Lou S.

Is this an Affiliated Service Group (ASG)? If yes have the individual LLCs adopted the parent plan allowing the partner to continue to participate in the safe harbor 401(k) Plan? If no, under what athority do the partners contribute to the safe harbor 401(k) Plan? If you are an ASG then the partners can not set up SEPs for the LLC and pass coverage as you'll be treated as one big happy family for IRS testing.

I'm not an expert on this topic but I think you would have problems offering or making available an investment that only HCEs have the ability to purchases even through an SDBA option.

No an existing 401(k) plan can not be amended to a safe harbor 401(k) plan as soon as the plan year begins so January 1, 2015 would have been too late to amend the plan to safe harbor. And existing 401(k) plan would have had to hand out the safe harbor notice for 2015 by December 1, 2014 and amended the plan to safe harbor effective 1/1/15 by December 31, 2014 to be safe harbor for 2015. If the Plan was a profit sharing ONLY plan that was adding a NEW 401(k) feature, October 1, 2015 would have been the deadline to give the 3 month deferral window for new plans. See the 401(k)(13) regs for additional info.

My understanding is that a self-employed person doesn't "know" their income until the tax return is completed and that the election only needs to be in place before the end of the year.

You can never amend a regular 401(k) plan to safe harbor 401(k) plan mid-year. The lone exception is a 401(k) plan that properly gave out the "maybe notice", is handing out the required supplemental notice, and is amending for the year that they elected to be a 3+% non-elective SH for the year. Any new calendar year plan or existing profit sharing plan must be be implemented/amended by October 1 to allow the minimum 3 month window for newly formed SH plans. Existing 401(k) plans are are amending to safe harbor plans must timely distribute the notice 30 - 90 days before the next plan year (unless you have reasonable cause for less than 30 days notice) and must be amended to include the SH before the year starts - unless availing yourself of the aforementioned "maybe" notice on the 3% non-elective.

Some of the free IRS webinars cover ethics credits 1 hour at a time. It varies when they are offered. The last example I see on a quick check of my CE files was 1/29/14 called - IRS EP Phome Forum - Ethical Standards of Employee Benefits Practice - What to Ask and Say to Clients and What to Tell the IRS. My other Ethics credits have been through paid ASPPA webinars.

In case ETA's answer isn't clear 1st match is safe harbor - not discretionary 2nd match is a fixed formula in the document - also not discretionary 3rd match is discretionary, can not be more than 4% of pay and can not match deferrals in excess of 6% of pay.

The problem you have is if one of them terminates employment between now and 12/31/15 as you would then have a RMD for 2015 based on the 12/31/14 balance due no later than 4/01/16 but may have a $0 balance in the plan with which to make the RMD.

Is this some kind of safe harbor 401(k) Plan? If the answer is no - then I see no problem with making the allocation requirements MORE generous than what is currently in the document. For example changing the conditions from "1000+ hours and employed on 12/31/15" to "0 hours and employed on 11/15/2015" would not cut back the allocation for anyone.

No plan NEEDS to provide a QDIA notice, but if you want fiduciary relief for defaulting participant's into an investment choice, especially those who refuse to make an investment selections themselves, then you MUST provide the notice.

I'm pretty sure that question and more is on the new 5500-SUP

Assuming it is not a partial termination (I am making no judgement on this issue) forfeitures can be used to pay reasonable administrative expenses if the plan so allows.

If you are asking can you exclude a portion of HCE income in the calculation? The answer is yes as you will clearly have a non-discriminatory definition of compensation, assuming you are not excluding some NHCE pay which would get you into a 414(s) test on compensation, The question then just becomes, how do you write the definition of compensation into the Plan Document to get what you want.

https://www.irs.gov/uac/Reporting-Miscellaneous-Income I have no idea what you are talking about. IRS guidance seems to clearly contradict your statement.

The employees of the brother-sister controlled group will have to be included as non-benefiting employees in discrimination tests. If the plan passes testing with them as non-benefiting employees they you are OK. In this case I have a hunch it will not pass testing. I could be wrong as I have seen no data on either of these companies but my guess is the company they want to cover has the owners and few if any other employees and the company they don't want to cover has a fair amount of rank and file non-highly compensated employees. But perhaps that's just the cynic in me coming out.

Did they provide a "maybe notice" or is the plan a 3% guaranteed SH? If the former just give the supplemental notice that you will not be making the SH. If the later, the 3% contribution will be due on compensation through date of termination.

I believe ERISA requires you to maintain all records to determine benefit calculations or something like that. So yes essentially infinite. Or at least past the edge of the mortality table. We had an ex-participant who found a quarterly statement from the late 1990s and wants to know where his money is. Of course it's a plan we took over in the mid 2000s that shows no record whatsoever of this individual in any plan records we have. The owners, management and anyone involved with the company that long ago have since changed hands and the prior record keeper has been defunct for many years so the older records are seemingly nowhere to be found. I mean what do you do in a situation like that? It's pretty much a kin to the SSA "you may have benefits" letter. We had one case on a terminated plan where where the woman had an SSA letter and we gave her a copy of her signed benefit election form and the 1009-R she received and she was still calling us asking where her money was. Again this was about 15 years after the plan had been terminated and the woman have been long since paid out. If it wasn't for electronic storage being so easy and cheap there is no way we as a service provider would have maintained those records on a terminated plan and the sponsor had long since gotten rid of everything they had as they retired the same time they closed the plan and shut down the company.

Wait you expect the SSA to actually update their database? We've had it happen on occasion. Very frustrating. Especially if it is a long dead ex-client or terminated plan.

How are loans of terminated participants dealt with normally? Does the loan become due in full or taxable income? If so I would treat it that way. I would not pay it off with funds from the employer as this would seem to compound the error being a potentially prohibited transaction.

Given that they have a program in place that's relatively cheap I would think "reasonable cause" letters would now have to be something a bit out of the ordinary. I doubt the "oops" didn't know I went over and had to file (or similar excuse) is likely to be accepted as reasonable cause and if you do try a reasonable cause letter you are no longer eligible for the program that allows missed returns to be filed for $500 a year with a $1,500 max cap. https://www.irs.gov/Retirement-Plans/Penalty-Relief-Program-for-Form-5500-EZ-Late-Filers

I'm unaware of a "maybe notice" provision for the safe harbor match. My understanding is unless an amendment removes the safe harbor match for a year before the year starts, it's required by plan document. You can stop a safe harbor match but you have to give give 30 days notice to participants and you are subject to testing. I'm also unfamiliar with the concept of the safe harbor notice itself being an amendment to the plan but I'm not saying that it is not possible.

If I remember correctly your partnership interest is the greater of your capital interest or profits interest in the firm. Both of these I believe are reported on the the K-1 - Part II, Item J.

1 - yes 2 - see Field Assistance Bulletin 2014-01 (you can follow link below) 3 - unless the plan is terminating which will allow cash out above the $5K you can not cash them out without their consent until the later of age 62 or the Plan's Normal Retirement Age. https://www.irs.gov/Retirement-Plans/Missing-Participants-or-Beneficiaries http://www.dol.gov/ebsa/regs/fab2014-1.html

If you have more than 3 years of pay history in the LLC but your employees don't, then maybe a SEP is for you. Especially if your employees have high turnover and rarely stick around for more than 3 years.

I think the problem Lando keeps running into is the Plan accepting deferrals for employees of unrelated companies who are not participants of the Plan prior to them executing an amendment making them an adopting employer and what the proper fix is. And it seems to come back to, can it be corrected by amendment under SCP or does it need to be corrected by amendment under VCP given his set of facts?