K2retire

My former employer sat on numerous corporate boards. In every case he was paid as an independent contractor with a 1099-MISC at the end of the year. A few of the companies continued paying him what they called a "retirement" benefit after he left the board, but those were also reported on a 1099-MISC that looked no different than the ones he got while he was still actively on the boards. He had his own MPPP for the income from his "business" as a corporate director.

An easier way to look at it: the maximum allocation of all money types is $49,000. If that amount has been exceeded AND the participant is over age 50 AND has salary deferrals of at least $5,500, then deferrals can reclassified as catch up bringing the new total up to $54,500. Which bucket fills up first doesn't matter.

I'm working with a plan that has this option and needs to establish a written policy/procedure to distribute to employees about the rules for the SDB accounts. (This is part of their self correction for someone who took a distribution from his account without a distributable event.) Can anyone recommend language for such a document?

That's definitely true. And I didn't think that you could accomplish the same thing just by pre-paying the surrender charges as an "expense" (and wasn't aware that any carriers would even let you do it). But what do I know? It's pretty rare that an employer wants to take on charges. But I ran into a few who felt it was unfair for the participants to be charged a surrender fee because the employer decided to move the plan to a new provider. Most of these were moving away from an insurance company platform, but a few were mutual funds with back end sales loads. In these instances, the only way the provider would agree (and many of them won't agree) to not charge the accounts at liquidation was for the employer to prepay charges. Since the payment went directly from the employer to the provider without ever going into the plan, it would be difficult to call it a plan contribution.

If the charges are deducted from participant accounts and later reimbursed by the employer it is considered a contribution that must be allocated in accordance with the formula in the document. To avoid that problem we have always asked for an invoice so that the employer could pay the charges directly. Not sure where this interpretation originated.

The page is automatically generated in the Relius software when a form is printed.

Many companies have 12-31 payrolls each year and routinely make the deposit in the next year. There should be a way to code the deposit to the proper year in the recordkeeping system.

Precisely why those of us who earned our QPAs the "old fashioned way" are so annoyed that ASPPA is automatically awarding them to all the ERPAs!

Thanks Kevin, that's exactly what I was looking for.

Anything on the safe harbor notice cannot change after it has been distributed. Basically, no 'material' amendments can be made to a safe harbor plan for a subsequent year after December 1. No, you could not exclude HCE if the notice has been distributed. That's what I was always taught also. But the place I'm working now says you can change it during December, you just have to give a new notice. I'd love any cites either way.

If she's already spent the original distribution, she probably couldn't do it herself. If she could , she would still have the original amount in an IRA somewhere.

With your formula, it takes a 5% deferral to get the maximum 4% match. My understanding pf the Rev Proc is that the missed amount the employer would make us is 2 1/2% (half of 5% deferrals) plus the 4% match.

You are correct that it doesn't make sense -- but that is exactly what is required.

Perhaps to avoid being defaulted. If the plan has a rule that you can't have another loan once you've defaulted it could be an issue.

Is it a community property state?

It is potentially discriminatory to deposit his contribution at a different time than the staff. The old school of thought was that being in the market longer gave the recipients of the early deposit an unfair earnings advantage. In this market, it might be possible that staying out of the market gives the recipients of the late deposit an unfair advantage to avoid a loss. (clearly, who has the advantage is not predictable) Encourage him not to continue this practice!

Unless this is a large medical practice, it is likely that the doctor has the bulk of the assets in the plan. Does he realize that when the plan pays the fees, a big part of that is coming from his personal account?

Interesting that the web site contradicts the instructions for the 2010 form.

I know that the 2010 filings happening now are supposed to be on the 2010 forms. A bundled provider with whom we have some business is sending out their forms today on the 2009 form. If the clients follow their instructions and file them on the wrong form, what are the likely consequences?

Some cities also have lisencing requirements (as in they want to collect your money, not they are really regulating anything).

Will the old custodian agree to allow the employer to pay them directly instead of charging the participant accounts?

Apparently you also refuse to listen.

But you could use a requirement that terminees have more than 500 HOS (instead of no allocation conditions) to get around this.

It's been a few years since I've used Relius, but there used to be a way to code that to work properly. It's probably something in your plan specs.

The plan document should have the answers to all of those questions about who to increase. The annual notice covers the increases.