Lou S.

Is she terminated and will be rehired later or is she on call and still an active employee just not currently needed?

Because many of them don't know the differences between IRAs and qualified plans.

No problem. Probably not to many SAR-SEPs still kicking around and even fewer that integrated but they are allowed.

Not if an amended return, not taking the deduction, had already been filed. Interest and penalties, not so sure. Yeah, no problem if amended return is filed before the IRS notices you. But yes penalties and interest would apply if taxes are now owed because of the amended return. But Rigby is correct, this should be addressed to the accountant who may have punted it back to the TPA because they don't know what to do in this situation.

Amended tax return to not take the deduction last year. Deduct the contribution in the year contributed assuming it falls within deductible limits.

Call the software vendor?

What does the document say?

I've never had an issue in the past. Is this new?

Is 2015 the only year effected or by "early 2015" does that mean the 2014 contribution was problematic too? Are there any employee besides the owner who qualifies for the SEP? Has the 2015 contribution already been deposited to the SEP? Assuming only 2015 is effected and the money has been deposited, I think the IRS would take your proposed correction to close the SEP and transfer to the 401(k) as an acceptable correction. However, I think you will need a VCP filing to get the IRS blessing as this does not appear to fall under self correction and it is possible the IRS may want the $18,000 contribution classified as a profit sharing contribution which could raise other issues and not a 401(k) contribution. If you have evidence of prior 401(k) contributions for the sole prop to the 401(k) in years before 2014 and an intention to continue make a 401(k) contribution for 2015 absent the poor advice from the accountant that might bolster your case to have the transferred funds treated as a salary deferral. Though maybe someone who handles more IRS VCP submissions can you a better feel if this is an acceptable correction.

Sign EGTRRA and PPA concurrently before PPA deadline and submit as nonamender. I think this would be best case approach if you can pull it off.

I think it depends on whether the Trustees are allowed to act independently or must sign in concert. That is probably buried somewhere in your document.

I guess the question becomes what happens if the employee actually terminates employment after the rollover distribution is processed but before 12/31? Does that trigger a required minimum distribution for the year due by April 1 of the year following separation based on the prior 12/31 account balance that has now been rolled over? That is does it retroactively make a portion of the rollover ineligible for rollover as it is now a RMD? Might this be analogous to an HCE in a 401(k) plan who rolls over his distribution to an IRA upon termination of employment only to find months later that a portion of his rollover is now ineligible because he has a required a refund of excess contribution to pass the 401(k) nondiscrimination test?

Your original post has the answer in the "any limit". It is recharaterized due to the 415 limit. In our case it was an owner and spouse over the 401(a)(17) comp limit who each made 401(k) = to the catch-up limit of the year being audited and a PS contrib equal to the 415© limit that year causing 100% of their deferral to be recharaterized as catch-up. I think it is in the code or regs of 414(v) ? the section dealing with catch-ups. Slightly different facts than yours but pretty sure the logic still holds.

Yeah, no problem we do it all the time. Had an auditor question it one time but as soon as she ran it by her supervisor it was not an issue any more. edit - this was an IRS audit, not an annual independent audit just to clarify.

if your document has an integrated formula you should follow the terms of the document if he wants the same percentage going forward, amend it to pro-rata allocation

They are eligible 1/1/15 then they are eligible for the 3% SHNE. Plan should have been drafted to exclude them from the plan so they didn't become participants if you didn't want to give them a contribution.

I think you mean W-2 earnings, his 415 compensation is the sum of his W-2 pay while an employee and his Self-Employment earnings. It would seem the most reasonable would be to calculate his contribution under the plan and prorate his portion. Also you might want to ask the accountant and partners how exactly the expenses for pension are being allocated. Hope that makes sense.

I could be wrong but I think that is probably because the statue and regulations there under predate the popularity of LLC concept. That said if the LLC is taxed as a corporation I would think you look at (i) and if the LLC is taxed as partnership you look at (ii). I could be wrong on this but to me that just seems like common sense and it's what follows in nearly every other regulation when you are looking at control or beneficial ownership interest or similar such concept. But maybe someone more in tune with the party in interest rules than I am can give you some additional insight of point to definitive source or citation for you, I'm not sure I can point to a specific one.

If you are trying to get around the 50% control by making a distinction that it is called an LLC and not a Corporation or Partnership I don't think you'll get very far with either the DOL or IRS. All of these rules tend "look through" to what is really going on with respect to who has control or a controlling interest.

An LLC is just a shell, you need to look at how they are treated for tax purposes. It could be as as sole prop., partnership, C-Corp, or S-Corp as I understand it. But maybe there is a CPA on the board who can chime in with a more authoritative answer.

Back when refunds were taxable in the year deferred and not the year received and you had non-calendar year plan issues they were done on a FIFO basis. I'm not sure it matters anymore since for gain/(loss) calculation you just apportion a percentage of the gain/(loss) for the year to the refund. At least that's the way we do it.

Yes I would agree she get a safe harbor of 3% of $0 comp from DOE to PYE and then she needs to get 3% of 415 comp for full year to satisfy TH minimum which can be reduced by the $0 she received as a safe harbor contribution.

I would agree with this approach.

what does the loan policy say? at some point he's in default if the payments aren't made/caught up.

If you look in the instructions for the 1099-R the IRS lays out some pretty easy to follow and detailed instructions for what the PLAN should to do when this situation occurs. I think the heading is "Corrective Distribution Following Total Distribution" of something similar.