Zoey

Oh, I whole heartedly agree that the trustee should receive their distribution last, and that has always been our practice as well. In the 17 years I've been doing pension, no other trustee has ever debated it (believe it or not). But without Regs enforcing it, I just don't see how I can deny this trustee, if he really wants to push the argument. Though I am glad to know that others have followed the same practice, and it is not just us. Thank you all for the responses! It is much appreciated!

Thanks so much for your response! That's probably why I couldn't find anything on it... However, I do wonder then, how investment companies such as American Funds and John Hancock require the trustee be distributed last. I guess I will have an argument with them if this issue arises again. (This particular plan isn't with either of those investment companies.)

Every plan termination we've done, the trustee is the last person to receive their distribution. This has never been a problem in the past, but we have a plan that is terminating and the trustee wants to rollover his account to an IRA and wants know if there is a cite that states that the trustee's assets are to be distributed last. I explained that it would be like a captain jumping ship and leaving the crew to fend for themselves, but that wasn't a good enough explanation for him. Is this just some companies policies, or is it written somewhere? I can't find anything on it. Thanks so much.

I may be getting caught up on a technicality, but I am a sole-proprietor TPA firm. My fees are not like most TPA's. I do not charge to prepare the Form 945 (or 1099's for that matter). But I do prepare the Form 945 and 1099's for a few of my clients. The technicality that I am getting caught up on is "paid preparer". Since I am not technically paid to prepare it, do I still need to file for a PTIN? Thoughts? Thanks so much!

Thanks so much! You both have been very helpful!

Blah... We took over a plan from another TPA who didn't keep good records. First, my question is, how do we do the plan termination amendment when we have no one to sign now? It was a Solo K and the only participant (owner/trustee) passed away. Second, the prior TPA didn't have any beneficiary forms on file. The owner was not married. I have asked the broker (who has been in contact with the owner's child), if the child has found any beneficiary forms with the owner's personal or business files. Lack of that, the plan is directed to pay out to the estate based on the division of the Will, correct? (For instance, say he has 4 children and the Will states liquidation of assets and division of the liquidation at 25% to each.) Thank you so much for any advice/opinions you can give.

Funny you should mention that. They asked if they had any recourse against the broker or the accountant. I told them I didn't know, but that it wouldn't hurt to give an ERISA attorney a call. I'm sure either way, they are going to have to make it right though, so I was looking at how. Thanks.

I am not at all familiar with SEP's. I know enough to be dangerous. However, a friend asked if I could help them (small company) with their SEP problem. They were given poor advice years ago and are just now realizing the mistake (pointed out by their broker). They thought they didn't have to give a contribution to anyone who didn't work at least 1,000 hours. I told them that hours cannot be required. After looking at their document (document is a prototype I believe, since it states "adoption agreement" and not 5305), they don't have the 3 out of 5 year requirement, minimum compensation requirement...the only requirement they have is age 21. What this tells me is that anyone who was 21 and employed by them at anytime is eligible. This goes back to 2000. So there are SEVERAL years that they will need to correct. (They were generous in giving a 15% contribution to those they THOUGHT were eligible each year.) Now for the bombardment of questions: Can this be corrected by calculating the 15% contribution for each year and then using the DOL calculator to calculate earnings (from 2000 - date of correction) and make the deposits asap? Would there be a penalty (excise tax)? Can they take the deduction if it doesn't exceed 25% of eligible compensation for 2010? What if it does? What about 415 limits? (Most definitely will be over 100% of comp for several ee's, and some are long gone, so how can 415 apply?) Does it have to be corrected all at once? (Could be as much as $100,000) I wouldn't think, but is there a statute of limitation? Would this be something they can correct themselves (using SCP)? Or will they have to go VCP route and pay the fee? Anything else that you can think of that I may have not thought of, would be great too. Thank you so much in advance!

Thank you so much for all of your responses! I learn something new every day. I've never had to deal with brokers fees, as they have always came from the plan, and now I know why.

I have a new client who asked me a strange question. He asked his broker if the broker's fees could be paid outside of the plan and the broker told him no. He now wants to know if he can "put the money back into the plan" to cover the brokers fees (i.e., make the accounts "whole"). This wouldn't be a contribution obviously, but I've never had a client want to do this, or if it can be done. Has anyone had this question, or know the answer? Thank you so much!

Thanks so much! It's a non-standardized plan. I knew we could exclude, but would be subject to coverage and I was afraid they would fail. I wasn't aware of the grace period. That's awesome! And that's exactly the answer I was hoping for (that they would be treated like new hires).

Company A is purchasing Company B (both Dental offices). Company A has a 401(k) Plan. Company B doesn't. Company A plans on keeping the employees of company B only temporarily (until they can find other jobs)...about 6 months. Can Company A make use of their eligibility requirements for those employees of Company B? In other words, do they have to take into account the time with Company B or can they make them wait 1 year to be eligible for the plan? I know it seems like a silly question, but I am somehow second guessing myself. Thanks for all your help.

