Lou S.

What you are describing is commonly referred to a s true up match. What is sometimes done is you do the match per payroll, at year end you calculate the match an employee would have received under and annual match based on annual pay and annual deferral and subtract out what has already been deposited under the per payroll matching for the year. What is left is the remaining deposit for each employee. This should be in the plan document I believe and as others have said you have additional caclulations so often additional expense.

I think the language in the audit is semantic. It is not definitive and as long as it references the merger somewhere I personally wouldn't have a problem with it. I would answer NO on 5A as the Plan has not formally terminated but rather merged with another plan. On 5B yes complete the information for the Plan merging to.

We've gone to using Penchecks for non-platform distributions strictly for withholding issues. Otherwise link an account with EFTPS https://www.eftps.gov/eftps/

It goes to the participants.

What about doing 8% + $6,000/number of remaining payrolls?

Assuming this is the only plan and the only eligible participants you can make a 25% of pay deductible employer contribution. Further assume PY=FY and pay based on PY. For simplicity assume mom made 50K deferred $2K and got $2K match, son made $100K no deferral or match. Eligible pay is $150K, 25% is $37.5K Company has already contributed $2K employer match so it can make a $35.5K profit sharing contribution. Since you said document has pro-rata allocation if company made max deductible 35.5/150 = 23.67% of pay. Son would get 23.6K, mom would get $11.8K (within rounding).

Actual earnings is an acceptable method. If there was a loss, yes you would have to reduce the amount forfeited by the loss. The participant should NEVER be put in a worse position than if the error did not occur.

Make sure you are up to date on any required amendments, even if the required adoption date might be in the future. I'm not aware of any current interim amendments that are required but there could be something I've missed.

Required? No. Offered the option, Yes. I'd probably include some cover sheet that states something to the effect of "We have added the ability to make ROTH contributions, please return a completed election from if you would like to now make ROTH deferrals. If no election form is returned your existing election will remain in effect." Or something similar.

Yes, but I'm not 100% sure how it is corrected. The funds were removed from his account so that's good. The funds were not refunded to the participant so that's bad. I'm not sure what the proper correction method is at this point and if VCP is required or SCP can be used since you are still in the 2 year window perhaps someone else who has gone through a similar correction can chime in and help you.

Was it unvested? Was it related match that forfieted? It is possible the prior TPA did it correctly and there is nothing to fix. It sounds like the funds were timely removed from the HCEs account to pass testing, the issue seems to be should he have received a taxable excess aggregate refund from the Plan. Unfortunately I am not sure what the correct answer to your question is if the funds were supposed to be refunded to the HCE as opposed to forfeited from his account. If the correction was done after 3/15 but before 12/31 it was timely for ACP correction but not timely to avoid the excess tax, unless it is part of automatic contribution arrangement that gets and extension of time to make the corrections (6/30 if I remember correctly).

My understanding is you are limited to the $1,950. However you must prorate the distribution between basis and earnings unlike an IRA where the basis is recovered first. I get $1,901.25 would be non-taxable return of basis and $48.75 would be subject to taxation and penalties in your example. And hopefully you have a good record keeping system to track the basis when he takes the rest out later.

HCE or NHCE? I think the answer is different depending. If it was an HCE you include the, If it is an NHCE you exclude them.

Do I follow this correctly? HC 100% -> A HC 60% - > I HC 40% -> B I 60% -> B Wouldn't that translate to HC pass through ownership from I being 60% of 60% = 36% So HC 40% (Direct) + 36% (Indirect) = 76% -> B < 80%, thus no CG? Or am I off base on my analysis?

I think he's doing it wrong but the income is sum of the two.

That sounds like the rule for providing Schedule A information. It is possible there is a similar one for trust reports but if so I'm not aware of it.

I believe they have the same restrictions as 401(k) elective deferrals under 401(k)(2). In addition, they are not eligible for hardship.

Maybe the 404 regs that detail the deduction methods you can use when the Plan Year and Fiscal Year are not the same? - PYB, PYE or proration. I believe a Plan year can been any 12 month period (or a 52/53 week year). I used to see a number of plans that ran 12/31/xx to 12/30/xx+1 Plan year to delay the effective date of most regulations by 1 year. I think somewhere in the regs it states that a Plan year can be any 12 month period (unless you have a short PYE!) but I'd be damned if I know the citation.

You can try here. https://www.ataxplan.com/downloads/ancient-history/ There is a resource with grandfathered rules that can be downloaded at no charge. Though you do have register to do so. I have no affiliation with them and can't vouch for the content but it looks like it will have what you are looking for.

Sure, if you have the cash. But if that was the case he'd probably just pay off the loan and then do the rollover.

I'm still not sure why you would offset it unless he requests it as a taxable distribution.

Typically, no it is not.

I am not aware of anything that would require an offset. It is possible the plan document or plan loan program may require it but I have not seen that the case. The "classic" example is in the case of a loan followed by a hardship distribution where after the hardship distribution the participant's balanace may consist solely of the loan balance.

Yes, no, maybe. Depends on how the plan is worded. If the plan is retro active to 1/1 and the employees worked more than 500 hours they would be included for 410(b) testing whether or not they receive an allocation.

I don't know what this means. Just in case, remember that fraud is a bad thing. I think what he means is that based on the timing of contributions, 2015 is the first year where he has a "true" excess contribution. As an example assume the following fact pattern for simplicity - 2013 - $51,000 K deposited in 2013 for 2013 2014 - $51,000 K deposit as mistake for 2013 (but not deducted on 2013 return) - simply call this his 2014 contribution 2015 - $51,000 K deposited for what he though was 2014 + $51,000K deposited for 2015. That would make 2015 the first year with a problem for excise tax which I think you could then deduct in 2016 amounts may vary slightly but you get the idea.