Susan S.

Does the DFVCP penalty calculator not take extensions into account? For example, it is calculating 79 days late for a plan year end 12/31/15 filed on 10/18/16. If an extension was filed, it is actually only 1 day late. Should the extension filing date be entered in place of the plan year end?

Can a 401(k) accept a rollover from a 403(b) that is not subject to ERISA? The document simply says that rollovers are accepted from an annuity contract described in section 403(b). The word "qualified" isn't included.

Thank you for pointing out that it is the employer who has the authority to amend the plan document. It seems to me that the person signing as representative of the employer should not be the same person as the individual being appointed as trustee, wouldn't you agree?

A 401(k) plan has 2 trustees, the executive director of the corporation and one other employee. I'll call the director John and the other trustee Sally. It is a non-profit corporation with a large board of directors, none of whom are employees or trustees. John resigned and they have a new director, Jane. I sent an amendment to appoint Jane as trustee, with a signature line for Sally to execute the amendment as existing trustee. I also sent appointment of trustee/resignation of trustee forms. No big deal, I thought, but could not have been more wrong. Jane does not want Sally, who works under her, to have any part of signing off on her appointment. To get around Sally having to sign, they asked if the change could be done as a board resolution instead of an amendment. I told them that would be fine. I'm not sure if that's right but I didn't see any other way around the ego trip. Now they are pushing it even further. Jane has a statement from the board that as director she can act on all matters on behalf of the employer. Given that, she is asking if she can appoint herself as trustee. Does the change have to be approved by the other trustee or the board of directors? She says if she can send a letter to John to remove him she should be able to appoint herself. She kind of has a point there, but surely there have to be some checks and balances.

Company A has a 401(k) plan, with participating employers Company B and Company C. They are a controlled group. Employee X owns 30% of Company B, but has no ownership in companies A or C. Is he still considered a 5% owner for determination of HCE and key?

In a controlled group of corporations, Company A is the current plan sponsor and Company B is a participating employer. We are restating the document for PPA and they want to make Company B the sponsor and Company A a participating employer. I thought this would be fine as long as the change was on the 5500. Their attorney says that if we change the sponsor, it is not considered a restatement. Is that right?

If the initial plan year for a 6/30 plan is a short year from 1/1/15 - 6/30/15, is the compensation limit for the short period half of the 2015 limit of $265,000? Relius appears to be calculating based on half of the 2014 limit instead of 2015.

Is anyone familiar with the general fee structure for TPA work at MassMutual? We have a prospective client with about 25 employees who says MassMutual is charging them $287.50 per year to administer their safe harbor 401(k). It's hard to move the case when this is what the client thinks he is paying. There have to be some additional fees built in, but we can't figure out where.

Thank you very much!

A 75 year old, >5% owner took a partial in-service distribution from a balance forward profit sharing plan. The distribution was made during the last week of December 2014 and he deposited the check in an existing rollover IRA in January 2015. So it was basically in limbo as of 12/31/14 and not included in his balance of the plan or his IRA. Since the deposit wasn't in his IRA before 12/31/14 and therefore the rollover institution is not going to include it in his RMD calculation, should I include it in my calculation of his balance as of 12/31/14 even though my allocation report reflects that it had been distributed?

A participant's balance is hovering around $1,000. If we request a cash out, it may take the investment company several days to process the distribution. Are we ok if the balance goes back up over $1,000 if we have proof it was under $1,000 when we made the request?

I am in the early stages of taking over the TPA work for a SH 401(k) plan with cross-tested PS contribution. The plan includes the owner and his son. There are no other employees. They only want to max out the father. They don't need the SH with 2 HCE's but I guess they are covered in the event they hire anyone else. I am concerned about the new comparability formula creating a CODA. Is this only a problem if the owner is a sole proprietor? Or is it irrelevant since all are HCE's?

A 401(k) plan allows in-service distribution of deferrals, match, and PS accounts at age 59 1/2. Several participants have money that was transferred from the employer's terminated pension plan. The transferred assets are not eligible for in-service distributions. The PPA amendment specified that in-service distributions of transferred pension assets would not be allowed at age 62. The employer wants to amend to allow in-service distributions of the former pension accounts at age 62, leaving the other accounts as-is, eligible to be distributed at 59 1/2. Document is Sungard Corbel. How do I change the PPA amendment? Do I call it a revised amendment? Looking at the document checklist and language manual, even if I had originally coded for distributions at age 62, it doesn't look like this would have been mentioned anywhere except the PPA amendment. Do I need to amend any other section of the document, such as adding it to the "In-Service Distribution of Employer Contributions" section?

