mschwechter

The ultimate penalty is plan disqualification, if caught. http://www.irs.gov/Retirement-Plans/Fixing-Common-Plan-Mistakes---Top-Heavy-Errors-in-Defined-Contribution-Plans I had an employer who failed to make the safe harbor match for 3 years, I ultimately fired the client.

Yes....I need an example. Participant took out a $35K loan from plan that had a balance of $70K. Loan current balance is $27K. Loan balance 12 months ago was $33k Plan currently has $52K ($35k + additions from loan payments + $7k contributions since loan). Please detail how to figure maximum amount for a 2nd loan. In this case, assuming the participant is 100% vested, then the total account balance is $79,000 (52,000 + 27,000), 50% of that is 39,500 less outstanding loan balnce of 27,000 = 12,500 available for new loan.

Yes, we did.

If you think this is the case, you can always search death records here: http://ssdi.rootsweb.ancestry.com/

So suppose you have 2 owners, one who does not want the match, TAG has opined in the past that you run the risk of having a disguised CODA. Hoe do you get past this?

Have a situation where a terminated employee returns to work. He did not intend to defer, since back on a part time basis. HR (payroll) screwed up and started deferrals based on his pre termination election (this occured in 2007). Participant wants the money back. How to handle? The Plan says a rehired former participant reenters Plan on DORH, so he was an eligible participant for deferrals. I'm thinking that we can deal with this in a similar manner as an "opt out" in an auto enroll plan, ie: simply distribute and 1099. The other option is to do a trustee check (mistaken contribution), and let them deal with it through payroll. Thoughts?

You do not mention if it is a 410(k) or a PS Plan, but in either case, have you taken into account deferrals or potential ER allocation, that might be in excess of the expected loss? If the anticipated loss can be offset by the contributions, may be OK. Also need to look at the potential increase in vesting, unless already 100% vested.

Some thoughts coming to mind. Suppose you have a case that only had deferrals and a safe harbor match (and maybe rollovers) The fund house has the ability to reflect vesting on the quarterly PBS's (assuming you upload them from your files), but does not have the capability to hard code sources of funds as always 100% vested. Further assume that a) you only upload vesting for participants with an account balance at 12/31/06, and: b) You cannot upload vesting for a participant not already enrolled at the fund house. Now, you have new participants entering the plan after 12/31/06, so their vesting is showing as 0% in the deferral and safe harbor match sources. Since we only update vesting once a year (at the Plan Year End), have we complied with the good faith requirements or not? I guess we can argue that the participant's vesting at the end of the prior year was 0% since they had no account balance. What else can we do? This requirement is an unfunded mandate, and we certainly cannot afford (or are staffed) to deal with each new participant as they enter the plan. Thoughts?

As far as I am concerned, the Tru Up is the same as an annul match calculated at the end of the year, and the timing of the deposit is the same as any other er contribution, by the time the tax retrun is due plus extensions. If the er files his return on 9/15, that is when the deposit is due, w/o interest

They don't have to limit their deferrals, they just have to expect a refund

OK, so we know about the substantial and recurring deposit rule in 3 out of last 5 for a PSP&T, but we now have a Plan that was submitted for terminaton in 2005 that the reviewer wants us to go back basically to the last year a substantial contribution was made and vest prior terminees who received distributions in the subsequent year. IE: 2 terminated ee's in 1999 (last year of PS contributon), received distributions in 2000. Company had a MP/PS combo that was merged in 2000. Company fell on hard times and although intended to resume PS contributions when conditions improved, finally decided to terminate plan in 2005. Agent wants those 2 partically vested terminees fully vested, in effect going back to a plan termination date of Jan 2000, citing the regs that the termination occurs "not later than" the last day of the following plan year. I personally think this is a pretty hard line to take. In effect, if we fully apply this logic, we should never make a distribution in a Plan year where the Employer "might not" make a contribution, since we might have to go back and fully vest a paid out terminated employee. Of course, we won't know until the end of the year that the employer cannot make a contribution, so we have to wait for the following year, and have the same problem. Sounds like a catch 22 to me. Presumably, this agent's supervisor agrees with him. I kind of think that using the 3 out of 5 rule would at least get us out 2 years to the end of 2001. I have been wrong before, but this seems kind of Rube Goldberg to me. Anth thoughts?

I don't like being the first, but it would be nice if the releases could happen just after the 10/15 crunch, so we have some time to install and work with it. OTOH, I don't want to wait until April or May either. There is some neat stuff in 11, nothing earth shattering, but why pay for something in January, and not use it until June? I can't stand being more than a couple of weeks behind. We usually let updates age 2 weeks before we install, but that is about it.

a couple of foibles we discovered, without any fixes forthcoming from relius You have to click on compute comp in match and safe harbor allocations to get those compensation fields to populate, even though you already have an eligibility transaction run. When batch printing, we are getting 2 copies (hope they fix this) otherwise havent had many problems

We are short a couple of licenses, but we have like 13 to start with. We are all working hard, but only occassionally run into problems. Not everyone works or needs relius for all the time they are in the office, they are just squatters who are too lazy to log out and back in. I had a problem one day when we ran out of licenses, and 5 we active to employees who were out to lunch. So cant really see buying another. Would be nic though, if relius would come up with soem sort of special licensing fee for partial years to help us out during busy period.

I have an employee who is in a simple plan (w2 wages). Also self employed with Schedule C income. If he establishes a 401(k) for his self employed income, and he max's out in the simple, what is his limit in the 4K? $15K less his max simple contribution? Thanks