BG5150

I would ask under what authority this is allowed. These are not excess contributions being removed to a suspense account. These are not non-vested funds being moved to the forfeiture account. The funds are not being used to offset a fee. This reeks of outright theft from the participant.

I've heard that we are supposed to go by the check date to determine if a refund is "late" or not. For example, if a refund is processed March 15, but the check date is March 16, then it's considered late and the penalties apply. Do the IRS folks really look at the check register? Wouldn't they use a transaction report that shows the distribution was done on 3/15? has anyone ever been dinged on that? What if it's an ACH that doesn't happen for two or three days? There is no check register to, pardon the pun, check.

I see now. Thx for the clarification

is that backward? How could the seller grant service with someone else? If I sold my business you you and you took the employees, how could I grant service while they are working with you...

From the client: We recently awarded a trip to Jamaica through a raffle drawing for employees that elected to make contributions to AFSAPAC. This trip is taxable to the employee. We currently have a TFB (fringe benefits code) that we use for car allowances through payroll. This code taxes them on the income but does not pay them a net amount in their paycheck. For the annual 401k audit, we exclude this TFB amount from their gross income. Can we use this code for the trip as well? Document specifically excludes "taxable fringe Benefit for car allowance" from compensation and that's it. So, to me, that means this "income" is subject to 401(k) deduction. But how do they deduct for it?

One company in a CG got sold. The new ER does not have a plan, nor does it want one. What happens to the folks in the old ER who were in the plan? Numbers-wise, this is not a partial plan term--6 participants out of about 85. So, do these people have to be 100% vested? I would think not, but just want to make sure.

Then I would just deposit the gross amount. The ER should not get a windfall b/c there were losses in the market. Note the file. Move on.

Is the ROR negative from 12/31/21 thru today? If so, I would just fund the gross amount and leave it at that. If the ROR is positive, then some sort of reasonable calculation of the earnings must be used. If the custodian will do that for you, great. Otherwise find another method. Has anyone ever been taken to task using the DOL calculator for things like this?

I think some places create a stripped down version of a plan document that caters to an owners/partners only setup. Once employees are involved, then the document cannot be relied upon.

Just amend to SF. Get a bond going forward. And/or do a current amendment to preclude the kid's participation.

I'd run this past an ERISA attorney

We retroactively amended the plan. One thought was that the amendment is correcting the operational failure of depositing the PS based on full-year salary. Also, before the plan was adopted, several illustrations went back and forth clearly showing the PS based on full year comp, therefore showing intent.

As I understand it, sole proprietors and partners are considered to have their income determined on the last day of the year. How does that work in a short plan year? I have two examples: 1) Plan year 10/1/21 to 12/31/21. Effective date 10/1/21. Does everyone use pretty much 1/4 of their comp, but the owner gets to use all of it (subject to the comp limit and 415 limits) because it was all "earned" on 12/31? 2) Plan year 1/1/21 to 6/30. Everyone gets comp for first half of year, 415 and comp limit are pro-rated. But Partners get zero comp, therefore zero benefit because they earn their comp 6 months later?

Keep in mind. that's just from some random search request on the internet. I do not deal with cafeteria plans whatsoever, so use my result as a starting place for your research.

Employer deposits match and a "profit sharing" each pay period for everyone (who is supposed to get each). They missed one guy for a couple payrolls in 2021. (Deferrals went in fine) They deposited the missed contributions the other day. Given that the contributions need to be deposited by the time they file their taxes, do I need to bother withy earnings? (Let's assume the taxes weren't filed yet)

From somewhere ont he web: Does a Section 125 plan need to file a form 5500? There is currently no annual filing requirement for Section 125 Plans. However, the underlying benefits may be required to file a Form 5500 if they are considered a Health & Welfare Plan.

I would ask the cpa why he/she thinks you are exempt. What kind of plan is it? How many people in it?

Did the sponsor get any sort of letters yet from either the DOL or IRS? Even if they get a letter from the IRS, often if they file under DFVCP, the the penalty will not be assessed.

Either way, i think an audit needs to be done, no?

PYE 12/31. Sorry, should have made that clear. And... Yikes. (I pretty much knew that) I don't know who set up the plan that way and why. The only two times I ever use a short plan year are plan termination years and spin-offs.

Check the service agreement to see if the plan administrator agreed to have this happen automatically. I understand if the fee is more than the amount, the r/k keeps it. Is the money really being forfeited? Or is it being taken as a fee? If put into the forfeiture account, that is not allowed, as deferrals are alway 100% vested. What if the deferral is, say, $100? What happens then? I do not like the fact that these "distributions" happen right away. Side note: 2 of those 3 deposits after termination were probably late. Did anyone address that fact?

For some reason, powers that be made this plan effective 12/1/21. What limits am I prorating when doing the profit sharing? And am I correct in remembering that self-employment income is "earned" on 12/31? So in this case, the owner will be using his full $290,000 comp? (unless the comp limit is 1/12 of course...)

Is this an actual quote from the document? or is it a paraphrase. And where did your wife the the full plan document? Did HR give it to her? usually, participants only get the SPD.

No. 5% of compensation, not deferrals. Otherwise in your example of $4,000 in deferrals, the match would only be $200 (5% of $4,000). True-ups are simple. You calculate the match under the formula on an annual basis (ie, you treat the year as one big payroll). Since the plan does not exclude pre-participation compensation, you use full year pay. Divide deferrals by comp then apply the match formula. Then look at how much match was deposited and make up the difference. I'm having trouble with the wording on the match: it matches 100% of first 4% of pay and then half of the next 2%. To me, that goes up to 6%. But it seems to be saying the deferrals are capped at 5% for match purposes. I'm guessing it is supposed to mean that the MATCH is capped at 5% of pay (4 + 1/2 + 1/2 = 5), but it says the "Elective Deferral amount does not exceed 5%..."

It is my understanding, the loan gets offset when the participant has a distributable event. Therefore, if the plan allows for distributions at age 59 1/2, and the participant is still employed. the loan will offset when the participant turns 59 1/2. But what happens if the 59 1/2 withdrawals are restricted to deferrals only and the loan was taken from deferrals and match? For example, a $10,000 loan was taken: $6,000 from deferral and $4,000 from match. $5,000 was paid back, so his loan balance is $3,000 in deferral and $2,000 match. Loan defaults, deemed distribution processed. Participant still employed, and turns 59 1/2 on May 1. Plan allows for distributions of deferrals only at age 59 1/2. So he has a distributable event (for deferrals) on May 1. Does $3,000 get offset? All $5,000? None?