TPApril

Thought I'd throw this question out there: Non profit has started a new 401(k) plan for contributions moving forward. The legacy 403(b) is being left as is with no new contributions, but there remains a large forfeiture account, which exceeds payable fees. Can such forfeiture account be transferred directly to the new 401(k) account to be used for employer contributions over there?

So a 403(b) plan that is going to terminate can revert the forfeiture account back to the employer? Employer is a non profit and does not pay taxes, so no 50% reversion tax?

Bird, BG - thanks! So, originally I was looking to adjust the intended contributions to facilitate passing the test. Wrong. Instead, what is needed is to correct the failing test results of the allocations as already determined. Increasing NHCE's with an 11g amendment seems to be the best approach. My understanding is it can be arbitrary who to increase among NHCE's, so as to minimize total employer cost.

Would it be a reduction of benefits for an HCE if it hasn't been deposited yet? Testing is being conducted under intended contribution to see if it passes.

Looking for clarification on excluding terminees from 410b and 401a4 testing. Employee is part of a small group that is designated not to receive ER allocations. They also do not participate in 401k so they have no balance whatsoever. But this group is included in 410b coverage and rate group testing since they effectively make eligibility for the plan. 1000 hours and last day worked required for participants in group who do receive ER allocation. One of these employees who don't receive an allocation terminates with over 500 hours worked in year but no last day. Would this ee be included in testing or can be considered Excludable? I'm making myself dizzy over this.

so with individual rate groups, this wouldn't be an issue, and no 11g amendment even necessary?

Thanks to all for input. To follow up on Bird's comment - why is this discretion different from individual rate groups? Only difference seems to be there are limited %age amounts, rather than wide open as for individual rate groups, so perhaps this is more of a definite allocation formula than that is?

There is no date specified in VS. It simply says: "The Company shall notify the Plan Administrator in writing of the amount of contributions allocated to each group." When the company does so, it also indicates who is in each group.

The language seems pretty basic for each group, ie 'Group n shall consist of Category n employees'. Categories are 'designated by the Company' outside of the plan document.

I was thinking because the % groups are arbitrary, HCE's can be put into any of them. (amount not deposited yet)

For clarification then, option 1 would not be an option But reducing said HCE to 10% would be, without amendment And option 2 would be possible, effective for prior plan year, with 11g amendment?

Cross tested plan is not set up with individual rate groups for each participant, but rather rate designations (ie 5%, 10%, 15%). Rate group fails for one HCE. We see two options for correcting, but neither one fits cleanly into the rate group designated percents, is it still okay? 1. Reduce failing HCE from 15% to 14% (preferably than to 10% since 14% passes) 2. Increase 1 NHCE from 10% to 12.35%

I looked around the boards and found some older posts related to Tribes and 401(k) Plans. Not sure how current those discussions are however. Curious if there have been changes to the application of ERISA, control groups, 5500's etc.

CEB50 - how do you calculate lost earnings then? BG5150 - I recall an approach to calculate equivalent of 15% excise tax for first year and deposit it on top of the lost earnings

So...for the first time, a small plan has deposited contributions late (as discovered in process of preparing for prior year's 5500). 401(k) Amount = $500. Days late (after 7-day safe harbor) = 2 Lost earnings per VCP Calculator = $0.65 Report on 5500? (Late is late) Pay $0.75 to the trust?

In reference back to the original question, I tend to agree to file the SF that year of transition, however, in terms of privacy of the owner, I thought part of the reason EZs (& one-participant SF's) are not public are because the assets can so easily be linked to the Plan Sponsor as an individual, which would be the case in this year of transition.

Bird, Ratherbegolfing - agreed 100% on my dismal choice of word - when I came back to this thread and reread it, I was shocked I used that word. Aside from that, thanks much for your opinions on the situation!

What about this situation: Employer receives digital signing instruction for 5500-SF (one person plan). Reviews the form, prints it out, signs it, sends a copy off to TPA prior to the deadline, but never actually clicks submit online. So form is perceived as not filed. Eligible to submit even though it was formally signed on SF? Reasonable cause? I note that you lose Penalty Relief eligibility if you are denied.

Group Insurance broker was bought by another firm mid-year. So two different brokerages received commissions, even though the Employer did not formally change brokers. On insurance carriers' Schedule A provided information letters, they either indicate one or the other for the whole year (ie if their system is not updated, they list the prior firm name, if updated the new name) with the grand total for the whole year. To what extent is it necessary to break out what amounts were paid to which firm, even though it's the same broker group?

After submitting under the 5500EZ Penalty Relief Program, along with check, Plan Sponsor has found their missed 5500 which apparently was filed after all.... Any success getting the application taken back? Can't seem to find a number to call.

Owner has 4 hourly employees and the plan was set up with safe harbor match. None of the NHCE hourly ee's has enrolled in the plan although they are all eligible. So only the owner has a balance and he continues to put in the maximum 401k and s/h match for himself. Plan has no profit sharing component, so no top heavy minimum required. Just not used to seeing a plan with owner only having a balance and thinking about the implications.

I'm curious how other providers treat the 'claims charged' line item. Doesn't seem to be guidance.

yeah, I tend to agree. howabout the second question?

Seems that the majority of 5500-EZ's that are filed late and then use the IRS Penalty Relief Program have a similar reason in that they simply didn't know they were supposed to file (ie upon reaching $250K in assets). Anyone have experience with submitting a Reasonable Cause for late filing that they Plan SPonsor did not know of the requirement and is now trying to make good on their obligations? Another question - when reviewing the IRS instructions, it doesn't seem clear if a 5500-EZ should be submitted to the standard address, as well as to the Penalty Relief address, similar to filing for relief for regular 5500's.

Insurance providers report claims paid on their Schedule A letters, but not a separate item for Claims charged. I'm wondering if this amount should be entered on Sched., AIIIb under both (1) Claims paid and (4) Claims charged. Reason I wonder is that the SAR pulls the 'claims paid' number from the Claims charged entry.