Bird

I don't have a copy of the form or instructions, but in your intro you refer to "benefits" due, but then list a bunch of contributions due.

Agreed, it can be done, subject to document limitations. One reason for doing it it - in a one-man plan, if you keep the 'er contributions in the SEP you keep the qualified plan assets (the k-only plan) to a minimum and defer the need to file a tax return. That's pushing the envelope of cheapness and/or avoiding work, but why not? In a plan with employees, I'd be more inclined to keep it under one roof.

I think if you provide the basic match as described, it will satisfy the ADP safe harbor. And then if you have the enhanced match for NHCEs only, you shouldn't have a problem satisfying the ACP test, so it's probably ok. But I'd be more concerned about document issues - are you trying to fit this into a pre-approved document, and does it allow for that discretion, or hard-coding the different match by participant? Personally, I think I'd be more inclined to do what they're trying to accomplish with a discretionary (PS) feature using allocation groups. Why screw around with a nutty match when you can just specify exactly who gets what?

But is there really any doubt that W2 is the beneficiary? You have two factors saying W1 is not; first, the beneficiary designation that voids itself if he remarries, and second, the plan almost undoubtedly says W2 is the beneficiary, unless she has waived (there's a slim chance that if they were married less than a year, the plan says she's not his spouse for plan purposes, or if the plan has J&S options, that less than 100% is subject to the J&S rules, but neither seems likely and it's just a matter of reading the document). I see it as black and white.

001. The plan identifier is the sponsor's id # plus the plan number, and I think the most important thing is that it be unique...I don't know that you must start with 001, but I would.

Not that I know of.

But the contract asset charges were collected from the plan, not the plan sponsor, right? You're right, I don't see how anything paid from the plan is relevant to their claim. I'm not sure about the charges that were actually paid by the sponsor; if they have a legit claim to them then it could be that you'd have to return them, but then could turn around and get the money from the plan. But the reality is that they are almost certainly just blowing smoke with a shotgun approach; you'll probably have to get your own attorney to blow smoke back at them, which is unfortunate, but that's the way it works.

I think the answer is "maybe, but probably not." I'm not an accountant so I'm not sure what this is worth, but my understanding is that a company could have both an employee (W-2) and contractor (1099) relationship with an individual, if the individual performs different roles that are well-defined. So, you might work as a janitor on an hourly/W-2 basis, but also contract for a programming job which pays by the job and in which you have lots of flexibility in how the job is done, where, etc.

A 401(k) plan was with investment company A and switched to B a few years ago. A was involved in late trading and sent a bunch of settlement proceeds checks to the sponsor. The checks have prior trustees names on them, and B won't take third party checks anyway. The "pay to" description on the check is sufficiently mangled/shortened that the plan sponsor could (probably) deposit the checks to its own trust account. (It's a law firm and yes I mean the firm's trust account, not a plan account.) Question - although it would be a prohibited transaction to deposit the checks to the firm's own account, writing a check or checks back out of the account immediately would correct the transaction, right? Would there be any lingering effects from this PT, other than the need to file a 5330 and pay an excise tax on the use of the money, $1 or whatever? I'm weighing the hassles of trying to get the checks re-issued versus doing something "wrong" but easy. thx

I don't think you have much choice, it's compensation. Unless you're going to try to do it in a non-qualified plan, and they probably didn't want to be bothered.

Sounds like the employer wanted (wants) the employees to get their full share of the contributions in some form, even when the comp limit is hit. Just guessing, but it may have started back in 1994 when the comp limit was slashed from $235K+ to $150K, and it resulted in a real reduction in total pay. It all sounds legit from a tax standpoint.

I was trying to say the for estate tax purposes, if there was no subtrust in the plan, then there's no doubt in my mind that the policy is in the participant's estate, just like any other plan asset. As for the beneficiary designation, no,I don't think the plan itself has to have special language permitting an ILIT as beneficiary. (But I don't think the policy beneficiary should be the ILIT - I always want the plan to be owner and beneficiary of the policy, and have the participant's beneficiary designation then control where the proceeds ultimately go. FWIW.)

