Lou S.

Q1 - attorney is crazy in my opinion Q2 - depends, is a VCP scheduled? What would you put as a receivable if you are going to wait on IRA approval. Also I have no clue why on earth the CPA could not issue the audit and simply disclose the issue in their report. To me it sounds like they had zero basis for not getting the audit done on time. I'd look for a new auditing firm for next year. Q3 - Yea benefit audit have gotten increasingly insane. First started happening after Enron and whatever law that was that also brought in blackout notices but the level of crazy seems to escalate a bit each year. And attorney may be correct, IRS may disallow a QNEC that goes only to HCEs. I have no direct experience of that but it smells like something the IRS would not be too keen on as it is really a boon to HCEs.

Rollover 1099-R

Why not? 3% of $0.00 pay is $0.00 deferral. Am I missing something?

Salary Deferrals are subject to FICA taxes. Employer contributions from corporations are not subject to FICA taxes Your CPA sounds correct in his analysis given your stated facts and desire to contribute exactly $25K. In fact if you only want to contribute 25K you don't need any salary deferral, you can simply make a 25K PS contribution since you have 100K in w-2 wages. If you want to contribute more than 25K, then you could make an additional salary deferral of up to $18K ($24K if you are age 50 or older), though that needs to run through payroll and time for that is getting a bit short. edit - though in the long run it doesn't matter if your gross w-2 wages are $100K you will pay the same FICA taxes if your salary deferral is $0 or $18,000. The difference will be whether you have more pass through income reported to you and a lower taxable wage on your W-2 or a higher less pass through income and higher taxable wage in your W-2. Now if you have to raise your income to $118,000 to make an $18,000 deferral that would change my answer.

What are the Plan's provisions for proving disability? If she meets those and provides the evidence I would think the Plan Administrator would have to issue the 1099-R with disability code.

I agree with the attorney. I have nothing definitive to point you to. Though we have had clients back out of a PS contribution or discretionary match in the past under similar circumstances.

Probably gonna be top-heavy too.

I believe the answer depends on his wife.

Is it just one payroll? Can you make an adjustment on the next payroll or was this the final 2015 payroll?

I thought the IRS had a Rev Proc last year (forget the number) that cleared up the issue that don't need an Individual DL if the amendment doesn't take you out of reliance on the Opinion/Advisory letter of the the VS or Prototype.

She is an HCE subject to the deferral limits on HCEs in a SAR-SEP

Can they open an IRA in the missing participant's name somewhere with the returned funds? Though with 3 years back TH contribution if they are doing an EPCRS fix they can probably just add this to the VCR application. If they aren't doing EPCRS, I don't have much guidance in this situation.

I have no direct experience with them, but I will say from what little I have read, government plans that offer this option seem to have a death benefit payment equal to the un-recouped voluntary contributions to the beneficiaries. But I honestly don't know the mechanics of how it works. Though I am surprised this is not addressed in the plan document one way or the other. Is there anything in the SPD that beneficiaries might be relying on?

What does the plan say about voluntary annuitized benefits at death?

I think that fails as well on the first condition. I believe you can have a single entry date of the first day of the plan year if the eligibility conditions are no more restrictive then Age 20.5 and 0.5 years of service. And you can also have a last day of the plan year entry such as Tom Poje describes, though I'm not sure that works well in a 401(k) plan, seems more applicable to profit sharing plans.

Yeah it is a clear controlled group, no reason to make it complicated when one plan should work just fine. He'll just have zero income from the sole proprietorship in future years it will all be from the s-corp presumably.

Why not have the sole prop also adopt the S-corp plan and make a profit sharing contribution on the combined income from both entities? I'm assuming he has a 100% ownership of the S-corp but maybe that's a bad assumption on my part.

I'm not 100% sure but I think the answer is no as it would change the information in the previously distributed safe harbor notices.

A plan with roughly 140 eligible participants on 1st day of the year but 401K only and approximately 50 participants with balances. Clearly by definition the plan requires an audit and has filed one historically. In the last year of the plan the sponsor goes bankrupt and pays out all participants. If the sponsor has no funds to pay an auditor and the plan has paid all benefits to participants, what do you do? File Final 5500 with no audit? Obviously if someone comes up with money for auditor this is not a problem but this can't be the first time this has come up.

Since no one is yet employed on the last day of the year, they are not yet entitled to a contribution, and you can amend the plan to exclude them from receiving an allocation, subject to passing testing of course. However, because the plan is top-heavy and they are a participant for some component of the Plan (namely the 401(k) component) they are entitled to a top-heavy minimum. Furthermore since they are receiving some er contribution in the form of THM they would then be required to receive additional gateway contribution if the THM did not cover he gateway.

https://www.irs.gov/Retirement-Plans/Reducing-or-Suspending-Safe-Harbor-401%28k%29-Matching-and-Nonelective-Contributions-Midyear On the first question if the termination is due to acquisition you should be fine with the Plan termination and operating as a safe harbor through date of termination. On the 2nd question that is a little more sticky but I believe you could likely unwind the termination is the acquision falls though and hand out the 2016 safe harbor notice with less than 30 days and document your reasonable cause for not giving 30 days notice. Perhaps someone who has gone through similar situation can chime in.

Members of a controlled group are treated as once big happy family for testing purposes, while I don't have a cite for this next piece, I would assume the IRS would treat them the same for cash out purposes. That is if they have more than $5,000 vested you could not cash them out without their consent prior to the later of age 62 or NRA, if t he plan allows.

The management regs were withdrawn. I hate ASG determinations but my guess is in this situation it is most likely an ASG, especially if 100% of the S-corp income is from partnership. And for what it is worth I agree with your "arbitrary splitting of income" comment.

I don't have experience with that in particular but why not use it to pay a portion of next year's audit fees?

I don't think that will qualify if ANY HCE is eligible for the enhanced match as you will have HCEs with a greater rate of match that NHCEs for some level of contribution rate.