K2retire

I contacted a client who is delinquent in sending their census information for 2016. It's a safe harbor plan, so testing refunds are not a concern. I asked about a tax return extension to decide if I needed to be concerned about the getting them contribution numbers by March 15. During 2016 the plan sponsor was bought out. They responded by saying that the new owner is a sovereign nation and does not file a tax return. Based on questions that they asked before the buy out, I know that this is somehow related to being owned by a native American tribe. But it is a payday loan company and not in any way related to tribal government. Do any of you who are more tax savvy than me have any idea what they're talking about?

And that's why my attorney friends refer to it as "Disney law".

Does the document specifically say true ups are not allowed? Some do, others leave it as discretionary.

I was just offering a practical solution that works in many cases, not an opinion on whether it is legally correct.

Sometimes TPAs set fees high to discourage clients from asking for things they don't really want to do. As for an attorney drafting one for $700, I would love to find one that charges less than $1,000.

At one time I had a single person money purchase plan with Vanguard. They never mentioned anything about 5500 filings. If I hadn't been in this business I would not have known I needed to do that, or even what that was. At the time of the EGTRRA restatement they told me that it was not legal to restate a money purchase plan to become a profit sharing plan. Even when I explained that I was doing exactly that for most of my clients, they wouldn't consider it. At the time of the PPA restatement they told me they were getting out of the business and I would have to either terminate the plan or move it elsewhere. I chose to terminate it, but I don't remember if they issued a 1099-R for the rollover or not. Sometimes you get what you pay for!

The check is endorsed by writing "for deposit only" on it. Once in the account of the payee, how the funds come out of the account is another matter. If there was a joint owner of the account -- problem solved.

The only tricky part of this is remembering to watch for assets to grow enough to need to begin filing again -- and tracking the limit below which no filing is needed to be sure it hasn't changed.

Agreed -- but some people still use paper and pencils!

Austin, that's a great theory. But there are many people who prepare their own taxes and will deduct the full amount because they don't know any better.

In Missouri the attorney's fee is a percentage of the assets the flow through the estate. One hopes that would not be the reason for this suggestion, but you never know. There is also the issue of creditors of the estate who would stand to receive the funds if they go that route, but would not have a claim if the plan beneficiaries are paid directly.

Nearly every client I've heard of who let a payroll provider that also offers 401(k) plans found out after the switch that they could no longer make deposits to the 401(k) plan. The employer could set up a bank account in the name of the plan to hold the contributions and loan payments temporarily while they get a new provider in place for a transfer of the plan.

And to answer your question about safe harbor -- adding this feature means that you lose the ACP safe harbor and must test these contributions combined with any matching contributions.

BG, QACA caps at 3.5% according to my math. Our plan switched from traditional SH to QACA to take advantage of the 2 year vesting. But we chose to retain the basic SH match formula. Since that is better than the basic QACA match formula, we could do that.

Might this be considered a "mistake of fact"? It could also be a 415 violation because it was taken from compensation that isn't included.

Will there be a period of more than 3 days when the participants cannot take withdrawals or change investments?

That rule changed a long time ago. But it may well be what the CPA is thinking of.

Perhaps I'm over thinking this. That gives good information about what benefits are taxable and how to calculate the tax. What I'm looking for is something that tells which of the taxable fringe benefits on that list can be excluded from plan compensation and still meet the 414(s) safe harbor.

We have a client whose plan excludes fringe benefits from the definition of compensation under the 414(s) safe harbor alternative definition of compensation on an FT William document. Some of the things that the client believes are "fringe benefits" are not what I think is a fringe benefit. Neither the adoption agreement nor the base plan document defines fringe benefit. FT William says they can't give tax advice. Treas. Reg. 1.414(s)1(c)(3) also mentions fringe benefits but fails to define that term. Does anyone have a good reference that I can provide to my client?

Enjoy your free time!

Yes, deferrals are included in the 415 limit.

We've had a plan termination and a POA for a participant who was out of the country serving in the military. It was not narrowly drafted, just the standard POA recommended by the military before overseas deployments. The plan sponsor chose to honor it.

We recently did a VCP filing for a client who had been using ADP. They ended up having to pay over $50,000 in QNECs and missed match because ADP didn't think taxable group term life premiums should be included in gross wages. So every year when we asked the client for gross wages they gave us the wrong amount.

Interesting. The most common POA reason I've seen is because the participant was called to active duty military service.

I agree with all of the above (including driving a Hyundai ) and the reasons for it. But in light of all of the media concerns about stopping plan leakage, I'm curious to see how this evolves -- or if it does.