Bird

I think it's allowed. (But it's just an invitation to screw it up worse.)

We don't get one if investments are on a platform and the recordkeeper will handle 1099s and WH.

For $500, I'd call this a lesson learned. People should be making deposits based on a payroll report, not some assumption. (And they should be using a payroll company that says "hey you need to set this up right or it won't happen" instead of just processing and cutting off; that's pretty pathetic...but you asked to not comment on payroll companies.) A mismatch will almost certainly, I think, result in IRS correspondence, and if an accountant is involved, the fees will immediately exceed the potential tax savings, and frankly, I don't think he has much of a case anyway. I suppose if he wants to hold his company liable for failing to withhold as he requested he could go that route and then EPCRS, but frankly that's more than a little nutty IMO. You could definitely shift it to the ER account, especially if that amount or % wouldn't have to go to others. Even if you wind up giving something to others as a result, I personally would not be worried about the timing issue for the amount of money we're talking about. I must say that none of this makes sense; initially you said he tried to maximize catchup and now you're saying $500 is involved so I am actually not sure about any of this.

It sounds like he thought he did but he really didn't. Exactly how did he "increase and maximize" those contributions? Someone screwed up and didn't do it. Either poor communication by the payroll company that he couldn't do what he tried, or poor communication by the owner or his staff to communicate to the payroll company. I don't know that you can un-ring that bell, especially at this late date. If the payroll company dropped the ball, you might pressure them to re-run the payroll, but that's a systems question. I don't think you can proceed with an unmatched W-2. Sometimes when owners don't max out on deferrals we can increase profit sharing to make up for it...

Prior thread says end of the following year. But I'm the one saying it, with no cite. I'd be comfortable using that for loss calcs (i.e. no loss). But as noted, be careful with annual additions and 415 limits.

My opinion as well.

BG, thanks for taking the time to respond. I am trying that, so far it looks more like what I want. Software updates really irk me...

Ok. As long as there aren't any other employer contributions. We're almost always using a SH.

Sigh. This is probably answered already but I'm too lazy to look hard. How do I, basically, get this to look like it used to? Unread posts shows just the topic, not every f***ing reply separately. When I come back the next time, it shows me just activity from the last time I was on. I'm "clearing" unread content but it keeps coming back like a bad penny. I do NOT like change...

BG, it's a bit unusual to have everyone in their own group AND have a last day requirement (although we have, or had, a plan or two that way, frankly unintentionally). A reason for not doing it is to have total flexibility, including giving terms contributions without a corrective amendment. Maybe it is working to your advantage here.

Right. I think the problem is in this statement: We (the client) did not pick or choose certain people to not benefit; the document did that for us. The document is NOT saying terms don't benefit.

Isn't 1.72(p)-1 Q&A 10 crystal clear? See below; my emphasis in italics - they are definitely adding interest from Nov to Dec in the examples of different default dates. (I've got myself so twisted around I don't know anymore what we do when a loan isn't on a system...if we even have any. But I'm not going to try to override what a recordkeeper determines as the default amount.) (FWIW Q&A 19 is about continuing to accrue interest after a default). ------------------------------------- A-10: (a) Timing of deemed distribution. Failure to make any installment payment when due in accordance with the terms of the loan violates section 72(p)(2)(C) and, accordingly, results in a deemed distribution at the time of such failure. However, the plan administrator may allow a cure period and section 72(p)(2)(C) will not be considered to have been violated if the installment payment is made not later than the end of the cure period, which period cannot continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due. (b) Amount of deemed distribution. If a loan satisfies Q&A-3 of this section when made, but there is a failure to pay the installment payments required under the terms of the loan (taking into account any cure period allowed under paragraph (a) of this Q&A-10), then the amount of the deemed distribution equals the entire outstanding balance of the loan (including accrued interest) at the time of such failure. (c) Example. The following example illustrates the rules in paragraphs (a) and (b) of this Q&A-10 and is based upon the assumptions described in the introductory text of this section: Example. (i) On August 1, 2002, a participant has a nonforfeitable account balance of $45,000 and borrows $20,000 from a plan to be repaid over 5 years in level monthly installments due at the end of each month. After making all monthly payments due through July 31, 2003, the participant fails to make the payment due on August 31, 2003 or any other monthly payments due thereafter. The plan administrator allows a three-month cure period. (ii) As a result of the failure to satisfy the requirement that the loan be repaid in level installments pursuant to section 72(p)(2)(C), the participant has a deemed distribution on November 30, 2003, which is the last day of the three-month cure period for the August 31, 2003 installment. The amount of the deemed distribution is $17,157, which is the outstanding balance on the loan at November 30, 2003. Alternatively, if the plan administrator had allowed a cure period through the end of the next calendar quarter, there would be a deemed distribution on December 31, 2003 equal to $17,282, which is the outstanding balance of the loan at December 31, 2003.

FTW has an option- 38. If the plan does not permit participant self-direction, are loans treated as a segregated investment Yes / No Interestingly, it is in the " Items Below Do Not Affect Plan Document" section so I guess it will only be in the loan policy, not the document itself. Better than not at all I guess.

