Lou S.

Interesting just found this http://benefitslink.com/boards/index.php?/topic/52196-shifting-if-adp-fails/ from last year (or 2 years ago) particularly the last post I can tell your for a fact that by shifting in my example the plan will create larger ADP refunds all of which can still be reclassified as catchup even though there are 2 NHCs involved. time for me to read the attachment in the other thread...

How long did it continue? Was it one pay period where it was attributable to 2013 hours worked or has it continued throughout 2014? Is the Plan in the DL process or terminating w/o a DL?

Maybe, maybe not. Read your Summary Plan Description (SPD) on the definition of compensation. The employer is allowed to use either but it needs to be in the Plan document.

Well the ADP fails but no refunds are required because all the excess is recharacterized as catch-up and remains in the plan so I don't think I'm allowed to shift. Also plan uses prior year testing. If I'm allowed to shift 0.02 from ADP -> ACP the plan will pass ACP. This would create slightly larger refunds for ADP but still well below the catch-up limit so no ADP refunds would be required either. If this is something I'm allowed to do I'd love to take advantage of it. Is there a citation on how and when you are allowed to shift that I can look at? And on a chuckle note, NHCE ACP is closer to .05 than it is to 2 to use your numbers.

Can you change the termination date?

If he's a sole proprietor and the contribution was made in 2013, why do you need to remove it? Just call it an employer contribution the question becomes which year. Is he over the 25% deductible limit in 2012? If no do you really need to do anything? The whole contribution is deducted on the same line of the 1040. If he's over the deductible limit in 2012, amend the return but since contrib was made in 2013 and not 2012 you don't have an excise tax for 2012. If you are under deductible limit in 2013 I see no reason to pay an excise tax.

Pretty sure I've researched this in the past but is there a de minimums refund limit that you don't have to make? We have 2 ACP refunds, one for $1 + earnings and another for under $100. Unfortunately I think the answer is we need to make these refunds but just wanted to know if there was something I was missing.

Generally speak yes but if you have any specific questions about your own benefits I would strongly recommend consulting an attorney who is versed in both bankruptcy and ERISA or at least a firm who has attorneys who can consult on both. Not doing so could be a very costly mistake.

If there is money in the plan I see no reason not to make the refund from money in the plan. Of course you may have a problem in 2015 if the plan fails the test again and he doesn't have enough in his account to cover the refund but I say burn that bridge if you come to it.

I'm confused. If you use a target date fund, you usually use the whole suite of funds not just one fund. Someone who reaches NRA in 2040 would be defaulted to the XYZ 2040 TDA Someone who reached NRA in 2055 would be defaulted to the XYZ 2055 TDA etc. You just need a rounding method for folks who land in between the band.

Yes. It is an employer contribution.

If they are terminating the ESOP that will make everyone 100% vested. I'm sure there are a number of reasons why someone would terminate an ESOP. One might be that the company is being put up for sale.

Individually I suspect a lot of congress critters are reasonably smart. But when they get together I think their collective IQ drops by 30 points.

It's all part of the paperwork reduction act.

Yes. The amount is not deductible.

I do not believe code 7 is correct in that case unless the participant is over the age of 59.5

For what it is worth my mother receives a pension as surviving spouse after my father died and her 1099-R is code 4. Prior to his death the code was 7.

The first code s/b 4 The 2nd, what is the refund for? Is it a testing refund or return of basis of after tax contribution? The former has specific codes depending on the type of refund and year of taxation. The later is whatever code the distribution is supposed to be but you have lower taxable amount (Box 2?) and report the recovery of after tax in a separate box (Box 8?) on the 1099-R

You can change vesting schedule but anyone with 3 years of service at the time of the change has the right to chose which vesting schedule they want to be on. I suppose it is possible the IRS could rule the amendment discriminatory if all (or most) of the people hired before 1/1/13 are HCEs and most or all of the employees hired after 1/1/13 are NHCEs. This might happen in a small start-up that 100% immediate vesting and amends as soon as they decide to have non-owner employees.

Unless there is an opt-out in the plan document, the word mandatory is pretty self-explanatory. Usually there is not an opt-out as you run the risk of failing discrimination tests if too many folks opt out.

If there is reasonable cause it could get waived but the potential liability is $100/participant/day.

As long as you have properly complied with the fee disclosure notices to participants in advance and these fees were disclosed I don't see an issue. Of course that raises the question of how do you notice missing participants about fees that may be charged to their accounts?

Can the owner who just turned 70 1/2 and is awaiting IRS DL use the account balance method to to take RMD? RBD is 4/15/2015 but I think plan termination and desire to roll to IRA shortly after DL (expected in early 2014) trumps delaying the RBD to 2015. That is if he's electing a lump sum can he take PVAB of benefit on 12/31/13 divided by applicable divisor to determine 2014 RMD? edit - never mind for future reference the answer is in T.R. §1.401(a)(9)-(6); Q&A 1 - (d)(1) and (d)(2)

There are generally (at least) 2 types of possible fail safe language. The first is 410(b) fail safe language but it is generally NOT used with a cross tested plan because it requires to you to pass the 70% test. This fail safe is often used with pro-rata allocations in smaller plans that sometimes fail coverage due to last day requirement. The second is gate-way fail safe language which is designed to bring every employee who receives some employer allocation and additional allocation to bring them up to the minimum gate way regardless of other allocation conditions. Check you document for this one and you may be done. Otherwise yes this something that an 11(g) amendment can generally used to fix.

The regs only require a loan before a hardship, not before an in-service, unless the plan itself requires it. To play devils advocate maybe the employee has very large medical deduction expenses and will be getting tax refund. Why should they have to take 20% more than they need to meet the hardship and permanently lose that 20% as retirement savings? Granted that's "probably not" the fact pattern but just showing an example where no withholding makes a ton of sense. Though I admit usually it is the other way and the employee who takes a hardship gets hit with the double whammy of being woefully under withheld when they file their taxes.