TPApril

Small top heavy plan has about $1,000 unallocated funds in trust which has been tracked to earnings on a 2003 profit sharing deposit that were not allocated along with the contribution. Plan sponsor cannot locate report from that year. Can this amount be allocated this year as 1) among current active participants as a forfeiture? or 2) as earnings to all remaining participants who were in the plan in 2003, based on current account balance, or 3) as earnings to all current participants, even if hired after 2003?

Same topic, but different question: Plan forfeitures can be used to pay fees. 2010 plan year fees are being invoiced. There have been amounts forfeited in 2011. Can these amounts be used as well as prior year amounts, to pay for the fees? Or maybe plan year of forfeiture and plan year of incurred expense really don't matter?

If I understand your situation correctly, I had a similar situation earlier on. It appeared that the issue was they were using two different means of submitting different plans with the same signer - meaning different software (Relius, FtWiliam, or efast2 directly) for each plan. For future clients with different service providers completing other 5500's, I had them log on to efast2 first to verify credentials.

In general, can owner 401k be treated differently from employees. S-Corp deposited 401k contributions late in 2009. In 2010, he paid lost earnings on the late contributions, including his own. Did he need to pay lost earnings on his own amounts? Furthermore, does his amount need to be reported on the 5500? It would be a difference of $10,000, reducing the amount reported for 2010 from $13,000 to $3,000. If that is possible, would that be worth amending?

somewhat related - S corp - owner deposits 401k contributions late. When reporting on 5500SF, would you include the owners own 401k amounts? In general, would any correction be applied to his amounts as well?

New small plan client has finally sent in transactional accounting 'in time' for filing 5500. Here's what we've learned: 2009 delinquent contributions were deposited in 2010 with lost earnings of $65. No 5330 filed. No excise tax paid. 2010 delinquent contributions were deposited in 2010 and 2011 with lost earnings of $26 for 2010. No 5330 filed, no excise tax paid, no extension filed. When calculating excise tax in 2010, does the 2009 portion applying 100% include the unpaid excise tax of 2009? ie 65*100%+65*.15*100% = 74.75? I understand there is an option to pay excise tax to the trust and allocate to the participants affected. In this case, excise tax will be under $100 each year, and no contributions were deposited over 180 days late. Would this be sufficient, without filing a 5330 or VFCP? I also recall something about filling out 5330's for records, but not submitting. Much appreciated!

Participant misinterpreted the dependent care cap and pledged $5,000 instead of $2,500. What are the options for the participant - can she stop future payments without a qualifying event and recover the excess that is not eligible?

on the theme of late 401(k) deposits as reported on SF, instructions say: The total amount of the delinquent contributions must be included on line 10a for the year in which the contributions were delinquent and must be carried over and reported again on line 10a for each subsequent year until the year after the violation has been fully corrected by payment of the late contributions and reimbursement of the plan for lost earnings or profits. my mind is not focusing correctly on what this means, in particular, if you include corrected amounts in the year after or not. does this example make sense: 2009: late deferrals totalled $1000, $500 of which were corrected by 12/31/09 => 2009 5500SF 10(a) reports $1000 2010: late deferrals totalled $1,200, $600 of which were corrected by 12/31/10. Remaining $500 from 2009 were corrected by 12/31/10. => 2010 5500SF reported amount calculated as follows: 2009: first $500 was corrected in 2009, this is the year after so not included, second $500 was not corrected until 2010 so it is included. 2010: total reported of $1,700.

oh this topic always stumps me...5500 for wrap benefits plan has always been filed as a single employer plan, but employer is a hr leasing company with many companies under the plan. looked up one of their competitors and they file as multi, but seems to me the definition of multiple is more apropros. now i dunno if this should be single, multi or multiple? i know theres info i need to make the determination, just not full on clear what it is.

Service provider received direct comp of $500 and indirect comp > $5000. All indirect comp = eligible indirect comp. Would this service provider then be required to fill out line 2, and in so doing fill in $500 of direct comp and $0 of total indirect excluding eligible indirect? It just looks funny to be listing them with only $500. As an alternative can this service provider be listed only in line 1?