Generally speaking, plan assets, including insurance policies, are in one's estate. But a plan is often where the commission money, er, premium money, is found, so the insurance industry came up with a "subtrust" concept that supposedly left the policy in the plan but got the policy out of the estate. Supposedly this was "approved" by the IRS but I was/am skeptical. I haven't paid much attention in 10 years or so and don't know if there is something more definitive. If the plan doesn't have special language creating a subtrust and having the policy bought and owned by it, then the policy is definitely in the estate. If it does, then...maybe.

Sounds good, thanks for the update!

I dunno, I would hope this is answered in the document, no? I think it is more likely that this person does get a safe harbor contribution than not; unless eligibility for SH is specifically tied to eligibility to defer.

Thanks, I don't know why I couldn't find it. I agree, the regs seem to say you can file on paper before 12/31/09, even if the due date is later. But the website seems to limit the paper option only to those with due dates before 12/31. I don't think they meant that, at least I hope not, because I too would like to get rid of them. We'll probably do paper filings unless they come back and say they really, really meant it.

Yes, that's how it appears to read. I can see doing an "oops" on the last day of the short year if gets the due date in 2009. As far as I can tell, this is only on the website, not in the Federal Register?

Interesting. I think I would count them.

Where do you see that? (I actually couldn't find that, or what both Belgerath and I cited, in the link we both provided, so I'm somewhat confused.) But, I did find this (my emphasis): Under the Department of Labor’s Final Rule on Annual Reporting and Disclosure, all Plan Year 2009 and later Form 5500 Annual Returns/Reports must be filed electronically. 2009 Short Plan year filers whose due date is before January 1, 2010, are granted an automatic 90-day extension from the date the EFAST2 system is available for filing, but may file on paper using the 2008 forms and schedules if filed on or before December 31, 2009. Late and amended Annual Returns/Reports for plan years before 2008 must be submitted electronically once the EFAST2 system is available for filing. Plan Year 2008 filings (including late and amended filings) can be submitted electronically using EFAST2 beginning on January 1, 2010, electronically using EFAST until June 30, 2010, or on paper until October 15, 2010; 2008 filers with late or amended filings after January 1, 2010 are encouraged to file electronically using EFAST2. here: http://efast.dol.gov/about_efast2.html

I don't think an amendment would typically be required; it's not changing a plan provision. There's usually just whatever paperwork the investment company wants and notification to the participants.

The downside of waiting is that it's just one more thing to keep track of, and potentially get lost or overlooked or whatever. That may sound dumb, since our job is precisely that, to keep track of things and all that, but in my life, things get messed up when I'm done, but waiting for someone else to do something. I'd rather do an amended report/return once every 100 times than deal with an unfiled return once every thousand times. I'm not arguing that everyone should do it that way, but there are pros and cons to be weighed. We won't finish a val and print the tax return until we've been assured of the contribution amount, and once we're past that point I don't want to be holding onto it for any reason. To each his own.

Like I said, it depends on exactly what the waiver said. It might be ok. I don't. My point was that the employee elected a lump sum; I can sort of see paying it to the estate, but where does the plan get off adding the "FBO her IRA"?

Right, and you would only need to provide those contributions to those who had already died, retired or become disabled before the amendment. No one accrues anything until the conditions to receive a contribution are satisfied. No notice needed; the SMM should take care of it.

As has been noted, we don't know if the spouse's waiver permitted a particular type of distribution or not, and that needs to be determined. A giant leap was made from paying a lump sum to the participant, to writing a check to the estate, FBO her IRA. It's almost like this is a trick question - what about withholding, was that done, as would have been required under the original election, and did they just write the balance to the estate/FBO the IRA, or was it all arbitrarily paid to the estate, FBO her IRA? Either way, it's flat-out wrong, no matter if the husband is the IRA beneficiary and would be pleased with the end result.

You can file before the contribution is made. Most people have probably been burned at least once by a client who absolutely, positively will make a contribution - then they change their mind, hence the warnings to wait until the contribution is deposited. Me, I'd rather get the return out and take a slight risk that the client will change his mind than have the return sitting here, with the possibility that it will get lost in the system or something - but it does depend on the client somewhat.