Francis

I'm uncertain of how to complete Lines 7a-7c in Part III of the 5500-EZ. For End of Year Total Plan Assets (7a column 2) for a calendar year plan, should the value on the participant's 12/31 account statement be used? Or should any contributions made throughout the calendar year be subtracted from the 12/31 statement value? The instructions state to not include contributions designated for the plan year but those could be part of the 12/31 value if contributions were made during the calendar year. If contributions are made after 12/31 but before the tax filing deadline, should those be excluded from 7a-7c and just stated on 8a-8c? I know the 5500-EZ is supposed to really simple but how to arrive at the values for 7a-7c are confusing to me for contributions made during the calendar year and after the calendar year since the 12/31 statement is how I could arrive at the end of year value but contributions account for some of that value but the instructions mention not including contributions.

Thank you. I don't know if true-up is the correct terminology but essentially we'd like to have the plan consider all of a participating employee's annual compensation for purposes of the match. It seems that some employees who contribute too heavily early in the year miss out on matching dollars because the per pay period calculation caps the match. The match is now 100% of the first 6% of compensation deferred so 6% of an employee's monthly comp is all that's considered, not annual comp. Ideally we'd prefer to have no employee miss out on matching regardless of how they contribute during the year. Maybe there is a way to do this but if there are downsides to the employer, knowing that could help.

A 401k PSP has Enhanced Safe Harbor matching with the employer contribution performed "Each Payroll Period". Here and there an employee might miss out on some potential matching if deferrals are large early in the year and are forced to stop before the year ends because of the $18k limit. The match is calculated on compensation per pay period and not over the entire year. Is there a way to solve this issue so that the employer match is based on annual compensation regardless of the timing of an employee's deferrals throughout the year? Maybe a true-up? This would seem to be more fair to employees who defer irregularly due to a one-time bonus or for some other reason. If there is a solution, are there any downsides to the employer for making the change to a match based on annual comp vs. each pay period?

Can a business owner who is over age 70 1/2 establish either a SEP-IRA or a SIMPLE-IRA and contribute? It looks like RMDs will be required each year ahead but I'm not certain if contributions are allowable past age 70.5 for the business owner.

We had a participant die with an outstanding loan. The loan was never repaid so it eventually defaulted (in a later tax year) and a 1099 for the default was issued to the participant. The CPA passed the 1099 through to the estate. Interestingly, the estate was insolvent with no funds to pay the tax generated from the 1099 (the loan proceeds were fully spent by the participant before dying). I'm unsure if the IRS will ever be able to collect the tax given that the estate has no funds.

An employer with an Automatic Enrollment 401k made missed automatically enrolling a newly hired employee who didn't fill out an enrollment form. The employee was hired in January 2016, became eligible in April 2016, and the error was discovered in June 2016 when the employee was also finally enrolled. Are the below actions the needed steps to correct? 1. Employer adds "Missed Matching" to employee account. 2. Employer adds "Missed Earnings on Default Investment Option" to employee account. 3. Employer notifies employee of error and correction details within 45 days. If the "Missed Earnings on Default Investment Option" need to be added, can anyone explain how to calculate the amount? Is the DOL calculator used? Thank you very much for any information on the needed correction steps you can provide.

Hello, If the employee is 65 and enrolled in Medicare Part A and can't any longer contribute to his HSA, can his younger non-employee spouse who is covered by the HDHP now open and fund her own separate HSA? If yes, can she only contribute the individual maximum if the HDHP covers both spouses or is the family contribution an option (no dependents are covered, just the two spouses)? Thank you! Frank

A one-person business owner forgot to file his 5500-EZ due 7/31/15 and no extension was filed either. It's a solo-401k with more than $250k of assets and 5500-EZ forms were filed in 2013 and earlier as required. It looks like the penalty is $25 per day ($2,000+)! Does anyone know if there is a way to reduce or eliminate the penalty or is it best to just file the 5500-EZ ASAP and wait for the bill from the IRS? Thanks.

Does anyone know if FLMA is required for employees working outside of the US but for a US based employer? In some cases the overseas workers are US citizens and in other cases they are not US citizens but have US work visas. It appears that DOL may have a 75 mile requirement and these employees are located much more than 75 miles away from any employer office employing more than 50 people. Any idea if FMLA is required? Thank you.

Does anyone know if an employee who is working abroad for a US employer and who qualifies for the foreign earned income exclusion because of income earned abroad can also participate in the employer's ERISA 403(b) plan with her contributions going into the Roth 403(b) option? In this situation my understanding is that she'll just pay FICA on her foreign earned income but I'm not sure if the foreign earned income also ends up on a W2 and if the IRS allows her to contribute some of her excluded income into her employer's Roth 403(b). Thank you.

We have a similar issue. A small loan repayment was sent in a couple of weeks late resulting in $0.35 of lost earnings to the participant per the VFCP calculator. The 35 cents has been added to make the participant whole. Is 5330 now required and if a tax/penalty is due, how is the amount calculated? Also it looks like the VFCP Model Application Form may be required, too. Anyone out there have insight on this? thank you!

