Lou S.

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.

I'd check dates and amounts of contributions every year since 2013 as well and his tax returns from 2013 on to see if anything needs to be amended. If you are very lucky the contribution pattern will be OK and he hasn't over deducted contributions this will be largely dependent on the timing of the contributions. If you aren't luck you are going to have some non-deductible contributions and excise taxes and possibly a VCP filing in your future as well as some amended tax returns if he deducted too much.

No it is not subject to the 10% penalty. However I believe that after 4/15 you can no longer remove the 402(g) excess. Rather the employee picks it up as taxable income on his 2015 tax return and it is taxed again when it is ultimately distributed from the plan or IRA it gets rolled to. EDIT - I see Tom has more complete and better info then me as usual. Thanks Tom.

She probably didn't maybe still doesn't. It sounds like she had gross receipts from "consulting" or some such of $9K and threw them all in a solo-k because some one told her she could defer a 100% of it and not pay taxes. At least that's my guess of the less than accurate advice she probably got.

If the sale was indeed $18M then even with a "discount" $3.1M is grossly undervalued. What we don't know is the actual purchase price of the 51% stake, the $18M appears to be a "best guess" of the participant.

Sounds like your solution #1 is the correct one. Though her net earnings for the 25% calculation may be off as you need to back out 1/2 the SE tax and the contribution that she makes.

did she put the 9,000 in in 2015 or 2016? did she have an election to defer to the solo-k before 12/31/15? is she catch-up eligible?

No independent valuation is a red flag. Also how close is the $3.1M to the value reported on the prior Form 5500? That would be on your Summary Annual Report. You can also look up Form 5500 on the DOL website. If the Plan showed a huge loss in the year of termination, I would be concerned. I would recommend contact an ERISA attorney with your questions.

I'm not sure fair and equitable come into play. It's what the 2 parties can agree upon and whether or not the DRO is a QDRO that can be administered by the plan.

But most participant treat the SPD like junk mail, shouldn't it be sent bulk rate? I think mailing the SPDs certified is a bit over the top, but I do agree first class seems reasonable.

I believe the reason was a ton of plans used to have an early retirement age of 55 and it was a way for folks who elected early retirement to not be subject to the 10% penalty.

You would have a 10 month short plan year from 3/1 - 12/31. Hard to say if it will negatively impact the employer. The answer is probably not in most cases but I'm sure someone could come up with a set of facts where the employer would be better off with the Plan running on FYE instead of CYE.

I've seen the argument presented that because they were not keys on the determination date of 12/31/2014 they can't possibly be keys for 2015. Even though that contradicts the plain reading of the statute that says if you own more than 5% in the current or prior year you are a key for the the year. To me I'm with you I have no clue how someone could determine they are not key employees in 2015.

Earnings. Otherwise how could you possibly make them for someone at the 415 limit?

What I have seen the IRS screw up is say you file an extension today. You get a signed form on August 2 and file it. They send you a notice for it being late because they haven't processed the 5558 yet. I've never heard of an issue with filing for an extension but filing the form on time.

No worries. If you file by the due date you simply have an extension that is not needed. Don't lose any sleep over it.

Shouldn't be an issue. But if you do get noticed, let the merry-go-round begin. Should be a simple matter of 1 letter stating plan was not required to file in 2014 and why it wasn't.

I think he means they have a discretionary match that would be exempt from ACP testing absent the after tax contributions.