Below Ground

I believe the answer is "Yes", requirement of Top Heavy Minimum does generate a requirement under the Gateway. I assume that the person can't be otherwise excludable using the 1 year period. Oh. I see Tom beat me by about 2 seconds. Nice that we agree, but I usually do see Mr. Poje's counsel as very wise.

Sorry jkharvey. I didn't notice that you were talking about 457 plans. I suppose that since your posy was under the 457 forum, I really should have noticed that. Luckily, MJB was more awake than I was.

IRC 402(g) is a "personal limit", based on the person's tax year, which is the calendar year.

Mary, the posts by MJB were a good starting point for you. He, as always, offers good response. There are some people who are willing to help others with questions, as MJB clearly demonstrates. Sadly, there are also others who think that they should grill the person posting the question for reasons that only they could understand. Usually, those replies seem to blame the person for being in need of assistance. Good luck with your search for answers, and don't be afraid to use this board in the future. As evidenced by MJB, there are many people here willing to help, with only a few that will not. (I expect objection that will be based upon a need to get all facts allowing for a "complete answer". Sure...) Lastly, thanks to MJB for being one of the "good guys".

We are very proactive on data collection. In fact, some say we are too "pushy" on this topic... Still, I do know what you mean.

WDIK, I agree with the implications of your post. My point was like the old adage of you can take the horse to water, but you can't make it drink. We tell clients the potential consequences in written and verbal form, but how can you tell whether they did what was expected? It is, afterall, their plan and the TPA can't penalize or sanction a client. We can, however, be fired if the client thinks we are too "pushy". As example, I had a client that we were always concerned about the filing of Form 5500. The filing is sent to the client under a "no nonsense letter" saying sign, date and mail. (Signature lines even have flags.) This goes out in April to this firm. Then, when we check in June the filing status on the DOL's service line, we find it not coded as being processed. This starts our sending faxes and emails, and making calls saying don't forget to send the filing in. This became an "annual pattern" with this client. This worked for a number of years, but did not for 2006. Why? I can't say. I can say that the records showed repeated contact saying sign, date and mail in. Regardless, for 2006 this client did not because "something came up in the end of July". Since we were already "nervous" about this client, we actually filed a 5558 Extenstion before 7/31. We then mailed a new filing to the client saying that if the July 31 Deadline was not met, use this filing before October 15th. Okay so far, especially since the DOL still indicated that the filing was not done when we checked in September. So, again we start with the calls, emails and faxes. Did this work? Nope. In fact, when the IRS said the filing was never made this client wanted to say it was our fault. After I sent their lawyer copies of documentation, our next communication was a letter terminating our service. Why? Because the client thought our approach was too pushy! We suggest the DFVC since the letter was from the IRS. We even offered this service to them, but was told that the $750 reduced penalty was too high. The moral of the story in my opinion is that you can only do your best to guide the client. However, since you are not the client, be sure that records show you tried to have the client do the right thing. Oh yeah, and some clients just aren't worth having.

I really appreciate the comments. Just for the "record", I send each client a letter saying that processing assumed use of the Notice in a timely fashion. I also detail what would happen if this was not the case. I see the logic with the follow-up, but would be concerned that the client would get angry/annoyed if followup was more than once. Afterall, they can read, can't they? While this is somewhat rhetorical, it does demonstrate the problem I see.

I always wonder how, as a TPA, you can confirm that a client actaully distributes the Notice you provide to them. Anyone have any ideas on how to address the potential of a client not distributing the Notice to participants?

Adding to Janet's point, no impact for IRC 415 if before 30th day following due date of return. I think you have no problem beyond deductibility for 2007 return. You can deduct on 2008, provided that maximum deductible (25% aggregate for DC) is not exceeded.

Why do you think this deposit is late?

Believe me, it flies already, but....

Oh boy did I start something or what? I can only tell you that the 4 wheeler (quad) in my picture is my favorite toy.

Andy, the picture of the girl on your posts is not you, is it?

"Successor Plan Rules?"

Government Plan? You say it is for a school, which I think makes it a 403(b) Plan. I think you need to first review what type of plan this is as it does not sound like a "governmental plan".

Yes, it has me really frustrated. Well, at least we "know" that in 2009, #2 and #3 need to file a complete 5500. In the meantime, when asked about #1, the answer will be "I dunno". Thanks for your reply!

