BG5150

I thought that a SH match could not match more than 6% of deferrals (FBJ's example doesn't) and also not yield more than 4% of compensation (which this example does).

The problem with doing an 11-g amendment, is that it is supposed to be a 1-off deal. Part of the conditions of such an amendment is: 401(a)(4)11-(g)(3)(vi)(A) You may be having this problem year after year, so it is contrary to the regulation to do something like this every year.

It is an owner-doctor?

To the second point, his compensation from all members of the group will be counted together.

Would it be fair to say that accounting firms seeking make-work revenue by providing auditor's reports for 401(k) plans with well under 100 actual contributors don't have any kind of legitimate objection to this otherwise entirely beneficial change? I find that auditors perform varying levels of investigation. Some are only concerned the financials tie from the reports to the form to the ER records. Some go through the year-end work to see the proper people are covered, that is, they check eligibility and vesting for everyone. Those in the second group can say they are providing a valuable service.

I`m sure there are a lot of accounting firms and CPAs who don't want that "account balance only" rule instituted.

Is this a controlled group situation, or a multiple employer plan?

The instructions for this item read: [quote[special rule for certain participant-directed transactions. Transactions under an individual account plan that a participant or beneficiary directed with respect to assets allocated to his or her account (including a negative election authorized under the terms of the plan) should not be treated for purposes of line 4j as reportable transactions. The current value of all assets of the plan, including these participant-directed transactions, should be included in determining the 5% figure for all other transactions. I take this to mean you ignore the transaction if it is merely more than 5% than the participant's own account balance. But what if a single transaction is greater than 5% of the plan assets as a whole? For example, an owner with 70% of the assets of the plan, all invested in one fund. Then he transfers 50% of his stake in that one fund to another fund. That is obviously more than 5% of plan assets. Does that get reported? Or, does the above mean that you ignore ALL transaction in participant directed accounts, but you include their assets to see if any transaction in a pooled portion of the plan is more than 5% in total? For example, plan has 50% of funds in participant directed deferral accounts and 50% in ER directed PS account. A transaction would have to be more than 5% of the combined assets in order to be reportable?

Where does it say that a sole owner of a C-Corp cannot file an EZ?

What kind of plan is it?

Plus, you are taxed twice on the interest payments.

I just searched the publication and it mentions vacations only twice: as an award or unavailability of an automobile if the ee is on vacation.

How was it done in the past? If never, have the plan administrator come up with a method and just stick to it.

$0.02, that's just what I was thinking. It seems very suspicious that all three decided to say, "not only do I not want to put money into the plan, I never want to and also forgo any sort of employer money forever." It COULD be an innocent error, that the owners game them waiver paperwork thinking it was the right form to give them. Also, I have seem people waive rights to join a plan because of a faith that precludes them from entering into any transactions that involve interest of any sort. Maybe these three people are of that faith. And, if they merely wanted to elect zero deferrals, the ADP test will fail every year, and with the exception of catch-up, all the owners' deferrals should have been refunded. For 2014 and earlier, they would be in a refund/1-to-1 or QNEC correction.

Unless those other employees never worked more than 1,000 hours in a year, I don't see how the plan doesn't fail coverage each and every year. Remember, they may have waived participation, but they are still counted in 410(b) coverage testing as eligible, not benefiting. Do the owners make 401(k) contributions? If so, how can the ADP test pass any given year? [side note: did they irrevocably waive participation, or just chose not to make deferrals? If the former, something doesn't seem right. ]

Maybe the person is getting confused with the Allowances worksheet. It's only to be used with periodic or annuity payments. (To be honest, I'd have no idea how to apply it if somebody put something in there. I'm not sure if my software has a place for that)

Many times a lot of fees are flat for all plans. So some plans you make money. Some plans maybe not so much. Exit fees are more than just exporting the data. There are internal processes to make sure the client is closed out on the systems and the data properly stored and archived. As to your point #3, maybe your firms should start charging a discontinuance fee, too. Maybe not $500, but something that adequately pays for your time tending to the plan after they've left.

So, I pay you $2,000 a year to do a job for me and you are going to charge me $200/hr more to explain it to me? Not a very client-friendly business model.

What testing does he need to pass if the plan is to be Safe Harbor?

It comes down to basic EPCRS principles: we have an operational failure, and we need to put the plan (and participant) in the position they would have been had the error not occurred. To me, it's an excess allocation of deferrals, and can be distributed to the participant (with earnings).

There is no reason, since all non-frozen plans perforce allow new participants in on the first day of the plan year, for 5500 software to just assume that the end of last year count is correct for the start of this year. If the 5500 software prepopulates this year's starting counting with last year's ending count, give serious thought to finding a new 5500 software provider. I know. That kinda was my point. If the software is merely carrying forward last years data, then's its wrong. But if it is known that it is just a carry-over, then we can safely ignore it for all plans. However, if the program is calculating these numbers, or flat-out reporting the BOY should equal EOY, than the program has egregious flaws and should definitely be replaced.

Does your 5500 program actively calculate the participant count each year? Or, when the data carries over, does it just pre-fill last year's close?

Plan eligibility and the deferral start date can be two different things..

I don't think 1-participant plans (properly indicated on the SF) are shown on the DOL website.

Unless the sponsor can use the psychic hotline to know this person was going to terminate after the in-service distribution I am not sure what that procedure would look like. True. I missed the part about in-service. Must be the Friday morning reading comprehension lapse...