cpc0506

Participant defaulted on a loan in 2014. Never made a single payment to the loan. A 1099-R was issued in 2014. Plan allows for one loan. Only source of money in plan is Salary Deferral. Participant took a new loan in 2015. Is this allowed? FYI: Partcipant has not met any requirements for a distributable event.

We wanted to self-correct under EPCRS....

Business structure is partnership. Electroncially Filing a Form 5500-SF guarantees the filing has been made; with a paper Form 5500-EZ, that is not always the case. As for the bond, there is some initiative out there from the DOL/IRS regarding the Form 5500-SF filing for audit waiver but not showing a bond on the tax return.

We are the new TPA for a 401(k) safe harbor plan for 2014. During 2014 (prior to our taking the plan over) a participant took an in-service from her account from all sources. Plan allows for in-service at age 59.5 (she is 69 and still employed) but from only the pre-tax and rollover sources. Can I do a corrective changing the sources of in-service for 2014? I know this is a safe harbor plan..... Let's ignore that for now, under EPCRS we can do a corrective amendment for loans and hardships. Do you conclude you can do the same for in-service?

A plan covers 3 partners of a company. No other employees. We will be filing Form 5500-SF for 2014. In prior years, the TPA did not check on the Form 5500-SF 'one participant plan'. Question is: Should this box be checked in this instance? I say yes. Is there a problem with now marking the SF as a one participant plan this year when it was not marked in previous years. This question has come up because there is no bond for the plan and there does not need to be one but if the one-participant box is not checked, and the plan has no bond reported on the Form 5500-SF, I have concern the client will be contacted by DOL for lack of bond.

The maximum number of NHCE allocation rates is determined in accordance with the following table: Number of Eligible NHCEs Maximum Allocation Rates 2 or less 1 3-8 2 9-11 3 12-19 4 20-29 5 30 or more 6 or more but not more than 25 This is the language from the Basic Plan Document. There is only one allocation rate allowed for the NHCE when there are only 2 NHCEs.

OK. So you are considering the SHNEC contribution in your coverage test for Profit Sharing allocation. I guess my issue is: 1) there are two separate provisions in the Adoption Agreement covering SHNE and profit sharing. We have always included the SH contribution in our deferral coverage test since the provisions are identical, which you are saying is incorrect. Can you provide some written guidelines for this? 2) Our Master Plan Document indicates that an employee only getting the 3% Top Heavy is NOT considered benefiting under the profit sharing coverage test. How is this situation any different? 3) Now, if it turns out that he is in the coverage test and the coverage test passes, how can I allocate to this employee only 5% if the plan only allows for 1 rate group and that group is getting 31%?

Plan has 3 employees – one of which is an HCE, two NHCE. All are participants in the plan. One of the two NHCEs (NHCE A) only worked 499 hours in 2014 but was employed as of 12/31/14. Plan has 1000 hours and last day requirement for Profit Sharing allocation. Plan fails coverage when I exclude this employee, coverage % is now only 50%. Adoption Agreement includes fail safe language. So I need to bring the employee in to pass coverage. Here is the dilemma. With only 2 NHCEs I can only have 1 rate group (Relius EGTRRA document. The one NHCE (NHCE B) received a 28% Profit Sharing contribution and a 3% SHNEC. TPA has given NHCE A a 2% PS allocation and a 3% SHNEC allocation to satisfy gateway. I don’t feel that this is ok. Since you are forced to bring in NHCE A to pass coverage, I think he has to get the same allocation so he is in the same rate group. Giving a 2% allocation puts this employee into another rate group which is not allowed. Am I overthinking this? Can a corrective amendment be made to remove the fail safe language after the plan year has ended? (I don't believe so.) Any guidance would be greatly appreciated.

Is this eligible for self correction? And are taxes expected to be withheld? How do you report on the 1099-R?

Client's 401(k) Plan limits the deferral limit of HCEs to the amount which equals current 402g deferral limit divided by current compensation limit. That number for 2014 would be 6.73% (17,500/260,000). HCE contributes 10.6%. Plan does not fail the ADP Test but HCE exceeded the plan imposed limit. What is the deadline for the return of excess? March 15th or April 15th?

In 2013 Client had one participant who terminated in 2012 and should have been submitted on a 2013 Form 8955-SSA. TPA did not submit the Form 8955-SSA for 2013. Now we are working on the 2014 Form 8955-SSA. Can we include the missed person or should we provide a 2013 Form 8955-SSA and inform the client that a penalty may be assessed?

