bevfair

What are the repercussions for not timely distributing the SAR? Is the correction to distribute as soon as possible following the discovery of it not being distributed? I've searched and can't seem to find any answers. No participants are asking for it, but the client is preparing for their 5500 audit and the auditor asked for documentation proving when it was distributed. TIA!

My apologies for not providing more information. The first loan had 5 year term, with a repayment amount of $31.38 and was paid off early so that the participant could take the second loan (plan only allows for 1 loan at a time). The second loan also had a 5 year term, with a repayment amount of $140.53. Even though the client was advised of the new loan/new payment amount, and also advised of the fact that the first loan had been paid off and to start the new payment amount accordingly for the new loan (loan 2), they continued to withhold $31.38 as a loan payment. So essentially, they continued paying the loan 1 repayment amount but applied it to loan 2, rather than withholding and repaying the correct repayment amount to loan 2. I hope that fills in the gaps and doesn't muddy the waters. Thank you for your insight.

Plan allows for 1 loan at a time. Participant has a loan, which he took out in 2014 with a weekly payment of $31.38. In August 2017, the Participant contacts the Investment Company, pays off the loan and requests a new loan. New payment amount is $140.53. The TPA approves the loan and it is then approved by the Plan Sponsor. The entire process is done electronically. Participant is not married so there is no spousal consent and thus no physical paperwork is generated for the request until the loan is approved and the IC sends a confirmation report to the participant which contains the terms of the loan. This is a standard procedure. TPA and IC notify the client that the first loan was paid off and provide the amortization schedule with the new payment amount to be implemented via payroll. Payments are being made but the IC/TPA do not provide loan monitoring for this particular client. Fast forward to October 2018 during the 5500 audit, the auditor picks up this loan for his sample and discovers that while payments were made timely, the amount was incorrect. How does this get corrected? Would this loan be considered in default, even though payments have been made timely just in the wrong amount? Does the plan need to file under VCP? Can the loan be re-amortized so that the loan is paid off by the end of 5 years?

Anyone still using UltraVNC or something comparable to Logmein? We use logmein but their fees have increased quite a bit over the years.

What if this participant terminated 3 days before that first payroll date? Would you answer the same way and start deferrals even though they were technically terminated before their eligibility date?

Participant is on worker's comp and has not worked since November 2016. Participant is now working at a non-profit, while being on worker's comp. The sponsor indicated that the hours are being reported to them to pay the participant. Are these wages eligible for deferrals? Thanks.

That exactly correct.

Bird - it is a retirement planning software. Perhaps there is new coding that needs to be done that I'm not aware of. I'm going to reach out to them. Thank you all for the input and clarification.

Mike - neither software is reducing plan compensation for salary deferrals for non- self-employed individuals. But one does reduce plan compensation for the self-employed by the deferral 'cost' of the non- self-employeds. Based on what you and 401king are saying, I take that to mean that in essence it is doubling the use of those deferrals in the SE compensation calculation and that is not correct.

I'm working on a calculation of employer match for a self-employed participant/plan. The plan has 10 common law employees. We're transitioning from one software provider to another. The provider we've used for many years, includes the salary deferrals of the participants in the common law plan cost. The new software provider only includes the employer match in the common law plan cost. While this doesn't impact my match calculation directly, it does impact the resulting plan compensation for the my self-employed. So my question is, which software provider is correct? I've not had any luck doing a search to see if this has come up before and reading the SE instructions hasn't been helpful either. Thanks.

Top Heavy will be triggered anyway if we just reallocate the forfeitures. It seems like a no win situation. Unless someone has a more creative idea?

Plan has regular match forfeitures that occurred after the safe harbor match was implemented, due to non-vested terminated participants taking their distributions. Document allows us to pay expenses from forfeitures however the contract is written such that we don't bill the client directly. I'm left with a few grand in forfeitures to allocate to roughly 18 people. Plan is top heavy and the key defers. The only other option currently in the plan allows me to reallocate with employer contribution or on a salary ratio basis. Client wants to amend the plan at the end of the year, for future years, to use any new forfeiture to offset an additional employer match. (Plan document doesn't currently allow for match in addition to the safe harbor match). The client also wants to 100% vest this new match source. Can forfeitures be used in this manner? I thought I read that forfeitures that originated from non-vested accounts could not be allocated as a money type that would be 100% vested (the reason we can't use them to offset safe harbor match)? Or am I reading too much into that position? Thanks.

Can you file for an extension of time to file a Form 5500 for a terminated plan, beyond the 7 month deadline?

If an HCE takes multiple hardships, from profit sharing, a year for various reasons: medical and education, would you question the abusiveness of the hardship? Obviously we don't know the whole financial situation but taking two hardships within a month's time seems, on the surface, abusive.

