CLE401kGuy

Plan has brokerage account setup where each participant works with his / her own broker (approx. 30 some different brokers working with about 50 participants) - Non-terminated participant (a 30-something) - requested directly from his broker a distribution from his 4 plan - no distribution election forms were made, no other forms of distribution can be taken (hardship, loans, etc.) - so the participant was ineligible altogether from taking the distribution - never let the TPA or his company's HR know he was taking the distribution which was discovered on receipt of monthly brokerage statement cc'd to the TPA - how do you correct under EPCRS - it's 1 person, $200k account in a $15MM plan - so relatively speaking it's insignificant... SCP and just get the money back? VCP and just get the money back? - and then if the money can't be returned (if it was used to buy a fancy speed boat) - does the sponsor just show they made reasonable effort to get the money back? Thanks

Situation: Single taxpayer aged 25 W-2 $6,300 Sch C loss($5,236) started this business after working and getting above w-2 Adjusted gross income $13,198 (interest, dividends and capital gain make up the balance) Can the taxpayer make a $2,500 Roth contribution for 2012? What I'm reading points to max Roth contribution of $1,064, but a CPA's research seems to indicate the $2,500 is OK... Am I overlooking a key piece of info?

check in with Pension Pro - they're adding functionality to make it your office's electronic hub - paperless solution is part of it going forward... we may end up there in the not too distant future

Outside of being potentially administratively difficult, does anyone see any issues with implementing automatic enrollment for a plan for specific groups of employees - and if yes, which side of being eligible for auto enrollment should the HCE's be - covered by it or not covered by it? In this situation, the HCE's would be subject to the auto enrollment... and I'm only looking at 1 particular group being excluded from the provision - about 20% of the eligible participants... Thanks

Partnership has fiscal year 10/1 to 9/30, their 401k plan year is calendar year - when are contributions due for tax deduction purposes? - 7/15 of each year? (i.e. the fiscal year for the partnership of 10/1/12 to 9/30/13 ends within the plan year 1/1/13 to 12/31/13 so contributions must be made by 7/15/14 (i.e. 9 1/2 mos. after the fiscal year's end) - I believe this is correct...

Distributions are processed manually on balance forward plan.... Participant elects lump sum distribution to herself - It's $1200 - Inadvertently, a check is sent to the participant for the full $1200 with no withholding - therefore $240 in required FIT was not withheld - process the 1099-R in January '14 showing full amount taxable with no taxes withheld and move on or work with the participant to obtain the $240 and make the FIT as soon as practicable...

Thanks for the responses, much appreciated

The plan permits entry at 1st of the month following 4 months of service.... The plan is cross tested... When performing average benefits testing, is everyone regardless of service included in the average benefits test or only those who will be part of my nondiscrimination testing of the rate groups for the profit sharing? (i.e. those who are statutorily excluded will not be in my nondiscrimination test - therefore, should they not be in average benefits as well?) Any thoughts would be appreciated, Thanks.

Ahh, so if it was a deemed distribution, the participant receives a 1099 for the portion that was deemed, but still continues to make payments which must be directed to a separate 'after tax' source set up to receive payments on the deemed distribution..... However, if due to the participant's terminated status that led to him missing the payments in the first place, it was considered a loan default and processed as an offset distribution - the loan is considered off the books altogether and it's basically a 'done deal.' - It gets tricky because the participant rehired several weeks before the loan was officially considered in default and the provider accepted a payment on the loan... In this situation, it may be best if the loan was considered in default and processed as an offset distribution so it's written off the books altogether - I appreciate the response...

Participant in a plan terminated in July of '12 and rehired December of '12. He had a loan. He did not timely repay outstanding loan payments so he was defaulted and had a deemed distribution for 2012. In 2013, is there any way for the participant to pay back this loan and 'reverse' the 1099 for '12 in '13. Final-Reg, Tax-Regs 1.72(p) - Loans treated as distributions indicates is repayment continue after deemed distribution, tax basis in the plan increases - how does that affect the 1099 that was issued? Any suggestions would be helpful... Thanks

Any Form 5330 experts out there, I'd love to speak with you regarding some questions I have on how to complete this form... these instructions are pretty intense... 1) A distribution was made in error to a participant in 2010 and repaid in 2011 - A) does this represent a prohibited transaction; if yes, B) do I use the FMV of the distribution made to determine the excise tax; C) - if the distribution to the participant was repaid, but not FIT withholding - is my transaction considered to be ongoing requiring continued 5330 filings until the FIT is recovered and re-deposited? 2) Most of the plan's elective withholding was considered to be paid late years 2006 - 2011 - A) when reporting the late deposits on 5330 can I enter on Sch C Line 2 "various dates" and note the months that had late deposits, indicating a total missed earnings figure for the plan year? If the detail is required can I use an attachment to provide the detail and reference it on Sch C Line 2. 3) Is it best to report the late deposits on one set of 5330's and the distribution made in error on a different 5330 (the instructions seem to request this). 4) For late filings of 5330 dating back several years - best to put them all in one big packet to IRS with a single check covering all excise tax due. Any help anyone can provide, I'd greatly appreciate it.... Ted Triska 216.771.4242 ext. 209

Have a client that would like to have their participants self-serve benefits - i.e. they will log onto a terminal to complete all benefits items including 401k - they can enter beneficiary info - but a hard copy form has always been required... hard copy forms, still required? What are others doing in this area... Thanks

The employer has non-U.S. citizens with Social Security #'s - provided the plan doesn't exclude non-U.S. citizens - any issue with them participating? haven't run across this question before so I though I'd post in addition to research - any thoughts or observations on the issue would be appreciated... Thanks

