Bird

No question the partner can make two deposits in 2017, one for 2016 and one for 2017. Or one deposit of $36,000 for that matter. It does raise questions if a payroll company is involved. First is knowing whether they are actually paying on a W-2, which they shouldn't be but it happens frequently, in which case, the payroll company is not going to be able to cut a 2016 check and withhold from it. Second is if they are just cutting checks for draws, then I'd leave the payroll company out of the equation and just have the partner write the check directly. And finally, I don't know how you have a scenario where the $18K is overshot, unless income is actually under $18K. Otherwise you elect $18k before the end of the year and put it in, period.

No, you're not reporting any activity (income and expenses) besides contributions. It's definitely weird; no attempt to reconcile beginning and ending balances with activity.

I don't have a problem with it, as long as the related parameters are legit - like meeting eligibility. I don't even care so much about the working part as the getting paid part. If eligibility is 1 YOS and the spouse is paid $1000, that's probably fugazy.

Not to be too practical, but have there been any real problems resulting from failure to deliver "stuff," electronically or otherwise? How is mailing something, without a return receipt (and God forbid anyone is actually doing return receipts), or hand delivering without a signed receipt, and better than an email blast to all employees (without return receipt). Admittedly I don't deal with any plan that has 1000 participants, let alone 20,000, but I only see this becoming a real issue if there is some kind of pattern of secrecy and/or deceit. As nasty as the DOL can be, I don't see them dropping the hammer just because 5 participants' SARs got lost on a server.

Mmm, I thought I just started on this board about 4-5 years ago? LOL. I'm not aware of anything new. I would want to be very sure of anticipated comp before funding. I've been involved with a few SIMPLEs and they are generally a royal pain; don't need overfunding to make it worse.

I'd ask the same Q as 401king, although I can hazard a guess at the answer - your "service provider" (using the term loosely) is probably a large payroll company or other impersonal outfit. Your commentary "After many phone calls and emails...All of this was done without our knowledge. We were not aware they had a cash balance with funds we submitted." is telling. And you figure that trying to get them to actually do anything is about as helpful as poking yourself in the eye with a sharp stick, right? Ultimately, you need to work with them to fix it - it is really on them, although no doubt there was a message waiting on the website for you to read so they will blame you. Ultimately, the answer to your questions is that you need to open or re-open accounts for them and deposit the money to those accounts. It raises questions about timely deposits but that's a different matter.

It's $100,000. You would never reduce it for FICA, and while you might define comp for allocation purposes as net of deferrals, I don't think that would apply for deduction purposes. I guess it might if you tried hard enough to screw things up.

Is there a reason that the accounts can't be sorted and and the participant paid now? Nothing is going to happen unless the participant does something, and if they get paid now, I don't think they're going to file a complaint. I'm curious about this statement: "A small SH401 is currently in arbitration." Is the plan itself in some kind of legal action or the company?

Suzanne Wynn was ERISAFile and is now with Loren D. Stark Assoc. I talked to Suzanne and they don't have immediate plans for webinars but might. FWIW.

We use EFTPS for clients who don't have a platform. I wouldn't say it's that easy, at least as far as getting started; I mean, I would really hate to have to go through that for just one client (but I don't think there is a choice). To be clear, we are handling it for our clients by running checks through our own (separate) bank account. I do not want to think about a client trying to do this themselves...! As far as the inactive EIN, you can get them re-activated. There's a special fax number...but it's easier to just get a new one. You have to lie and say you never got one, and also can't use an effective date more than 10 years or so ago for the plan start date.

When would the "bonus" be taxable? I'm not sure what "PLLC" means but if it is an LLC taxed as a partnership, then "bonus" is "distribution" and availability for retirement plan contributions is dictated by when it is taxed. IMO the whole concept of a bonus is kind of a red herring - retirement contributions are based on taxable income. Determine that and then you know what they can contribute. If it is a cash flow issue, then they can use any money to fund contributions, including a distribution physically received after the end of the year. (If everyone in the world except me knows what PLLC means then maybe my comments are random/irrelevant.)

I'm with Bill on this. IMO the only reason taxes aren't imposed in these situations is that a) they aren't audited, or b) if audited, the agent didn't know enough. This is what Walters Kluwer says about using seasoned money: If we have seasoned profit sharing money in the plan, to avoid the incidental death benefit restrictions, must we have a provision allowing distribution of seasoned assets, or is simply having seasoned money in the plan enough to get around the limitation? The plan would have to include a provision allowing for the in-service distribution of seasoned money. Note that the entire premium would be taxable to the participant if paid from seasoned money, if the premium exceeds the ancillary benefit limit.

