jkharvey

When is code 3C (Plan not intended to be qualified--A plan not intended to be qualified under Code sections 401, 403, or 408) supposed to be used? The IRS refers to this code in Rev. Ruling 204-19 when it provided guidance for plans accepting rollover contributions. I did some brief research on the code and only found reference to Plans from Puerto Rico. Is this a code that should be used if the plan has known qualification issues that have not been corrected? Thank you

Very early in the audit, but the auditor is being unreasonable. We may be able to shift this position, but for general purposes, I have a question. This is a 401k only plan. The only contributions are employee deferrals. The owner does not defer nor does he have any money in the plan. There are 3 HCEs with balances and about 90 NHCEs with balances. If thie plan is disqualified, the only people harmed are essentially NHCEs. The issue is failed ADP test. When the test was originally run the failure was corrected by recharacterizing as catchup. In preparing for the audit, i discovered that the date of birth had been entered into the system incorrectly and the paritcipant was not actually eligible for catchup. If i had found this without the audit, i would still be in the correction period for SCP. The auditor is trying to play hardball and insist on audit cap. My question is this. It would be cheaper for the employer to just let the plan be disqualified. That would harm the participants however. Is there fiduciary liability there? Could the participants sue and win for this? Anyone with experience with an actual disqualification? Thanks

Does this QNEC contribution for the missed deferral opportunity of one nonekey remove the Top Heavy exemption for the plan?

Love this discussion..thanks everyone. Why would it not be considered 415 since compensation is zero? That is a theoretical question. I like the idea of forfeiting the amounts. I don't think now that I read all of this that the amounts go back to the participants since they never came from the participants.

Yes, there is a code for the 415 excess. That still generates a taxable event for the participant. The CPA is saying, however, that there should not be a taxable event. The participant never received any deferral of taxation benefit on this amount. I'm wondering now if this should be a mistake of fact that is returned to the employer. Anyone have thoughts on that?

Employer deposited amounts that were "deferrals" for the partners. After year end the K1s report a loss. The "deferral" amounts have to be returned to partners as there is no compensation. The Partners' CPA says that no 1099R should be issued and this is not a taxable distribution. I can see the argument that since the partners received no tax deferred "benefit" from these distribuitons. Money is going to come out of the trust. How is the 1099R supposed to be handled? Thanks.

The participant lives with her son. Neither the participant not the son legally own the home. Does the definition of "primary residende" for hardship purposes have any need for legal ownership? Seems to me it would not. The reference to Section for the Casualty Loss hardship refers only to the type of casualty, correct? There is not a requirement that the paritcipant would actually be able to deduct this under 165; therefore the ownership question would be an issue. Thanks

I can never remember this one for refund purposes. Is the first business day after the 3/15 deadline sufficient? Thanks

For plan purposes when does an owner (stockholder) actually "terminate"? The owner in question has not disposed of his shares, so still owns more than 5% of the company. He has, however, stopped taking salary and is not sharing in corporate gain/loss. I still need to confirm if he is actually performing any services, but for this scenario, let's say he is not. At what point is he "terminated"? Thanks

One partner wants to make his elective deferral deposit by transferring title of assets in his brokerage account to the 401k plan. I understand about required contributions having to be made in cash. Seems to me that a deferral is a required contribution in one respect. Would this be permissable? Thanks.

I'm reading through EPCRS 2003-12 trying to find correction for this. Is the plan allowed to self correct by just returning the deferrals?

I understand about forfeitures not being available to be used to fund QNEC or SH contributions. If an employer makes an overdeposit into a participant's account in error, I'm thinking those monies could be used to fund a QNEC or SH since they are not true forfeitures. Am I way off base? Thanks

I forgot a few points. the log in feature is cumbersome when you consider it took no time at all to just log into it when it was inhouse. The timeout feature is very short, so if you are logged in then move out to work on something else for a little while, you will get logged out and have to log back in again. Did I mention that it is not a quick easy log in? I work a lot of "off hours", either late at night or on the weekend. If I goof on the log in and get myself "logged" out, I'm stuck and can't work again till Relius is open to unlock me. Yes, I realize that this is operator error, but i'm only human and it happens on occasion. the log in is "fob" based, so now I have to keep track of this "fob" and the number on that is needed for the log in. Again, it's an additional step or 2 for everyhting I do and I don't like working this way. I've told Relius all of this and I've told them this is their worst product ever.

