Lou S.

We have run into similar in the past. Fees have always been waived when we sent in copy of the acknowledgement file and an explaintion of what happened. Some times it took a few phone calls as well as a couple of letters but it was always fixed in the end. It's kind of a pain.

I'm guessing it was probably a DB plan that had a funded percentage under 80% or 60% that had a full or pratial freeze on lump sum distrtibutions due to funded status.

Is there something I don't know about amended 5500s? That could be the case. I was unaware you needed a filing ackowledgement ID to send in an amended return. Going forward, it would seem you can grab a copy of the 5500 that was filed from the EFAST site, if you are concerned whether or not it was filed, and simply send in an amended filing. My understanding is the amended return will replace the orginal that is up on the site. The client can go in with their log in to see all plans filed, pre & post amended but what is up on the public disclousre site would just be the amended one. Do I have this wrong?

Just a guess but it was probably to save money on contributions when it was originally setup.

Thanks.

Elderly client got check books mixed up and wrote a $10,000 charitable contribution from the profit sharing account. I seem to recall charitable contributions could be made from IRAs (up to $100,000), but that the legislation trying to extend it to qualifed plans never went anywhere. I also seem to recall that provision also was set to expire for IRAs but can find the year of expiration. IRS Pub 590 for 2009 indicates it was still in effect for 2009. Questions 1. Am I right this is not allowed in qualified plans? 2. Can it be treated as a taxable distribution of $10,000 from the qualified plan and then a $10,000 charitable contribution for her accountant to deal with on Schedule A of her 1040? Any thoughts are appreciated.

3 years ago I would have agreed with you a 100%. With the economy the way it is and with staff turnover combined with cuts in employee contribution rates, often coupled with reduced or eliminated matches, we've seen a lot more plans in the 20 - 35 life range moving towards or becoming top-heavy. And possibly more will as some of the hardship distributions in recent years fall off the books after the 5 year look back period.

Form reading a few other threads it sounds like others are having the same problem we are with Sundgard - not timely returning any calls for government forms support. It is very irritating to say the least. We had several plans fail yesterday when e-filing, kind of stressful being the 13th and all and still haven't gotten a call back from Relius. Fortunately it was the 13th and not the 15th and the problem seems to have cleard today and we were able to file our last 3 remaining plans. We once switched from then Corbel to Hyperprep over a similar issue one year but Sungard just went out and bought up Hyperprep a few years later and we got sucked back in. I'm wondering if we should change again next year? Question for people using other government forms software, what has been your experience with them for ease of filing, helpfulness of support and timeliness of return calls, when software is initially available, ease of using program, etc.? Any thoughts (possibly after the 15th I understand) would be appreciated. Thanks in advance.

The instructions say for DC plans to "leave that question blank" so I think it is clear it applies only to DB plans.

If you are using a prototype the restrictions are probably listed in the relavant secetion of the master text as opposed to the adoption agreement. Also the language is often in the distribution section of the SPD. As for "generally" some of the money (like deferrals without earnings) is sometimes available for hardship if the plan allows before age 59 1/2. If you have someone who takes an impremissable distribution you have a qualification issue, see EPCRS for correction methods.

One of the questions on the SF is, "Is this a DB Plan subject to minimum funding" - if you answer yes they should be looking for an SB, if you answer no they should not be looking for one. As for the 5500 I think if you just don't check that an SB is attached in Q10, they shouldn't be looking for one on their audit check. As to to OP asking about sending in w/o Sch SB, that's one I haven't heard. I've heard of a lot of plans in the past that would file w/o an audit and use it as an unofficial extension to get the audit finished. My understanding is that you can still try that but due to the new error checks the letter asking for the missing audit is going to go out within days of filing now it instead of about 2 months after you filed like it did in the past.

Short plan year = prorated comp and 415 limit.

No, the lost earnings would need to me made up by the employer.

You don't have a problem with the Form 5500 for this issue. You do have a compliance issue though that should be corrected through EPCRS; I believe a QNEC of some sort to the people who were not auto enrolled is the correction method the IRS wants.

Yeah, my understanding is refund is still allowed to correct 415 excess but not by document provsions. Only through EPCRS.

But aren't they all terminated with 0 hours worked? And can't you exclued terminated with fewer than 500 hours from the testing as excludable? I have a similar issue with a guy who was out all of 2009 on disablity leave. He has no comp or hours and is not yet terminated. I ssume you would leave him out of the 401(k) test too. But what about top heavy? - This plan is going to be top-heavy eaither way so it is moot in this case but this is the first year (2010) where they will be top-heavy in a long time and they are like 62% if I exclude this guy out of leave then it changes to like 70%.

I whole heartedly agree! Sounds like the auditor just made up his/her own rules to the benefit of the client, though not necessarily the benefit of plan participants.

For a new administrator it sounds like you've covered the bases of a straight forward cross-testing 101 scenario. On 3, yes you can exclude them unless they received some 401(a)(4) allocation, such as in a safe harbor 401(k) with 3% non-elective - in which case they might need additional allocation if your gateway is over 3%.

thanks. I never really thought of it that way but makes sense you could run them in any order and correct that way, at least to me. Though the IRS I suppose could have a diferent ideas.

I'm pretty sure that EPCRS does not allow the use of forfeitures to fund lost earnings on late deposits.

Plan match formula is 50% of all deferrals (including catch-up) and has only one HCE. Assume no earnings to make it easier. The inital ADP refund is calcualted as $5,000 but $1,000 is recharaterized as catch-up eligible and retained by the plan so the ADP refund of excess contributions is $4,000. The Plan also fails the ACP test and needs correction of an additional $5,000 for the match to pass. - the plan's ACP correction is method in the document is to refund the excess aggregate contribution to HCEs however any match "related to excess contributions" is forfieted. The related match on the intial refund amount is $2,500 (half the $5,000) but the related match on the actual amount distributed would only be $2,000 (half the $4,000 ADP correction). So for the excess aggregate contribution would the plan refund $2,500 and forfeit $2,500 or refund $3,000 and forfeit $2,000? Any thoughts?

I'm sure this is not comprehensive but... 415 & 401(a)(17) are prorated while 402(g) is not. This can lead to some interesting results if SPY is less 5 month or less and someone maxes out deferral.

term with more than 500 and no allocation, yes zero EBAR.

I believe you need to pro-rate beween taxabale and non-taxable recovery but I don't have an exact cite for you off hand.

He pays back the gross amount. Depending on where the funds come from he may have an after tax basis in the plan.