Lou S.

Were they IRA contributions or SEP contributions? While you can't make pure IRA contributions after age 70 1/2 I'm pretty sure you can continue to make SEP contributions after age 70 1/2 or else you'd run into some ADEA violations so I'm not sure you really have excess contributions for the years in question.

For the 415 limit in plan #2 his 415 limit would be reduced by benefit received in Plan #1 (this should be addressed by Plan document) but for phase in of the 10 year participation limit he would start with the the 3 years of participation in calculating his 415 limit.

Pretty sure the IRS position on this is no pay = no opportunity to deffer = not in ADP test.

Yes. You need an employer identification number.

The RMDs from the 403(b) are not eligible for rollover so the advice to transfer the 403(b) w/o taking RMDs could open the tax payer to further penalties of 6% per year (I think that in the tax rate on ineligible rollovers) for each year the ineligible RMDs remain in the IRA. That would be in addition to the 50% excise tax taht might be imposed for not taking the RMDs in the first place.

The IRS has the authority to waive the 50% excise tax. The best course of action given the size of the penalty is to get a CPA who understands the issues or a tax attorney to give you advice on the best way to correct and get the penalties waived. Very likely the participant will have to take all back RMDs from the 403(b) plan and request a waiver of the 50% excise tax for reasonable cause (in this case bad advice on aggregating RMDs from IRA & 403(b)).

If the plan allows in plan rollovers there is no limit on the types and amounts that can be converted within a 401(k) plan. Beyond the participant's ability to pay the tax hit that is. http://www.irs.gov/Retirement-Plans/In-Plan-Roth-Rollovers-Expanded Opens up some interesting planning opportunities for self employed with varying income that is sometimes negative in some years.

Yes and no. I believe the formula he has satisfies ADP but ACP still needs to be tested.

Isn't that the basic match? Did you mean to put a different formula down?

The IRS position is that Safe Harbor contributions must be 100% vested when funded. Since forfeitures arise from contributions that were not 100% vested when funded they can't be used to satisfy safe harbor contributions. At least that's my understanding of their position. I have no idea why they took this position it seems to me a more reasonable approach would have been to say safe harbor contributions are 100% vested when allocated to a participant's account. I'm also not sure what authority they have to support the position but unless someone is willing to challenge the position I think that is the rule we have in place.

The IRS position whether we like it or not is pretty clear that you cannot use forfeitures to fund any safe-harbor contributions (match or non-elective) and it is my understanding that language to prevent such "reallocation" had to be in PPA approved documents so after the effective date of your PPA restatements you can't do what you want. In pre-PPA documents it is more of a gray area though your position may or may not hold up if a plan is audited. If anyone had something more substantial to add I'd be curious though if you do a search on this topic I think you will find a number of past threads discussing just this.

You can purchase a deferred annuity (likely at a premium) provided it retains the distribution options available under the plan. Good luck.

Forfeiture if allowed in Plan Documents which it probably is. Restore the $250 in unlikely event that beneficiary shows up at later time.

I agree with you.

Will the prior company be retaining/maintaining the plan or will the plan transfer to the new sponsor and part of the asset acquisition? If the former, separate limits, if the later it is a related plan of the new sponsor so it would affect the limits.

You are right. My bad. Got confused thinking the charity was the beneficiary. They rest of my post wrt to the RMDs and excise tax should still hold regardless of who eventually receives them.

In the past you were supposed to pay the excise tax and request a refund for cause. The IRS is kinder and gentler now. Send in an explanation of why the RMD wasn't made, how it was corrected and request that the excise tax be waived. A CPA should be able to help you with a letter. My mom missed and RMD when dad's IRA transferred to her. We made that year and the next as soon as discovered, did not pay the excise tax but requested a waiver and it was never an issue. Your mileage may vary but I've heard a number of similar stories to mine with waiving penalties on late RMDs. I'd also have to think the IRS would be especially understanding with a charity as the beneficiary.

I don't think so. It is Dad B's ownership that is attributed to Child #4. Since all children are over age 21, and each has ownership in only one company, they all should be ignored. Therefore, I believe there are no control groups in this example. You're correct. I had my attribution direction crossed up. It attributes to the person with greater than 50% of the business but not the other way. Thanks for picking that up.

Was he paid for work in 2014? If not he retired in 2013 and the first RMD was due 4/1/14.

There is some prior discussion here http://benefitslink.com/boards/index.php?/topic/40654-timing-of-forfeiture-of-related-match-on-adp-corrective-conts/#.VGKOt8nYtKo and http://benefitslink.com/boards/index.php?/topic/9946-forfeiture-of-related-match-from-adp-test-failure/#.VGKO5MnYtKo

It should be in the Plan Document. Possibly under the title "forfeiture of related match" or similar item.

This may be helpful http://www.irs.gov/pub/irs-tege/epchd704.pdf I think that Company C & D are controlled by virtue of Child #4 ownership being attributed to Dad B. I do not think any of the others are controlled assuming all the children over 18 are also over age 21 which I believe is the age for 1563.

I believe Revenue Ruling 80-229 provides the authority for what you are describing and has several examples that should be reviewed before doing so. I'm not sure what the practical consideration are but I would strongly recommend a DL to client and hold harmless release if they decided they don't want a DL. After that I think a cover letter or notice with the withdrawal packages stating something to the effect of - "Because the assets in the Plan's trust are not sufficient to cover all benefit liabilities your distribution will only be made to extent funded but the Plan's trust. You will be receiving X% of your benefit accrued under the plan " We have not done one of these where the owner did not waive a portion of their benefit to make it whole but it does appear permissible under IRS guidance and I don't believe the IRS considers it a prohibited 411 cut back.

As long as you don't have mid-year safe-harbor amendment issues or the usual allocation cutbacks for folks who have already met allocation conditions I don't see why not. I'm sure we did something similar on EGTRRA restatements back to 1/1 the year IRS issued opinion letters and we've terminated several of them since with favorable IRS DLs and never a question for the IRS on the effective dates.

Sounds like a question for the payroll IT department on how they will be generating W-2s.