I am suffering from a severe mental block with the impending changes toward 403(b) Plans. Any assistance would be greatly appreciated. 1) A Not-For-Profit has a deferral only 403(b) Plan. (There is no employer contribution.) Employer allows people to use any "TSA Product" or "Custodial Account" for deposit of deferrals. Is this Plan considered to be exempt from ERISA and the 5500 Filing; meaning, the only concern would be to get a plan document? Would this Plan need to file any form of 5500? 2) A Not-For-Profit has a deferral only 403(b) Plan. There is no employer contribution. Employer does require that people only use the Annuity or Custodial Account of a specific vendor. Is this Plan considered to be exempt from ERISA and 5500 Filing, or does this Plan now need to file a complete 5500 with Schedule I or Schedule H as would a 401(k)? 3) A Not-For-Profit has deferrals and employer contribution under their 403(b). Employer requires people use only the Annuity or Custodial Account of a specific vendor. Starting in 2009 must this Plan file a complete 5500 with Schedule I or Schedule H, as would a 401(k)? I am having problems determining what causes a 403(b) to file a 5500, and what the "form" of filing that would be. Again, thanks.

Excellent points, Peter. They will, however, not sway this client. They want to deal with employer allocations once per year, and that is it. Unless forced by law or the like, they simply will not budge! Luckily, this specific client has had zero turnover in the last few years, from what we can see. Otherwise, the points you raise, would be a concern for us. Please note that I said us, and not them (meaning the client). As I am sure you know, some people believe that they can just do as they please! My daddy did it this way, and so will I..... They don't look like they will be a bad client, but they are set in their ways. This has been stated to me in no uncertain terms. Unless I can say "this is required", they won't budge. Regardless, thanks!

Agreed 100%. I will tell the client they should do NOW, but if they choose to wait at least I can take some comfort in that "SCP Rules are not being broken". I have no intention of telling them that they should wait. Instead, I will know that they can and be "okay"; assuming no audit between now and then. In effect, I will provide "full disclosure" but they must choose when they will follow my advice. I suspect I will have them execute something saying when the correction will be made and that I have advised them to do now. Again, thank you very much.

Thanks Sieve. I really appreciate your thoughtful reply. I intend to take a very cautious approach and have client correct ASAP. In fact, my reason for the post was that I felt uncomfortable with waiting until early 2009 as desired by the client. You have helped ease my mind that this should be okay, since the close of 2009 really is the deadline. Again, thanks!

I'm pretty sure it would be by the close of the 2nd year that follows the year of defect. That's my read of the "SCP Rules". Anyway, I was looking to get confirmation, or correction, toward my understanding.

We recently took over a case that incorrectly allocated the profit sharing contribution to member accounts. While the total amount is fine, there are small errors given a misapplication of the Plan's allocation formula. (The errors are small $100 here, $50 there, $25 there....) In addition, members have separate, individual investment accounts; meaning a "physical move" is needed to correct the errors. I believe that since the errors are "small" in dollar terms, SCP can be used under EPCRS. The question is, how soon do physical transfers need to be made. The Client would like to make adjustments within the next year's deposit of profit sharing, that will be for 2008 but will actually be deposited in early 2009. The Plan uses the calendar year and the errors were in deposits made in 2008 for 2007.

Apology accepted. I appreciate your taking the time to do so. May I suggest that it is always a good idea to read the person's post to see what that person is saying, and not assume the person is saying or asking something else. Of course, if I failed to clearly define the problem under the Potential Problem in the OP, then I apologize to you. I believe that a reply to a post should reflect that the person doing the post is most likely using replies received as part of a "research project". While offering advice on how to approach a problem should be appreciate (even if not requested), a comment that simply "piles on" and serves no other purpose and should not be posted. All too often I see posts that serve no purpose toward the discussion. Anyway, I make these suggestion to you as you are labeled as a sitewide moderator. Of course, those are just my opinions...

Thank you Laura! I really appreciate your reply. My research reach that conclusion, but there seemed to be some question about when the premium is taxable. There was an answer in the Nondiscrimination Handbook that was somewhat unclear to me, on this specific topic. Again, your direct answer to my original post was most appreciated. Have a great day!

Mr. Burns, the auditor wants us to explain why we did not use Box 5 Compensation, without adjustment. We know that we must add in the 125 Contributions since Box 5 does not count those monies, and those monies must be counted (see OP). That accounts for most of the difference. My question was not how to deal with the auditor. I simply wanted to know if others thought the reduction applied for taxable group term life premiums was a problem, which is the balance of the difference. Mr. Rigby, you raise a good point. In fact, my reason for the OP was to have as much insight as possible. When typing the original post, I was not sure if the the disability premium was also under 125. I knew the health premium was. I was waiting for confirmation on disability. I now know that both are under 125. My question, which I had hoped the "benefit community" could respond to, was not "how should I approach the issue". It was simply does the exclusion of taxable group term life premium cause a problem when defining IRC 414(s) Compensation or 3401(a) Wages. Anyway, I do thank you for your posts.