BG5150

Side note: if it's a small company, did losing the CPS and a few of the staff create a partial plan term?

Side note: who prepared the obviously incorrect EZ?

^ Relius wouldn't calculate it correctly?

^ true. And sometimes, firms just prepare the same form as the previous year "because that's the way it's always been done."

To go further, see if any of these apply:

Is this a daily valued plan? Aren't these fees mentioned in the 404(a) notices?

I would think that putting in the deferrals the first time was failure to follow deferral election. Say my pay for the period is $1,000, with $100 fringe benefits. My election say 10%. If using all the comp, then it's $100 of deferral. per the document it should only be $90. They withheld $10 too much.

Never mind my silly "match goes down" thing. It's been a long day. Good news is that the PS passes on a contributions basis imputing disparity using full comp. Now, I just have to give everyone more match. No other way around that.

I have a plan that fails 414(s). They are a safe harbor match plan. (QACA, 100% of first 1% comp and 50% on all other deferrals up to 100% of pay) Plan excludes bonus for allocation purposes, plan allows people to defer from bonus. Thing is, if I include bonus, the employees' deferral rate goes DOWN, therefore DECREASING the match. Should I just let it go? Also, for the PS. Can I allocate it excluding the bonus (it's a pro-rata allocation) and then TEST it using full comp? (It's about a 7% PS, so I think I'd be ok with gateway.)

What does the plan document say about timing of distributions? Is it something like "as soon as administratively feasible"? If so, then I can't see a reason for waiting over a month and a half. What if the asset value takes a nosedive between now and next year?

You are correct. The match cannot get bigger as the deferral %'s go up. Why the 1/2% penalty at 4%?

Do you have to put the group names in the SPD?

If the non-key is deferring, and there will be no PS, then the QACA match will suffice. If the non-key is not deferring and there is no PS, the QACA match will suffice. If the non-key is deferring and there will be PS, then QACA match may suffice. The non-key must get 3% of full year comp between the QACA & PS. So if the calculated match is at 3.5%, they are ok. (I believe the doc must say the match offsets the the TH. If it doesn't you have to do a 3% on top of the match). If the match is lower than 3%, the ER must add enough to get the non-key to 3%. If the non-key is not deferring and there is PS, they are owed 3% of full year comp.

Did you ask Relius? They have live help now.

If all the assets were gone by 12/31 except for the owners, and all the plan doc stuff was up-to-date, I'd charge like $300 to file the final 1-participant plan 5500. Could even do it on an EZ.

The thing about HCE determination is that's it's a pretty simple calculation, and any record keeping system made after 1984 should be able to handle it. All you need is last year's compensation and ownership and family information.

Going back a few comments about the owner dying in a "solo" K: If the only participant dies, the plan will have to terminate, thus making the participant 100% vested. Or, the participant will forfeit some of his account. The forfeiture account can be reallocated. he forfeits some more. it gets reallocated again. And again and again, ad infinitum (or ad nasuem) until there is only a penny left and he gets the remainder anyway.

maybe I should have said "not necessarily." I'm not saying there HAS to be a vesting schedule. In fact, if you are designing a one-participant plan there probably should not be a vesting schedule. However, you could write a plan to have one in anticipation of hiring an employee who may become eligible for the plan. This way you don't have to remember to amend the plan later.

So what do you put in for the cost fo the entire report? Leave it blank? Or do you calculate it for each plan? I think this is becoming less and less relevant with all the forms on the DOL site now, but it has to be in there.

But I think a lot of the advice here boils down to this: You may think you are merely going down a small rabbit hole by record keeping the funds. But you may find yourself waist deep in a warren of rules and contingencies you weren't prepared for. Some tunnels are straight forward, but some are winding and complex and lead to further winding and complex tunnels.

Bottom line: can you track the contributions on a platform that doesn't separate them? Of course. It happens all the time with pooled plans. The plan document should tell you when and how to allocate the earnings. You can build a spreadsheet to calculate those earnings. You (someone) will need to furnish the participants with a statement at least annually with a breakdown by money type of their account.

My thoughts in bold.

A QRP has to do with DB Plans. It's a way to mitigate the tax on reversion of assets to the ER, by placing the extra assets in a DC plan. It has nothing to do with terminating a 401(k) plan.

If $300 is too much, how can they afford to put money into a 401(k) plan. Especially employer money. The plan document can be set up to allow for fees to come out of the plan. If these are self-employed individuals (non-C-corporation, non-S-corp.), they wouldn't (shouldn't (?)) be getting a "payroll" to deduct from, and thus would have no W2 to reference. Are you going to advise how much Employer Contribution can go into a plan when someone's Schedule C income is $35,000 and they choose to defer $10,000? An "off-the-shelf plan" can comfortably accommodate loans/hardships/after-tax transactions. If you go this route, which you seem hell-bent on, why can't you create two accounts, one for EE and one for ER money? I see it all the time.

There is a difference in record keeping assets and administering a plan. Could you easily record keep assets of a "one-man' plan? Probably. Administering it? That's a different story. As was mentioned before: who is going to make sure the plan is amended timely? Who is going to make sure the deferral and 415 limits are not violated? What about the deductibility (25% of comp) limit? Are hardships going to be available? Someone has to track contributions vs account balance. Who is going to track vesting? What if something goes amiss? Who is going to make sure it gets corrected properly? Regular paychecks on a W2--who is going to track timing of deposits?