ETA Consulting LLC

Wouldn't hurt to file; wouldn't hurt not to file. I use actual assets in the trust as of year end (not the accrual method). In all instances, if I am uncertain, I would play it safe and file. But you don't have to. Good Luck!

No problem. You get two years to decide what you want to do.

Mid November; unless this is a trick question. The deadline is typically the end of the 7th month following the month in which the plan year ends. For plans with years ending December 1st through December 31st would have a July 31st due date (extended 2 1/2 months to October 15th). So, any plan year ending in January should be the same logic; with an August 31st due date (extended to November 15th). I am not tracking the weekends in my analysis, but merely stating the concept. Good Luck!

You should report all plan assets, including those in Self Directed Brokerage Accounts that are part of the plan. Keep in mind that those individual accounts are still part of the plan and subject to all plan rules (i.e. distribution availability). While particpants my typically direct investment line-up, they would typically need the plan's trustee (or some authorized signor) to authorize a distribution from those accounts. Good Luck!

No, it doesn't. Don't overthink it. Good Luck!

You're welcome

The contributions to the SEP will be aggregated for the 415 limit. Also, they are a controlled group of companies, so the SEP eligibility must be determined across all related employers. What you're proposing will, likely, not work. Good Luck!

Check the loan terms in the document. There is some relief to the participant under the 72(p) regs to all them to delay payments when their compensation is reduced to amounts that make it impossible to repay the loan. I'm stating the rule loosely, but the terms of the plan should define the relief. As for the 10% exemption, it's strictly 72(m)(7)... Inability to engage in ANY substantial gainful activity. Some documents provide a disability benefit based on a different definition (for which participant is best qualified through training or experience), but that doesn't fly with the 10% exemption. If you can work, then no exemption. Ultimately, when the 1099-R is coded, you will only face an issue if you actually have to prove it to the IRS. Ultimately, that is the standard, whether you can prove your disability to the IRS. If they see ongoing w-2, the that would normally imply that you are engaging in substantial gainful activity; you may try to argue it's not substantial, but I would be on that argument. Good Luck!

Check Rev. Proc. 2008-50. I think as long as it is within the same year, the participants who were brought in late should be given the opportunity to contribute additional deferrals by year end. There's still an additional 9 months for them to catch up and contribute amounts that they would otherwise have wanted to contribute for the year. Good Luck!

You do agree, you just mis-read what we were saying. We were saying that there are no NHCEs. If there aren't any, then how could one have benefited?

It is not possible to discriminate when all employees are HCEs; or all employees are NHCEs. The only way discrimination would be possible it you brought in ALL HCEs when it would have been possible to bring in NHCEs as well. Please note: I am not defining "discrimination" but merely speaking to the facts you are presenting. If your only option was to bring in HCEs, because their were no NHCEs, then it's impossible that would be discriminatory under 401(a)(4).

It should be as simple as creating the correct template to load the information to. Each software, whether Relius, ASC, Datair, etc... should have this functionality. I would imagine the most important function is to download participant details with "totals only" from AXA and Valic. Many times, you will not need fund details from the annual reports, but instead source totals (including Beg Bal, Contributions, Distributions, Earnings, and Ending Balance, and maybe a few others).

The answers to your questions (from a qualified plan operational perspective) are simple. 1) Nothing from the plan design changes. 2) He is subject to the plan's limit; not the PR limit. Now!!! Things may be very different from a personal income perspective (where the employees only advantages are from a PR Tax law). The overidding factor is that the PR resident (citizen) would be exempted from US income from non-US sources (where this qualified plan clearly does not qualify). So, in essence, he's deferring to the US plan to have to pay tax on amounts that are ultimately distributed (a tax that he would otherwise not have to pay had he taken the income and not deferred). Good Luck.

I think there "may" be a little more to the story; since this goes back to 2001 and before. The initial plan was likely written to a TRA '86 adoption agreement. Many of those had two parts: 1) Profit Sharing; and 2) Deferral Agreement. It was only after GUST that many prototypes merged those two on a single document. So, there would be a separate attachment containing the deferral portion on the original document that wasn't mapped over when the plan was restated for GUST. Since the plan was already operating under these provisions since inception, nothing changed, operationally, when it was mapped to a PS only instead of a 401(k). You should ask the client to look for the other attachment (containing the deferral portion) from the original document; because it must be there. Then, you can file under regular VCP because it's a common occurance. Note: Back in the day, we learned that 401(k) isn't a plan, but instead a feature within a profit sharing plan. During TRA '86, prototypes were created as PSP prototypes and merely contained attachments for those plans that wanted to add the 401(k) deferral feature. I'll bet that attachment exists, but was not considered during the GUST restatement. I could be wrong, but in my submission to the IRS, that would be my story (because it's likely what happened). Just my $0.02. Good Luck!

To whom? I'd just document the conversation and move on. If it becomes an issue later, you have documentation showing they you gave them proper information. It is there responsibility to ensure the plan is operated according to the terms. You provided a service by explaining to them, in detail, what that means. You did your part; just keep documentation showing that and you'll be fine. Good Luck!

