Bird

If it's a conditional SH then a final decision for 2015 would be made in November of 2015, with a notice saying whether the 2015 contribution is or isn't being made. So, notice or not, there's no SH obligation for 2015. The Nov 2014 notice(s) should say, in essence, "we might make a SH contribution for 2015" and "we will (or will not) make a SH contribution for 2014." I don't know if everyone else is assuming there are typos and you are talking about 2014 or what but I am confused.

I think you have the actions right, but to be precise you want to roll over the plan assets and then file the 5500EZ, after you know how much was distributed. A plan is supposed to be "permanent" but that isn't defined anywhere...I don't think I'd worry about it.

That's a pretty important point. I'd assume that the guaranteed payments were treated as wages on the partnership return, and that's why they are generating losses. Issuing W-2s to partners is not correct, but everyone seems to be doing it, and until I hear otherwise, it doesn't appear that the IRS cares too much - it does in fact sort out in the wash and they may be overpaying on self-employment taxes. "Proper" treatment, using these improper facts, would be to net the W-2 and the loss. If the losses aren't significant I'd be inclined to use the W-2s and move on.

Yes, we have this structure. The reason we do is that we find payroll errors "and such" (deposit errors) - all the time. I'm not sure that we are getting paid (adequately) or not but can't/won't do it any other way.

I agree; I wouldn't second-guess the participants. If it's a small-enough plan, someone could contact the participants and say "hey you have multiple TD funds which is somewhat unusual; if you want to change please go to the website and do so." (Deliberately phrasing it in such a way to put the burden of change on them.) But it is possible it is deliberate. It is also possible that it doesn't make any difference at the moment - far-off target date funds can have identical allocations. I'd be inclined to minimize any action on this. (I'm not anti-TD funds in general, but I am against the concept of re-enrolling into TD funds, and mapping to TD funds. I think someone over-thought the issue too much and all of a sudden it's a "thing.")

If nothing has been done to memorialize the allocations, then I don't think they have to be considered final. That is, you could say "oops" and take some money from the HCEs and allocate it to others. You could in a pooled environment, and I don't see self-direction making the deposits irrevocable allocations.

Yes. What was eligibility? Service in a prior year? Somehow I think it's irrelevant.

Fidelity actually did the right thing - after the fact, they realized that some of the distribution that was rolled over was not eligible for rollover, so they told you about it, and issued two 1099-Rs, one for the non-taxable rollover and one for the portion that was not eligible for rollover, and therefore taxable. When you took the money out from the Schwab IRA, it was a distribution of an ineligible contribution, i.e. an excess contribution. If you told them that, it should have been coded differently; I can't remember the code off the top of my head. At this point, just report one, keep your records, and be prepared to explain it all.

Thanks, that's what I concluded. I agree that the "per-pay period" calc is typically for match.

Sounds like it should be included in comp. fyi Guaranteed Payments are usually earned income, and if it is subject to SE tax, then it definitely is.

I have a twist on this. Takeover plan - it's a safe harbor nonelective. Plan effective date is 1/1/14; it was signed on 9/1/14 and that's when Pay... er, the large payroll company that set up the plan...started calculating and making the safe harbor contributions. There is a section of the plan that says: The Safe Harbor Contribution will be calculated based on the following frequency: Per-Pay Period ("Per-Pay Period" is typed in, not a check-box election.) I'm not quite sure what to make of it; should we do a true-up for the compensation prior to 9/1? I think if they wanted it effective 9/1 they could/should have said so, and think additional contributions are due. (Making it a bit more interesting is that it is a sole proprietorship, but the owner gets W-2 income. He has significant Schedule C income and using that income as a 12/31 "pay period" will result in a significant additional contribution for him.)

If he did not make a contribution for the SEP in 2014, he is not covered for 2014. (Assuming he did not make a contribution in 2014 for 2013.) In 2015, he will be considered "covered" due to the contribution made in 2015. A summary of the "covered" rule is that a participant is "covered" for a year if s/he participates in a plan with a required contribution and accrues a benefit, like a defined benefit or money purchase plan. Plans with optional contributions go (pretty much) on a cash basis - they are covered for the year in which the contribution is made. With exceptions when contributions for a year are made in two different years...

I think the issue is getting the same SSN for different people. When you have one database for all participants it is evident when entering the second individual, so I'm not sure there is a "search" as you might think of it. I don't think what they're doing is unreasonable, as long as it leads to some conclusion. I'd rather not have someone processing loans and distributions under my SSN if there is any suspicion of it not being legit.