Safe harbor 401(k) has a YOS requirement, but the plan sponsor has been operating as immediate entry. Per the plan document and SCP, a retroactive amendment will be drafted to correct the inclusion of the ineligible employees. The SCP procedure says that the amendment can only include the affected employees. The employer wants to keep the immediate entry permanently. Can the retroactive correction and the change to future entry requirements be done in the same amendment? Does the language "anyone hired on or after" a specific date, without specifically naming any employees, satisfy the SCP rules and adequately convey the change to the entry requirements going forward?

Thanks to all for the excellent guidance!!

Pooled profit sharing account valued annually on 12/31. The plan's written policy calls for an interim valuation if the balance of the participant's account to be distributed equals or exceeds 5% of the total of the plan's pooled assets. Can the interim valuation be used for the exclusive benefit of participant X, the individual for whom the valuation was performed? Let's say an interim valuation will be done on 7/31/14. Participant Z terminated on 5/1/13 and his account was valued on 12/31/13. He has a small balance and has not been paid out. If a distribution is made to participant Z between 8/1/14 and 12/30/14, can we still pay out based on the 12/31/13 valuation or are we obligated to pay based on the interim valuation? It seems like you can make a case for using the 12/31/13 amount since the interim valuation was only intended for a specific individual.

401(k) plan with entry requirement of 3 months of service. Dual entry dates - January 1 and July 1. Former participant was hired 12/12/96 and terminated 1/1/1999. He would have become 100% vested at that time due to a partial plan termination. I do not have records old enough to determine whether he had an account balance. He was rehired in 2014. Document language (Sungard VS restated 1/1/2010): Reemployed before five consecutive breaks in service. If any employee becomes a former employee due to severance from employment with the employer and is reemployed by the employer, then the former employee's prior service shall count in the same manner as if severance from employment with the employer had not occurred. If any participant ceases to be a participant due to severance from employment with the employer and is reemployed by the employer, then the participant shall resume participation (in the same manner as if severance from employment with the employer had not occurred) as of the reemployment date. Does this paragraph apply to him since he has more than 5 break years? Document doesn't spell out what happens for someone with more than 5 breaks. Vesting is not an issue since the current document provides 100% immediate vesting for all. But for eligibility, does he need to satisfy the 3 month service requirement again?

Do you generally recommend that your clients maintain a fidelity bond for SIMPLE IRA's? What factors should be considered in making the determination? The guidance that "such plans are generally structured in such a way that if any person does handle funds or other property, that person will fall under one of the financial institution exemptions" seems to lean toward the bond not being necessary. However, if the employer or a payroll company handles funds, how does this fall under the scope of the financial institution exemptions?

Peter @ Fiduciary Guidance Counsel --Yes, the trustee and administrator are satisfied that the amounts were paid as a good-faith mistake of fact. Lou S. -- Changing the termination date is not an option because they want to establish a SIMPLE IRA later this year.

A SH 401(k) plan was terminated effective 12/31/2013. The employer continued to deposit deferrals and match beyond this date. What is the appropriate correction? Should these amounts be refunded/forfeited?

In addition, they have a short plan year from 1/1/14 - 6/30/14. Does this change anything? When determining a year of service, I assume they still had to be hired on or before 1/1/13 to be eligible on 1/1/14.

Brand new SH 401(k), effective date 1/1/14. The person who enrolled the employees did not check eligibility. Deferrals have been withheld for 8 ineligibles, no HCE's. All were hired in 2013 and have not met the 1 year wait. Will follow the EPCRS procedure for amendment. I was originally thinking I would word it so that anyone employed on 1/1/14 is eligible, but since it states that it should change the entry date only for the specific employees, do I include their names in the amendment? Have not yet submitted document for LOD. Is this amendment going to cause a problem?

There is only one location.

A medical practice is hiring a new physician. They have asked if it is ok for his employment date to be July 1, even though he may not start work until August. From a TPA standpoint, I'm going to use whatever date they put on the census. However, as far as telling them it is ok to do this, I'm not so sure. It seems a little fishy. If they have a contract with him that specifies his employment date as July 1st, are they in good shape?

Business owner/HCE is regretting his decision to stop the safe harbor match, realizing how much his deferrals will be limited. He has a calendar year plan and wants to reinstate safe harbor mid-year in 2014, but since it is not a new plan, I don't believe that is allowed. Please correct me if I am wrong here. Are there any other creative solutions that can be implemented for 2014 that would allow him to maximize his salary deferrals?