Bird

Thanks. Whatever I was looking at only said "adopted by 4/30/16", or more likely, I just didn't see it.

You mean the statements for which the DOL was required to provide samples within 1 year? Still waiting... If you are talking about a non-participant directed account, the diversification notice is not required. In any event I see nothing about plan provisions being required.

I wouldn't do it. As noted, it's either a merger or a termination. And why would anyone want to keep those lost accounts hanging around, when you have blessing to get rid of them by forced IRA rollovers?

Agreed on point 1. Above a certain point, the only benefit of a 401(k) vs. SEP is the catch-up. On the other points, I'm not 100% positive but I think he could make a retirement plan contribution based on his earned income, regardless of passive losses. And he only gets one 415 limit, so doing different plans for different businesses does not accomplish anything. If he wants more than a $53K deduction he should look at a defined benefit plan.

Thanks Kevin. There'll probably be a new thread on this in a few months, and I'll think it sounds familiar and re-read the regs, and probably mis-read them again, so I apologize in advance.

Agreed that you can't; you have multiple formulas and you'd have to test both results together. Excluding HCEs from the SH is usually the best method. I'd put everyone in their own PS group for max flexibility, and you should be able to give the young HCEs something to make Dad happy. I give you credit for trying to find a use for an age-weighted formula .

I still (mostly) agree with Kevin on this. I think the IRS thinks/knows that they can't list all of the amendments that would be permitted (and it's a little silly to think that they could/should do so, to be honest), so they named a couple of obvious ones and let it be at that. I am pretty sure they did express some "concerns" about mid-year amendments, and those concerns related to the notice requirements (changing something that is covered in the notice being the issue). I think they have legitimate concerns as the regs say that amendments to the SH provisions are not allowed (1.401(k)-3(e)), below (this was cited in the link from Kevin above), and I think the notice requirements are part of the SH provisions. So I will definitely not change something that is in the notice (unless it is specifically permitted, like Roth contributions, or it is some similar expansion of benefits or provisions). But...I'll avoid it if possible. (e) Plan year requirement (1) General rule. Except as provided in this paragraph (e) or in paragraph (f) of this section, a plan will fail to satisfy the requirements of sections 401(k)(12), 401(k)(13), and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in paragraph (g) of this section or in guidance of general applicability published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of § 1.401(k)-1(b) if it is amended to change such provisions for that plan year. Moreover, if, as described under paragraph (h)(4) of this section, safe harbor matching or nonelective contributions will be made to another plan for a plan year, provisions under that other plan specifying that the safe harbor contributions will be made and providing that the contributions will be QNECs or QMACs must also be adopted before the first day of that plan year.

I think I would make the restatement effective 7/1/15, and make the particular provisions you want to change effective 7/1/16. The PPA provisions that have to be effective on certain dates are probably buried somewhere with those effective dates, but I'd feel better if the general restatement date were before 4/30/16. Although I think the IRS just says it must be adopted by 4/30/16...so maybe that works. (Just thinking out loud here...what about the new position that you can't use forfeitures to fund a SH contribution? I don't think that has a required effective date other than the fact that it must be included in a PPA document. Could you restate a plan on 4/30/16 and say it is effective 7/1/16...7/1/17? That's definitely not the intent but so far I only see that the signing date must be on or before 4/30/16.)

We don't usually provide that type of analysis to the client but I suppose if someone asked we would. I don't know that there's an industry standard. It sounds like the other firm did all of the testing but you are preparing the tax return? That seems odd, but in that situation I think I would do a hold harmless or at the very least caveat that we didn't do the testing. Here's a question for you; not to be snarky but what's the difference between having their test results, if you're not going to re-do the test, and having no test results? What confidence or protection does that test give you?

I laughed when I saw the topic, pretty much knowing what was coming, then laughed some more when I saw the replies. I agree with the responses - my take on it is you can try to argue with them, or you can poke yourself in the eye with a sharp stick and save the time. If I had good documentation that they did the wrong thing from the beginning, I might be tempted to let them do what they want and then argue it with the IRS when they come calling. That's not a pleasant thought either because you're not going to be dealing with plan folks who might have a clue; you (or the client) will be dealing with someone who has a 1099-R for $X and thinks it is infallible. Sorry, not much help...

If it is payable to a trust then it is not eligible for rollover, so no mandatory WH. Code 4.

