Lou S.

If you want to follow the terms of the document, deferral would change from 0 to election on 1/1. Is there a reason the forms were turned in late? I mean did the participant get an enrollment package at the end of June? Or did they get one in May an just sit on it?

The plan document should spell out how the assets are allocated when insufficient to cover all benefit liabilities. Section 7.12.1.20 of the IRS internal manual may be helpful http://www.irs.gov/irm/part7/irm_07-012-001.html- though after looking at it probably not. See Rev. Rul. 80-229 - I think this is the one that spells it out pretty clearly and I don't think it has been superceeded. I think there was discussion of similar situation in this thread http://benefitslink.com/boards/index.php/topic/12131-distributions-from-terminated-small-db-plan/

I'm a little confused by your description does the trust own the shares of the company (or 100% interest in an unincorporated business)? I assume the original owner is the beneficial owner of the trust and is carrying on the same business, no? If so you might have an EIN change along the way but essentially you have the same ownership structure for pension purposes when you look through the trust. That is he went from owning 100% of the business as the shareholder of the company to the 100% owner of the business which he now essentially owns through his trust.

There are absolutely some fiduciary issues with the owners taking their money and leaving the rank and file with the bill.

The short answer is it is required by law. And the bond doesn't protect against losses from poor investment due to individual direction, it protects the participants from theft by a plan official with access to their account.

I assume you are talking about folks who met the eligibility and have entered the plan as participants and not just employees and will answer accordingly - If a participant terminates on 12/31/2014 and does not have a balance I would say they are no longer a participant "as of the end of the Plan year". If a participant enters the plan on 1/1/14 they are a participant on the first day of the plan year. Yes it is possible for the 12/31/2014 participant count to be different from the 1/1/2015 participant count due to new entrants.

In Service distributions are not a Plan requirement, but the rules about withdrawals should be in your Summary Plan Description. If you don't have one, request a copy from the appropriate person.

To Add to what My 2 Cents says... Since it is the Plan Administrators duty to file, they are liable for the penalties. In many cases the Plan Sponsor is the Plan Administrator. If the Plan Sponsor is bankrupt my understanding is that that IRS is simply another creditor for the penalties owed. Is this an Orphan Plan? If so there is a whole DOL procedure for wrapping up an orphan plan where you simply file a final 5500. edit - typo

Well I think you need to look at the PCRA accounts and see where the gains/(losses) actually come from. At least if you want to do it correctly.

IF it was an overpayment the excess should be returned to the plan as a trustee to trustee transfer. There should be no tax implication to you.

I am not aware of any legal authority that would allow the plan to pay anyone other than the named beneficiary.

The last submission we did we submitted from GUST - date of termination in 2014. The IRS did not ask for anything prior to GUST. We did not have a signed copy of the original document in 2000 but the IRS did not ask. We're very confident that a signed document did exist but were happy we didn't have to make the client search his records or go back to the prior record keeper to to locate the original plan document. YMMV edit - I will note that submission was a 5310 for a terminating plan and not VCP for a non-amender.

I agree with mbozek and if he is terminated and therefore has a distributable event I believe the correct terminology in this case would be "Loan Offset" as opposed to the term "Loan Default".

My understanding is if you can't show amendments since the last DL, you need to do all the amendments from last DL to current date. Others may have a different experience.

You'll need to track the sources separately and will always need to retain the QJSA on the MP money (unless law changes in the future) but you do not need to have QJSA provisions on the profit sharing money.

Pretty sure it has been in the EPCRS procedures since day one. Here is a a decent recap of the program from the IRS web site including the differences between DOL/IRS. http://www.irs.gov/Retirement-Plans/Late-Deposit-of-Salary-Deferrals-Fixing-Common-Plan-Mistakes

Yeah. Stupid me. I used your $17,500 in the OP and not the actual 2015 limit of $18,000. And if you have expenses on your Sch C, that will reduce your income further, but you've got a pretty good estimate if you are shooting for the max.

25% of your "pensionable income" plus the remaining 401(k) contribution limit. "pensionable income" is going to be be Sch Net minus 1/2 self employment taxes minus employer contribution; can't recall if there is another adjustment. As an approximation I'd guess you could put in about $26K er contribution + $4.6K 401(k) contribution.

Assuming you are under age 50 and not catchup eligible and that you had no ownership, controlled group issues or affiliated service with company X then your annual additions 415© limit for your solo-K would be $53,000 for 2015 - assuming you have the income to support such an addition and presumably to make it tax deductible. That is company X plan has no impact on your solo-K, other than to reduce the amount of elective deferral 401(k) that you can make you your solo-K for 2015. If your income is from your solo-K business is $212,000+ you can simply make an employer contribution of up to $53,000 and be done. If you are self employed and/or your income is below that number the math can get a bit trickier. Also if you are over age 50, the additional catchup limit of $6,000 for 2015 can come into play.

I have no direct experience in this happening but... Was a 5500 filed or 5500-SF for the years in question? If 5500, you can probably file an amended return for each year with an audit and no DFVC. If SF, then same answer but with DFVC since not filing the correct form is probably considered not filing at all or "willful neglect". I do not believe you can get by with one "mega audit"; each year will need it's own audit. Though the statute of limitations may have expired on some years and you may be able to get away with not auditing those, just the open years. Hari Kari for CFO seems a bit extreme but I suspect this may cut into his annual bonus, if any. Unless they are getting Federal Bailout money in which case he'll probably get a raise. Might also be a good time to see if the Plan Document is up to date or if they need a VCP for late amender.

Yes it is possible.

I do not believe you can charge expenses directly to the participant in a CB plan. Unless you have it written into the document somehow as part of the accrued benefit.

Have you tried calling Oppenheimer?

Probably correct. Is this part of the new guidance on missed deferral opportunities? For some reason I was thinking the employer would have to make a QNEC for the failure to implement the participant's election. Though maybe I'm wrong on that.

How many payroll are you talking about? Can you run a "negative" 401(k) contribution equal to the amount withheld? If so that should fix the W-2 and make the 0% person "whole" accept for any lost earnings. Forfeit the amount in the plan and use it to fund some or all of the QNEC for the 10% person.