K2retire

I have also heard that you can create a separate money source that will hold the new (post amendment) contributions. What I haven't heard of is a record keeper who can keep that straight.

Plan sponsor did not submit census data to prepare 2012 testing until 2014. We are the financial advisors. The plan is bundled with Fidelity, who is not responsive to our questions and has not mentioned any of these issues to the client. I think I know the answers to these questions, but I want to double check before we meet next week. 1. Although the document calls for the discretionary match to be calculated on a plan year basis, they deposited it each pay period. As a result several people are due a true-up. Because it is so far after the due date for 2012 contributions, I suspect it will need to be counted in the 2014 415 limit, with all of the attendant issues of those who may have left in the interim. Is that correct? 2. Should the ACP test use the match amounts actually deposited on a timely basis, or the after true-up amounts? 3. The plan fails ADP. So far no one has mentioned anything about needing to do a one-to-one QNEC. Has that requirement changed? And finally (for my own curiosity, not the client's) is this sort of laissez faire approach typical of how Fidelity operates?

It's a great time to be in Kansas City!

It seems odd to me that the beneficiary designation could not be changed until benefits commence. This situation is exactly why that sort of provision should not be in place.

Don't forget to complete a deferral election form and keep it on file in case the IRS ever has questions.

Could you make the argument that NOT depositing lost earnings on the match is discriminatory since other participants had use of the money at an earlier date?

Receipt would increase the adjusted gross income. That could impact how much of Social Security benefits is taxable and also the thresholds for several itemized deductions.

Before I got into this business I worked for a family that owned numerous oil and gas leases. In addition to the receipt of cash income, they typically also had monthly bills to pay for drilling, maintenance, etc. Valuing the lease is also problematic. This is probably not a good plan investment for more reasons than just the potential for UBTI.

If you're using a Standardized Prototype, all of the related companies must be included. If you're using another type of document you have more flexibility. However, regardless of which companies are or are not included, they must be able to pass testing on a combined basis.

Thanks!

We have a new client who is just adding Roth to their plan. Their payroll folks are asking about the order of deductions for people who might not have enough income to cover all deductions. Currently they are deducting pre-tax deferrals first, voluntary after tax second, then other things such as health insurance. My gut reaction is that deferrals of any sort should be calculated first, but if there is a shortage the health insurance should be paid first. I'm also inclined to put Roth after pre-tax and before voluntary after tax. But I have no basis for those opinions. Where would one look for an answer to such a question?

John Smith living in his car probably is a lost cause. But Google, Linked-in, Facebook, Twitter, etc. can be helpful.

Because the person who got the early deposit is an HCE, it could be construed as discriminatory. But the custodian should not be making the decision about how to correct the error, unless they are also a plan fiduciary.

I understand that Great-West can handle this. I think Principal might also have that ability, but I'm not certain of that.

This situation sounds like it could be a classic affiliated service group. If so, they are all one employer and she won't have a termination until she doesn't work for any of them any longer.

I've heard former DOL agents say they are specifically coached to look for low hanging fruit.

If it is going to be corrected in 2014 how could it be taxable in 2013? Yes, that is when it should have been paid, but it wasn't. I would include it in the 2014 W-2 because that is when the pay was effectively available to the employees in question.

Some documents specify when deferral changes can occur. Changes restricted to entry dates are common, but not universal or required.

Kevin, thanks for helping me think outside the box!

Plan participant (HCE) is transferred from one geographic location to another. A large bonus is paid to the participant as part of the relocation. The payroll company fails to withhold the appropriate health insurance premiums, additional Federal tax withholding and 10% salary deferrals that the participant has requested for the one pay period that includes the large bonus. The client would like to make up all of these missing amounts from the next pay period. Assuming the participant agrees, is that an appropriate fix for the missed deferrals, or must they make a QNEC?

One wonders why they think it may still be coming if it hasn't over the past 24 years.

Most likely it will be deductible in 2014. The possible exception is if the 2013 remainder plus the 2014 contribution exceeds 25% of the 2014 eligible payroll.

When I've used the new name on the extension, I've always received a notice of not filing for the old name.

Typically 403(b) plans have a custodian or insurance carrier rather than a trustee.

Don't be surprised if the plan's recordkeeper doesn't get this right. Many of them will try to prevent an in-service withdrawal in this situation.