If an employer wishes to have its health plan remain grandfathered and if the employer has been paying 100% of employee premiums and 50% of spouse/dependent premiums, would they lose grandfathered status by reducing the spouse/dependent employer payment to 25% or 0% even if the employer keeps paying 100% of employee premiums? In other words, does the grandfathering issue pertain only to how the employer pays for employee coverage in addition to other factors or might changes to spouse/dependent premium payments by the employer also impact the grandfathered status?

Does anyone know if there is a way for an employer to not provide matching dollars on any bonus money paid to participants and then deferred into the 401k plan? The plan is a QACA safe harbor with a non-elective contribution but it also has a separate discretionary PS match and the PS match is what the employer would like to avoid for any bonuses. Compensation is now defined to include all W2 money so maybe we can amend the compensation definition and also somehow exclude bonuses from being defeferred into the plan or somehow eliminate matching on any bonus money? Is there a way to do this?

Does anyone see trouble in an employer terminating its SIMPLE IRA plan for 2011 by notifying all employees before Nov 2nd 2010 that the SIMPLE IRA will be terminated effective Jan 1, 2011... and then this same employer establishes a SIMPLE IRA at some later point for the 2011 year? It may be necessary to do this (if it's allowable) because the employer isn't sure it can offer the SIMPLE IRA in 2011 and the notification requirements to employees are fast approaching. It would be helpful to terminate now for 2011 and then if things improve, the employer could then establish a SIMPLE IRA in 2011. Just trying to gain some flexibility but not run afoul of any rules. Thank you.

Does anyone know of any circumstances under which an employer can offer a SIMPLE-IRA to one class of employees and a 401(k) profit sharing plan to a second class of employees? This is a single employer with one tax ID number.

Wonder if anyone has thoughts on this... I just read a technical summary from BlueCross/BlueShield on PPACA and a few select words from the document concerning non-grandfathered plan are below... "employers pay full cost...based on recommendations of the U.S. Preventative Services Task Force and other agencies, "to be defined in future regulation", and "to be further defined by the Department of Health and Human Services". One thought is that non-grandfathered plans could be financially riskier from the employer's perspective given some of the above open-ended wording. If a task force or government agency comes out with something that's expensive for an employer, it appears that non-grandfathered plans will not have a choice other than to follow the guidelines and pay the bill. Probably all will work out okay and the requirements will be reasonable but it seems there is added financial risk for employers with non-grandfathered plans.

Can anyone comment on the pros and cons of maintaining grandfathered status for a health plan? Is losing the plan's grandfathered status that much of a negative?

This is a similar situation but different... we are a 501c3 and also had salary deferral into 403b accounts but ours are 403b7 mutual fund custodial accounts held at various mutual fund companies. There was no employer match, just employee salary deferrals only. The salary deferrals into these 403b7 accounts continued until 12/31/2009 (no contributions in 2010 and none expected moving forward). Do we have to have a written plan for this 403b7 salary deferral arrangement and do we need to file a 5500 by 7/31/10 for the 2009 year since salary deferrals went into these accounts in 2009?

We have a Safe Harbor 401k plan with a 3% NonElective employer contribution. This is for a non-profit and we file a 990. If the 990 for 2009 is due October 15, 2010, is the employer's 3% 401k contribution for the 2009 plan year also due October 15, 2010? In other words, is the due date the tax filing deadline plus extensions, if any? Thank you.

Does anyone know the time period employee benefit records should be retained? We have health insurance, life, disability, and 401k records going back many years. It would be great to destroy the old records and free up space. Thank you very much.

To clarify even further, let's say we have 20 HCEs who make $100,000 each and all 10 defer $15,500 into the 401(k). And let's say we have 2 HCEs making $225,000 each and these two $225k HCEs also defer $15,500 into the 401(k). Then there are another 30 non-HCEs. To correct a failed ADP test, would all of the HCEs have to receive back an equal dollar amount? Is the percentage of income deferred into the 401(k) not important? It seems unfair to hit the $225k HCEs less hard from a refund percentage viewpoint than the $100k HCEs. Equal dollar refunds would hurt the $100k HCEs more than the $225k HCEs as a percentage. Is this how it's done?

May an employee who is in the USA on a G-4 visa participate in an employer's ERISA 403(b) plan without jeopardizing his G-4 visa status or his spouse's G-4 visa status? The employee's spouse is an employee of an international organization and both are in the USA on G-4 visas?

If a 401k plan fails the ADP test, how in general is it corrected? Let's suppose there are 20 HCEs with various salaries and deferral percentages. Do the highest paid HCEs take the largest refunds or do those with the largest percentage contributions take the largest refunds? Or is it on a percentage basis or dollar amount across the board? Or something else?

It has been suggested that I set up a separate IRA account for nondeductible IRA contrituions (Traditional IRA) to not mix deductible and nondeductible money. Is this a good idea or it is really not necessary because the 8606 takes care of the tracking? Any good reasons to set up a 2nd IRA for only nondeductible money? Thank you.

We have an employee who worked for one employer from Jan 1, 2007 until May 31, 2007 and during that time he deferred $7,100 into a 403(b) plan and the plan had a limit of $15,500 for the year. He stopped working for this employer 5/31/07. July 5, 2007 he started with a new employer and he is eligible to participate in the new employer's SIMPLE IRA with a $10,500 limit for 2007. Since he already deferred $7,100 into the 403(b), what is his limit for the SIMPLE IRA for the remainder of 2007? Thank you for any help you can provide.