I posted this question elsewhere but received no response. Looking for some opinions: There seem to be no instructions for Schedule A Part III. I'm guessing this is to be filled out on a cash basis but was looking for other thoughts. Specifically premiums for a prior year that get paid after the policy year is over - I'm assuming these should be included with the current year's premiums.

There seem to be no instructions for Schedule A Part III. I'm guessing this is to be filled out on a cash basis but was looking for other thoughts. Specifically premiums for a prior year that get paid after the policy year is over.

It's now some 10 days later and the filing still does not show up. Calling up the efast2 number gives a status "Filing Received", so not sure what this means?

Plan sponsor was not able to make payroll for May, but was concerned about 401(k), so she made the 401(k) deposits but they were paid in July, and actual payroll has not yet been paid. So is the 401(k) late and needing lost earnings?

Has anyone else had this circumstance: 5500 filed last Friday, plan sponsor logged in shows it has been received, but searching online at efast2 does not show the filing?

Yes, it all sounds familiar! Thanks for a great description and comparison.

Andy, interesting discussion you linked to which brings up a lot of other issues related to fee reimbursement. ESOP Guy - I thought by your name you would suggest the reimbursed fees be treated as employer contributions. If I recall correctly, in an ESOP, when an employer reimburses an ESOP for the value of a distribution that is paid out, that amount is treated as a contribution. I know it's different but it does make me wonder, any time an employer does put money into a plan for one reason or another if it should be treated as a contribution.

I thought I'd repost my questions. Not sure yet how to treat amounts deposited to the trust by the plan sponsor to reimburse the plan for fees withdrawn from the trust, either for administrative or other expenses?

response questions well posed - DC plan with some fees reimbursed by investment company and some reimbursed by plan sponsor. Are you saying that when reimbursed by the plan sponsor they are counted as Employer contributions? if so, do they need to be included in the 415 test or just the max deductibility test?

simple question- when prepping Schedule H or I, are amounts that are reimbursements for fees treated as Other Income or subtracted from the Administrative Expenses

Similar situation in that plan document preparer submitted restated 401(k) plan with a typo in a provision related to eligibility to defer. Plan continued to operate under prior provisions, SPD reflected prior provisions, and document preparer has now amended the plan to correct for the typo. It seems to have been an isolated case by document preparers, but could cost plan sponsor significantly to submit VCP. Would maintaining all records with history of adhering to prior provision enough as SCP?

Now that it is many years later, dividends from mutual funds are no longer included in line 2b(10), but separated out and reported on its own line entry under 2b(2). My question then is where do capital gains distributions from mutual funds fit in - with dividends on 2b(2) or realized gains on 2b(10)? Same question for interest/dividends that come from Money Market Funds?

different but related scenario, similar concept - trying to determine if there is a fiduciary or simply ministerial role here: client faxes tpa a copy of the biweekly payroll indicating 401k and match deposit amounts. tpa logs onto tpa accessible website of investment company, enters contribution amounts by participant, and then enters total deposit amount to request transfer of dollar amount, as preauthorized by client from client bank account. Is there any concern that that last step may be treated as handling money or going beyond ministerial role?

Thanks for your response. I would make a correction to my first post - regarding defaulted Loan 1 - interest, as calculated from date of last payment to date of default, was indeed included in the 1099 in 2005. So I think no interest on that loan is taxable at this point (since interest calc'ed later is only used for future loan availability calcs).

Participant has terminated and has two outstanding loans – the first one defaulted in 2005 and was a deemed distribution with 1099 issued; second one is active loan until termination. Participant is taking cashout, so I’m trying to calculate both withholding amount and distributable amount after loan offset of second. This is my calculation, any helpful thoughts? General Account Balance (excluding loans) $50,000 Loan 1 - Defaulted with 1099 in 2005 $20,000 Loan 2 - Active Loan Current Principal $15,000 Interest on loan 1 accrued through default date (never paid or reported) $500 Interest on loan 2 accrued from last pmt to distribution date (never actually pd) $100 Subtract Loan 1 with phantom interest - already deemed $(20,500) Total - Taxable Amount $65,100 Less 20% $(13,020) Offset - Subtract Loan 2 with interest $(15,100) Net Cashout Amount $36,980