Essentially, it is the same, but there are some differences that slow down how I work. for example, reports take longer to generate using ASP. They somehow "offload" the report generating (I don't remember the term they use, but I joke about it being a person in the Philippines, but I know that is not really the case) and that makes it slower. You cannot have more than one report open at a time. You cannot quickly export files or save them to your computer hard drive. For example, I do a lot of exporting census and contribution reports. I used to just export as excel and it was right there on my hard drive. That doesn't work any more since my hard drive is no longer "where" the reports are being generated. I now have to save the file on the ASP drive then take an additional step to "move" that file (FTP) to my hard drive. Printing reports also requires an additional step. These are minor differences that add up to additional time to do the work. I would say that my time to complete any task has increased because of ASP. We've been on it for about a year now, so my learning curve has improved, but it is definitely slower now. I would NOT recommend ASP to anyone and I've told the people at Relius this. We have had a problem (it was frequent for a while, but is better now) with data being duplicated on reports. For example, i could print a census report and it would have every participant listed twice. I could print a Summary of Accounts and each person's balances (beg, ending, contribtion, etc) were doubled. How would you like to give a client a Summary of Accounts report that looked like that? We have to look very carefully at each report as we generate it. when this doubling issue happens it doesn't happen all the time and stay that way. I could print the report and review it and it would be fine, but then I could immediately print that report and save it as a file for you as my client and it would be wrong.

Prior company is keeping the plan. I think they are actually terminating it. Thanks.

An employer (our client) has purchased another business (asset purchase). Several of the employees from the purchased business are going to become employees of our client. Would thie plan of the purchased company be considered a "related" plan for purposes of determining any amounts avaialbe for loans of these new employees?

I've been using ASP for almost a year. I can honestly say that I absolutely HATE it and it is probably the worst product Relius has. I loved their administration system, but can't say the same for ASP. I've told Relius this, so I am not speaking out of school. Their ASP document system is really good, but something is lost in the move to ASP for administration.

My concern was since the Trustee of the Trustee directed plan is the only participant, it is essentially a participant directed plan and trustee directed. So, if the plan language provided for participant directed accounts, this exact same plan would not be able to invest incollectibles.

One man plan with assets exceeding 250K, so 5500EZ is being filed. If the plan document does not allow for participant directed accounts, would investing in collecibles trigger distributions? For practical purposes this is the same as an individually directed account since the only individual participant is the trustee.

Thank you. I had not looked at it in that perspective.

I'm not sure if this belongs in this forum or over in distributions. 401k plan has assets invested at large platform. Participant has been receiving RMDs for a few years and dies during 2013 before the rmd was distributed for that year. The beneficiary is a trust for the participant's children. Rather than make a distribution of only the RMD amount, the platform moved the entire account balance into an account ini the plan and named it "revocable trust for XYZ participant". the RMD was then distributed from that account. Is it permissible for a nonperson like this to be a participant in the plan?

I'm drawing a blank here, sorry. The employer has a PS/401k plan and CB plan. The plans are aggregated for nondiscrimination and 404 deduciton, but totally separate 415 limits. Is that correct? I keep wanting to say 415 has to be combined, but I think I'm bringing in the old rules...really old rules.

F5500SF Part V line 10(f) --- Has the plan failed to provide any benefit when due under the plan? does this include missed RMD payments?

Thank you. Yes, I find plenty of information about the safe harbor plans, but not just the EACA. I understand the concept for the safe harbor plans and the "pass" that they get on testing, etc and thought that perhaps it did not apply to the EACA since there are fewer compliance advantages associated with the plan.

Is it permissible to amend an EACA plan mid year to add discretionary match and profit sharing contributions? How about to change entry date and Normal Retirement age?