imchipbrown

I see.

My documents have several choices of when you become a Participant: the entry date: coincident with or next following next following coincident or immediately preceding immediately preceding nearest to the date the requirements (age and/or service) are met. You stated that the entry dates are 1/1 and 7/1. 1/25 is not an entry date in and of itself.

Dad "owns" the sole proprietorship and 100% (son's 50% and daughter's 50%, by Sec. 318) of the corporation. Right? Is the contention that receiving 1099 income means you're not employed by the corporation? I looked at 414(m) and didn't see any employment requirement.

That's the answer I want, but I can't find any reference to the shared HCE requirement.

Dad sells corporation (a service business) to son and daughter in year one and retires. Corporation sponsors a 401k with son, daughter and a NHCE. In Year 2, Dad receives 1099 income as a consultant to corporation. Dad wants to set up a Solo 401k as a sole proprietor. I'm setting aside the question of whether Dad is an independent contractor or employee. I'm thinking that there's an Affiliated Service Group; Dad still owns the stock of the Corp through attribution. If so, aren't there coverage and non-discrimination issues, since Dad will want to defer most 1099 income.

The Plan opens individual (non-custodial) Schwab accounts for its participants. The accounts are titled: "Joe Blough and Betty Boupe, TTEES; Atypical Company 401k Plan FBO Ima Participant" The company mails (or walks over) a bi-weekly deposit check with instructions on whose accounts are to be credited. Schwab dutifully divides the deposit among the accounts. The Participant walked into a Schwab office one day and inquired whether he could make a deposit into his account. The Schwab employee says "no problem" and accepts the deposit. This from the Trustee: XXXien told me that when he went to Schwab he was told it was ok to make those deposits... So, stuff like this happens, though in my decades of admin, I've not encountered it before.

My LLC "return" is a Schedule C attached to Form 1040. If I make 401k deferrals, they go on the front of the 1040 (Line 28?). I make them as and when I see fit, mindful that I better show income so as not to make non-deductible contributions. Maybe Schwab is mindful of DOL deposit guidelines as they would relate to employees? Is the Schwab account Custodial or non-custodial. If it's their document, probably custodial....

I've discovered several deposits to a 401(k) Plan participant's individual "brokerage window" account during 2011. These were not disclosed to the Trustee nor was permission requested. I suppose the brokerage mailed monthly account statements to the participant, with an deposit slip to add more funds if desired. To my mind, these are Voluntary Contributions. The document does not (and didn't) allow these at the time they were made. Can the Plan do a retroactive amendment to allow the voluntary contributions? Can this be done using the voluntary self-correction program? Ever see this? I haven't.

We've decided to issue a 1099-R to the participant showing the gross distribution and no fed or state withholding. The estimated tax deposits (withholdings) have been remitted by the participant.

Actually, the company wrote the checks, so there would be no "945" deposit to match up with a 1099-R, if that's how the matching up is done.

A participant's distribution was processed by closing her FBO brokerage account and having checks issued to the participant (70.5%) and one to the company (20% Fed w/h, 9.5% State w/h). Company wrote two checks and remitted with vouchers to US Treasury and FTB under the Participant's SS#. Don't I have to prepare a 1099-R? If I do, would I put SS#s in where the Plan's EIN would normally go (Fed & State Payers ID #)? Otherwise, something isn't going to match up somewhere. I have to report a gross distribution and withholding somehow.

That's certainly an eye-opener! The plan has always used prior-year testing, so the "applicable year" is 2011 for the 2012 "plan year". So, no testing on 401(k) deferrals or 401(m) match (for 2012). I assume coverage passes since deferrals and match are available. I also assume a Top-Heavy contribution may be required if the NHCE makes no deferral, so gets no match.

Thanks for the reply. I had no NHCE's in 2010 or 2011, so wouldn't the prior year NHCE % be 0%?

