K2retire

Related question: for self employed individuals do you use the additional Medicare tax in the deduction for 1/2 of the SE tax?

Automatic enrollment plans frequently have errors in enrolling people at the proper time and rate. The QNECs to fix those errors can be costly. Having to figure out who is or isn't covered by the automatic enrollment and when (especially if people move between the groups) seems to dramatically increase the possibility of errors.

That's what I thought, but I needed another opinion. Thanks!

We are the advisor two a couple of plans maintained by a controlled group. One of the companies gives a match, the other does not. The bundled record keeper has tested it each year, demonstrating that the two companies pass coverage separately, and preparing separate ADP/ACP tests. The employer is nearly frantic because they have now been told (by someone of unknown credibility) that they can no longer do separate testing because they have switched from C corporations to S corporations. I have not been able to find anything to support this contention, but wondered if I've simply overlooked it.

FT Williams doesn't mention how to use forfeitures in the 401(k) adoption agreement. It is in the base plan document. After years of using Relius documents, it took asking someone else for me to find that!

Schwab has finally confirmed that they were cashed. We have copies of the cancelled checks in anticipation of IRS correspondence about not being able to find the payments indicated on the Form 945.

We had a similar issue with a law firm recently. They hired a new graduate and paid him a stipend (W-2 wages) while he studied for the bar, but he didn't show up in the office until he had passed. The payroll service wanted to use the first day in the office as the hire date. As TPA, I told them that I was not in a position to offer legal advice (to a law firm of all things) and I would use whatever date they told me.

Excellent example of why a SHNE elective contribution might make more sense for these paired plans.

I think the intention is for the benefit to be access to the low cost/low risk underlying investment. One piece that I read indicated it would be one of the funds available in the Federal Thrift Savings Plan. Those funds are often mentioned as examples of a low cost, reliable investment option.

How will they be correcting the error?

No kids is not the sole determining factor for a husband and wife controlled group.

I keep reading that fiduciary education, specifically educating plan committee members is the new, important process. I like the idea, but haven't seen any good resources about what should be covered. Can anyone point me to a good source for a starting point?

Was this $80,000 payment for services rendered? Looking at the quoted reg above, I believe that is where the answer lies -- not the timing of the payment.

We are TPA on an old profit sharing plan that has pooled assets with Schwab. The plan made several distributions in 2013. The plan trustee didn't want any of the money running through the company bank account, and didn't have a separate bank account for the plan. Schwab was instructed to cut checks to the IRS and mail them in. The checks were sent with no accompanying explanation or forms, and a note in the memo line that read "f/b/o [participant SSN]". Any suggestions about how to reflect that on the 1099-R and 945 forms?

The 415 regulations that were supposed to make this clearer did the opposite. (Sorry I couldn't be helpful.)

Unless, of course, the withdrawal was a hardship and therefor not eligible for rollover.

I don't know -- that's why I was asking!

It doesn't appear that Notice 2013-74 addresses how to code the 1099-R for the new ATRA IRR. I couldn't find it in the 1099-R instructions either. Is there other guidance that I've missed?

I used to work for one of the record keepers who had exactly that issue. While there, I wrote hundreds of documents that included Roth contributions to exclude the Roth balances from in-service distributions and loans. It never occurred to us that there might be a testing issue and to my knowledge it has never been questioned by an auditor. Although I'd love to hear if anyone else has had the issue raised. Keep in mind that just because someone can't take a loan from Roth doesn't mean that they can't take a loan, unless ALL their money is in Roth. The Roth balance can still be counted towards the 50% of the account balance that stays in the account.

I agree with all of the reasons given for not stopping the payments. But I thought I had read that some state laws prohibit continuing a payroll deduction (other than those required by a court order) after the employee has requested that it stop.

Presumably he signed a note agreeing to repay the loan along with the payroll agreement. That is a legally enforceable obligation that the plan trustee is supposed to pursue. (Is your participant also the trustee?) On the other hand, if he instructs payroll to stop withholding, they are probably required to follow that direction. In which case, the loan would become a deemed distribution, but remain on the books. Depending on the plan's loan policy, the defaulted loan might prevent any future loans to this individual.

If we live long enough!

Have you explained to them that until they either get the signatures of all of the board members on a unanimous consent, or have a board meeting, the retired individuals continue as trustees with all of the attendant responsibilities and liabilities?

Although some plans have a $10,000 limit, that is not a requirement.

Both of you should know that "normal" and "IRS" are mutually exclusive!