I'm going to buck the current here and say they may not be prohibited or otherwise not allowable. "as if" ...they are solely for the purpose of the named individual does not necessary mean they are solely for said individual. As long as the plan owns them (and I think your second post says that), and can use them for others in the plan if needed, then they are just assets of the plan. Naming someone as annuitant is a requirement of the policy but doesn't mean much of anything until the policy is annuitized. I'm not saying it's "good" - expenses are probably - definitely - higher than they need to be, and all the crap built in about "guarantees" doesn't do anyone any good in the context of a plan, but it doesn't make them prohibited or wrong.

Don't drive yourself nuts trying to prove why someone can't do something. Tell 'em no and ask them for a cite for why they can.

But which? That's the whole point of this thread.

I dunno - what does it mean to them if you tell someone "your account will be allocated 100% of any fees?" I would not want to be in a position where I had to explain - to a participant or a DOL agent - that I think the regs said the fees did not have to be disclosed because of that language. Others can argue how many angels can fit on that pinhead.

The DOL regs (from 2004...I think they are the final ones) say you must disclose how fees will be allocated...I take that to mean that you also have to disclose them. (4) Participants have been furnished a summary plan description, or a summary of material modifications, that describes the plan's automatic rollover provisions effectuating the requirements of section 401(a)(31)(B) of the Code, including an explanation that the mandatory distribution will be invested in an investment product designed to preserve principal and provide a reasonable rate of return and liquidity, a statement indicating how fees and expenses attendant to the individual retirement plan will be allocated (i.e., the extent to which expenses will be borne by the account holder alone or shared with the distributing plan or plan sponsor), and the name, address and phone number of a plan contact (to the extent not otherwise provided in the summary plan description or summary of material modifications) for further information concerning the plan's automatic rollover provisions, the individual retirement plan provider and the fees and expenses attendant to the individual retirement plan; and

You might want to download the 1099-R instructions, and look at the top of the first page under Specific Instructions. If you are looking for something more specific, like "The investment company gave a 1099-R to the trustee and nobody knows what to do about it" I don't think you are going to find it.

Sounds like the accounts were set up wrong, or the investment company doesn't know what it's doing, or some combination. "Somebody" (who knows what they are doing) probably does need to prepare a 1099-R for the participant, and maybe an amended one if the first one was an actual 1099-R in the name of the trustee.

I agree...but it happens, and it's not fatal. (It's not an original thought but...) if you have distributed the money from the plan, you have done your job to satisfy the required minimum distribution. If it happened to get rolled over, well, coding it as not eligible for rollover takes care of the plan's responsibilities (of course I would notify the participant and explain it so they know to take the money out as an overcontribution, not as a regular distribution, which would result in double reporting on the taxable amount).

If you include the RMD in the amount rolled over, and you know it, you should issue 2 1099-Rs, one for the legit rollover and one (Code 7) for the amount not eligible for rollover. Then the participant will have to request a withdrawal of an ineligible rollover. It might seem easy to "just" let it all be rolled but it turns into a PITA for everyone. Best to do the RMD before the R/O.

I was just at an ASPPA seminar and an attorney in the audience stated that a board action taken on a specific date does not need a document with that date on it - e.g. the board meets on Sept 15, and the secretary writes up the minutes on Oct 31, everything is considered to be "done" on Sept 15 (at least in Pennsylvania). The implication was that that is effectively the signing date of a document that was approved on Sept 15. Now, I'm not a lawyer so I don't necessarily understand all the subleties of the issue, but as noted above, it may depend on what the resolution says. If it says "we authorize the restatement of the plan" then I think maybe that's not enough - it sounds to me like that requires some additional action, the actual restatement - heck, maybe the plan isn't even written at that point? If it says "we approve of the plan presented and hereby adopt this restatement" then that sounds a lot better.

I think what you suggest works. I think you could even restate the SEP to the Schwab document retroactive to 1/1/14, roll the account with the $10000 contribution, and not go through the trouble of making the extra deposit. Your way is probably marginally safer, in terms of exposure, going from .005% risk of problems to .001%, or maybe 0. I give you a lot of credit for thinking this through.

So they are just funding it each pay period; the plan does not say that it is calculated each pay period? I think you can true it up whenever it is convenient - after the end of the year if that works best. I suppose if you have HCEs getting contributions each pay period it might appear discriminatory but...nah.