BG5150

To save the OP time, here are a few discussions on the mythical double-taxation on loans: http://benefitslink.com/boards/index.php?/topic/46277-double-taxation-on-loan-repayment/?hl=%2Bloan+%2Btaxed+%2Btwice http://benefitslink.com/boards/index.php?/topic/49323-discussion-on-loan-payments-and-double-taxation/?hl=%2Bloan+%2Btaxed+%2Btwice http://benefitslink.com/boards/index.php?/topic/16641-401k-loansdouble-taxation-or-not/

Advice: put all your questions, comments and concerns as to the issue in writing to the client so you don't get that "you never told us this" phone call when the DoL noses around.

One of my X-test groups is "Owners." Situation 1: Jim owns 100% of the company. Is Mrs. Jim in the "Owners" group, too? Situation 2: Jim owns 4% of company. Rest is owned by passive investors. Is Mrs. Jim in the "Owners" group, too?

How can there be a control group if the two entities never existed at the same time?

Does the DoL opinion mean anything if the plan doc tells you how to dispose of the proceeds? As long as it's one of the methods listed, I think the OP has the course of action. OP: How long ago was the record date? Do you need participants in the plan? Or participants invested int he insurance product?

That's pretty restrictive document language.

Move the money + earnings to the suspense account and use to offset a future SH match.

^ sorry. I got this thread mixed up with another. I deleted my post. Not a banner day for BG at BL.

You are correct. That's what I meant.

* never mind *

Well, now that I think about it, it there was withholding, it would be tough to unwind.

I meant no harm, no foul in that if the money is returned, there won't have to be any tax issues.

If a profit sharing contribution is discretionary, the contribution must be authorized each year by the Trustees. Usually, it's just the dollar amount. In a plan where the PS is allocated by groups, the declaration should include amounts for each group. maybe this is something along those lines?

Significant failures can sometimes be corrected under SCP if corrected within two years after the error. Insignificant errors can be corrected any time. In this case, since the ADP test never failed, your error is current, and not from 2008. I'd just try to get the money back from the employees. Put it back with earnings. tax forms were not done, so no harm, no foul, so to speak.

How long ago was this? I don't think you need VCP if it's not too long ago.

And what of the discord that would be sewn if someone finds out he has his very own plan! (Won't there be two 5500's publicly filed? )

Yeah. Especially if they are getting 5% already.

^ and these days, unless you cannot come up with a valid SSN for someone, I see no reason why you couldn't set up an IRA for somebody. There are several providers that do these now.

waid--I'd say ASAP. The RMD is not coming from the IRA. It was already done; it came from the plan, but was erroneously sent to the IRA. The 1099-R will come from the Plan, not the IRA. Side note to others: I think earnings (if any) have to come out of the IRA. Does the IRA then issue a 1099-R for the earnings?

1) In that case, I don't think an SMM is necessary. 2) I'd ask Relius; couldn't hurt. 3) As PensionPro said, you may still want to convey this to the participants.

The Plan Sponsor has implicit duties to monitor the fiduciaries it employs in regards to the plan.

If the ER is truly concerned with this participant, and if it won't break the bank, they could always bonus the amount back to the person to even it out. Then, maybe lower pay a little bit for a few months until the ER is paid back. This way, the EE doesn't get behind on bills and the ER garners some good will from an EE.

Plus it may give clients a sense of confidence in the TPA b/c the TPA is being kind of audited every year as to their processes and controls.

What did the SPD used to say about the match exactly?

No earnings? Even though the match was due by 12/31/12?