pixmax

Gee thanks, why be a moderator if you can't give insight.

What are your thoughts signed before 12/31/13 and thoughts signed after 1/1/14? What issues are the client facing?

We only have the SPD, still waiting on the signed document.

Taking over a 401k plan. Plan effective date 1/1/2014-12/31/2014. Clients fiscal year is 2/1-1/31. Plan Compensation is W2 and the compensation computation period is paid to participant during the plan year eligible. Client mentioned that they put in a $75000.00 contribution in May of 2014. This Profit Sharing Contribution was deducted on their tax return for 1/31/2014 and was based on participants compensation for 2013. 1. Could they do this? My thought is that they should have matched the plan year with the fiscal year and have put in a contribution based on compensation from 1/1/14-1/31/14. 2. I am now asked to allocate PS for their fiscal year of 1/31/15 based on 2014 compensation. Do I need to change the definition of compensation in the plan document? Or do I add both contributions together for 2014 and make sure that 415 is satisfied?

That was my thought, however if everyone took their money except for the owner, and if the plan would not be considered terminated, don't we have a prohibited transaction since their is no distributable event? The client would like to keep the plan going but all employees took their money and some are still working for the company.

CPA came to me with a client that terminated his plan 3 years ago, all participants have taken distribution except the owner. The owner was told that he could not take distribution until the Safe Harbor was made from 3 years ago. The Plan is a Safe Harbor maybe and sent paperwork to TPA and never provided notices to participants. Should and can this go through VCP? We can roll the money out and finalize the termination but the client will need to wait 1 year before opening another plan. Does he have the option to keep the plan open if he filed under VCP and not terminate?

Thanks for your reply. All children are over age 21. If company D changed child 4 to 40% and gave child 1,2 and 3 5% ownership would this then not be controlled since child D is now under the 50%?

Need to determine if I have a control group and if possible to change the ownership around so that they are not controlled. The children are all over 18 and do not work for any of the companies. Those controlling 1% ownership are also not employees. Dad A and B are brothers. Any help would be greatly appreciated. Control group.xlsx

Do I need to be concerned if the company being acquired has no retirement plan? Will they be included for coverage test?

I just took over a plan and noticed that there is a note to a non participant who has not made any payments. When does it go in default and who would receive the 1099 on the defaulted loan?

Company A Company B Owner A 99 % Owner A 69% Owner B 1% Owner B 1% Owner C 30% Owner A and C are cousins. Owner A does not receive income or from Company B and Owner C does not receive income from Company A. I believe it's controlled based on 50% identical ownership correct?

As a TPA I am having a problem approving a Hardship withdrawal for an owner. The participant has an estimate to fix a roof and has termite, mold problems. This is not due to a loss from hurricane, flood etc. and he has not submitted a claim through insurance. He only has an estimate and has no intention on using the money to fix the problem since he is selling the house. Are we liable or are we just responsible for signing off on the vesting and the Plan Sponsor is liable for approving the hardship ? Under audit this could be a potential problem?

Scenario - participant termed 2 years ago. Based on the Plan Document distributions occur when administratively feasible and the plan is valued once a year at 12/31. If a participant wanted to take distribution in November following the plan value he would receive the 12/31 prior year value, correct? Gain/loss would be allocated amongst those with account balances as of 12/31. What happens if the termed participant takes out his balance and the remaining left does not cover the remaining balances? It makes sense to value quarterly or when a person wants to take distribution but of course the plan sponsor does not want to pay for the cost. Any suggestions or comments would be greatly appreciated.

Participant has an account balance of $70.00 and TPA charges $75.00 for a distribution fee. TPA wants to wipe out account and have the remaining balance sent to them as a fee for distribution. Is their really a distribution fee to be charged? I have found no IRS guidance on this nor a De minimus amount .The distribution was not initiated, no notices to the participant and not disclosed as such in the Fee Disclosure Statement. Under audit would the IRS ask for the money to be put back with earnings? What would be the correction? Or is this the norm and it's ok to process the transaction?

Client has not funded their Safe Harbor Contribution for 5 years. They however took a tax deduction for the contribution each year. We've calculated the amounts due with earnings and will put them through the Voluntary Correction Program but now I am worried about 415. Since they already took the deduction do I need to add all 5 years of Safe Harbor Contributions to 2012 415 limits? Any other concerns I should be worried about?

If the plan makes loans to individuals who are disqualified persons then the loan is a prohibited transaction under 4975. A disqualified person includes a 50% owner. Under EPCRS fix it guide, review potential mistake #9 (do participant loans conform to the requirements of the plan document and IRC 72p). Under 9(b)(5) Review the disqualified person's acutal loan repayments to determine if he or she is following the loan document's terms. The law treats amounts not timely paid according to the loan's termas as unsecured loans and prohibited transacations. Corrective Action - if a loan is a prohibited transaction, then the disqualified person must pay back all amounts outstanding on the loan (principal and interest) to the plan. Excise taxes under 4975 apply until the loan is fully repaid. The disqualified person pays the excise taxes on Form 5330. Correction Programs Available - The IRS does not have a correction program that provides relief from the excise taxes owed under Code 4975. The disqualifed person must pay all excise taxes owed with respect to the prohibited transaction.

Since the loans were to owners, they were also prohibited transactions. Form 5330 should be filed and the 15% excise tax paid for each year that the loans were (are) outstanding, until repaid to the plan.

If our Firm receives a fee to deposit contributions do we have a Fiduciary Responsibility? Let's say we know deposits are not being deposited by a certain time or if we missplace a deposit etc?

I have a plan where the HCE is deferring .46% and the NHCE's are not deferring. Wouldn't this test pass since it's under the 2% threshold?

Yes. You may have a problem even if they are getting PS; read what the SEP says about controlled groups and whether you can use it at all or if it automatically covers all members of the CG. Also the first sentence about deferring and "want a PS" doesn't make sense to me. PS Means they want to put in Profit Sharing to get to 49000.00

I have a client with a SEP Plan, husband and wife will defer max and want a PS to get to $49000.00, not over age 50. They also own another company 100% and want to offer a plan to their employees so they are setting up a 401k with the Basic Match. The owners will not participate in this plan. Do I have a coverage problem with theSEP Plan if they are not giving employees PS?

We currently took over a large 403b plan and are in the processing of moving the money to a new vendor. In 2006 the client moved money to another vendor however 9 contracts stayed with the old vendor. 5 are currently active and 4 are terminated. All 9 accounts were not included on the Form 5500. I guess Accountant did not know of the contracts. Can we consider them orphaned contracts? Does the money have to moved over to the new vendor for all the contracts or just actives. Any advice would be greatly appreciated.

I appreciate all of your help. I just want to make sure that I am making the correct clarification of an employee before I tell them that I don't have to include them in testing. Are they considered providing services if they are Key such as officers that are on the Advisory Board?

If they are receiving K1's doesn't that make them an employee?

It's an LLC with 20 investors that all receive K1's, there are no employees. Could this be considered a holding company? Either way would it matter?