BG5150

What's the 1099-R gonna say? (it better say $872) I would have w/held 10% on 872. Why wasn't the fee done separately? Basically the owner is paying taxes on the fee.

^^ You must read the part about rehires

Any other thoughts on this? I have a plan that is doing the same thing: moving from group annuities to another investment platform and there are surrender charges involved. The ER wants to make the participatns whole after the transfer. Are the only two options 1) special allocation don by amendment and tested or 2) a "bonus" paid to affected people with the options to fully defer the amounts? And for testing, it probably would have to pass on an allocation basis, right?

Nothing wrong with that, as long as there is a provision that if someone works 1,000 hours in a year's time, they would enter the plan. For example, someone starts in January and works 400 hours by the end of March. He leaves. No 500 hrs in 6 mos. He comes back at the end of April and works another 400 hours by the end of July. He leaves again. No 500 hrs in "6 consecutive months." Then he comes back in October and works another 400 hours by year's end. He's got his 1,000 hours in a year.

I think this is the salient point:

However, the decision to defer must be made by the end of the year in consideration. So, you'd better find that election from the SE individual stating he or she wants to defer $x or y% dated before PYE.

Don't forget PPA restatement in a couple years....

I would say yes. Service spanning rules would have the person satisfying the 6 mos of service on 7/6/08. Assuming they met any age requirement, I believe they would enter the plan on 1/25/2012.

I understand that an RMD in the year of death gets calculated as if the person was still living. Does the assumption of still living apply to age consideration as well? For example: someone is 73 and dies on Feb 1, 2013, and her birthday is October 11. Do use the life expectancy factor for 73 (when she died) or 74, the age would have turned in 2013?

What kind of plan is it? I've done it numerous times in a Volume Submitter without filing for a determination letter.

Say this was allowable. Vendor pays investment house send $2,500 c/o the Plan. How does the asset provider know how to break down that $2,500? I would think they need specific instructions from the Employer. Most daily shops can handle doing ACH debits. So when the ER gives them the breakdown, the provider can just debit the ER's account. I don't see how it could get any easier than that? Plus, it would be much easier to verify a payment to the Trust if it came from the ER account. How do you know Vendor send their portion of the "contribution" this month.

Though I don't see any deminimus amount anywhere, I would not hesitate to do no refund in this case. If an agent is going to bust you for something like that, he or she will more than likely come up with something else, too.

Have you checked with the people who drafted the document? (The Volume Submitter or attorney) They might be able to shed some light on the situation.

Just pay him "under the table" and not even worry about it any more...

Does the service spanning rules apply anywhere there? I didn't peruse the data given.

Could this be considered a Mistake of Fact and the funds sent back to the company? I'd prefer the money stay in the trust and the ER just short the next wire by the amount "forfeited." Actually saves a step, and it's a zero sum game in the end.

...and be used to offset future contributions and NOT used toward fees.

Also, if it is done "pro rata" you can't have salary get 6% and bonus get 3%. Somebody with $70,000 salary and $30,000 bonus gets $5,100 (5.1%), but someone with just $100,000 salary & no bonus gets $6,000 (6%). So that cannot be pro rata.

Which comes first? Bonus comp or regular comp? What if I made $1,000,000 Through the middle of December and a bonus of $150,000 was paid to me at the end of the year. My PLAN comp is still going to be $250,000. Do I get 6% of that? 9%? 3%?

The client may send in the PS per payroll, but what does the document say is the basis of the PS? Per payroll or annual? I don't think I have any clients that do PS per payroll. match, yes, but PS, no.

The only way determining an HCE could have a discretionary component is if you are using the top paid group and there are a bunch of employees who have the exact same compensation and there are more of them that would in into the TPG. Then you get to pick an choose who is in the TPG and who is not. As a TPA I would not make that decision, but have the client make the call. Maybe give some suggestions, but never just pick on my own. Everything else is by code.

But Congress doesn't make the stuff up all by themselves. They get "experts" to help out...

Why age 55? I think the people at the IRS said, "why not?"

So, git 'er done BEFORE April 1. What's the correction for a missed ACA if there's more than 9 months left?

In the two-step process of correcting an ADP test, you first determine the total dollar amount that needs to be removed from the plan by leveling down the HCE %'s starting with the higher %'s. The second step is to determine the excess contributions by leveling down the HCE's contributions, starting with the highest. It is then you know what each person's excess contribution is and then you can apply any left-over catchup in order to offset any refund. In your case, only the highest-deferring HCE has an excess contribution. And since he is not yet 50, there is nothing to re characterize.