All of this boils down to: you just have to try harder. The DOL calculator has nothing to do with your own gains or losses, nor do the plan returns (from the 5500). Start with some common sense - do you have a clue as to how much you contributed (and your employer, if applicable) in those years? Subtract that from your earliest known ending balance (2014?) after the 2009 balance, which is presumably known, and you should have a ballpark idea of the gross gains or losses over that time period; some of which would be attributable to new contributions, but I suspect that even if you used those numbers (too high), it would be less than the S&P returns (10 year ave. for Europac is under 3% and S&P is almost 7%...unfortunately the other names are pretty generic and could represent any of many different funds). If your employer has the records then you are home free. If not, call the financial advisor for the plan and see if s/he can help zero in on returns for those funds. Also there should be a third party administrator (most of us responding here are TPAs) involved so if your employer whiffs ask her to ask the TPA.

I suppose the technical answer is the loan value as of the earlier of 1) the earliest date a distribution could be made, or 2) the date of default. If distributions are available on the date of termination of employment, I would definitely not accrue through the grace period. If distributions can't be made 'til...the end of the year, then you're looking at the default date, which is possibly the date of termination, if the loan policy says loans must be repaid immediately upon termination of employment, or the end of the grace period. But, the practical answer is - most recordkeepers aren't going to credit (charge?) interest unless a payment is made, so it's going to be whatever the value was as of the last payment. And that is close enough for government work in my book.

Yes, that! The S&P has outperformed most funds over the last several years. I'm not saying it's better but I would definitely not accept that as an earnings basis.

Not surprising that this is bad info. And this is incorrect as well; your 2016 contributions don't impact your 2016 ratio, which is determined as of 12/31/15. But those contributions are in fact what triggered the TH contribution. No need to be embarrassed about not knowing; it's a complex field but unfortunately TH is a classic example of where Paychex and other automated/do-it-yourself "administrators" let you down. Their business model is basically "you want fries with that payroll service" and depends on low IRS audit rates.

But if "earnings" are negative they shouldn't have taken out the full $6000. fyi I think " Early Inclusion of Otherwise Eligible Employee Failure" is a red herring; they didn't mistakenly include you in the plan early. I'll be honest and say I'm not sure about whether there should be a match or not under these circumstances. I think there certainly could be, especially if the plan does not exclude comp before participation. We rarely if ever have split eligibility, especially for a SH plan, for one reason to keep things simple.

Unlikely. (what are you going to do about it now if someone says "yes"...?)

Does this help? You adjust the PS ("basic" below) for permitted disparity, then just add the 3% to get the total allocation rate for testing. We call it "ageless" testing in my office. Sorry about the formatting. Basic Alloca- Adj. 3.00% SH Final Adj. Plan alloca- tion Allocation SH Total 'er Allocation Allocation Comp tion Rate Rate Alloc contrib. Rate Rate - - - - - - - - - 39,608 2,812.19 7.10% 12.80% 1,188.25 4,000.44 3.00% 15.80% 265,000 27,050.00 10.21% 12.76% 7,950.00 35,000.00 3.00% 15.76%

I was taught that the accumulated PS-58 costs were basis and have seen several articles supporting that, like the one attached - see p 471. "The P.S. 58 cost...is deemed to have been a contribution of the employee for this purpose [determining the tax free amount]." (Interesting how this stuff is so old that it is scanned from hard copy.) I'm not sure that I was making separate points...we agree that the at-risk portion in my example is $80000 but I think you are saying the $3000 is not recoverable as basis and I am. I didn't know it was the subject of endless debate... Taxation of Life Insurance in Qualified Plans.pdf

I'm not sure I understand how much the participant is receiving in cash; I think ETA understood it to be just the pure death benefit. You said " The beneficiary is getting paid out payments of the cash surrender value..." but I suspect you meant the full death benefit? Let's say death benefit is $100K, and cash value is $20K...and accumulated PS-58 costs are $3,000 (they are recovered as basis). All is paid in cash. $100K is the total, and $17K is the taxable amount (100-20-3). The bene could roll over $17K, in which case you report $83K as the gross and $0 as taxable...on this 1099-R; the other would be the rollover for $17K. I imagine there are other monies to be included as well.

If payroll can be re-run why not do it? I don't even see it as a plan issue.

Exactly. I agree that it doesn't make it right, but at the same time you have to have some sense of practicality. When you think about, you can have a payroll department that has absolutely nothing to do with plan operation, other than feeding withheld money to it. The plan fiduciary doesn't necessarily have control over that operation, and certainly can't override instructions the employee gives to that department. And to fail to approve a loan because they don't have absolute control to force repayments is not justified. The fact is that loans default, all the time, and we have lots of guidance on how to handle them. The only defaults I'd be concerned about are those that are a sham from the beginning, with no real intent to repay.

Don't understand how just the ability to cease payroll deductions is inconsistent with having a reasonable expectation that it will be repaid. Nobody said this was a sham from the get-go.