BG5150

Wow. Pre-dates my entry into the field. Plan was effective in 1976, so it could make sense.

I do agree with him that often loans are a bad idea. But not always.

I sent him an e-mail about the flaws this morning. What people fail to realize is that the taxes will be coming out of their paycheck regardless of it being a loan payment or not. Look at it this way: I want to buy a car. I can either use $10,000 from my savings which has already been taken out of my paycheck and been taxed. Or I can take a loan from my 401(k) plan and have it paid little by little out of my paycheck. (with a little interest on top of that). Either way, paying for that car, I'm taxed on $10,000. Later, I will be taxed on the original $10,000 that was withheld and not taxed yet. The only double-taxation is on the interest.

We have a plan where a participant took out a $50,000 loan many moons ago, and it's set up as only interest payments are due (while he's employed). Evidently this set up was, at one time, acceptable. Really?

Plan docs can limit the number of times participants can take in-service withdrawals.

He does NOT have to take a loan before a hardship if the loan will result in a counterproductive measure to his situation.

That, and he already has a loan he cannot pay. To the bank.

...in an eligibility period. ;)

All I Really Need to Know I Learned at BenefitsLink. In stores now...

I think a very important question is: was that employee eligible for the plan in 2007? If not, then when (if ever)? That answers 5500-SF/5500-EZ question.

Well, they said their only employee declined to participate in 2007. So unless that EE was statutorily excludable, they did not have an owner only plan. Then in 2016, the EE wanted to participate. I missed the part about the first year being the only contribution. But, still, if that EE was indeed eligible that first year, there was an ADP failure. (So either a QNEC to participant or (pretty much) full refund PLUS that amount in a QNEC to the EE. I'd probably choose the former.) Would this plan be a candidate for "let's just disqualify this plan right now"? What would be the consequences other than paying taxes on the deferrals in 2007? Would that be cheaper than trying to fix the plan?

I think for tuition, the regs even say they can be for 12 months. Not so with mortgage payments.

If the plan document allows for it.

Hardships are for immediate need, not to lessen future burdens.

The "penalty" for filing late wouldn't be that severe. $1,500 to file all those years under the DOL Delinquent Filer program. What the TPA would charge to prepare all those forms, I'm not sure. Like Mike said, depending on the employee's status, a 5500 might not be needed at all for some years. Suggesting to open up a Simple IRA and "pretend" the previous nine years never happened, in my opinion, is a violation of professional ethics. Another concern is that the owners were making deferrals, while an eligible non-highly compensated employee was not (declining to make deferrals does not remove participant status from the employee). In the non-Safe Harbor years, there is an ADP test failure and some, if not all of the deferrals (plus earnings) need to be refunded, and/or contributions need to be made tot he employee's account. I would not file anything until you are satisfied the advice you are given is correct.

I would be wary of any record keeper that said I had to amend my document because of system limitations. Unless the provision was quite out of the ordinary.

If you include group C in the plan and give them zero (with "everyone in their own group"), you lose the average benefits test for coverage if that matters here.

Can someone tell me where I can find the rule that states you have to have a blurb on the participant statements is the PS is integrated with Social Security? (The reg and/or where to find it in the EOB) Does it only apply to participant-directed accounts, or pooled accounts, too? Thanks in advance.

Does anyone know of a decently priced locator service? I always thought it was the sponsor's responsibility to first try to track down the account owners (with proper documentation, of course) before the rollover even happened. In a former job we had one that was relatively cheap (maybe a dozen for $25?), but I've forgotten the name.

What happens next year (2017) when you file for the first time? You'll indicate a first return. Yet the plan establishment date will be in 2016. Expect a letter. Then prepare a defense as to why you didn't file. The prepare for the DFVCP.

So, after aggregating for the ABT, I have to aggregate for testing, right? I have one SH plan and one non-SH plan here. :(

I think I may have had my fact pattern wrong. So we have this: plan will pass with only the g/w given as PS. But, we have an allocation group that has people with different gateway minimums. Of those, 2 have a g/w of 2.7% (with one of those two otherwise not elgiible for PS due to last day rule) and everyone else has 4.5%. I think that the one 2.7%er needs to get an additional 1.8% to be up with the rest of the group. That's what the allocation conditions require. The terminated 2.7%er stays there, because there is nothing in the plan giving her anything more--she is not eligible for PS this year.

One company, 2 plans. The plans used to satisfy coverage separately using ratio test. Now they don't. Can I apply the ABT for coverage separately (considering those in other plan as zeroes)? Or must the populations be aggregated? And if they are aggregated thusly, will I lose my ability to perform nondiscrimination testing separately?

As I see it, you are stopping at the gateway for the 2 participants in the CB plan. Are these 2.7% people otherwise eligible to receive a PS? If so, I would say they must get the same % as those in the same allocation group. There is nothing that says they do not get it, unless they fail any of the conditions to receive a PS in the first place. Just because the gateway passes doesn't mean you stop allocating the PS per the document. You don't need an 11-g amendment, because you are not trying to give anyone something they didn't originally "deserve."

You are not crafting an amendment to keep people out, you are including them. So you don't have to worry about blowing your ABT for coverage, if needed.