Santo Gold

This was a 2015 filing. I am sure I have had plan name changes in the past and this never came up. Sounds like it is new for 2015.

I meant to say the 5500 software DID NOT flag this as an error. Its the DOL/EFAST that once it was uploaded to that site, indicated there was a problem.

The 5500 software did flag this as an error. Once it was uploaded to EFAST we validated it and the error message keeps catching it. As I said, I talked to someone at the DOL/EFAST about this and twice he confirmed that in fact this is a correct error message (Z-003). But, I know that he is not correct, at least when he says that changing the plan name means that this is a new plan, therefore needs a new plan number, need to terminate the old plan, etc.

Yes, I did check that the employer name changed. The error message is referencing the plan name being different though. No place to check for that......

Employer ID number did not change.

And that is exactly what was done with the PPA document restatement for this 401k plan. We changed the company and plan name. But after talking to the DOL today via the EFAST website, I was told that the Z-003 error message pertained to the change in plan name and, sounding rather convincing, pointed me to page 15 of the instructions which would state that the plan name must match the plan name from the prior year's return. The instructions do in fact state that the plan name should match last year's plan name and I did not see anywhere (in the instructions) that an amendment to change the name is acceptable.

When a company changes its name, can it also change the name of its retirement Plan? I didn't realize that the answer is apparantly "no", but when filing a 5500 showing a new company name and plan name, it keeps getting kicked out of the EFAST system because of the plan name change. Is this correct, can't change a plan name?

The Plan Administrator can be liable for plan violations. But is that the same thing as saying the individual is personally liable? In this case, the employer is the plan administrator; no indivdual is named a the plan administrator. There is an individual in the company that handles the deposit of 403(b) contributions to the plan. The same individual signs and files form 5500. If there is a violation that results in a fine or penalty, it is the company (which is the plan administrator) not the individual carrying out the duties of plan administrator, that is liable, is that correct?

The controller for a company that sponsors a 403(b) asked whether he could be personally liable for errors or problems that might occur with the plan. He said that at a recent seminar, the speaker suggested this is the case. I know that if he were to take any criminal action he could be personal liable. But the Speaker mentioned that if, for example, contributions are late to be deposited, he could be personally liable. I do not believe that this is correct. Any thoughts on this would be appreciated.

The 403(b) plan excludes those who work less than 20 hours/week. But when an individual is hired full-time and then is later a part-time individual (less than 20 hours/week), is it acceptable to automatically no longer permit that individual to make 403(b) contributions to the plan? The employer has been doing this and our question is whether this is a violation. Thanks

What if the partner receives both and wants to establish a SEP for herself just based on the 1099 income?

The details on this are a little sparse, but any comments are appreciated: A partnership exists but does not have a retirement plan, nor do they wish to sponsor one. However, one of the partners was interested in possibly having a SEP for herself. She receives only 1099 income from the business; She is not on payroll and apparantly for now, any money she makes is paid via 1099. Does a loophole exist for her to use this 1099 income as a basis for establishing a plan only for herself? This sounds a little like an "as-needed" independent contractor who is paid via 1099. The big difference is that this is an owner. If she wanted to start a plan, who is the employer? If its the company,then I don't think she can without covering the others. If it is not the employer, who is and could she do a plan for herself? Thanks

The "Others" reference themselves as a source. Thanks for the replies.

I have a sole prop who has a 401k plan for several years. He turned 62 in 2015 and started to take social security. He still owns the business, works and maintains the plan (he is the only eligible participant in the plan). He is being told by others that since he took SS at 62, that he cannot fund his retirement plan anymore. I have not heard of this before and suspect something is being confused, but can anyone confirm whether taking SS prevents him from funding his 401k plan? Thanks

the owner has a relative who wants to put him in an annuity and since the relative doesn't want anything to do with retirement plans, this is the solution they came up with. Get the larger deduction from depositing into a plan, but take ISW to move it to the relative to manage. We'll see how that works out in the long run, but right now I don't see why doing so would be any sort of violation.

A S-corp started a 401k plan in 2010. The owner is the only eligible particpant and has put ER contributions into the plan every year. He is currently age 52. The plan allows for inservice withdrawals after 5 years of service, which he now has. He wants to take an ISW of all his money in the plan (all ER dollars) and roll it into an IRA. He wants to maintain the 401k plan, make a nice deposit each year (around $20,000) and then each year take that as an ISW. It seems that this can take place per the document, Is there anything that would prevent him from continuing the plan in this manner? Thanks

Lou S - The purpose is for determining that particular owner's share of the non-owner employer contributions. If the ownership had not changed, then each owner would be responsible for 10% of the total non-owner employer contributions. But since there was a change, does that mean that (1) the 8 remaining owners are responsible for 12.5% of the contribution while the 2 owners that sold their shares are responsible for 0.00%? (2) All 10 owners are still responsible for 10% each (3), is the ownership for this purpose pro-rated based on how long and how much each owner "owned" throughout the year? You idea that it would be split equally among the 8 remaining partners seems to make sense. Maybe the sales agreement between the partners would address this. But if it does not, are we left with choosing whatever is reasonable?

