TPApril

So actually, because there is the option of directing one's account balance in a brokerage account, the pooled account, which appears to be historically valued annually, should be valued quarterly.

I'm curious how ag780 treated this. Similar, but larger, situation - new CPA believes that plan audit would be easier and less costly to actually include all participants that were excluded in past 5500 filings. The question then is how to bring back a significant level of assets. Not sure that showing as a Rollover is the best approach, but showing as the opening balance would have a significant difference from the closing balance of the prior year.

The pooled account is valued annually, so annual statements are sent out, rather than the PPA Notice.

Is there a guideline regarding how often participants in a non-safe harbor 401(k) plan need to be informed that there is the option to invest in a brokerage account? In this situation, participants are either in the Pooled account, or can pull out vested balances to put into brokerage account. They receive annual statements of their balances and vested amount. Information about the investment options is provided in the SPD.

Sole Proprietor has set up 5305-SEP and wants to set up a 401k plan for current calendar year and only contribute to 401k plan. No contributions yet for current calendar year. He will notify recordkeeper that he will terminate the 5305-SEP (seems that is how to terminate such a SEP?) Question: Can the PS feature of the 401k plan be effective 1/1 of the same year, which is prior to the 5305-SEP being terminated?

Kristina - first time hearing that a participant who is never reported as an 'A' would be reported as a 'D' ESOP Guy - yes thank you, I should have seen that prior to posting my question.

Small plan (< 10 participants) >On Form 8955-SSA, participant w/ vested balanced who terminated in prior year is required to be reported in current year filing. >Current year filing is being prepared during following year, during which said participant takes distribution (to be specific, 2017 terminee to be reported on 2018 form being prepared in 2019, takes distribution in 2019 prior to filing form) I'm curious the general approach - required to report as 'A' only to report as 'D' in following year, or just ignore?

Thanks much for the responses. Plan is a part of a control group - each doctor has their own plan. There is an equivalent plan with same provisions for the staff. Same investment options. Why keep plans separate at this point since restated plans have them set up similarly in spite of recommendations to merge them? Because they have always been separate and the legacy doctors feel they have more control that way. Mike - I should have typed 'fully vested' as plan is on 2/20%.

One person plan for a doctor - for the beginning five years of the plan, the doctor is not vested in the profit sharing contribution. Inasmuch as a plan is meant to be more permanent than 5 years, how to explain to plan owner that the money is theirs even if they are not vested at the current time in the first five years? (in this example, plan started when employment started).

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.