Bill Presson

We've had some clients recently involved in DOL audits. Both of the auditors have indicated that the standard for large plans is less than the 7 day safe harbor allowed for small plans. FYI.

We recently have had clients go through an IRS and a DOL examination (different clients). Both reps said to view the amounts in conjunction with the latest date the deposit is allowed (15th day of the month following, etc) and make a reasonable decision. If I was faced with what you have, we would recommend to the employer not to report the amount as a late deposit.

I have the same recollection, but can't find it anywhere.

We've had one for years, but we are having it reviewed just to see if it needs an update.

When would you ever be able to restate it?

Authority, probably. But at the Benefits Conference of the South a few weeks ago both Andy Zuckerman and Monika Templeman claimed that they just want to see evidence that the documents/amendments were adopted timely even if they weren't properly signed. I would ask the IRS auditor to get technical advice and if you still don't get a good answer, then contact either Andy or Monika.

This would seem to be legally problematic to me.

That's because it is. If the plan has a last day employment requirement, then you can't allocate (eg deposit) a profit sharing contribution until it's earned.

In the first year that an employee is eligible for the SEP (say, turns 18 mid-year, but has been employed since the start of the year), MUST the plan count all of that calendar year's compensation when determining the employer contribution on behalf of that employee? CAN the employer only contribute based on the date of eligibility going forward for that first year? Thanks. I've never seen an SEP that allowed for mid year entry; I'm not sure that the regs even allow it.

I don't know the specific answer. But, let's assume that you can do it. What are you going to do with the money in the meantime? Hold it in a plan bank account? Which will mean you will end up with a 2012 5500 filing on top of the 2011 filing?

I think they are even better in that situation becaust you don't have to maintain a bank account. We started using them last fall when the 8109 deposits changed. Been very happy.

I don't have access to my files, but I'm pretty sure the Katrina amendments would apply to this as well.

Use Penchecks instead.

No, as long as it is not a controlled group. It's comparable to working for Ford and GM and getting contributions in both plans. Just make sure his sole-prop compensation supports the deduction.

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I don't have a specific cite for you, but I believe that it is. We had a very similar situation and the ERISA atty on the plan told the doctor that he could invest his personal money or plan money, but not both because it would be a PT. The doctor believed him and I believed him so neither of us asked for documentation.

In our instructions to our employer clients, we reminded them that they are REQUIRED to print a copy of the 5500 and sign it for their files. That would be the paper version that they would copy for distribution, if needed.

Tom, let's say the formula is implemented and the BRF tested and it fails. What is the correction? I would think the correction would be an amendment to increase the match for one or more groups until BFR is passed. Excellent. Don't know that I ever contemplated failure.

Tom, let's say the formula is implemented and the BRF tested and it fails. What is the correction?

http://www.irs.gov/pub/irs-tege/se0509.pdf

But in your scenario, he doesn't want another loan. He wants inservice distributions because he doesn't intend to pay the loan back. Just amend the plan to allow for in-service and have him stop paying the current loan.

Can he not just stop paying the loan and accomplish the same result?

No. It's the lesser of 2% difference or 2X the NHCE amount (I'm ignoring the upper 1.25 limit). So the HCE can defere 2X 0%.

I'm saying that your time involved in typing the message and replies is worth a lot more than $.08 and forfeiting it will be very unlikely to cause any issues with the plan. Is it 100% accurate; probably not. But it's what I would do and I'm usually a real stickler for doing things right.

Why don't you just forfeit it?