No, apparently the client used their new name on the plan document but the w-2 still had the old employer name. The new name is still being 'registered'(?).

Client established a new plan effective for 2014 with deferrals effective 10/1/2014. All paperwork provided by client indicated that the company name was XYZ, LLC. We generated the Adoption Agreement with that name. Now, client sends us the w-2 for 2014 to reconcile compensation and company name listed on w-2 is NOT XYZ, LLC but rather ABC, LLC. Tax ID given by client at setup matches the tax ID on the w-2, just not the company name. Is this a problem?

The document does dictate that the PW contribution is considered a QNEC (100% vested) Here is the language of the plan document c. [X] Prevailing wage contribution. 3. [X] QNEC. The "prevailing wage contribution" is considered a Qualified Nonelective Contribution (QNEC) As such it is included in either the ADP or ACP Test.

Maybe I am not saying this correctly, but we thought that we could boost the NCHs rate for the prior year by using the PW contribution made in that prior year. So that the prior year ADP number is higher when testing the HCEs for the current year. Are you saying that is not allowed?

Plan has gone to prior year testing for the plan year ending 9/30/14. Plan provides a prevailing wage contribution. Employee A was not HCE for the prior plan year, but is for this current plan year. Employee A received a PW contribution in the prior plan year as well as the current plan year. We have used some of the total prevailing wage contributions from the prior plan year to boost the ADP rate for this year. Do I need to increase Employee A current deferral rate by the current year PW contribution to determine if he is due a refund? Or do I ignore the PW contribution? Sal's book states: "in the rare event that all or part of the HCEs QNECs are included in the ADP Test, it is the current year ADP test for which they are eligible to be included because the prior year testing method applies only to the contributions made by the NHCs".(chapter 11.205) What is meant by this statement "in the rare event that all or part of the HCEs QNECs are included in the ADP Test?" When are they included? When wouldn't they be included? Thanks.

That is my question. I think he should have made $100 in the quarter and that is what is due to him.

Can anyone provide some guidance here. We are having a discussion in the office as to what constitutes number of days in the denominator when calculating lost earings. Employee A did not receive a $1000.00 salary deferral contribution to his account that was due 7/1/2014. The deposit is not made until 10/1/2014. From the Alliance investment statement, the rate of return for the period 7/1 to 9/30/14 was 10%. What would you calculate his lost earnings to be? There are two schools of thought in our office. First group say his lost earnings would be $100. (1000 x 10% x 92/92) The second group say $25.20. (1000 x 10% x 92/365). The language on the Department of Labor website talks about 'annual' or 'annualized' rate of return for lost earnings calculation. How is the calculation affected when the rate of return is per a period less than one year?

What if the plan of Company A was a Simple-IRA plan? Does this change your answer? The orginal ownership of Company A was split 50-50 between Employee A and Employee B.

Company A was a partnership (2 partners, Employee A and Employee B in 2014) which sponsors a SEP. Midway through 2014 the partnership dissolves. Employee B has started a new company, Company B, (100% ownership) after the dissolution of Company A. Can Company B adopt a 401(k) Plan for 2014? If so, does the contribution made under Company A's SEP have any effect on what Employee B can receive under the new 401k plan?

Just an FYI, this is a defined contribution plan.

Client has ERA of 50 at which you become 100% vested. Why I do not know. Now the client wants to remove the Early Retirement Provision. Can this be done or is it a cutback?

Client is intent on terminating the 401(k) plan and keeping the 403b plan. So, if I have read everything correctly, we have a distributive event for the 401(k) plan and the employees take either take their money or roll the funds to the 403b plan (which does allow for rollover contributions from qualified plans).

Do the funds have to be rolled over to the 403b plan? Or can the employee take a distribution from the terminated 401(k) plan? What if it was the other way around? Say the client decided to terminate the 403b plan and keep the 401k plan, can the employee take a distribution from the 403b plan or would it have to be transferred to the 401k?

Hello. A new client has come to us. The client has a 401k plan and a 403b plan. The 401k plan was established in 1999 and was funded until the employer got its 501 © (3) designation at which point it established a 403b plan and just stopped contributions to the 401k plan. The cleint is telling us that the 401k plan is 'frozen'. I have not heard this term used for a 401k plan. The client told us that they wanted to terminate the 401k plan. My question is: can we not just merge the 401k plan into the 403b plan? What issues would arise? I would suggest that merging the plans will eliminate the need to restate the 401k plan for PPA.