Lou S.

Under the terms of the plan document.

I think we had this happen about 15 years ago. Sent the 1099-Rs, filed the forms with IRS (though FIRE I believe) and the IRS send a late penalty notice to the client to pay the late filing fee.

If the Plan is top heavy and he's not a key, he'll need a top-heavy minimum but otherwise you are allowed to discriminate against HCEs all you want. So if he's in his own group allocate $0 to his group.

I'm not an employment attorney and it sounds like you may need to talk to one to get a determination. That said to me it sounds somewhat analogous to a co-employment situation where the employee in that case would be credited with the full hours worked by both employers with each employer.

It seems like they are changing from 0% to something other than 0% and can do so "weekly".

What does the Plan Document say about changing deferral elections?

I can't remember if this one gets extended if it falls on a weekend or not (I think it does but wouldn't stake my life on it) but March 15, 2018 was a Thursday so for 2017 calendar year ADP tests it is a moot point.

I think this is correct and how the IRS judges it. Though I think you could probably make an argument that is the funds were liquidated on the 15th and check issues on the 16th that the refund was made by the 15th. I don't know how an IRS auditor would rule on it. That said in this particular case the refund was late since it wasn't even initiated at the investment house until 3/16 per the OP. And it looks like the plan sponsor gets to file a 5330 and pay the 10% excise tax.

He's over 59 1/2 so wouldn't the code be "7B" And correct, only the earnings would be taxable.

I believe it is because the 402(g) refund is taxable in the year deferred and not necessarily the year received.

What does the document say? If she's not otherwise eligible for the PS contribution but the plan has fail safe gateway language you would give her the 0.11% to pass gateway. If the plan now passes all applicable non-discrimination tests I'm pretty sure you are done. If on the other hand she's eligible for the PS and in the same group that is getting 5.5% than she would get the bump to 5.5%. From the way you describe the situation is sounds like she doesn't meet the allocation conditions for PS but is getting a required TH minimum plus the additional amount required to pass gate-way under the plan. So I think she gets the 3.11% contrib and you are done if plan passes 401(a)(4) testing.

You didn't make complete corrections. It sounds like you have an ADP failure correctable under VCP.

A long time ago we had an annually valued pooled profit sharing plan that the owner wanted the condition for distribution to be only after a 2 year break in service, which was an option in the AA He was paranoid that one of his employees was going to take his profit sharing distribution and setup a business in competition with him. I think all he really accomplished was more lost participants in the days long before automatic IRA rollovers.

It was very common not to long ago. It is less common now. There is nothing illegal about it if the plan has a provision that termination distributions are not made until the anniversary of your separation from service. In fact the plan, if written as such, can restrict distributions until you reach retirement age but that's very rare in a 401(k) Plan.

If there are additional allocations for Profit Sharing beyond just deferral and allowable SH contributions, the plan is no longer deemed to the be not Top Heavy.

I would have a hard time seeing any US court rule that opening a retirement account for employee under terms of the Plan is a violation of their religious beliefs but maybe I'm crazy. What if you do exclude him or have him irrevocably opt out and the Plan fails coverage, what then?

Tell them to donate it to charity when they leave the company, after talking to their accountant of course.

Put him in the default investment, problem solved.

Are you trying to pay the insurance company salesman instead of the IRS? Is the policy set up as a "springing cash value" policy? If so I think those are frowned upon by the IRS. I don't think the mere fact that contract has an early surrender change allows you to value the policy assuming it is immediately surrendered. I'm pretty sure you need a fair market valuation of the contract.

It's an investment issue. The loan I'm sure was assigned to the 401(k) source, there is likely no reason it couldn't have been assigned to the rollover source unless that is against the provision of the loan program but I can't think of any good reason that would be the case. Let amount of outstanding Participant loan = Y Let amount of refund = X You move $X from rollover to 401(k) source and do refund You change the loan so that outstanding principal in 401(k) source is (Y-X) and amount in rollover source is X. You haven't changed the characteristic of any money just the investment fund of the sources.

Seem like an accounting issue. Can't you simply transfer some of the rollover source to the 401(k) source and reassign an equal portion of the loan to be repaid to the rollover source?

Thanks Mike. I guess "recent" is a subjective term for me.

Calavera, I take Cloudy's question to mean the Plan was formally terminated 9/30 but assets haven't been distributed yet since they still need to fund the MRC for the 2017 year. So yes I believe recent IRS guidance (i forget which) makes the MRC due 8.5 months after the formal termination of 9/30. So June 15, 2018 if I did the math correctly. Since you have a calendar year plan that had assets at 12/31/2017 the Form 5500 would be due 7/31/2018 without extension. Unless they shortened the Plan Year to 9/30.

Spend a whole year in prison and still get max comp? Who says crime doesn't pay.

@ESOP & @PAM good points both of you. I guess the bigger question is why did the participant hold this uncashed check for 9+ months. Obviously this would have been an easy fix if it hadn't crossed tax years with 1099-R reporting already done.