K2

not likely, no

The SIMPLE has to be the exclusive plan of the employer for the whole year, so I don't think you can do a merger into a 401k.

IAW Lou and Tom. An additional $4,000 can be recharacterized as catchup, bringing the total PSP /other sources allocations up to $39,000.

IAW Belgrath. The participant's 415 limit is $53,000, of which $18,000 has been used as deferrals. He can get another $35,000 in other contributions.

So I assume the plan's enrollment form and/or procedures didn't allow for a Roth election. What would have happened had someone read the SPD and elected Roth? Seems to me the best fix is to amend the plan and have the Roth effective date be the date it was truly effective.

Maybe this is a controlled group an your document automatically covers all employees of all employers within the controlled group. I think that's fairly common, so you may not have an issue at all.

Trying to straighten out the earnings on something like this takes a lot of unnecessary time and effort given the amount. But that said, I think the basic premise is to put everyone into the position they would have been in had the error not been made. That means taking the money and the associated earnings from the participant who received it in error. And depositing the amount plus associated earnings into the right persons account. The earnings to the right person would be based on their investments. The gains/losses from the person who received the erroneous amount should be actual as well. This is what you would likely do if it was a significant amount, like for example depositing someone's rollover account into the wrong person's account. I don't think the deposit was late, and I wouldn't be doing a VFCP filing or reporting it on the 5500.

I have a hard time imagining a scenario where it is other than the insured.

I would just make the effective date for deferrals 4/1, and then any eligible participant at that date could start deferring. I assume your document will allow deferral changes at least quarterly, so that people can "enter" on 4/1 by changing/implementing their deferral election.

EACAs are seperate from QACAs so yes. But a basic SHM is an enhanced QACA anyway, which would allow you to have two year cliff vesting on the match.

And there are implications for coverage testing as well. What is the correct treatment of all of those spun-off employees? Are they 'non benefiting' but in your test denominator?

If they are not in a community property state and they have no minor children, then there is no attribution and they are not in a controlled group.

What's a pick-up contribution?

Millenium Trust was easy to work with.

So the bundled provider is asking that you move to your document? Now you have an excuse, er, a reason to charge for the restatement. "We would have been happy to use your current document, but provider X has asked us to restate. Rather than risk a compliance issue down the road, we recommend that the plan be restated now at a cost of X, which represents an XX% discount from our usual fee". Should you be so inclined to discount. Kevin

Lost participants?

But it hasn't been deposited yet, you said. So if and when it's deposited, it could be either a 2016 contribution or 2017 contribution, and the person or persons, and source or sources, and year or years, should be spelled out when contributed, or in some cases put into a prefunded contribution account, and I'm not fond of those.

You might want to review this: https://www.irs.gov/pub/irs-drop/rp-16-51.pdf If the amount is small, under $100, you don't have to seek recoupment nor notify the employee that the amount is ineligible for rollover. Over that, you try and get the money back and you reissue the 1099 showing the ineligible amount.

Good cite. So now it sounds more like back pay to me, and it has no impact on 2016 testing, but additional contributions may be owed for 2015 based on a higher 2015 salary.

Compensation is whatever the plan defines it to be, typically w-2 or withholding wages. Unless this person is paid as an independent contractor on a 1099, they are likely to have compensation. That said, there is no threshold amount that they can be paid and have them be excluded from the plan, and where if you cross that threshold, you have to bring them in. Rather, they are a re-hire and would get a suspension of benefits notice in all likelihood, and absent the consulting agreement they could potentially accrue additional benefits upon their reparticipation in the plan. Unless the plan specifically excludes bonuses, it is included in compensation. If excluded, the plan's definition of compensation would need to be tested under 414s in most cases.

I thought maybe BRF, but see question 1 here: http://www.asppa.org/LinkClick.aspx?fileticket=lHluDaBqAQI%3D&portalid=2

As long as he doesn't receive a contribution, he's excludable.

If the plan was a prototype style document with an adoption agreement, I'd be willing to do basic amendments to the plan without restating, assuming it's just a question of changing which box is checked. The preferred practical answer is to restate as soon as possible, though, since it's easier on staff to use "our" document. That said, I'm unwilling to restate for free and uncomfortable charging for a restatement just for my own benefit.

It sounds like excluded severance to me, but I suppose it might matter based on the terms of the settlement. Is this additional compensation for hours already worked? Would you then go back and revise an earlier year to reflect higher compensation? I think not, but worth considering...

I think you revise the prior year's work and allocate a contribution of $35,000, taking into consideration the plan terms, THM, gateway, etc. I don't think a proration works.