TPApril

Consider MP Plan which contains many adopting Partners in professional firm. One partner dies. Based on last post, how do you amend the plan to remove the requirement for contribution if the partner has died? Otherwise how can contribution be avoided and if not who funds it?

Safe harbor 401(k) Plan, 1owner, 5 staff. Discrepancy exists for 401(k) deposits only for owner back to 2014. Owner ran payroll as if one amount was being deposited each time, but actual deposit made was less. Taxes were filed as if the larger amount was deposited. (Example - W-2 showed $10,000 but 401k trust received $5,000) Contemplating best means to correct - owner would like to make late deposits on own behalf, rather than refile personal/business taxes.

jpod - all good points. No not looking to present risk to company at hand, just looking for solutions I might not be aware of that would exclude such risk.

ESOP Guy - also wondering if there is an increase in risk exposure for the plan sponsor of being audited. Lou S - all great points.

ESOP Guy - thanks! never asked for a waiver before. generally how long does it take to receive such a letter and do you always receive one? Also, do you then leave the DFVC blank and simply file late?

7/31 plan year for medical plan 5500 filing did not file form 5558 by 7-month due date (2/28). Filing itself will be filed as 'Final' with no Schedule A's. Employer's fiscal year is not 7/31. Filing itself will be filed by extended due date of 5/15, even though there is no extension. Question is: Any chance the late penalty can be waived, in light of this being essentially a blank 5500? (Would not be asking this question regarding a regular ongoing 5500 that missed filing form 5558)

My familiarity with IDP restatement cycles is limited, as well as my access to prior tpa/attorney records on client in question. I believe that they missed a restatement, but nothing has happened in the plan for years since before that, other than distributions.

PS only husband/wife only Individually Designed Plan restated effective 7/1/08, signed 12/2009. Had rec'd Determination Letter for prior plan doc but did not submit for that one, so currently no effective DL. EIN ends with '2' but no plan doc restatement by 1/31/13. Restate plan w/VCP? w/out VCP? just wait for next cycle?

Plan year starts 3/1. PPA Restatement not yet signed. Can effective date of restatement be 3/1/15 or should it be 3/1/16 now that prior plan year has passed? I recall seeing prior restated plan docs with effective dates of 1/1/02 or 1/1/08. Do earlier dates apply to current restatement?

fwiw - my understanding is that all HCE's are aware of 401k plan and ability to participate, but through discussions (which I was not part of), they have chosen to not participate. It sounds like Plan in question will be excluding Partners and Associates moving forward, as defined in the restated plan document. Coverage testing will continue to include them.

@My 2 cents - no it's not that employer ... this employer has separate ER only xtested plan in which HCE's benefit. But there will still be those HCE's who do not reach their max annual additions in that plan.

401(k) only plan, no match or nonelective contributions excludes all HCE's from plan, but without a formal provision in the plan document. One recent NHCE who became HCE stopped participating on change in status. Plan sponsor prefers not to write this into the plan. What if an HCE insists to participate?

Possibly related - 401(k) plan's 415 amendment included only post severance pay that was 'regular compensation'. In practice, final paycheck includes unpaid PTO. 401(k) is taken from that full amount and match based on that full amount. Does this require a VCP to correct that 415 amendment and subsequent plan document restatement to include this PTO in the plan's definition of compensation?

Plan Design challenge here... All that being said about their desire to maintain the two plans, setting up a 3% safe harbor feature in the 401(k) plan would still be a 'defined' contribution, even if the MP was reduced from 10% to 7%, with a total 'defined' contribution remaining at 10%. Given the ability to take advantage of the catchup feature in the 401(k) plan, I'm still trying to guess why this wasn't done by the prior tpa (who I admire and respect, so skill set was not an issue).

Plan Sponsor understands the ability to stop and/or change MP contribution rate, but they feel in the local business environment that they want to retain the separate plans. That being said, I don't know why the prior TPA did not present the safe harbor option for the 401(k) plan, or if they did why they didn't proceed with it, so I'm trying to ponder reasons against it before we present it.

Company currently has a 401(k) plan and x-tested MP plan w/10% to general staff (10-20% to HCE partners). What would be a reason against making the 401(k) plan a 3% nonelective safe harbor plan and reducing all class rates in the MP plan by 3%? Highest HCE rate is currently 20%. Reason for change is currently no HCE participates in 401(k) plan but this would make catchup available to those over 50. Understood that s/h contribution is fully vested etc.

Looking for clarification - VS plan restated for PPA does not request DL. In 2017 they amend the plan by making changes to PS contribution. Plan becomes IDP. Correct that no DL will be required at that time? Think they should request one at current time even though there is no divergence from the checkboxes?

ok I think I get it (summarizing my thoughts more than asking a follow up question)... When doing taxes, a person can only include up to the 402(g) limit, even if more than that was actually deferred. When the person is following the rules, that distribution will occur to correct for it, and as you say, the 1099-R indicates that it is not a taxable item in the current year. as for your Roth scenario - good question!

In this example where a 1099-R will be issued with code P for excess deferrals in the prior year, it can occur that this is determined after January, specifically when person realizes they deferred to two separate unrelated plans over 402(g). So when distributing excess deferrals prior to 4/15, there is a 1099. Is this 1099 normally issued right then, or wait until January of the following year when 1099s are normally issued even though now it's a year too late?

Break in service generally defined as working < 500 hours in a plan year. Say a participant terminates 1/31/10 in a calendar year plan year, having worked < 500 hours. Is forfeiture after 5 full plan years at 12/31/15, or rather after 5 plan years of break in service, ie 12/31/14?

The relationship issue that i'm referring to is that the individual in question is part of an affiliated service group. are there repercussions to the other plan in the asg?

investments are mostly non participant loans which i have little details about. also real estate, ltd partnerships. i agree with the advice to 'run' but as i implied, it just aint so easy due to certain relationships...

One person plan in which participant seems to believe she is above the law. Problem 1 - prohibited loan of $200,000 with no interest in resolving it Problem 2 - no interest in taking out RMD by due date, she says there is no cash in the plan TPA has explained the repercussions, qualification issues etc. but she simply is not concerned. Due to relationships, the easy solution of firing the client is not so easy. So attempting to think creatively, looking for some thoughts - if the loan were corrected and 'converted' into a distribution from the plan, can that distribution be treated as the RMD? Loan is from a year prior though than the year of the RMD. Challenge is she does not want to submit for VCP on this.

New but related question on existing thread: Issue is the match formula was applied wrong to some employees so they received more match than the formula allows. Plan is going to move these amounts to forf acct. Question: should there be earnings and gap earnings applied to these amounts?

you make a good point Tom. I guess I shoulda clarified that it is an HCE in question. I will just test without it.