's caused by 415 and not by some other limit is, I think, not relevant.

I agree, but some (maybe all?) investment companies will make you open a separate account as a "traditional" IRA for the rollover. I think it has more (everything) to do with their recordkeeping and tracking of contributions than any legal requirements.

I was a little worried about the 50% rule taking this down the wrong path and I retract that reasoning for it being a PT. The bottom line is that if the loan is distributed, then it's no longer a participant loan meeting those requirements - (in)adequate security is a fine reason.

No. I believe the correct reasoning for this is a) a loan to a participant is a prohibited transaction, b) there is an exemption for participant loans meeting certain requirements, c) you blow the exemption when the participant holds a note that doesn't meet the requirements, and it would in fact fail to meet the requirements, the 50% rule being the first one that comes to mind.

I don't know how you allocate an integrated formula on anything less than a plan year, but ignoring that for now and assuming that you are indeed following the terms of the plan, I believe you may indeed change the formula mid-year. (Just like you may, if the plan allows it, allocate 15% to participant A and 5% to participant B.) The problem, as Tom notes, is that it may result in a discrimination issue. My (Ft William) plans allow for allocations on a shorter basis that a plan year, but this caveat is in the Adoption Agreement right under that option: NOTE: Selection of C.35b.ii through C.35b.v may result in the Plan not meeting a Code section 401(a)(4) safe harbor allocation formula within the meaning of Treas. Reg. 1.401(a)(4)-2(b)(2). I think you must do general testing on the resulting contributions. (And I'm skeptical about combining an integrated allocation formula with less-than-annual allocations. I don't know how to do it.)

Right. I have that same situation. Of course the SB doesn't go anywhere but the file so it's not like it's a flag anyway.

That's my understanding too. This could be for a sole proprietor or LLC taxed on a Schedule C. to answer the question, I believe you could do it either way. Either file on a strict cash basis and not include accrued contributions, or include the accruals. I always include the accruals as I think that ties out better with other reports and the business return. I wasn't aware of that, is that something that was said publicly?

IMO no return at all is required, but it will definitely generate a "missing return" letter, eventually. I don't know if it is true now or not but I think the letters used to have a box you could check that said something like "this is now a one man plan with < $250K so a return is not required." You have to decide if responding to that letter is easier than just filing an EZ (I do think they recognize if a filing goes from regular to EZ so that course should not generate a letter).

Yes, you just want to amend to change the sponsor.