Thanks all. I was "raised" in a one-man shop; wouldn't trade it for anything but certain things I thought were true aren't. Always learning.

I had it burned in my mind that once someone is in a plan, they are in. I think I am slowly learning otherwise. The situation is a safe harbor match 401(k) with immediate eligibility. If we change that to one year of service, do all of those part-timers/short-timers just cease to be participants? Is any documentation other than the amendment itself required in order to achieve that result? (I know - it is, um, uncertain if these folks were given the opportunity to defer.)

Use DFVC and be done; why wait to be contacted?

I've benefited from that too Mike, but have also had someone decide to stay with Paychex when I explained to them that their spouse is an HCE and Key and they were really failing the ADP test (and, minor detail, owed TH contributions because the plan was TH). Their business model is predicated on low IRS audit rates. We (small shops) should probably be encouraging the IRS to gather provider info rather than fighting it. (I'm not honestly sure I'm "there" yet but just sayin'...)

There's nothing "wrong" with paying someone out late in the year under these circumstances. I will sometimes tell explain the situation to them (the participant), and explain that if they want to take their chances and wait, they can. Most will just take the money and run but I feel better letting it be their decision. Of course if you need the data from the accountant to determine the G/L you are having the same conversation in about a year.

Well, the plan is top heavy before that employee becomes a participant (100%). It's just that the consequences are different when a non-key becomes a participant. What, exactly, is the problem here? You don't say what kind of safe harbor it is, but (I guess) the only way that non-keys would get "more benefits" than keys is if keys are excluded from SH contributions, but then if there weren't any keys, why was it a SH? Just in case there were non-key, in which case it is working perfectly? I tell my small clients - which is most of our clients - that if they can't make a 3% contribution for staff, they shouldn't bother having a plan. It's a bare minimum and we're going to build other contributions from there.

Coincidentally, just got more info on a takeover plan from my other favorite, Paychex. My questions about other participants and other locations were met with a dismissive "well they are part time so they aren't in" - of course the plan doc says immediate entry.

I agree. The plan's job is to get the RMD money out, and if it happened to be rolled over, well, at least it got out. It is in fact an ineligible rollover and should be reported as indicated...the participant should get the ineligible part out as an "overcontribution." Important so the IRA custodian doesn't report it as taxable income (again).

I might be tempted to give the owner a choice - use $0 and avoid another plan year, but have all sorts of nasty consequences as you note, or wait until after the end of the year and then pro-rate comp over 10 months...or don't have a short year at all; the others' comp will presumably be self-limited by the acquisition. There is an argument that a self employed individual earns all of his or her income on Dec 31, but I think it is reasonable to pro-rate. Honestly I don't think it is reasonable to estimate it but others may differ.

Does anyone know enough about the ADP "system" to know how to get ownership into it? I was sitting down with a prospect yesterday and sure enough, all tests show the owner and his wife as NHCEs since they haven't been over the comp threshold. I tried to explain to him that the tests were all wrong and he should at least get the info into the system so it would at least be right for this year before we take over and do it right (I got a blank stare and then 5 minutes later he asked if he should increase his contributions). Anyway, while you expect that result when a novice is "running" their own plan, you would think that someone with 25+ years of experience could find the place to enter that info, but it all appears to be grayed out in "view only" fields. I'm actually just whining and not expecting an answer, sorry. It's just so frustrating to see the level of questions posted here with the strong (sometime overzealous and silly!) desire to get things right, and then you think of the...thousands?...of plans with bogus reports saying "The plan PASSES the ADP test" and whatnot.

I think that is what is going on; the 404a fee disclosures are really requirements under 404©. And if we're being picky, why do you keep calling it 404©? Is it copyrighted or something?

Methinks that since this is being pushed by a "heavy hitter" that there is a link to "commissions" - either on the rollovers or maybe the existing investments won't be allowed under the fiduciary rule. Therefore, logic, or best practices for the plan, are not relevant to the discussion.

Let's put it this way - if you leave things as they are, you report the full amounts on 1099-Rs and report no withholding. The plan failed to withhold, so the participants could demand that the plan pay the withholding, but then the plan could demand they reimburse for the overpayment in the same amount so nothing much happens. I've never heard of any consequences for failure to withhold the 20%. That said, I remember collecting $ from a participant once, or twice, to submit as WH.