DLavigne

If a self-employed individual exceeds the 402(g) limit, is he subject to the refund correction? He didn't get a W-2 and his tax return hasn't been filed yet so he really hasn't taken the deduction at this time. Could his accountant change the deferral on his tax return to $25,000 (2019 limit) and then we could apply the excess to another contribution type for 2019 (ie. match true-up or PS)?

This may sound stupid, but when exactly does a distribution occur? This is an ADP refund question. If the process to pay out a refund was started on 3/14/16, ie the shares were sold and converted to cash, but the trust account doesn't reflect that the money actually left until 3/16/16, is it beyond the 2 1/2 months? Our recordkeeping software will show the distribution on 3/14/16 even though the money didn't leave the trust account until 3/16/16. I know the safest answer is 3/16/16 is the distribution date but technically, did we make the 3/15/16 deadline? Thanks.

What are the consequences of depositing 2016 employee deferrals into the plan in December 2015? Tax and plan years are both calendar year. We have confirmed that the 2016 W-2 will reflect these deferrals. Thanks.

A plan was a Money Purchase plan until 2013, when it was amended and fully restated to a Profit Sharing Plan. When the plan was a MP plan, it allowed in-service distributions at age 62. The PS document changed in-service to age 40, particularly so one participant (age 41) could take a distribution. Unfortunately, the accounts were never split to separate out the MP monies from the new PS, and the EGTRRA Adoption Agreement did not mention that in-service distributions for the MP monies were only permitted at age 62. In 2013, the 41 year-old took an in-service distribution for $73,000 which was all MP monies since the 2013 PS contribution had not yet been made. This has recently been discovered and we're wondering how to correct this. The $73k was taken in cash and the participant is in no position to pay it back to the plan. We would like to file through VCP but we're unsure what to propose as a correction. Can we file a VCP submission simply begging for forgiveness? Does anyone have any experience with this who could offer us some advice? Thank you.

A plan is written so that if a participant (not a >5% owner) turns 70 1/2 but still is employed, he does not take an RMD until he actually retires. If that plan terminates in a year after the participant has turned 70 1/2, is he required to take an RMD before he rolls over his distribution to an IRA? He is still employed; it's the plan that terminated. Thanks.

We have a plan that has one participating employer. Up until June 30, 2015, they were controlled. As of July 1st, the ownership changed so that the two companies are no longer controlled. In previous plan years, we did coverage testing by aggregating the employees of both companies. I know in MEPs, they must be tested separately. How do we handle coverage testing in 2015? Thanks.

Thank you! Stupidly, it never occurred to me to look in the document. I've looked in other reference material, but not there. Yes, it does address it (this is an MEP) and it does say the MEP can terminate and distribute assets. So, thank you for pointing me in the right direction.

If a participating employer wants to terminate their portion of the plan, is the only way to do that by creating a spin-off plan and terminating it? Is it possible instead to simply terminate the participating employer's portion of the plan and allow those participants to take distributions? Terminating the participation agreement does not allow participants to take their monies from the plan and this is what they want to do. Thanks.

A plan has a plan sponsor and two participating employers (PE1 and PE2). The plan sponsor is owned by Scott (100%) and PE1 is also owned by Scott (100%). PE2 is owned by Robert (75%) and Chad (25%). Robert is Chad's father. So sponsor and PE1 are controlled but PE2 is not part of the controlled group. Cheryl, who has no direct ownership of anything is Chad's mother and Robert's ex-wife. She has no family relationship with Scott. She works for the sponsor. Is Cheryl an HCE? Does family attribution cross companies that share the same plan but are not part of a controlled group?

I appreciate the replies but I'm still a little unclear. Are you saying that we would need to run the general test on a contributions basis, and if so, wouldn't we still need to pass gateway? Or are you saying we don't need to run the general test at all, and therefore, also no gateway?

Well, in our situation, there is a lot more to the story but I thought I could ask the general question of whether the contribution has to be tested just because the document says the formula is comparability. In this case, the plan has dual eligibility (1 YOS for deferrals & SHM and 2 YOS for PS), and the plan is top heavy. So, we very often have people who either get the TH minimum in the SHM or as an additional PS contribution. Since the HCEs who benefit get 11%, in order to satisfy gateway the people getting the 3% TH minimum all in PS would have to get an extra .67% to satisfy gateway IF we have to satisfy gateway. If we can say that the contribution is really salary ratio (with the one HCE exception) then we don't need to look at gateway. At least that's what I'm hoping.

A plan uses a volume submitter document and is set up as comparability with two groups, 1) one named individual and 2) everyone else who is eligible. The employer is a partnership and the person in group 1 is one of the partners (HCE & Key). He gets a 0% PS contribution and everyone else gets 11%. Does this scenario need to be tested for gateway and the classification/average benefits tests? It's as if the formula is salary ratio with one HCE not getting a contribution, but since the document is comparability, does it need to be tested anyway? Would the answer be different if the partner was getting 11% too? Thanks.

I have a question regarding Cycle A restatements, which are due 1/31/12. We have one ESOP which needs to be filed with IRS by this deadline and it doesn't look like we're going to make it because the document is currently being reviewed by the client's attorney. We'll have the 5300 and accompanying forms done and the document is done, just not executed. Do you think we can make the submission without an executed document? The document would be included in the submission but it wouldn't be executed, we would file it as 'proposed'. Thanks.

Thank you all. The employer wants to give this employee the allocation for the Owner group for the portion of the year he was an owner and the allocation for the all others group for that portion of the year, and that's exactly what the LRM says. Thank you.

I can't find anything written that states as of what date the allocation group classifications are made. The plan document simply names the groups. If the document has two allocation groups; Owners and All Others, and a participant is an owner part of the year but isn't at the end of the year, which allocation group is he in when it's time to allocate the contribution?