August 2010 employer incorrectly pays out a $10k account balance as a lump sum - $8k to participant, $2k FIT - participant was not eligible for distribution - $10k is noted on 5500 as a PT. October 2011 participant pays back $8k that was rec'd - but the FIT is not recovered... As of July 2012, no 5330's have yet been filed - the kicker: the plan terminated 1/1/12 and the participant's balance has been paid out in full under the termination. 1) is one 5330 completed at this time for 2010 and 15% excise tax is based on lost earnings for the period 8/10-12/10? this 5330 is late... 2) is a 2nd 5330 completed for 2011 showing 2 PT's - the first for the lost earnings related to '10 reported on the late 5330 noted in item 1) above and a 2nd PT that is the lost earnings based on the full $10k from 1/11-10/11 + lost earnings on the unpaid $2k for the period 10/11-12/11? this 5330 can be extended still 3) since the plan is now paid out due to termination - how is the $2k portion of the PT that was never resolved handled? 4) the employer had paid no lost earnings to the plan - and since it is now terminated and fully paid out, there is no plan to pay lost earnings to regardless, how are the lost earnings handled? Any thoughts would be appreciated...

Here is a nuance to the above.... regarding the ownership of the billing entity - a non-owner of Dr. Group A will be the 98% owner of the Billing Co. - two of the docs from the doctor group will own 1% each - the 98% owner though does not have an option to sell without the approval of the docs in Dr. Group A - i.e. they have first right of refusal - in that scenario - do I then have an affiliated service group?

Dr. Group A has 30 docs - they have 8 billing personnel and 9 nurses... Dr. Group A wants to split off it's billing personnel with a 100% owner who is not a doctor and has no ownership in the Dr. Group itself... if all services provided by the new billing company is for Dr. Group A - does an affiliated service group relationship exist? if yes, the billing group would still need to be considered in the retirement program in place, if not, the billing group could start its own plan entirely independent of that of Dr. Group A. If the answer is yes and the billing group is an affiliated service relationship - how much revenue from different non-Dr. Group A sources must be generated by the new billing company for it to NOT be an affiliated service relationship? 50%?

Here's the setup - client has allowed it's participants to select any broker for their 401k account - in some instance, a participant even has multiple brokerage accounts... the only statements the participants are receiving are their brokerage statements - since part of the plan is on a 404a5 'ready' platform, those participants will receive the required info... it's all those other participants I'm concerned about... side note, the plan is 100% vested on all sources... any thoughts or ideas would be appreciated....

Although Cash Balance is technically in the DB realm, on SSA - is the balance for a reportable participant shown as DC the instructions on the for for item (f) Part III note only indicating Defined Benefit plan - periodic payment - I'd report in column (g) - DC plan - total value of account and provide current cash balance... agreement?

Client wants to have participants complete enrollment forms at hire to attempt to increase participation - eligibility is age 20, 90 days, quarterly entry (calendar year plan) - the payroll system has the rules for eligibility entered so elections can be entered at the time of completion and automatically go into effect when eligible, what are peoples' opinions on having enrollment forms completed so far in advance of entry date? Definitely seeing issues with those folks under 20 (and this employer has a fair amount of them) and issues with the SPD and SMM's - My thought is just to relax plan entry to date of hire, no age - the main goal is to get people started participating early and catch them when they are completing the rest of their enrollment forms... (or at least eliminate the age 20 rule) Any thoughts would be appreciated....

Thanks for the response - greatly appreciated, I'm feeling the same on all of these points, thanks again!

Now that we're in the home stretch of creating disclosures - how are others out there assisting plan sponsors with actually using the disclosures? Are firms simply providing the disclosure and letting the plan sponsors know it's coming and leaving it at that? Are firms providing additional info outside of the disclosure itself or providing some sort of background on the new regs and the plan sponsors' responsibilities included therein? Are firms helping the plan sponsor out with reading, reviewing, interpreting disclosures? Since we are accepting fees (even though in many cases we are a co-fiduciary), those of us providing these disclosures are not impartial and cannot give independent assistance with reviewing the disclosures. I've seen new services cropping up that offer independent review of disclosures, but in many cases that could result in adding another layer of fees. Is there any type of checklist out there that a plan sponsor can independently use to make his / her review? Any comments, thoughts or inspiration would be appreciated...

Participant in the plan has provided the bill for funeral expense as evidence of hardship, but along with it, he's provided the check showing that he made the payment to the funeral home. Making the payment has caused hardship - if you have proof showing that the participant paid the expense that qualifies as the hardship reason could you still make hardship distribution - the bill was paid on 6/7/12, and the invoice from the funeral home does show that the participant was behind in the payment for the service as of 4/21/12... Any thoughts? My original thought - no go on hardship since the hardship reason no longer exists due to being paid off...

Thanks everyone for your thoughts and direction, much appreciated!

You cannot allow catch-up without allowing regular contributions first. The funds can be re-classifed as catch-up only if the plan is failing testing or exceeds limits. I might have amended the plan to limit the amount of deferrals for HCE to $5,500, but don't believe that you can state that deferrals are limited to catch-up only. However, you still run the risk of failing ADP Testing and not all of the funds being re-classified. Thanks for the quick response, I really appreciate it! TT

We've amended plans to permit HCE's only to make catch-up contributions - i.e. those HCE's age 50+ during the PY can only make up to the $5,500 and then are not permitted to make any additional elective contributions in order to have $0 contributions for HCE's in year end testing. Is it possible to amend a plan to count any elective for HCE's age 50+ to be counted as catch-up first and then any elective over $5,500 be counted in the test - I have a plan with a mix of HCE's over / under age 50 and low NHCE participation... could be beneficial for testing with some planning to count the age 50+ HCE's first $5500 as catch-up and remove from the test as opposed to reclassifying (avoiding refund to the under age 50 HCE). Thanks in advance