Bird

Haven't worked with Relius for years but that is how I recall it has to be done.

Of course we would all rather be able to do that, but no it's not allowed. If you want to take your chances, that's up to you.

American Funds, both on the plan side and for IRAs, wants whole percentages and will reject fractional percentage designations.

It would have been helpful to know that there was a cash balance plan and the problem is the 6% limit (!). As I suspected, the incidental benefit commentary was an unfortunate distraction from the real issue. You have contributions that are not deductible. The first thing you do is take charge and tell them not to do this again - figure out how to pay the premiums from plan assets, not from the company. Then you have to figure out how much is nondeductible - I think it is not as simple as just the excess over 6%; I'll let others opine on that. They can deduct the excess in future years.

I'm guessing there was no WH but that's a different issue (and at this point nothing can be done about it). I agree with the others. What happened the moment it left the plan is what matters, not what happened later.

This is my interpretation as well. And I don't know that it's all that risky.

I agree the contributions have to be made. We did have a situation like this and were able to get the participant to agree to pay back some of the stolen money with plan money. It was done right in the courtroom. Part of the deal for a more lenient sentence.

Thanks for the feedback. I could be mis-remembering, but I thought I remembered hearing of a similar scenario where I was shocked at what they let someone "get away with." That's the only reason I considered this.

More on this - they maximized SEP contributions for a partner (wife) and did not make any contributions for another partner (husband), as well as two regular employees for two years, 2019 and 2020. Does anyone have experience with SEP corrections (or PS I guess) and whether the IRS would be likely to allow a fix that involves giving some of the wife's prior contributions to the husband? This would of course lower her percentages and thereby lower the amounts owed to the other employees, and eliminate the need to make new contributions for the husband. (If you're wondering, we have spoken to an ERISA attorney but this person obviously had no direct experience in such a situation and I was not comfortable with that lack of experience.)

I don't see how the withholding could be anything other than a regular distribution, Code 1. (Probably defeats the purpose, and then some, if you don't have cash to pay the taxes on the conversion. Unless I don't know something.)

I didn't pay that much attention to the initial discussion, but is it crazy to say that the plan is not providing quarterly statements? Just because participants get brokerage statements does not mean the plan is providing quarterly statements. The plan is providing annual statements and would include the lifetime illustration on those annual statements.

I think a second resolution saying "never mind" fixes this problem. I'm not a lawyer but I don't think a resolution is irrevocable.

Is this an internal plan conversion? How/why would there be withholding? I think I'm missing something (even if it is a plan to Roth IRA or IRA to Roth IRA, how is there any WH?).

Have you filed tax returns? Might it be easier to just write a new plan?

I don't see what it accomplishes. You can't change the fact that it was deposited to a properly titled plan account in the first place. You might even be drawing attention to a (possible) problem if someone ever looked at the paper trail. I'm not sure it is in fact a problem but in no way does this actually fix it.

I don't think so. I get where you are coming from but it's almost like saying if a plan didn't have profit sharing contributions, you couldn't add that mid-year because you are potentially taking away money from other employer contributions (e.g. matching).

The plan pays you $1500 in fees and you refund a prior fee (presumably paid by the company)of $1500 to the company .

It was right at the time it was made so you just have to explain it.

I don't see the other post, and in general there is no need to post in different forums - everyone, or most everyone, just gets a feed of new activity, I think. Anyway, I see no reason for the plan to do anything. Money was deferred; the fact that some of the bonus was clawed back is not relevant to the plan.

I gotta be honest, don't understand the language. The chart makes it seem not self-correctible. Sigh, I might have to print it all out and concentrate.

The first question(s) would be "why" (and "what")? To avoid commissions? Not worth the risk. Because it is a hard-to-sell asset, such as real estate? No way. And doing it from a personal account is a definite no.

Thanks. Yeah, probably some technical issue that they can't let them self-correct or they just recognize that they are generally poorly overseen and letting people self-correct is likely to be fubared as much as the original "administration."

Is this actually a plan termination? (You say "One of the terminating plan" - rather odd phrasing by the way - so if in fact the plan is terminating, then you have a distributable event and it just goes away as a loan offset at that point). Or is it a merger of plans, or is the acquiring company taking over the old company and its plan? If the latter, I'm not sure they can refuse to take it. (For that matter, if it is the former, I don't see how they get to refuse to accept it.) It shouldn't be a big deal in either event; it's just a phantom asset which, as noted, is only maintained on the books for purposes of limiting future loans. It can be offset (distributed) if there is a distributable event, which depends on the nature of the plan transaction.

I thought SEPs couldn't use VCP for a significant failure of any kind? We are within the three year period. It's a CG from the get-go, thanks.

We were brought in to look at a SEP for a company in a controlled group because they didn't cover (2) employees in another company. (Not only that but they didn't include a partner in the sponsoring company.) One employee was excluded for two years and one for one year, and the partner for three. My reading of EPCRS is that this is a significant failure and not eligible for SCP; must go through VCP. Is that correct? Any experience with fixes for this other than giving the employees the same percentage as the partner who got the contributions?