Lou S.

If the election for 50% was valid the participant is out of luck.

EPCRS would be the best way to correct.

don't be the last participant to return a withdrawal form? don't forget the 25 HCE restricted distributions. recertify? Is this a PBGC plan? candidate for distress termination?

Mine has never asked, small employer. My wife's employer did ask to show coverage about 2 years ago and I believe they requested a copy of marriage cert.

Plan fees will increase.

The 3% safe-harbor has to be made to the terminated employees because you can't have hours or last day on the SH piece. The new employees are not eligible so they are not participants and get no contribution, unless you have split eligibility that lets them in for 401(k) which would also make them eligble for top-heavy.

That make sense. I agree with Belgarth. Given that the failure to make RMD is 50% excise tax, I'd advise the client to make additional distribution to satisfy the RMD if any required. I would not worry about it if there was a loss and RMD is smaller than actual distribution.

Maybe I'm obtuse but how do you process a 2013 minium distribution and then retroactively amend to a short prior year? Wouldn't the short year amenedment have to be adopted before 12/31/12 thus rendering the 8/31/12 valuation moot for calculating the 2013 RMD?

Yes you can have seperate formulas if so provided for in the document and it passes testing. With no HCEs the testing would pass automatically so it's just a question of getting it the document.

He has a zero balance after payout. I assume the current year contribution get's no weighting in earnings so no earnings on the current year contribution, just pay him out after it hits the account. You can get a new distribution form for the residual payment if you need one. You did a valauation as of 9/30 right to get the payout? Why not just do an additional allocation from 10/1 - 12/31? Alternatively allocate the g/l for the whole year carving out what was already allocated to the physician. But if the plan terms already indicate that an interirm valuation is done for "large distributions" then it may also tell you how to allocate fo the year.

I was afraid of that. Thanks. Fortunately though it won't cause an overfunding problem. I was just thinking back to the days when uncapped actual salary was used for 415 limit was wondering if that got grandfathered when the IRS recently decided that each year was capped at the limit; I guess not.

I'm having a brain cramp. Employee age 70. High 3 consecutive comp is years for participant is 99, 00 ,01 Actual comp 230K, 240K, 240K 401(a)(17) limit for years 160K, 170K, 170K If Eggtra amendment so provides comp limit 200K for each year. For purposes of the 100% of comp limit is his high 3 (230 + 240 + 240) / 3 = 236K is it (160 + 170 + 170) / 3 = 166K is it 200K if egtrra amendment allows for "walk back" of 200K comp limit?

This may sound cynical and I'm sure there are many valid reasons to have insurance in a DB plan beyond generating commisions for the broker, but I haven't really seen them in practice.

Gap period income got axed a few years back, maybe with PPA if forgret whic actual law did away with gap period income. Yes, though at this point I'd probably wait until the deposit is actually made to do the refund and 5330. I mean what do you do if the client never makes the matching deposit? Others may have a different view.

Plan Administartor's responsibilty for maintaining all records to establish benefit payment eligibility. If the Sponsor couldn't be bothered to maintain good records I have little sympathy for them. I will note though that coding someone D is no guarantee they will be removed from the SSA lists. We have had several participants who were properly reported with the D code still recieve the SSA letter.

If they impute income, do they get to impute taxes too?

For 1, are you doing the valuation on a cash or accrual basis. That should answer your question. For 2, how are forfeitures being used in the plan? If added to the contribution very likely show it as 2012 and reallocate it. If used to reduce contributions or pay admin fee very likely just show in 2013 when you process. Ideally you'd have a system in place to do it at the end of the plan year since presumably you knew they had a 4 year break the prior year but sometimes ideal doesn't happen.

Terms of the plan should indicate if you off-set the TH minimum by match recieved or not. And yes once you make any allocation it has to satisfy top heavy.

Informally from the podium of several conferences I have heard IRS representitives expess the opinion that no compensation = no service. I'm not saying I agree with that opinion but I have heard it on more than one occasion.

record keeper is an idiot have them tell you what code section allows them to apply 100% of the exess payment to interest. Estimate the APR that would generate and then ask them to justify that as a reasonable rate of interest under 72(p)

It varies by auditor. We've had some wrapped up in a few weeks. Others have dragged out close to 2 years.

Check your document to see if it allows for in-service. If it does, sure you could take a taxable distribution or roll over to IRA. Though as the sole participant why would need an IRA? If it doesn't you could amend your document to allow it. You should talk to your record keeper or custodian of assets as to what forms they require. Distribution would be reported on a 1099-R not a W2. You are probably the ERISA Plan Administartor and you are required to prepare the 1099-R though that is something your custodian of assets or third party administartor could prepare on your behalf. You should as them about the scope of their services.

Tell him to go read IRC sections 401 - 416 inclusive. If he finds something that allows an employer to make post tax ROTH contributions (not just employee ROTH deferals) to the plan tell him you'll do his plan administration for free for the next 5 years.

No. You have to included them.

Don't see why you can't pass the 70% test if you treat those who only recieve the SHNE as not benefiting.