BG5150

The deferral rate is per pay period. It's not an overall figure for the year.

Being the cynical guy that I am, I'm guessing they want to do this so the doctor can get a PS for 2015.

True, the DEFERRALS are not included in the ADP test, but the PARTICIPANT is not excluded entirely. They are in the test as 0% ADR. (Same thing with ACP test: in there, but as a zero (if there were no other allocation conditions))

Why would the IRS care if it was eligible for rollover?

I think they were doing it to avoid as much taxes as they could.

In strict terms you have an operational failure. You (the proverbial "you") never allocated the forfeitures. It's probably too late to use them for past expenses (there are threads discussing how far back you may or may not be able to go to use forfs for fees). A primary tenet of EPCRS is to put the plan in a situation it would have been had the error hadn't occurred. Also, if you were reviewing this plan, how would you look at the circumstances that forfeitures were not allocated when the lion's share (if not all) of the amount was to be given to NHCEs, but rather when, now, the bulk of the proceeds (if not all) are going to the owners? It could seem like the non-allocation was done purposely to the advantage of the owners. And again, I don't think you can self-correct this; it doesn't seem to be insignificant.

David, How would you handle this client? Administer it with a 7/1 hire date because it's "on the census" even though you know it's probably not the case? The latter part of that sentence makes it your business.

What does the 5+ years break have to do with this?

Do the seasoning rules apply at all here? Why does he even keep the pre-tax money in there? Move it now, and there's only the '14 RMD to worry about and then nothing more.

Charge him $7,000 for your time figuring this out. This way, you only have to spread around $200. What is the allocation formula?

How far back does this go?

Way to go!

Why would you think it would be okay (excise tax notwithstanding) to return the money to the plan sponsor? They are legitimate forfeitures, no? Not mistakes of fact? Also, I do not think you can self-correct back to 2009--that would have to have been done by the end of '12. Also, I would consider this a significant failure, as there is a pattern of failure, and it could quite possible affect 100% of the participants.

Not "giving" them away. It's $50 for a credential upgrade.

PASSED! Application for credential upgrade submitted.

Just b/c the law allows you to take more than the RMD, doesn't me the plan will let you. That seems to me the case here.

Why would this person be excluded from the ADP test?

The 80 yr old factor is 18.7, so it's close to 20.

Well, a PD allocation automatically satisfies the testing doesn't it? So, just have a general tested PS int he document and allocate as with PD and be done with it. No?

Why would anything over the RMD be allowed for installment treatment? (And would it really be a burden to offer it plan-wide? Who ever takes advantage of that?) Does the plan allow for partial in-service withdrawals? Could Grandpa sign 6 distribution forms every 6 months (tax elections are only good for 180 days, plus, I think you'd have to furnish the Tax Notice) and have them processed at once a month? (Would that violate the "as soon as administratively feasible" provision? Lots of questions, few answers from BG)

If all the kid is doing is working on the website, could they pay him on a 1099 as a contractor?

We send out (or tell our clients to send out) the supplemental statements, too. They include the vesting schedule, as a lot of carriers do not track vesting for plans with TPAs.

It's not considered a catchup until you hit a limit. So, you have $17,500 in 401(k). Note: not 12k & 5.5k. Are you over the base $17,500 (for 2013)? No. No catch-up yet. Are you over a plan-imposed limit? (ex. plan limits deferrals to 6% of pay, and person makes $100,000). No? No catch-up yet. Have you failed the ADP test and this person needs a refund? No? No catch-up yet. Are you over the 415 limit of $51,000 (for 2013) after profit sharing? (17,500 + 39,000 = 56,500) Yes! You can now re-characterize up to $5,500 as a catch-up.

^ or entitled to be paid.

I would say yes. Though related, it's still a separate plan.