We have a calendar year plan with 10 partners, and lets say all 10 have equal ownership in the business (10% each). The business entity is a partnership. A 3% safe harbor employer contribution exists; there is also an additional profit sharing contribution. On February 1st, two of the partners leave and their ownership shares are divided equally among the remaining 8 owners, such that 8 owners now own 12.5% of the business. At year end, for purposes of determining the total employer contribution, the self-employment calculation must be performed in order to determine the amount of contribution to the employees and the owners. The ownership percentage for each owner is a factor in this determination. How is this determined when the ownership changes in during the year? Thanks

The employer sponsors a plan that allows for davis bacon contributions. Recently, there has not been any davis bacon work, but the company has other non-DB projects for the employees. The company continues to compensate these employees at the DB prevailing wage, even though the work is not DB work. For purposes of the retirement plan, can the employer continue to "treat" these wages as DB wages, taking out fringes and making contributions to the plan? This doesn't sound right, but any comments are appreciated.

Thanks Lou - We were thinking about this more in terms for 2016 (there documents still needs restated and that would be a good time to put this in there).

We have a 401k plan with match (not a safe harbor) for a public library, with only 5 eligible employees, none of whom are close to being HCEs. The Library's director is over age 50 and will contribute the full elective deferral max of $24,000, including catch-up plus receives a match of around $2,000. Can the Library Board make an additional employer contribution for her, perhaps up to $33,000, without giving any additonal employer contribution to the other NHCEs? With no HCEs there would not appear to be any discrimination issues. The plan would have to be amended to allow for individual rate groups and this probably could not take effect until 2016, but once that is in place, would this fly? I think the idea is that she would go the Board and ask that her compensation be reduced by the $33,000, and the Board would then simply deposit that for her as a PS contribution. Thanks

The employer terminated a calendar year 401(k) plan, effective 12/31/14. They signed plan termination amendments, distributed plan termination notices to employees and stopped all EE and ER contributions so that no new contributions were made to the plan in 2015. No one has been paid out yet due to the plan termination. Over the past few months, the participants complained and now the employer is reconsideriong the plan termination and may want to restart the plan and forget about all that plan termination "stuff". Can the plan be restarted and if so, what issues are involved? It does not seem too difficult to restate the plan document to remove the plan termination amendment and its impact. And no one has been paid out which is good. But is a do-over really acceptable for this? How would we prepare year-end 2015 ADP testing if the participant did not have the opportunity to make contributions for 4-5 months out of the year (use only 7-8 months worth of compensation)? The plan is neiither top heavy nor a safe harbor and the ER does not want to put any ER dollars into the plan, so ER allocations basis is not an issue. Any thoughts, comments or ideas are appreciated.

Thanks Tom. If the plan document states that the safe harbor is conditional, is it your opnion then that if the proper steps are not followed each year (i.e., no amendment is signed and/or no notice is given), that the default is that the plan is not a safe harbor for the upcoming plan year? That would appear to be so in this document; there is language stating "for any plan year in which the employer has elected a safe harbor". I would interpret that to mean that the employer must proactively make the plan a safe harbor each year. To do nothing means no safe harbor. But is it required that with a conditional safe harbor, an amendment be executed each year, stating clearly whether there will/will not/possibly be a safe harbor for the upcoming plan year? About the notice points that you mentioned - since 2015 plan year is the year in question, the follow up notice is not really the problem, since that is not needed until later in 2015. And if there was no notice provided in 2014 about the 2015 safe harbor, is a followup notice even needed since nothing was announced prior to the plan year? Thanks

Document does state that the safe harbor is optional and that the notice must be given. It goes into detail about the safe harbor being optional and the employer needed to inform the participants 30-90 days before the plan year starts and then again 30 days before the plan year is over as to whether there will be a safe harbor contribution. But, they never distributed a notice 30-90 days prior to 2015. I think the operational failure that Lou S mentioned may be valid. But, I am thinking that the 3% is not required for 2015.

401(k) Plan that has a conditional 3% safe harbor language in the plan document. The employer had the 2015 plan year notice prepared in November, 2014, stating that the employer WOULD make the 3% safe harbor for the 2015 plan year. But, the employer never distributed the notice. Now, in April, 2015, the employer would like to not make the 3% safe harbor fr 2015. Since the notice was never distributed, and the plan document allows for a conditional safe harbor, is the employer still on the hook for the 3% safe harbor for 2015? Thanks