Lou S.

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?

I'm not 100% sure but I think this is eligible under self correction via your plan amendment proposed in option 2. It seems to fall under several items the IRS lists as available for self corrections - 1. as a result of a corporate transactions 2. expanding coverage to an otherwise ineligible group of employees. But it is sometimes risky to do self-correction when it is something that can clearly be fixed with VCP using your option 2. Just galls you to pay for VCP if you can fix via SCP.

I'm not sure what the "proper" procedure is but I would think you don't get SH relief for the 1st plan year since you "effectively" don't have 3 months of deferrals and would be subject to ADP/ACP testing and TH minimums, if applicable. Perhaps someone else has been in this position before and can offer better info than I can.

October, November, December is 3 months right? Did no one signup until now or did they just get around to doing the enrollments now?

I agree with you. No audit for 2015.

401(a)(17) is limit in effect at start of the year. 415 is limit in effect at the end of the year. At least that's the way I've always learned it. Though I think you CAN get some different results if the Limitation year is defined differently than the Plan year.

I'm not aware of any grace period for delaying enrollment or not allowing deferrals. I think you have a reasonable administrative delay (changing providers) for delaying/suspending the deposits, until the accounts can be setup. One administrative issue might be those payrolls are going to the old provider, in which case I'd assume you would have to enroll/default those participants into the old program.

The portion that is tax free recovery of basis or qualified distribution is not subject to income withholding.

I am not aware of any exemption from the audit requirement for any qualified retirement plan covering more than 100 (120 if previously filing as small plan) participants at the beginning of the year. There are some rules for deferring one audit in the case of at least one short plan year (less than 7 months) where you defer the earlier audit, but the audit for both plan years has to be attached to the subsequent year filing.

I think it is on safe harbor 401(k) plans using the 3% non-elective contribution that you run into imputed disparity issues in the general test where you aren't allowed to use it.

I don't think the Plan is allowed to be put in a better position than if the mistake was not made. In this particular case it sounds like the size of the correction was calculated in error causing an "over correction", presumably by the brokerage house, the excess of which should be returned to the brokerage house. But honestly I'm not 100% sure on that, it's just an educated guess.

Good luck. Likely you will need an attorney who is versed in drafting QDROs to put the 1991 divorce settlement into terms the Plan will accept as a QDRO.

I'm pretty sure that unfunded* plans under 100 lives are not required to file Form 5500. I believe the DOL also has an exemption to the filing requirement for small plans if the only "funding" is through insurance contracts. Now if you have a funded plan trust, I believe you are required to required to file regardless of participant count. But welfare benefit plans are not my area of expertise. *plans that pay out of the general assets of the employer.

Have the Plan Administrator make a decision on how it will be handled and then treat all future participants the same way. Ideally incorporate the decision into the Plan's Administrative procedures or better yet formalize it with a Plan Amendment. (It is possible this is part of your new PPA document, I know it was added to ours). There are a number of acceptable alternatives that include - All participants will be treated in the class they are in on the 1st day of the plan year. All participants will be treated in the class they are in on the last day of the plan year. Participants will receive a "blended rate base pro-rata" on when the change occurs. Participants will get A% on compensation earned while in group A and B% on compensation while in group B. There may be other acceptable methods but I think the most important thing is establishing a rule an following it in a non-arbitrary manner.

Looks like a clear parent subsidiary relationship with S-Corp owning more than 80% of the LLC.

I usually ask to speak to the partner in charge and tell them it's not our job to train their interns and can you please have your underlings read the instructions so we don't have to bill the client for our time educating your employees. Though I usually use nicer language.

Jim I agree with you.

I'm going to assume you are talking about adding this condition for the next plan year and not the current plan year. But yes this sounds like a fairly standard cross tested design with the safe-harbor as a floor in your general test. If you want the HCEs to get more than 9% total allocation though, NHCEs are most likely going to need a larger contribution to pass gateway testing whether or not they work a 1000 hours.