Bird

I thought I remembered some responses - maybe it was a similar thread. Anyway, if they are at work on the last business day of the year, or gettting paid for vacation time, they're employed on the last day of the year in my book.

I have to think that someone has their dates mixed up and thinks that it's April 1. Amen. Even in a one-man plan, you must have a mechanism for allocating the contribution to that one person.

If the plan says matching is on a payroll basis, then we don't attempt to check the calcs. (And we point that out.) Yes, we check for the maximum. So I think what you suggest is reasonable...provided you are following the terms of the document (that is, that it does in fact say that's how the match is done...I'm sure there's a fair number of plans that operate that way even though that's not how they're written),

dougsbc, I am more certain that it is 12 months after the end of the year; still don't have a cite. We handled a "project" in which TH contributions weren't made for '02 and '03; we had the client make up the missing contributions - without an earnings adjustment for '03, since the money went in in '04 - and with earnings for '02, since it was more than 12 months after the end of the year. (As provided under SCP.) I researched it pretty carefully at the time; just went through the papers and still can't find the cite. You might want to poke around in the EPCRS guidelines, but I don't guarantee it's there either.

The question being "when is the TH min due" (period). I think the answer is the end of the following year. Can't find a cite right now, sorry.

But Katherine didn't say "more" automatic rollovers. If you don't want to have ANY automatic rollovers (for amounts over $1,000, but presumably you still want to cashout under $1,000), you need to reduce the threshhold to $1,000, and NOT ignore prior rollovers when you determine whether a participant is over the threshhold.

I can understand the thinking that it is not a mistake in fact. But if it's not, then it's an employer contribution of some sort and you have to figure out what to do with it. It appears that the match is required so it CAN'T be a matching contribution. That means it must be profit sharing. You then have to either allocate additional moneys to the other participants, or take it from him and reallocate it. But there's no way it's in the ACP test.

Wait a sec. I think you mean the match DEPOSITED. The correct allocation is $8,250. Anything deposited over that was simply a mistake. Would you think differently if someone calc'd the match at 100% instead of 75%? It's the same type of error. Reed is right.

For the sake of trying to get something going, I'll comment. First, not to be a scold, but I think both the employer and recordkeeper have to review their systems to make sure this doesn't happen (again). On the plan side, there's money flying around not accounted for, and on the employer side there's money leaving the company that has been misclassified (well, maybe, depending on the ultimate resolution) as...well, we don't know what. Anyway, I think the correct answer is to go back to when it occured and allocate it as an employer contribution. That's sure to be a problem, right? The practical answer is to use it to pay expenses. How comfortable I would be with this would depend on how much there is, relative to different factors, but one of the key things I'd look at is typical annual expenses. if it's less than one year's expenses, I think I'd do it (prior year's assets could be increased by the found money and offset by an accrual for expenses, so participant allocations don't change).

GBurns, when I said vote for "it" I meant the union (and everything that goes with it).

Supposedly they follow all these steps to make it legal. I don't think the employees would be stupid to vote for it, if they are getting better benefits. I think the employer would be nuts to urge his employees to unionize, but that doesn't make it illegal.

IMHO = In My Humble Opinion I don't think it's a big thing at all to simply put the partners in different classes, going forward. But, if they don't want to, fine, just clean up the existing language so you at least have discretion in the total to be allocated to the existing class. BTW, your cryptic "up to the maximum" and "the maximum based on group 2" (or whatever the existing language is) is leaving me a bit confused. I think I know what you're getting at but honestly I find it hard to believe that the existing document locks you into the maximum. Care to post the exact language?

The deal is that they go in and give the employees more benefits than they have currently, and they get these benefits by joining the union and bargaining for them. They make sure they get at least what they would get under a safe harbor plan. Plus, some term life and disability. Union dues are $25/month and the employer funds it through a pay raise. The owner then is free to put in a DB plan without covering anyone else. They require either a 412(i) plan, or a regular DB with 30% in life insurance, or a combination. I got an e-mail Monday and follow up call yesterday. Suppoosedly they've had 12 audits with no problems. Everybody's happy, right? I honestly don't know that it's not legal, if done properly and without coercion. That doesn't mean I don't find it slimy. I can't imagine anyone going through this...wait, I can think of a couple of...dentists...that might jump all over it.

Oh, OK, I didn't realize that's what Austin was referring to (retroactive entry). Yes, that's a possibility. I found that to be such a nuisance that i don't use it and have pretty effectively put it out of my mind.

Thanks mbozek for the reference, that was extremely helpful (pages 14/15 were most relevant to my particular situation, if anyone else is following this). FYI for anyone paying attention, it looks like if you have a separate account for vol contribs, and if the plan permitted, as of 5/5/86, the withdrawal of said contributions before separation from service, then you can first recover basis from any distributions (that is, all distributions are tax-free until basis is consumed).

I thought you couldn't disregard prior service until the greater of 5 break years or the actual prior service (or is that only for vesting?)? As I see it, he has a year of service on his re-employment date, and he is 21, so he is eligible. The only question is does he enter immediately or at the next entry date, which should be in the document.

THAT's what I was looking for! Thank you.

Thanks to both of you, but... I did say that the excess was not timely distributed. Let's say...OK, it IS for 2003. The problem is not fixable, by either employer. I can't imagine that the participant can/should tell one or both employers to do any reporting, 1099-R or otherwise. I'm concluding that the employee should do something on his 1040 to claim the excess as income. Is that correct? If so, what is (was) he supposed to do?

If a participant exceeds the 402(g) limit, say by contributing $10,000 to each of two plans, who, if anyone, has reporting responsibility if the excess is not timely distributed? I know, or think I know, that the consequence is double taxation. But what about the mechanics? I'm looking at something that seems to indicate a 1099-R is issued, but how does either plan know to do that, without the participant's instructions/decision as to which plan has the excess? Or is this something the participant handles on his personal tax return?

To save you some trouble looking for prior threads... A SIMPLE can't exist in the same year as a 401(k). That doesn't mean you can't adopt a 401(k); it means that if you do the SIMPLE is not valid for that year. So then you have a godawful mess with payroll issues, contributions that have to be recharacterized, etc. I wouldn't try this unless there were huge savings to be gained under another plan; just make a clean break at the end of the year.

If the document doesn't say anything, then unless the participant has changed his election, deferrals should re-start when they are no longer prohibited; i.e. you are simply following the participant's election.

You leave it there and simply cannot contribute if your income is too high.

I've always used A, A and the account balance. The instructions aer a little curious in that they say "Enter the code that describes the type of annuity that normally accrues under the plan..." If "normally" is to be taken literally then I have no doubts about using A,A, at least for my plans. The instructions are clear that you use the account balance. I use the value as of the val date for the return, not "...at the time of separation" as per the instructions. Tough nuts if anyone cares about that.

I think any coding errors are the participants' problems. You can have a SEP with money going to different institutions, and the more I think about it the less I think the employer has to ascertain where it is going, except to assure that it is going into an IRA. It would seem that if the contributions were improperly coded as annual IRA contributions, and the amount exceeded the annual limit, the custodian would not accept the money and the problem would be resolved right there (presumably by changing the code). Or, if the amount was less but then the participant tried to deposit a true annual contribution that would cause the limit to be exceeded, it would not be accepted and again it would be resolved at that point. If it went in as a rollover, well, it's one of those things where the code is wrong but there would be no consequence.

Unless there was a mistake, the taxable portion rolled over was 100%. There may have been other (non-taxable) monies that were paid but not rolled over.