Just received this in an email.. "We have an employee to add to the 401k who started in March 2011. How do we go about doing that? If he decides not to contribute, does that affect our matching?" Company had only 3 HCEs (and no NHCEs) in 2011. Straight 401k and Match. Eligibility is one year, semi-annual entry. Can this be amended to Safe-Harbor Matching for 2012? Or even Non-Elective? I think notice would be timely, as entry date would be 7/1/2012. Plan is calendar but company is 7/1 - 6/30 fiscal. Could I amend the Plan to new year to match the company year and make it Safe Harbor, either match or non-elective?

A client with a Profit-Sharing Plan has consistently kept a portion of the trust invested in real estate (usually raw land) and has done well buying and selling over the years. A few years back, the Plan purchased a 60% interest in a property as a Plan asset, and an individual (also a participant) purchased 40% personally, not as a plan asset. The land is roughly 1/3 of plan assets. The Trust is commingled. The client is now at retirement age (though not ready to retire). His account is 95%+ of Plan assets. The plan allows in-service distributions. The Adoption Agreement doesn't now, but can provide for in-service distributions. Is there any prohibition from him taking an in-kind distribution and making direct transfer to a self-directed IRA? Assume an independent third party appraisal or three are obtained.

OK. No one's recollection is clear. One person thinks the Plan lent the company the $40k Another thinks the Participant/Owner borrowed the $40k that day. Still another thinks the employer changed its "mind", so still has a contribution receivable.

An employer makes a contribution to its PSP of $40K and the Plan lends the Employer $40k the same day. Is this covered under the VCP Class Exemption? Is a filing required? The $40K represents less than 10% of plan assets. Only owners (100% owner and adult children through attribution) are participants.

I work at McDonald's always works.

Thanks for the link. Doesn't look like replication on EFAST will do what I hoped (bring data forward). As for FTWilliam's process, hey, my plans are all submitted and approved, on time. Good enough.

I used FT William for 2009. I'm struggling to see why I can't "roll my own" for 2010. I uploaded a 5500 or two to the DOL site with an error here or there and was able to fix the entries directly on the DOL site. If I can roll data 2009->2010 on the DOL site, why pay FT William (now CCH)? (If not, ignore the rest of the rant). I'm kind of put-off getting the new (higher) invoices from CCH months in advance. I liked FT Williams' smallishness. CCH, not so much.

Thought I'd double-check my understanding before I mislead my client. The Plan is a 401(k) with a 3% Safe-Harbor Non-Elective (hard-wired and notified). Additional Match up to 6% of Compensation with no last day/hours is discretionary. Integrated Profit-Sharing is discretionary with last day/hours requirement and 410(b) "add back" clause. Owner and one terminated employee with 1000+hours. Top-Heavy. Both make deferrals. 1) Plan will make 3% Safe Harbor Non-Discretionary. 2) Maybe additional match up to 6% to both 3) Maybe integrated Profit-Sharing to owner only. I think (1) satisfies Top-Heavy and Safe Harbor I think (2) is OK as far as staying Safe Harbor I think (3) is OK, because (1) and/or (2) makes 410(b) pass. Flaws?

So, Tom's post says to me the the ER is off the hook for 10% penalty. So now, I tell the distributing fund, issue a 1099-R for ($200k-$700) as a rollover and $700 as an excess. Participant would report $700 income in 2010 and $700 IRA contribution deduction (assuming no unrelated complications). So ADP isn't really moot, since Participant is reporting income? Receiving IRA could kick out the $700 and accept it right back. If the number were much bigger (>$5,500), I can see that that would be a problem.

I have a failed test, but the Plan has terminated and all assets distributed. The affected HCE rolled her ~$200K to an IRA in early 2010. The excess (after Catch-ups) is ~$700. So, I can see two 1099-Rs; one for net rollover ($200k-$700)? and one for $700 excess. What concerns me is no actual refund, so possible ER tax? I think $700 would also be a deductible IRA contribution in 2010.

I'm wondering whether you need to take the whole account or if a partial distribution also escapes. First impression is that something less than the whole account balance is OK (if Plan document provisions so allow).

Open Office Word Processor's mail merge function sucks, if I may use a technical term. But, it will output each individual "letter" to a separate document, which can be saved as PDFs, .ood, or .doc files. I'm living in Linux-land, but it may also work the same in the Windows world.