K2retire

In that case, the potential consequence of failure to follow the terms of the plan document is disqualification. It sounds like a VCP filing is in order.

You haven't given enough information. Is this a fixed match required by the document? Is it a discretionary match? Have they passed the ACP test each of those years? If not, were corrections done?

That was my thinking as well. But how would do you treat the money that is deposited? It's neither a contribution, nor earnings. (added question) These are individual daily valued accounts. Would the money go back to the participant who got the excess distribution?

Due to a coding error on the part of a recordkeeper, all money types were permitted to be used for hardship withdrawals even though the plan documents called for hardships to come exclusively from pre-tax deferrals. At this point it is uncertain how many plans/participants may have been impacted by this error. In many cases, the balances were sufficient to support the amounts distributed, so the correction is merely a coding change. However, there were some instances when the amounts distributed exceeded the amount that was available for hardship distribution under the terms of the plan. Some of those are probably instances where the excess was withdrawn from the safe harbor matching source. What options do we have to fix those errors?

You and MANY others!

Regardless of whether the plan or the employer pays the withholding it is still a 945 tax. Where I used to work the plan's custodian wrote a check to the employer for the withholding. That way the employer had a canceled check without having to open a checking account. The deposit was still made using the plan's EIN.

If they exist anywhere. I've heard of many merger and acquisition situations where the attorneys for the small companies didn't think to include anything about qualified plans. (Or probably didn't realize there were any.)

I've known a couple of people who were Primerica advisors. They are primarily a multilevel marketing arrangement that sells life insurance and finanacial planning. Some, but not all, of their people are also registered to sell securities. Typically the focus more on selling insurance and recruiting new sales people than anything else. I've not heard of any of them advising plans. Like many other sales oriented organizations, the quality of service and advice will vary from one sales person to the next.

The ACP test does not include Roth contributions. Those would go in the ADP test just like pre-tax deferrals do. The vested portion of the employer match should be paid to you. If you are not fully vested, the non-vested portion will be forfeited. Anything paid to you is fully taxable. It is somewhat unusual (although not impossible) that you would receive an ACP refund without also receiving an ADP refund of part of your deferrals. Whether that part of the refund is taxable or not will depend on whether it was a pre-tax deferral or a Roth deferral.

No. The business owner (or someone to whom he delegates the job) still has to get the money from the payroll to the appropriate separate accounts in a timely manner.

MIke, while your point is valid, hopefully she won't ever learn what financial institution to contact!

Coverage rules were created to prevent exactly what this client wants to accomplish -- covering only management or HCEs. If they don't want to expand coverage, they probably can't have a qualified plan.

Of course, having a TPA doesn't guaranty that the client will consult them before taking money out of the plan!

As I recall PPA creating the "permissible withdrawal" was one of the big advantages of offering an EACA. It seems unlikely that it would be allowed otherwise, although I believe some of the EACA rules have softened of late.

All these young workers coming and going met the statutory eligibility requirements before they left?

I've seen not only payroll companies, but other TPAs take that position. But I still haven't seen any change in the IRS position.

Part of what they are telling you is correct -- it is entirely possible that the plans are structured to put the top heavy minimum contributions in only the defined contribution plan. If there was no contribution to that plan, it sounds like there may be a problem, but you said "assuming they are top heavy" as though you aren't sure if they are or not. Benefits, top heavy or otherwise, are correctly calculated based on compensation, so I don't understand that concern. The lump sum payout in a DB plan is based on many variables, so the folks here are unlikely to be able to tell if the calculation is reasonable or not. Involving the Department of Labor is an option, but not one that will produce a speedy result. Getting your own ERISA attorney truly is the best alternative.

The reason we are so far along is because we offered a discount to people who completed the process early. (30% if they responded within 60 days, 20% for the next couple of months) We also plan to raise the fee for anyone who delays too long, but have not yet heard an amount from management. P.S. Jack Frost makes a good point! What was Robert thinking?

I also have a Vanguard MPPP (personally). I was told that they are eliminating MPPPs, not small plans. They said I could restate to a PS or 401(k) plan (amusing since I asked to do that at the GUST restatement and was told it was not legal) but that they would not permit the MPPP money to be rolled into the new plan. FWIW, the only thing they ever did for the plan was provide a document. Fortunately I knew that I needed to file a 5500EZ when the assets reached $100,000 because they never mentioned it. I am not complaining, because there was no charge to set up or maintain the plan. But now that I'm in this business, I have to wonder how many plans they have that are out of compliance due to neglect!

The plan where I work (not any that we allow our clients to use) specifies that home remodeling is an allowable hardship. I'd love to know how they got that approved!

I truly believe there will always be at least a few clients that refuse to act until the last day!

We started last September and we're about 75% done.

The regs you will find require that the plan be operated in accordance with its written document. So if the document says you must do it, you must either do it or amend the document.

Could that be because the people writing this stuff have never actually attempted to do any of it?

Generally an S-corp K-1 will be reporting only investment income, not earned income for retirement plan purposes. The W-2 would report the ONLY income that can be considered.