BG5150

Agreed.

We TPA a plan that has part of its assets some old annuity contracts. The provider is refusing to provide the investment chart under 401(a)5. What recourse does the sponsor (more specifically, the Trustee) have? Is it similar tot he 408 notice where they can (and must) squeal tot he DoL?

Do the periodic (quarterly) statements have to break down the assets into sources of money? Assume same vesting schedule for ER money. For example, can the statement have: Deferral: $6,345.21 Employer: $49,837.90 Rollover: $19,048.67 Where in the employer bucket there's match & PS money. (Again, on same schedule) Or does it have to be: Deferral: $6,345.21 Profit Sharing: $45,824.89 Match: $4,013.04 Rollover: $19,048.67 (I know the latter is preferable to the participant, but does it HAVE to be broken out like that?)

If it's discretionary and calculated yearly, why can't the ER just adjust future contributions to aim for the funding target? For example, if they were doing 5% and want to do 3%, just put in 1% for a while. Or nothing.

Yes, that's right, but since there is no "fee" it gets transferred to the forfeiture account. It doesn't seem to make sense that we put the $1.37 into somoene's account only pay $1.37 to FundCo as a "bonus". Rather, the money gets transferred to the forfeiture account where it will benefit the remaining participants. Is it a QNEC? Then it's fully vested money. If the person is still employed, it stays. If the person is terminated, it gets distributed as a force-out. However, in this case, there is no distribution, b/c the $1.37 (plus investment experience) is taken to cover the "fee." As long as other, "normal" participants are usually charged a fee.

Does the document call for a fixed contribution already? Or is it discretionary?

Is the corrective contribution a QNEC? If so, I can't see how/why it could be forfeited. At the least, it would go into an account and come out as a fee.

(And perhaps a Safe Harbor contribution!)

You're right. 'Twas Friday, and I was was looking forward to the weekend, I guess. I have amended my original post...

(And by the way, they do not HAVE to do distributions and a 1-to-1. A straight QNEC can be done as well, though oftentimes it's more expensive. Even if it is a prior-year tested plan. Appendix A of EPCRS has the straight QNEC correction, and Appendix B describes the 1-to-1 method.)

FWIW, you don't have to do a 1-to-1 QNEC after distributions. You can do a straight QNEC in an amount enough to pass the test and not have to do refunds. (Appendix A) In my experience, these are usually more costly, but you do get around the sometimes-thorny issues of sending checks to the HCEs.

How wasn't the participant given the opportunity to cure? Was he getting pay stubs with suddenly-higher net amounts?

I don't think the plan is covered under ERISA, so no disclosures would be needed.

Why not just report them currently?

This is why getting a payroll report or W2's before doing the testing is so valuable. It (w)(sh)ould have been caught before the refunds were issued.

Formula is "0%," not frozen. Thing is, all the assets are the employers and are 100% vested. So, at the moment, there is no chance for any other participant to have a balance. So is a bond really necessary to protect his own assets and only his own assets?

Nope. Just assets held in a trust.

Not only are the assets solely the owner's, there is no foreseeable way for the other participants to get a benefit in the near future. What makes this plan subject to ERISA? The fact it is a plan covering an employer and it's employees? Even though, as the plan is currently written, there is no benefit to protect for the employees? The "E" in ERISA stands for "Employee" doesn't it? "S" is for Security. However, at the moment there is nothing to secure.

I have a plan that used to be considered a one-participant plan, covering just an owner. He has recently had two employees become eligible for the plan. (It is a Money Purchase plan with a 0% contribution formula.) So, now the plan is subject to ERISA and must file an SF. However, 98% of the assets are in non-qualifiying vehicles (an LLP and real estate). He must now get a bond for the $2MM in non-qualifying assets. The wrinkle I have, is that ALL of the assets are the owner's. So any loss or theft (by him--he's the only one who handles the "funds" I would guess) would affect only his own assets. Any thoughts on NOT getting a bond because of this?

^^ ugggh

From whom would this bounty come?

That would be discriminatory. Only if it was lowered for an HCE.

Side question: does the document have to specifically allow for the shifting method? Or is it just an allowable mechanism for testing, like separating out otherwise excludables?

Paycheck 1: pay period--July 1 to July 15 Paycheck 2: pay period--bonus for 2012 Worth a shot?

I agree with chc93. If deferral elections were in place, you use those. I think the OP is beyond the time to have the participants make up the missed contributions--you need at least 9 months left in the plan year to do that (under SCP). How long did this go on? Did the people think they all got raises all of a sudden?