K2retire

Unfortunately, the person being unpaid now (who is supposed to be forced out) probably means that they are missing. When the person is missing, it can easily happen that they are not paid out before filing for Social Security. If, after this year, they are found/forced out, they are just reported again with a "D". I know that is the way it's supposed to work. But I've found that reporting the distribution does not necessarily prevent the SSA from telling the participant they still have money in the plan.

I don't agree with the conclusion that you don't have to file. But perhaps the reasoning is that the balance will be forced out long before the person files for Social Security. Having received a plethora of calls recently from former participants who were notified that they still had balances that were no where to be found, I have some sympathy for that line of thought.

Their accountant told them this plan design was perfectly fine. Likely expensively and with a good ERISA attorney. If they're lucky, perhaps the accountant's E&O coverage will help with the attorney fees.

Our document makes a true up discretionary. A plan sponsor has typically done a true up, but has decided that they don't wish to continue doing one. They are asking if they need to provide any notice to the employees. While I don't think it is required, I do think it is a good idea. What do others do/recommend in this situation?

What you describe there I see all the time. We even do it at my current job. Basically void the check and its a do over. I've worked places that did this also. It always made me uncomfortable, even though it often solved problems.

Goal is Retained Earnings for the first several years as well as reduce personal income during this period. Dividend could be zero during that time and thus double-taxation can be avoided. C-Corp seems to be the only entity that allows for Retained Earnings. What does your accountant say?

Can I have their contact info, I might need them after this October 15 since the IRS decided to audit two clients with less than month before the October 15 deadline.... It would be a great public service to provide us with this information ASAP!

If no SE income, there can be no deferral!

Thanks!

Why do clients always have obscure questions late Friday afternoon? Normally we tell people that the deadline to deposit their employer contributions is the extended due date of their tax return so that it can be deducted on the return. I seem to recall that the deadline to count the contribution in the 415 limit is 30 days after that. (unless that has changed or my memory is faulty) What if you are dealing with a non-profit? Since they don't file a tax return, and can't deduct the contribution anyway, how do you know when the contribution must be deposited?

The plan cannot legally pay someone out without reporting the distribution to the IRS as income. In order for your sister to receive her share of the account (assuming it is ultimately determined that it goes to you and her) she will have to supply a Social Security number to the plan. Until it is determined who the beneficiaries are, there is no need for anyone to collect the SSNs.

Most of my clients are small businesses. We generally tell them that if their plan is NOT top heavy, they are doing something wrong. Of course, we also encourage them to go safe harbor so that it's a mute point.

Top heavy is not a punishment. It is part of the price to be paid for the tax benefits of having a plan that successfully creates a significant retirement balance for for the company's key people.

Sounds like you need a better TPA!

We are the TPA for a large plan that has changed audit firms due to poor quality audits of the prior firm. The new firm is clearly performing a much more thorough audit, but they have asked for some information that seems both impossible to calculate and completely unnecessary (at least to me). They have asked the plan sponsor to calculate the number of hours that each employee has devoted to working on the plan and then calculate the dollar value of that time including both salary and benefits for each person. Is that a common or reasonable request?

The group gets 15%, the doctor, however, is limited by 415.

I agree with what your saying, but there's more to it. There seems to be an incredibly large number of employees who demand the right to mange their own accounts despite their lack of training and/or ability to do so appropriately.

I guess my age is showing. To me the concept of charging the participant for plan expenses is the "new and different" way of doing things. I miss the days when employers expected to pay those expenses!

Many record keepers agree with your boss. As far as I know, the rule is that the 50% balance must be in the account on the day the loan is issued, not for the life of the loan.

Keep in mind that determining what is marital property to be divided and what is the amount that will be awarded in a DRO are totally separate calculations. Even if all marital property is divided 50/50, one person may prefer to receive a house and let the other have the retirement account.

I am told that some record keepers can only post incoming deposits as contributions. Empower assures me that when they do that it is not included in the contribution total for 402(g) or 415 purposes. Not sure if they all keep that straight or not.

How do you bring someone back into a 401(k) plan on a retroactive basis? What mechanism would be used to provide the opportunity for salary reduction amounts for the period for which retroactive membership is granted (especially if the person wants to defer maximal amounts and is too young for catch-up payments)? Precisely why you don't see it this provision in 401(k) plans! But it is possible to use that rule only for employer contributions.

Are you talking about a late amender? Or, a plan that was timely updated, but doesn't allow catch-ups? The plan was updated, but the plan sponsor chose not to allow catch ups. I can't for the life of me figure out why they don't want to allow them.

If a plan has never been updated to allow catch up contributions, can you still reclassify a possible ADP refund as catch up for participants in that plan?

With the coverage issue in mind, are there prior year coverage tests showing this doctor as not benefiting? If not, are you sure that the client understands the difference between opting out and declining to defer?