I didn't think of that...Of course one company can have multiple documents. I too, am worried about discrimination issues. Thanks Tom!

A European company has a 401(k) Plan. They are opening another company/branch in the U.S. Since this is a controlled group situation, does the U.S. company have to adopt the European's plan document, or do the rules apply differently, allowing them to have their own plan document? Thanks!

Thanks again J. Yep, 401k plan. ER contributions are discretionary. No question there is no obligation for one company to make the contribution for the other company. They were voluntarily wanting to do this. I guess the issue would be in the deductibility then...never looked at that angle of it. If the first employer were to make the contribution for the second employer, why would they if they can't take the deduction? I was thinking that as long as the employer didn't exceed the 25% of eligible compensation for his own company, that they could contribute to the plan as a whole (i.e., for both companies) if they wanted to. Yes, the document states that it shall be the same level of benefit for all participants (including the participants of adopting employers), but there is no language even available (boiler plate or otherwise) in the volume submitter document software that we use that states "who" is to make the contribution, or even give us the option of making that choice, so amending won't do us any good if the language is not available. I guess I'll just tell the client that each is to make their own, just to be on the safe side, huh? Thanks so much for your response! I sure appreciate it.

Thanks J. Funny though, the plan document does not have the language specifying that each company is to make their attributable employer contribution. I would think that it would work that way, but I was just wondering if it had to work that way. What if only one company wanted to take the deduction? Could they make the contribution for both companies (as long as it didn't exceed the deductibility limit)? But what I gather from what you are saying is that each employer must make their own employer contribution, correct? Thanks again.

Ok, here's the situation... A law firm has 2 owners. 1 owns 99% and the other 1%. The 1% owner of the law firm is now starting his own law firm (100% owner). Obviously, not a controlled group issue. However, he will work for both law firms. His own law firm will have his own clients and not be doing business exclusively for the other law firm (so no affiliated service group as far as I can tell). Suggest a multiple employer plan, right? The question came up as to who has to make the employer contribution? Can it come from either? A combination of both? Or does it have to be attributable to the participants under each company (i.e., each company pays their own)? Any help you give me would be greatly appreciated! THANKS!

Ah ha! You bring up a VERY good point! That's exactly what to do. (Issue a 1099 for the withholding, showing the distribution for the same amount.) Why didn't I think of that? I guess this time of year my mind goes to mush. Thank God you've got it all together. I know the participants 1099's will kick back (since the checks did), but oh well, at least everything will tie out to the DOT. THANKS SO MUCH SIEVE! You've made my day!

Ok, this is a first for me... One of my clients (who has a high turnover rate due to the line of work), had several terminated participants with small balances. The client requested from the investment company that they be forced out of the plan (which the plan allows for balances under $1,000). For the distributions over $200 (but under $1,000), 20% federal withholding was taken out and sent to the DOT. A few of the participant checks were redeposited (voided checks) at the investment company because they weren't cashed within 6 months. The issue I have is that no 1099 will be issued for those whose checks were cancelled since the participant did not receive the check (or cash the check whichever the case may be). However, I would have to report the withholding on the 945 correct (since the DOT did receive the withholding)? How will this work? If the IRS tries to tie out the 1099's reported withholding with the 945 reported withholding it will not match. Has anyone ever had this issue? If so, how did you handle it? Thanks so much in advance!

Whew... That's exactly what I thought and told the client, but then I started quessing myself. Thank you so very much!

Can a 401(k) Plan ONLY allow for Roth (not pre-tax) deferrals? Thanks so much!

If he was 100% owner of both (which he is), I guess it would be a stupid question. I was asking hypothetically, if he wasn't. (I was just curious.) I would assume though, that if it isn't a controlled group or an affiliated service group, that why wouldn't he be able to maintain both and contribute to both (still subject to limitations)? I think I just answered by own question. ha! Also, by no means did I mean to insinuate that other posters are not knowledgable. I know there are a lot of knowledgable posters out there and I appreciate all of their input. Masteff is also one of them. Because there are so many knowledgable people on here, is why I look to these message boards. Thank you all for your responses.

Thanks. I'm just curious, would it matter if it were two separate companies? (One company in which he is a sole proprietor, and one company in which he is an S-Corp and has one employee?) I would assume it would if it were a controlled group or an affiliated service group, but what if they were two totally unrelated companies? Thanks again.

Thank you so much for your responses. All 3 of you are my favorite responders because you are so knowledgable. I just want to be sure I understand... Since he is using a Model 5305 SEP, not only can he not contribute to both the SEP and 401(k), but he cannot maintain both in the same year either?

Anyone? Thanks.