imchipbrown

I opened a Schwab Individual 401(k) for a buddy before year-end 2016. Funded with $100. There were no fees, etc. Went into a local office, waited in line for all of five minutes.

I'd rather see an adjustment where you are taxed on (income - SS/Med taxes). Right now, you are taxed on the ss/med tax. So, Box 1 would be (Gross - 401k - ss/med).

Can you start a new Plan and Trust with eligibility limited to former terminees with forfeited benefits? Possibly a non-standardized new comparabilty profit-sharing plan with each former participant his/her own group? If no highly-comp'd involved, should be an easy pass. Just spit-balling...

In the above cited IRS FAQ: "An affected employee in a partial termination is generally anyone who left employment for any reason during the plan year in which the partial termination occurred and who still has an account balance under the plan." If the remainder of the account was properly forfeited (When do forfeitures occur according to the Plan?), I think it would be reasonable to call the paid-out terminee as un-affected.

Sounds like an Insignificant Operational Defect, by my first blush reading of what's cited below. 26 CFR 601.202: Closing agreements. Rev. Proc. 2006-27 Take with a grain of salt

Per IRS Plan Fix-It guide: It's the 2016 excess I'm unclear on. If it's taxable in the year of deferral, wouldn't I issue a 2016 1099-R for the deferral and a 2017 1099-R for the earnings? (And another 2017 1099-R for the 2015 excess deferral. "Luckily" no earnings involved.)

Curious what the Code might be for the 2017 1099-R. If it matters, there were no earnings for the 2015 excess. I assume this means filing an amendment to 2015 Form 1040? As much as golf hates me, I might rather be there....

I've discovered a mistake I made in 2015 where I allowed an excess deferral (402(g)) of $2,000. I'll refund it before 4/15/17, along with earnings. My question is about 1099-R reporting. Do I issue a 2015 1099-R? It's happened again (another $2,000) for 2016. I assume I'll issue a 1099-R for 2016. For $2,000 or $4,000. I guess the 2016 earnings are reported on a 2017 1099-R.

Earl This is from the FT William NonStandarized 401k Adoption Agreement 8.Special Participation Date a.[ ] Allow immediate participation for all Eligible Employees employed on a specific date. All Eligible Employees employed on shall become eligible to participate in the Plan as of b.[ ] The Plan provides conditions or limitations on immediate participation: NOTE: If B.8b applies (B.8a is selected) and is selected, describe the conditions or limitations and indicate for what purposes (e.g., Elective Deferrals, Matching, etc.) the conditions or limitations apply. The conditions/limitations must be objectively determinable and may not be specified in a manner that is subject to discretion. I've used this provision many times in the past. I can't say that I've been audited and questioned about the provision.

Thanks all for your help. I think I'm free to go golfing (just my 2 ¢).

So, clearly the Non-Resident w/ no US source income is not the applicable exclusion. I'm trying to gather opinions about an exclusion by classification (J Visa holders). The employee would rather have current vs retirement comp. (Oh, Linda is the very nice CPA)

I have a client with a Safe Harbor 3% 401(k) that hired someone in the US under a J Visa. , "She is going to get a W-2 and be on our normal payroll. Linda told us she isn't subject to SS and Medicare taxes but is for state and fed. taxes" I'm thinking she's a resident alien with US source income, so I'll have to exclude her under the 70% test. Anything squirrely here? We have the numbers (5/6 NHCEs)

Thanks Kevin, That's the crux of the issue. The mighty internet is coming up blank with the references. I guess Gore hadn't invented the internet yet! It makes sense that assets coming back from the dead can't spoil an otherwise completed Plan termination. I'm going with 5500-SF final year ending 5/3/16.

We scrambled to get snap-on amendments signed and assets distributed before 4-30-16 PPA Restatement deadline. All participant accounts distributed and zero'ed out. Then, interest of $3.17 appears on 4-30-16. It gets swept to HCEs IRA on 5-2-16. I'm about to file the final Form 5500. Can I file 4-30-16 final with a $3 payable, or include the $3 in benefits paid or file 5-2-16 final date? Is one automatically a non-amender on 5/1/16 if there's $1 left in the trust?