It's common. Add 'em together (after making appropriate adjustments to self-employment income - deduction for 1/2 of the SE tax, and the contributions).

I'd say "no." I think the language for removing them says something to the effect of "...no longer entitled..." and they are still entitled to something.

That's really a question for your document provider. There was also a thread on this very recently. I think most providers are saying to restate as of the beginning of the year of restatement, and/but I just saw a Sungard Relius bulletin that recommended doing SH plans as of the beginning of the next year. That means that you have an effective deadline of 12/31/15 for SH plans (which is definitely...silly). The effective date is less important than you might think for PPA compliance purposes, as the PPA stuff is likely buried somewhere with its own effective date(s), as applicable. The question is, when do you want it to be effective...? If you are making any changes to plan provisions, then that will drive your effective date. Otherwise, it doesn't matter much.

In my world, there would be a comprehensive account balance statement for 2013 showing all allocations of anything and everything, including (these) forfeitures. We might have to create a separate account called "pending forfeitures" or something like that but if it was allocated in 2013, that's when it would show up on the comprehensive statement; it would be an annual addition for 2013, and this question would not arise. The physical movement of money is a separate and somewhat irrelevant operation. I'm not sure if it's a "problem" to move it more than a year later but I would probably just do it and move on.

I've seen it done both ways, neither of which, IMO, are correct. I see the insurance as just another asset of the plan, so the premium itself is a purchase of a (different) asset, not directly reportable on the income statement. It will almost surely be worth a lot less at the end of the year than the premium, and that difference would show up as a loss in the other income line. If the purchase of a policy or annuity is a transfer of liabilities to the insurance company then I think it might be a benefit paid. We never do that so I'm not sure.

I agree that you do NOT subtract the deferral. The calculations we are doing are, more-or-less, to put a sole proprietor on equal footing with a corporate owner-employee. A corporation that paid a salary of $84,219 to an owner, who made a $16,900 deferral, would make a SH contribution of 4% of 84219, or $3,369. My interpretation of the "typical" definition of Net Schedule C differs - I assume that is what you would read off of the Schedule C bottom line, which wouldn't be reduced by 1/2 of the SE tax, which is done on a different schedule. As long as you know the numbers you are working with...

Yes I believe you have to take into account the deduction for 1/2 of the SE taxes; that's how I showed it.

I'll let others respond; I'm a TPA and your plan is way bigger than my typical or even largest one and I'm afraid that pricing for my recordkeeping partners wouldn't apply to a plan of that size.

for 2014? You subtract 1/2 of SE taxes from 94249; I get 87591. Then you want 4% of whatever you get after you subtract 4%, which can be done by trial and error or algebraically as 4/1.04, or 3.85% of the gross number. I get $3,369.

Those fees are really all over the place. Some charge a flat percentage of assets, some charge a direct base fee, some waive fees if all assets are held by the custodian, some charge a direct base fee plus a per participant fee, maybe minus a credit based on assets. Which one is "best" depends on your situation - number of participants, average assets, etc. Are you a plan sponsor?

We are, generally, restating as of the first day of the year in which the restatement is done. Our document provider, Fort William, suggested that is the way to do it. If there happens to be something that we feel is subject to the restrictions on amending SH plans, then we'll either make the restatement date the first day of the next year or make the specific provision effective the first day of the next year. Comment - for those of you who have your panties in such a bunch over this and think you need to make the date prospective, I hope you get your restatements done by 12/31/15, effective 1/1/16. Doing it near the end of the window, April 30, 2016, would put you in a Catch-22 where it is "too late" to make it effective within that window.

That's correct. You need 2 1099-Rs, as originally suggested. The one for $150,000 is code 4, taxable amount $0. (Actually, if PS-58 costs were properly reported, they are recovered as a return of basis, possibly increasing the $150,000 non-taxable portion.)

Not that I can think of.

You could do that, as long as your income while the plan was open was adequate (if you are a sole proprietor, income is deemed to be earned on the last day of the year, so it doesn't work). To be honest, once you have a 401(k), there's no big advantage to terminating it, since you have the final return requirement (Form 5500EZ) no matter when you terminate it. But if you do just want to be rid of it, I would not do it in the same year I was making contributions to it. If you want to make a contribution in 2016, then terminate it 1/1/2017 and distribute assets in 2017. There are issues with making contributions in/for short years that you just don't need to mess around with.