401king

https://www.askebsa.dol.gov/dfvcepay/calculator

Assuming that your 5500 is accrual based, just amend the 2015 Form 5500. If you report the 5500 on cash basis then it's lumped in with 2016 ER contributions. Why would the $1500 count against 2016? It was withheld in 2015; just not deposited until the following year - same as any 12/31/2015 payroll withholdings. And report the late contributions & VFCP, lost earnings, etc.

Would this all be a moot point if they found a TPA to manage their Individual 401k for a nominal ~$300/year? Peace of mind comes with minimal cost in this case. If it is your opinion that they do not need a TPA then you may be making yourself a fiduciary to the Plan, putting you at great risk if & when something is overlooked.

Is this a new participant, or someone adjusting their deferrals? If someone adjusting, then can they only adjust on a quarterly basis? The term 'self-correct' usually gets floated around only when the company has made a mistake, but it seems that the participant has made the mistake. If you allow an exception to quarterly deferral adjustments, then if the procedures are well documented and the same exception would be made in the future for someone else in a similar situation then I see no harm.

It was only a new plan once; would the advisor think it's a new plan after 9, 10, 12 15 months of being in existence? Your instincts are correct that you can't reduce someone's vested percentage, but you can make those participants grandfathered into the old schedule where all of their service gets counted. I wonder how many days the plan has to exist before the financial advisor does not consider it a "new" plan. In fairness, Financial Advisor generally doesn't encompass the minutiae of 401k plan rules, but his 401k recommendations should be filtered through a 401k administrator before being effective. The fact that the new TPA made the change makes me think that maybe they did it on a pro-active basis, where current participants were not affected.

Ask the company that manged the 401k plan to send you a copy of the Summary Plan Description, Loan Procedures, and your Promissory Note. One of those documents should have the specific language you're looking for, if not all 3. FWIW I would have issued the 1099 in 2014, as well, based on the maximum cure period which is the option we use. Regarding your $6500 liability - are you saying that you would have owed $6500 less if this were taxable in 2013?

From what I recall, he must have had the written election on/by 12/31/2015. Cannot elect to defer after-the-fact. If he had a written election and mistakenly did not withhold then that would be a different story.

4% non-elective is fine, but your approach would be more beneficial to the Plan Sponsor.

An opt-out is irrevocable. If he did opt-out, he cannot opt back in. If he did "not" opt-out (i.e. they can't find the evidence), then the plan is in bad compliance shape as you would have late safe harbor contributions for 8 years.

I think if the Sponsor's RK is having a hard time allocating the money to the participant accounts then it may be time for a new RK. The DOL's rule targeted only the Plan Sponsors, but no the RKs. It may be a lot to ask for some RKs to allocation within X number of days, depending on what systems or investments they use.

How are you tracking the various sources currently? i.e. How do you separate gains for deferrals from match?

I don't see how a fiduciary could approve a loan knowing that the participant cannot make the loan repayments. I would not want to put myself in that position.

I wish we could shorten that timeframe to a number of days after reviewing a pay stub.

The TPA is correct. There are Allocation Conditions (i.e. Last Day + 1000 hours during the year - an annual requirement) and Eligibility Requirements (21 + 1 year of service - a one-time requirement); they are mutually exclusive. You can be Eligible for a PS contribution, but not meet the Allocation Requirement - In this instance you do not receive a PS contribution, although you are included in the PS test.

Does the document have an allocation formula for profit sharing contributions?

Isn't the loan determination date is the big factor? When you determine the vested balance, loan amount, payment amount, amortization schedule, promissory note, etc. I don't know how we could effectively administer loans in preparing a Note, knowing that the Note may need to change each day that the participant does not return it.

Shouldn't Box 5 should be the basis attributable to the distribution?

This still seems to be sufficient evidence, in that they are not excluding the paychecks after November from being 401k-deferral-eligible. It seems that the ill-informed would assume that any paychecks after someone hits $265k would be ineligible for 401k deductions, regardless of whether it were a percentage or fixed-dollar.

I sure hope that the IRS would see it as ridiculous as those in the practice do. Otherwise, next thing we find out is that 401k plans can't transfer providers mid-year because they cannot restate the document to a new vendor's program.

Their plan is to, essentially, delete their payroll entries for the affected periods - returning the Gross amount to the company. Return the net paycheck, all deductions (401k included) and any taxes. Edit: Their words are that they are "forfeiting their 4th quarter pay" retroactively.

A business is having poor cashflow as they get to the end of the year. 4 Owners have chosen to reverse their Q4 paychecks, of which the payrolls have already been processed including 401k deductions & company contributions. These paychecks each had deferrals, safe harbor match, and some had loan payments associated with them. The owners will be returning the amount of their net paychecks to the company. It's the first case I've come across where a business is reversing payrolls. Has anyone dealt with this before? With a detailed letter of explanation signed by a trustee, my plan is to reverse the contributions, including gains/losses, as if it were erroneously transmitted & funded. A check for the lump-sum would be issued, payable to the company. Any other thoughts?

Be sure that the Plan permits Indirect/Participant Rollovers.

If there is no balance fund or target-date setup as a default, then there likely is no QDIA. There is no requirement for a QDIA. If it is at Schwab using their PCRA platform, then the plan should be meeting the 404© requirements. It's those requirement you'll need to meet; not QDIA.

What would be the obvious reasons? If a non-HCE wants to sign up for the IRA, IRA + 401k, or 401k only, what is the downside to the employer (I'm not familiar enough with the Payroll IRAs to know). What seems to be a more likely issue is that some of the HCEs would not be eligible for deductible IRA contributions.

What issues are you thinking of specifically? As far as availability, it'd be open to 100% of the eligible NHCE and 100% of the eligible HCE. I can't think of an issue that non-discrimination tests wouldn't suss out, but it's the first time I've thought about this.