I don't have the article. My two cent observation is that you can easily change from prior year to current year but need five years of current years to go back to prior year.

I seem to recall that a profit-sharing plan needed substantial and recurring contributions. Some plans were restated to 0% money purchase plans to get past this requirement. I don't have the resources to quote chapter and verse.

Dentist client is taking RMDs from the Plan. The Plan holds 17 Krugerrands (market valued) and "100 Silver Dollars" (valued at spot silver prices). If Dentist were to take distribution of this gold and silver as part of his RMD, the remaining assets could be rolled to a generic IRA and the Plan terminated. The "market value" is less than the RMD amount. The question is "How do we establish that the assets have changed hands from the Plan to the Participant?" Appraisal? 1099-R filing?. I'd like to make sure the Dentist is credited with taking the full amount of the RMD (some cash plus the gold and silver).

There are also entry date determinations which include the phrase "coincident with or next following". A few more keystrokes.

Any chance you could call it a de-facto cash-or-deferred election? Employer offers bonus and employees elect to defer it. What brought me to the thread is the FT Williams Non-Standardized 401(k) Adoption Agreement of 2009. Section C.25 is: Matching - Formula 25. Matching Contribution formula. The Company's Matching Contribution shall be allocated to eligible Participants who have met the requirements of B.20 through B.23 and C.20 through C.24 as follows (Section 4.02): i. [ X ] An amount and allocation formula as determined by the Board NOTE: The discretionary formula in C.25.i and the special schedule C.25.v must meet the non-discrimination requirements regarding benefits, right or features described in Treas. Reg. 1.401(a)(4)-4. Sounds to me like anything goes that can pass 1.401(a)(4)-4.

I have a two person 401(k) in 2014. One is an HCE, the other NHCE. The Plan has used prior year testing for over 10 years. In 2013, NHCE deferred 5% of $40,000 gross W-2 (Box 5) which is $2,000. Calculating the ADR using net comp (Box 1) would yield (2k/(40k-2k))= 5.26% ADP. The FT William doc is silent on how to calculate the ADR. I'd like to calculate the deferral limit for the HCE to be 7.26% of gross (Box 5) compensation. Any thoughts?

Sorry. After a good night's sleep, I see this was a really unclear question. What I'm trying to accomplish is to let the owners defer their $18k in 2015. They've customarily thrown $50k into the Plan as a match. The 2014 (and probably 2015) NHCE ADP will prevent them from deferring $18k unless there's a safe-harbor. The allocation results for them would be roughly the same under a comp based allocation (straight PS) or a deferral based allocation (match). But they'll exceed the (4% comp, 6% deferral) limits and be subject to and fail the ACP test by a lot. Since all employees are deferring, I'm thinking I can suggest a 3% mandatory contribution and a subject-to-vesting, sky's almost the limit, discretionary Profit-Sharing. I think I'm answering my own question, now that I type it out. I don't think a straight salary ratio PS spoils anything. As a bonus, Top-Heavy can be satisfied.

A plan is projected to need a Safe Harbor in 2015 so that the owners can defer their $18,000 in 2015. The match has always been allocated on a deferral ratio and has been almost 100% of the deferral. The NHCE deferring 20% of comp has been joined by two new participants deferring a more "normal" average of 6%. Can I have a Non-Elective 3%, plus a discretionary PS contribution subject to vesting (which may approach 100% of the deferral amounts)? I think I know that the amount of match above a certain amount (4% of comp, 6% of deferral - or so) leads to ACP testing.

From a boots-on-the-ground perspective, the particular employer informed me that the fund company fees were big enough to soak up the forfeitures. So I don't need to quadruple my fees

Maybe someone with regs and such in front of them can flesh out this response. I'm restating a plan onto a new PPA prototype and it seems the Approval Letter was issued before a new regulation was passed that allows in-plan Roth conversions despite there not being a distributable event. My doc provider solves this with an "addendum" (like an amendment, I suppose) to allow in-plan Roth conversions at any time. There is also a checkbox (with or without the addendum) asking whether a participant needs to be 100% vested or not.