A small law firm plan allows deferrals and match. Plan is top heavy, only non-Keys receive. No other employer contributions. Match formula is 100% up to 3% for NHCEs and 100% up to 1.5% for HCEs, with a last day of the year requirement. 3 non-keys retired. 2 at Normal Retirement Age and 1 at Early Retirement Age. 2 NRA retirees deferred. One terminated on 12/31 and will receive match but not the full 3%. Since all 3 are terminated before the end of the year, are they required to receive the minimum top-heavy under the NRA/ERA provisions or do top-heavy rules supersede, meaning they do not receiving top-heavy as they are terminated? Document is unclear on the matter. Thanks for your input.

I also have questions on the 'active participant' definition. When is 'currently in employment'? During the plan year or just on the first and last day of the plan year, per questions 5d1 and 5d2? What about a current year terminated participants with a balance? Are they considered active at the beginning of the year and not at the end? I have two 2014 final forms to do and wanted to get them out before testing season hit. Thank you.

Tom - there are no other contributions, only deferral and SHNEC.

Plan adopted the 3% SHNEC provisions, however only NHCE's will receive the safe harbor contributions. The client wants to exclude bonus from compensation for all purposes, including the SHNEC. Since the HCE's do not benefit from the 3% safe harbor contribution, must I still do a compensation test which will probably fail? Or would the exclusion of bonus from compensation for the safe harbor be acceptable in this situation? Thank you.

Has anyone had a client receive one of these rejection letters, specifically citing the reason as the IQPA failing to perform a sufficient audit? I'm wondering if there is some sort of audit initiative, if this is random or if something on the 5500/audit package triggered the inquiry. Thoughts/Comments?

I have a plan that excludes comp for employer provided health coverage, commissions and incentives for all purposes. For match, it also excludes bonuses. Compensation is from date of entry. Deferral entry is first of month following 90 days. Match entry is first of month following 1 year of service. It is possible to have some participants with 2 different date of entry compensation amounts for one year. I have been running the ADP/ACP testing using 415 pay for the full year. Most of my newly eligible participants are statutorily disaggregated the first year. When I started doing this I had found references that said I could test using full year/415 comp. Now I'm not finding that information. Am I still okay? Next, when I run the Compensation Ratio test, which compensation do I use for my mid-year entrants? Am I testing date of entry plan pay against full year 415 pay? Or do I test date of entry plan pay against date of entry 415 pay? Or can I test full year plan pay against full year 415 pay? Again, most of my mid year entrants can be disaggregated but I do have a few newly match eligible that are in my test and I'm not sure what compensation I'm testing.

We have a davis bacon plan that exceeded the deduction limit. What do we do to correct it?

Thanks Tom. I also fouond additional information on how to treat the distribution in the ERISA outline, Chapter 15 Section VI Part b¶6.d. (because I enjoy digging - is TPA work similar to anthropology?? )

401k plan imposes a 6% deferral limit on all HCEs. New HCEs for 2012 were not limited to 6% until Feb/March of 2012. Deferrals for the first month were more than 6%. As a result, their rates at 12/31/12 are 6.08% and 6.22%. In researching in the ERISA Outline and then in EPCRS, I think I have an excess allocation issue and need to 1) distribute the salary deferrals, plus earnings and 2) forfeiture any subsequent match, plus earnings. What I do not find in EPCRS is how I code this when I do the distribution? When is it taxable? 2012 or the year distributed? I found only one other post on this subject and it was from 1999, which indicated coding/treating as a 402(g) limit. I don't feel comfortable with that since it was so long ago. Anyone have any insight aside from calling the IRS directly? Thanks.

That is exactly what my language says. The master document and the commentary go on to say that in order to pass 410b I bring in the minimum number of participants needed to pass the test, starting first with those that were employed on the last day of the plan year and who completed the greatest number of hours. Do I even need to do this or do I let it stand with all 7 NHCEs benefitting (including those that are TH/SH only)? Do I have the option to rate group test the allocation or is that precluded by the failsafe language? Thanks for your response.

I have a similar situation to the original post. I have a Corbell non-standard 401(k) PSP. The plan uses the 3% nonelective safe harbor. Profit Sharing is integrated at 81% of the TWB, 1000 hours last day rule. The plan is top-heavy. I have 7 HCEs and all benefit. I have 7 NCHEs. 3 of which did not have 1000 hours to receive the Profit Sharing contribution. I pass 410b because I am including these 3 as benefitting for receiving the TH/SH contribution. But since they do not get a full allocation it is no longer a designed based safe harbor, testing on the allocation my 410b test is now only 57.14% My doc has the fail-safe language for 410b. So I'm thinking in order to pass the safe harbor non-discrimination I need to give one of my NHCEs a full allocation rather than just the TH/SH, making the test pass at 71%. Or do I run average benefits? If I do that I can pass on a benefits basis but not a contribution basis, does that matter? Thoughts??