TPApril

To be specific, based on 7 day safe harbor, the deposits ranged from 2 to 16 business days late

Company was changing recordkeeper for 401k plan. They got locked out of outgoing custodian and new one could not set up in time, so they missed timely deposits for one month. After they were advised the late amount that would show up on their 5500 and the lost earnings deposit due (<$100), they have resisted and they believe due to intention, they are not at fault. Contemplating how to handle

Dealing with a similar situation right now, but not spanning 2 taxable plan years. Full account balance was rolled over to IRA, including the RMD payable. IRA is going to distribute to participant that RMD as an excess contribution. Plan is going to issue 2 1099Rs - 1 for RMD amount and 1 for eligible rollover amount When recipient receives 3 1099Rs, will it be clear that the amount is only taxable once?

ESOP Guy - yes I am, in this case for the one person company, which is a corporation. Payroll is processed monthly at the end of the month. By comparison, in another situation, how about for a large 401(k) plan where the payroll period ends every 15th and last day of month, and they cut they payroll checks on the 5th and 20th following the end of the period - I have seen HR teams that are so anxious about depositing late that they deposit the day they are finalizing payroll, ie the 18th and 28th, ie before the paycheck cut date.

CPA for an Attorney who has her own plan (no employees) has set up payroll for the end of each month, but plans to deposit 401(k) each month prior to the payroll date (ie the 20th). Is that okay?

I noticed many life insurance companies fail to provide participant counts on their Schedule A letters. Sometimes there will be a note indicating that information is on file. Also, some medical carriers will not report covered employee and cobra counts. In our office, our approach is to obtain this info from either the broker or the plan sponsor themselves, but I've noticed some 5500 preparers will instead leave the item blank and check off "Yes" to failure to provide. We've always felt it will make the 5500 stand out less if we can answer No, and it doesn't seem that after all these years of these questions that such carriers have adjusted their reporting. It doesn't seem like a big deal to go back to the Plan Sponsor. I'm curious what is done elsewhere.

Agreed, but, the issue is not the controls being in place which has long been settled, but the wording of the explanation for the 'massive' error.

CPA firm auditing a pension plan of 500 participants has found the goose who lays the golden egg - one participant's data was used in place of another, and they have determined this to be 'major' and necessary to include in their report, even though the effect on the valuation was about 0.75%. We have identified that a staff editing the data made an inadvertent data error. May I throw out there if anyone has provided an acceptable reason to the cpa's for such data errors?

The thread above deals with COBRA notices upon termination, but what about upon enrollment of an employee and spouse? Say the EE receives the notice upon employee orientation. When EE enrolls spouse, does a notice get generated and mailed to spouse's attention?

All benefits were managed by the local operation (there were no formal plan documents, just the service agreements with the carriers which current plan sponsor (and former owner) no longer has access to). If I might add one piece of info to the original posting - all 3 operations had over 100 covered participants, so even stand alone they would have needed to file the 5500.

Background: Real Estate Investment Company owned 3 businesses, seemingly unrelated as they are in different states and simply different operations. Benefit plans are operated independently at each location. But there is common ownership. One of the 3 was sold off 2 years ago. Company now realizes they needed to file welfare plan 5500's, so they are going back in time under DFVC, combining the two current locations with the intent to reduce the number of plan filings from the past. Moving forward they will file as one wrap plan. Question: To what extent should they worry about the now sold off location for those years?

My understanding is that Medical FSA plans are considered Health plans subject to ERISA and would use Code 4A and check off General Assets (assuming no trust is set up). DCAP (Dependent Care) and Transportation related plans are not subject to ERISA and do not have to file 5500.

On the theme of transferring money between plans sponsored by the same Plan Sponsor - can a participant in both plans, which are still active, transfer her 401(k) balance into the MP plan? Or since they are both still active it would not be allowed? My instinct says no, but i haven't had this question before.

It's been just over a year since you responded to my question, so I thought perhaps it's a good time to respond back.. For clarification, doesn't an FSA plan without a trust still need to file a 5500 (when there are > 100 participants)? It's just that there is no Schedule A since there is no insurance carrier.

I endeavor to leave out my own editorial comments. Turns out that with no owner related 401k contributions, the plan passes the ADP test, which was the main concern. Even excluding the owner who made and received zero contributions of any sort, so as to increase the HCE ADP for a worst case scenario, the test passes.

I'm so sorry for omitting one piece of info that is exceedingly relevant. The owner was in prison for the entire year.

Census reports zero hours for the owner of a company but maximum limit of pay. Just contemplating this before I get back to them - would he be counted in the ADP test as a zero? Is this W-2 pay?

With the upcoming 4/1/18 effective date of new disability claims procedures as related to plans which do not use an unrelated party to determine disability, I'm curious if there is a general push to amend these plans so that disability is determined by an unrelated party such as the Social SEcurity Administration or any licensed physician, or just leave as is and deal with the new, potentially more administratively challenging requirements.

I've seen 2 documents in use wherein the Plan Document is relatively generic and the SPD will be more specific and the only document that references actual insurance carriers, actual contribution amounts etc. In the two types of arrangements, say a sponsor changes carriers or the contribution amounts between ee and er, in which case is an amendment required?

I concur with Madison71 in thanking Tom for such an apropos find. Concluded - in this case there is indeed an early w/drawal penalty To be determined - getting the 1099-R issued for the earlier yr.

thanks for confirming. in this case, plan sponsor told ee the loan was paid off and never restarted pmts after being told it was still outstanding. ee is still active so no distribution event. complicating the situation - this was a year prior, but recordkeeper never formally defaulted the loan, so the 1099-R is being issued in current year, when ee is now over 59 1/2, instead of the year of loan default.

Participant defaults loan on 3/31 Participant turns 59 1/2 on 7/1 1099-R is issued after end of the year Early distribution penalty?

well, 'final' comp has been updated again. remaining safe harbor amount is just under $500. former recordkeeper will not make it easy to reopen account for this (owner's account is elsewhere) paperwork and original final distribution are over 180 days ago. based on your comments, perhaps the following solution: resend distribution paperwork pay check from prior owner to ira (will not reflect as coming from a plan) create 1099-r from plan if ira cannot accept, then I guess paying directly to participant with 20% withholding and 1099-R (highlighting how it can be deposited into IRA)

2 person plan - owner and nhce - terminated early last year due to business closure and all final comp was provided for safe harbor contribution which was deposited, and nhce account liquidated. owner account still exists so the plan itself still has assets. with the close of the year, accountant has determined there was additional pay that did not receive the s/h contribution. with no account to deposit to, what would the best way be to make up the s/h contribution of about $50?

David - good questions. In response company in liquidation effective mid-year. There is no more company period. Because it ended operations mid year, there were benefits offered for part of the current plan year that is subject to a 'future 5500'.