It's just a big Money Purchase Plan on a DB platform. Instead of an actual account with real investment gains and losses, the plan provides a calculated rate of return. The trust may actually lose money, but the participants' balances will remain unaffected (as the employer continues to bear the risks of investment losses). So, the account is "hypothetical", but reflects the particpants' entitlements under the plan. The big difference is that all employees earning the same level of pay will typically receive the same level of benefit (regardless of their proximity to retirement). Someone who is 25 years of age making $50K per year will receive the same accrual as someone who is 60 years of age making $50K per year. So, unlike traditional DB, the costs do not explode for older employees who are closer to retirement. The big point of contention (IBM case) has been that a DB plan, by definition, cannot provide a decreasing benefit as employees get older. Even though the allocations are the same, a DB plan defines the benefit as the amount payable at retirement. Since the 60 year old is closer to retirement than a 25 year old, the same "allocation" violates this rule and therefore fails to meet the requirements. PPA changed this rule to basically define "simularly situated" employees with respect to "compensation" as to avoid the age issue. Good Luck!

Those amounts deposited to his account represent funds that he was not entitled to under the written terms of the plan; and should likely be forfeited to the plan. It's one thing to catch it during a single year, but when it happens over several years it brings into question how those amounts were deductible when allocated to someone not eligible to receive them. It doesn't seem major on the surface, but you may consider VCP to forfeit (and possible offset the Safe Harbor contribution for the current year). The key is that he's not entitled to the contribution under the terms of the plan; this is what you are correcting. Good Luck!

Doombuggy, The key here is that you are cognizant of where you are in your level of understanding and what you may do in order to continue to enhance your knowledge base. This most intriguing thing about this industry is that you may study for 20 years and will only know half of what you need to know. For the other half, you may have some idea on where to look or how to approach a situation, even though you don't have the immediate answer. This is the attraction; for me at least. This separates you from many who choose to meet the minimum requirement for the designations and then forget everything they've learned while making no attempts to learn more; not that there's anything wrong with that (to each his own). I think the universal issue for anyone holding the designation is that we want it to continue to mean something. I have often stated to clients (in situations where ASPPA credentialed members worked on plans) that the individual working on the plan was very skilled and likely accounted for everything that needed to be addressed (and was right). Now, my concern is that my assumptions may no longer be as automatic; which is something that I have to deal with. Good Luck!

Good point. Once you're severed from employment, it doesn't matter whether it's for disability, retirement, or disability retirement. You're still severed and, therefore, eligible for distribution without any 10% early withdrawal penalty (regardless of the age).

Indeed, so it's not the same protection as a 401(k) as it is not a qualified plan Question, with respect to the $1 million bankruptcy protection for IRAs, don't qualified plan funds that were rolled into IRAs continue to receive bankruptcy protection regardless of the amount?

True! If he knows enough to ask this type of question, then he's in good shape

No, it couldn't be. All automatic enrollment does is create two equivalent defaults on the 'elections' made in the elective deferral process. Think of it like this, in order for the contribution to fall under 401(k), it must be made pursuant to the election of the employee (e.g. cannot be mandatory). So, under any and all circumstances, the employee will be given an opportunity to make an election. If the plan has auto-enrollment, the employee will be given an opportunity to elect not to defer (or to defer at a different amount). If the plan is not an auto-enrollment, the employee will be given an opportunity to elect to defer. Nothing else changes, it's just that automatic enrollment says that you can avoid any inconvenience (imagine that) of making an election to defer; or better yet, we're going to make it inconvenient for you if you do not want to defer. Neither one precludes you from making an election. Good Luck!

Apparently, consistency is required with respect to the top-paid group (e.g. if you use it for one, then you must use it for all plans, including non-retirement plans). An HCE for retirement plans (as defined in 414q) is included, among other things, in the awkward definition of a 125 plan. Therefore, when you apply the 414(q) definition for your qualified plans, this same definition transitions to any other plan that references 414(q) with respect to the use of the top-paid group (or, at the very least, the classes that are excluded in arriving with the final number to be included). Had Section 125's definition of HCE not referenced HCEs for qualified plans, I would view it differently. I do understand the conflicting opinions you get, as I am pretty conflicted about it myself Good Luck!

A high school? Public education institution, yes, are they are governmental employer. If so, then moot point, because the ERISA 1000 hour rule does not apply. For a non-governmental sponsoring a 403(b), you've just identified an interesting anomaly with respect to match eligibility; where it is actually possible (in theory) to meet the conditions of receiving a matching contribution without actually meeting the conditions for deferring. You can actually get up to 1000 hours per year without "normally working 20 hours per week"; but the maximum year of service for match eligibility is 1000 hours per year. Adding fuel to the fire is that the definition of match is basically a contribution that is contingent upon a deferral (or employee contribuiton). In other words, you cannot make anything other than a matching contribution contingent on an employee making a deferral. So, any of the 'so called' nonelective contributions given to only those employees who defer are basically matching contribution (tested under ACP) whether you like it or not (except for governmental employers and churches). So, who would you include in the ACP test when the employee meets the age and service requirements for matching contributions but fail to meet the service requirements for making deferral? I'd say shoot the consultant who designed this fiasco. It's the same has providing a payroll matching contribution with a last day requirement. It's legal, but administratively and (legally) inconsistent. One art of plan design is consulting to avoid those inconsistencies. But, once you're staring the issue in the face, you're left with only judgement call taking a 'reasonable' approach (which there's always going to be someone to disagree with). I wouldn't include them in the test if they were actually ineligible to defer (but do not think it violates ERISA on the surface, because it's still match). I do understand your fact pattern doesn't prescribe a 1000 hour year but a 24 month elapsed time, but the arguments are still the same. I appreciate your situation

The SEP is only a traditional IRA. So, you're looking at creditor protection for IRAs when dealing with SEPs. Good Luck!