BG5150

You need to determine if the error was significant vs insignificant. Insignificant errors can be corrected at any time under SCP.

The kill-joy was the person who thought I was trying to insert a sex-joke into my explanation. HR is just protecting their own butts. (Pun intended)

I used to do some in-house education classes at one of my old jobs. And to illustrate the point further, (this was before the proliferation of camera phones, so no selfies, Thank God), I said I dumped the money on the bed and rolled around naked on it. (Someone said something to HR and I was told to find another anecdote for my class. True story.)

When I wrote the author the e-mail, I used a similar example to Austin's. Here's mine:

What do you mean by " reclassifying the next $6k above that as catch-up since he's over 50."? Does he make more than $270,000? The 6% should come out of his pay until he hits $24,000 or the end of the year. If he made $400,000, the $24,000 is 6% of his pay. Don't confuse it with the % used for the ADP test. That would be 6.67% ($18,000/$270,000). You do not look at the comp limit when you are implementing the participants deferral elections. Just plan limits and 402g/catch-up. Deferrals are not "reclassified" until they go over one of the limits: 402(g), ADP test, plan limit.

Are TPAs subject to circular 230? I seem to remember in a past job that we were told to remove the Circular 230 disclaimer on our e-mails because it didn't apply.

Bottom line, though: find out what happened before you start amending W2's and making people re-file taxes.

My main question is: if the plan gets audited (or investigated), does the TPA have any exposure when it's quite obvious there was a late deposit and that we prepared the forms with an obvious omission. I do know the client said in writing (or rather electronically indicated) there were no late deposits, and that the client is signing the 5500.

A 12/30 payroll deposited in the first week of APRIL is definitely late. I think I see what you mean now. It was due around January 10, so it's a late 2017 contribution. But we do the forms on an accrual basis. So, the contribution is already on the 5500. Same crap, different day, though. And we'd have to remember to book it on the 2017 forms. The interest will be the same. So why not just get it taken care of today.

Was $465 the normal contribution for the recent payrolls? Maybe they capped out on week 52, but someone just assumed the money was deducted and passed it along to the r/k because that was happening in the weeks previously. If so, it's not a 402(g) excess, but an excess allocation. See EPCRS for correction. (I agree with Bird: W2's generally get generated through the payroll software, no? So how could 18,465 be withheld and only 18,000 reported?)

This was the 12/30/2016 payroll to the penny, and each p/r is different each week. It was coded at the R/K as 12/30/16 (it would have been an odd mistake if it was really for the 3/29 p/r). We had sent the client a breakdown of the "receivables" we had calculated, and a week or two later, the contribution is posted. Am I 100% sure without asking the client, but 99.8% sure given the fact pattern.

If you can't find her now, then mailing the check certainly won't help.

What is the TPA's responsibility when a client indicates in the TPA's year-end paperwork that there were no late deposits of deferrals (and/or loan payments), but upon review, the 12/30/16 payroll was not deposited until the beginning of April? We are preparing the 5500 for the ER to sign. What is our exposure if we do not indicate late deposits because we are filling out those questions per the client's direction?

That sounds like it would be fascinating reading...

Let's not get hasty... ;)

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.