Bird

The SPD (and of course the plan) should have a claims procedure. Ours had a 90 day review period with another 90 day extension possible.

Here too.

I can't but remember that the regs say "...only if no other benefit is conditioned (directly or indirectly) upon the employee's electing to make or not to make elective contributions under the arrangement." (My emphasis) I'm not a law/reg expert by any means but I suspect the point of this is more about the scenario where an employer says "if you contribute to the 401(k) then you don't get..."something, health insurance, whatever.

IMO this is clearly an over-reading of the contingent benefits reg. Yes it says "... increases in salary, bonuses or other cash remuneration (other than the amount that would be contributed under the cash or deferred election) are benefits..." but remember that the beginning says "...only if no other benefit is conditioned (directly or indirectly) upon the employee's electing to make or not to make elective contributions under the arrangement." These bonuses are triggered by refunds, not by making or not making the deferral elections. It's a few steps removed and I think Luke Bailey made the case pretty well. At the end of the day, it's perfectly ok to pay anyone what you want as taxable income.

Those fees come off the top. If the account is $170 are you going to send him a 1099-R for $170 when he received nothing? I hope not.

ok thanks

Thanks, no arguments. But a question, Gary, what did you mean by this?

Employer has an old (obviously!) SARSEP. No NHCEs contribute. Owner should be allowed catch-up, right? Are top heavy contributions required? I think not...IRS examiner guidelines say: Determine if the plan is top-heavy or is treated as top-heavy and if so, confirm that top-heavy minimum contributions were made. If a the plan is a SARSEP verify that elective contributions made by non-key employees were not used to satisfy top-heavy minimums, but that elective contributions made by key employees (other than catch-up contributions) were used to determine the minimum that non-key employees should receive. How do you feel about it if the owner has already contributed, say, $20,000, but withdraws the excess contributions before 12/31?

You're absolutely right. All I can say is "good luck" getting the custodian to accept this and process it. It should be do-able but someone will have to be persistent.

From what I understand, this "lost opportunity cost" is an arbitrary figure, not based on plan documents or compliance-related dates. (Not that you are making up a number, but the date everything is based on is essentially arbitrary, at least as far as the plan is concerned.) That makes it a contribution. And if you have forfeitures, you can use them to reduce contributions.

You use the "2017" form and change the year beginning and ending dates.

Once money goes into an IRA, it's near impossible to get the IRA custodian to fix it without issuing a 1099-R. Unfortunately, it sounds like it is not their fault, but the broker's fault, and my experience with brokers is that you're going to have to tell them exactly and precisely how to fix this, and then cross your fingers that they don't screw it up again anyway. I think - and it requires some more research and/or someone else confirming - that the participant needs to take it out as an excess contribution. That way the custodian is treating it as never deducted in the first place and not taxable when distributed. Although...I just re-read your message and I think it is too late for that now, sigh. I suppose you could consider whether treating it as a rollover gets the participant to the same place and whether you want to go along with that charade. It's probably the only practical solution at this point. I doubt you'll get the custodian to treat it as if it never happened.

I thought so too, but anecdotal evidence indicated otherwise. We had one that was really annoying; of course a plan termination often goes hand in hand with a business termination, and of course they come calling several years later. I explained to the auditor that we had an FDL and he said "oh sure but we just need X, Y and Z" and of course X, Y and Z was really everything. We had all of our plan records but the client had to go to a warehouse and dig out payroll records and whatnot. Could simply be me overreacting to a random event but that convinced me there was no benefit to getting an FDL on termination, especially given that we are using pre-approved documents.

IMO grounds would be that it was done incorrectly. So much stuff is automated and spit out based on what was input to a system, and if the input was wrong, the output might be wrong. I've managed to prevent a few defaults from happening incorrectly; I imagine it would be harder to fix one that's already happened but that doesn't make it right.

I think, at least with our (FTW) documents, that if you selected a $5000 cashout threshold, then up to $1000 would still be literally "cashed" out and $1000-$5000 would be auto rolled to an IRA. I don't see an option to make the auto roll applicable from $0-$5000. I guess with proper plan language you could indeed just force everyone into an IRA from $0-$5000 but I think that is a question for the recordkeeper or TPA.

We were just discussing this scenario and (I think) you could set the plan up as a SH, excluding HCEs. That is deemed to meet SH requirements, and the fact that no one actually gets the SH is immaterial. Any employer contribution at all would trigger TH though.

I think your first paragraph answers your second; perhaps with the word "significantly" deleted, but somebody assigned a value (revenue) to that concept and it got put into a spreadsheet and was used to justify other cuts.

Agree with above. At the end of the day, the determination letter upon termination doesn't offer that much protection - certainly for document issues, but it really says the termination of the plan doesn't impact qualification, but in theory they could audit and find some operational issue that wasn't reviewed subject to the favorable determination. If you use a pre-approved document then you shouldn't have to worry about that end of things.

The rules boil down to not making contributions for the same year to both plans. If it takes a while to distribute 401(k) assets that's ok.

It's an irrevocable pledge and assignment, not an irrevocable promise to continue to pay by payroll deduction.

I'd be curious to know in what state you could say "I'm sorry but you have to maintain this otherwise optional deduction from your pay." None, I believe. RBG beat me to it - this is an administrative requirement, not an ERISA requirement, IMO.

I think the house bill is at 25% and the senate at last review was 20%. Yeah it's bad for plan formation for the reasons mentioned; I have some plans on the fence because of it. (shrug - I try to react as an American and not a pension person.) I don't want to get too political but...well, the whole thing is utter nonsense, IMO. They want to get rid of the estate tax, which affects something like 3500 people per year. It's a windfall, and won't affect behavior. Ditto the pass-through income; it's a windfall and won't change business creation behavior; it will just change the way people organize their businesses. And the cynicism of throwing middle income people a bone and then having it go away after a few years is beyond disgusting. It's ballyhooed as tax "reform" but it's really just another tax cut. Has anyone noticed that we are in an expanding economy? I know it's not expanding as rapidly as everyone might like, but what are they going to do if/when the economy goes south? I know - a tax cut!! A tax cut is the answer to absolutely every problem. Now, I'll be one of the first to say that high taxes are indeed a drain on the economy, and maybe they are in fact too high. But they're not high enough to support the spending that we are doing! Have some b*lls and cut some spending.

I agree, and think it's just being overthought.

Agreed; we have a template like that and pull it up for loan modeling. There are lots of online calculators too but I'd rather go directly to a spreadsheet that I have confidence in.

I wonder if there is an actual entity that all have an interest in? Somehow this seems to be stretching the boundaries of separate entities and shared employees. Unfortunately I've never wrapped my head around even the basics of ASGs but this just doesn't sound quite right to me.