Lou S.

It sounds like you are trying to institute a last day requirement for partners to receive a safe harbor contribution. I don't think your logic will fly with the IRS but I could be wrong.

I'm still a bit confused is the design something like this - Plan 1 - Cash balance - Owners get credit bringing them at or near 415 limit, NHCE get credit such that they pass 401(a)(26) Plan 2 - Profit sharing - Owners get 415c limit, NHCEs in CB plan get 7.5% PS contribution, other NHCEs not in CB plan get 3% TH minimum? If that's the case then no I don't think that works. But I'm really just guessing at what you are trying to get done.

How do you give a 7.5% gateway in the DB plan? How do you not give the 7.5% gateway to all employees in the DC plan if you are using it to satisfy coverage testing with the DB/DC combo? Non-keys only in the DC plan would only need to receive the 3% TH minimum, but that brings back the issue of the 7.5% gateway. Non-keys in both plans need to satisfy one the following based on drafting of the plan (though again this may or may not satisfy gateway) -the full TH minimum in both plans -5% DC contrib -2% DB minimum accrual -another method that satisfies the rules and does not have employer discretion.

Thanks, I'll search.

I'm coming across a weird situation I have not seen before and wonder how to handle. I feel I should know this so if it's basic my apologies, CB credits are roughly $250K Due to mandated interest rates my valuation results are coming up with a minimum contribution of roughly $190K and maximum of roughly $220K. There is no current Funding Target as this is first year with no past service so I don't seem to be able to take advantage of the cushion amount. The plan results have the $250K credits as the amount payable under the plan and these are below the 415 payout limit for all participants but my max deductible results fall $30K short of the the CB credits? Can the client fund and deduct the full $250K in year one? Plan is PBGC if that makes a difference. Am I missing something obvious here that will allow me to make the full $250K contrib?

They can do it now and deduct it in 2016, subject to deductible limits in 2016. I believe in needs to be deposited by 4/15 to count as an annual addition for 2015. I seem to recall something about with in 30 days of the tax return deadline.

Been awhile since I've run into this but informing them that they are taking on direct fiduciary liability for ignoring the Plan Trustee's written direction often gets them moving in the right direction.

Any employer contribution to the DB plan will reduce the Sole Proprietor's self employment income which can drastically effect the DB valuation in some cases. In other words you are correct it could cause the SP to have very low compensation if a large "cushion" contribution is made. This can impact the 415(b) limit if owner doesn't already have a "good" high 3 years compensation. And can throw off testing in a DC/DB combo plan if SP comp becomes too low and you are using the current year testing method.

If he puts $10K into a DB plan his income is now $0 and he can make no deferral, ROTH or traditional. If his income is $10K he can make a ROTH or traditional 401(k) of $10K.

TH minimum required for 401(k), no question about it.

It must be pro-rated

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.