Bill Presson

I just read that and came here to see if anyone else thought the same thing I did. Is there a curse word filter on this site?? I find it difficult to believe that this is an accurate interpretation. Edited to add: I emailed Derrin Watson to ask if he was serious or maybe he accidently released an April Fool's joke early. I also posted a question on the ASPPA LinkedIn site.

This is a general reply to all, thanks, (and nothing taken as a knock, I may be inclined to go on the cheap and risky side on my own personal affairs, but not in the professional work role), and yes, I've come around to the "correct" definition our government has set for "active" participants as it applies to the 5500 form and the audit waiver exemption. So to the lesser question, for an organization just getting to the 120 or so participant mark and out of the audit waiver status, what should one expect to pay for such a service? Couple of items: 1. The TPA firm I run is owned by a CPA firm so I've seen both sides. I've seen audits done for as little as $7k and they generally aren't really worth much. Most of the audits our firm does (and the ones I've seen on the plans that we do the recordkeeping) run in the $12k+ range. 2. Assuming you didn't hit 120 on the first day of the current plan year, take a look at the terminated participants with small balances and see if your plan allows/requires you to force them out of the plan. Many times you can avoid an audit just by eliminating these participants. Good luck.

I'm not certain. The only contract that we have is a retainer agreement, but the contract is with the plan sponsor/administrator. Also, let's say we do have a contract or arrangement with the plan. Wouldn't legal services constitute indirect compensation (from the plan sponsor) under the final regulation? So the law firm would then have to disclose? Plan sponsor payments do not count as indirect compensation. From the rules: It also applies to providers of other specified services who receive either "indirect compensation'' (generally from sources other than the plan or plan sponsor) or certain types of payments from affiliates and subcontractors. Also, I've been told from other attys that they would never sign an agreement directly with the plan because they might then have to sue the sponsor.

Legal services are covered, but it only counts if you are going to receive any indirect compensation from the plan. All the attorney's that I know get paid by the employer and not by the plan, so I don't think it will apply.

Based on the info provided, $44k seems quite high to me. There may still be extenuating circumstances (like whether they charge separately for distributions/loans, how many payrolls they process, does that cost include the custodial fees, etc.), so don't take this as a final indictment of their fee. Still don't have an answer on additional revenue sharing available and what happens to it. Frankly, it would be much closer to what I've seen if the numbers WERE reversed.

GMK, I read that opposite of what you do. rcline46 raises the main point: how many participants? If there are 10 participants, you're probably being overcharged. If there are 1000, you're probably getting a good deal. For our TPA services, we bill on a base + per participant fee. The assets in the plan really don't make a difference in the amount of work we do, so we don't charge an asset based fee. And we pass through 100% of the revenue sharing in excess of what's used to pay the custodial fee. The question on what the financial consultant does is also critical. Bottom line is that I don't think there is enough information provided by the op to determine if the numbers are in line.

Thank you guys. Do you happen to know the IRS form that forbids having another plan? If we can run the 401k & SEP concurrently, that would be ideal, very good, wonderful. No one seems to really have an answer for me on this. One guy I called said they can't exist in the same plan year. The ERISA book, according to the helpful friendly poster before, said that there is no ERISA exclusivity rule. Now I have this IRS piece. If the government rules don't forbid it, that'll be great. The IRS Form 5305-SEP is the form that prohibits it. If you use that form to establish the SEP and the 401(k) still exists, you would be in violation. However many mutual fund and brokerage companies have developed and gotten approved their own Form 5305. They are usually a bit more flexible. But the only way to know would be to call fund companies until you find one with a form that would work. Why not just amend the existing 401(k) and stop allowing deferrals? Just run it as a profit sharing plan.

Really nice post. I've known Christopher for more than 10 years. Believe it or not, not everyone posts here. And that's okay.

The key here is the type of insurance. shERPA is right on the difference in the limits. But universal life is considered to be term insurance so it falls under the 25% limit and you only use the cost of insurance.

We had a client get a notice as well. We're just going to file an amended return instead of argue about it.

Thanks everyone.

We have a plan that has failed the compensation ratio test. They exclude various items (bonus, overtime, etc.) and have always passed previously. However this year, the NHCE group got quite a bit more in bonuses than in prior years. So now the differential is about 5% instead of 3% or less. I cannot find anywhere an outline of what to do to fix this. Do we just amend to include pieces of comp until we pass? If so, what happens to the ACP/ADP tests? Are they rerun? Is there an issue that now comp is included that the participants couldn't defer on? Thanks for any help.

The thing that I've always loved about these regs is how the DOL & IRS think bankers have time to just sit around all day taking calls from plan sponsors to analyze potential loans that they'll never get. Brilliant government thought.

This had to be a difficult thing to write!! (not intended as an insult to the colleague above with the same name!)

We use Cash Balance Actuaries and they've done a very good job for us. http://www.cashbalanceactuaries.com/

How about a SEP? Of course. That resolves all the issues and they're always free.

We use Penchecks. The broker cuts the gross check to them and they make the distribution, tax withholding, 1099, etc. Full disclosure: I have no financial interest in Penchecks, but I have known the guys that run it for a lot of years.

Interesting. I've never done that before and was unaware of the use. Guess necessity IS the mother of invention. Thanks.

Whether you can or not, why would you? I assume there are no deferrals or matching contributions in the davis bacon plan, correct?

1. Why would you have the immediately eligible people also receive the safe harbor? Since you can test them separately, you will only fail if you hire a new owner. 2. If the plan is top heavy, you can ignore 1.

If you find a way, let me know. We haven't found a way.

Two things: 1. Have them send you the Schedule A when it comes in and you can hold it for them. 2. Define "relatively small group". Because if it's under 100 participants, they don't have to file at all.

If you have a welfare plan "wrapper" so that they are all part of the same plan, you could report both on the calendar year 2011 5500 and use the matching schedule A and the schedule A ending within that year. Many, many plans are like this. This is how we do it too. I think the only "requirement" is to be consistent year-to-year. Agreed.

If you have a welfare plan "wrapper" so that they are all part of the same plan, you could report both on the calendar year 2011 5500 and use the matching schedule A and the schedule A ending within that year. Many, many plans are like this.

hahahahahahahahahahahaha Thanks.