ETA Consulting LLC

No, as long as they continue to meet the safe harbor 401(k) exemption from top-heavy. Good Luck!

I do. I am not saying that my approach is better, but I would like to see more depth of understanding from members who hold these designations. It is typically not there in recent designees; at least the ones I come across.

It's unfortunate, but now you'd probably have to ask someone when (or how) they obtained their designations when you interview them for open positions. Having taken and passed the CPC, QPA, and QKA, there are areas of competence that would be implied for candidates with the same credentials. Heck, even if we don't know the answers, we'll know where to look (or at least there's a question that should be asked). The ERPA material simply did not engage any thoughts on those levels. It appeared to be written at a level of a take-home test. The key is that industry is always going to be divided into two groups: 1) those to study to learn, and by learning they are able to pass the tests to earn the designations; and 2) those to remember enough material to pass the test and earn a designation. You get enough people in group 2 that get the designation and stop learning will tarnish the credentials. I am a fan of anyone advancing their knowledge bases, but believe a free ride on the credential will make the community weaker. A good thing is that we have these types of boards to exchange ideas. There are some heavy hitters here

You are correct by simple math. You should ensure there is no rights of first refusal if one wanted to sell their portion of the business (that would require them to sell it to the other). I "think" that would create some type of attribution. It always gets tricky when the fact pattern is exactly at the legal written limit (like a Key Employee owning exactly 60% of plan assets not being top heavy). I hate those situations

I think you have it covered. I'd redo the 5500s to reflect MEP. I'd also write to a Volume Submitter and actually file for a favorable determination letter and provide all prior documents to the IRS in order to obtain the letter. Nothing is a disqualifying event, just they never had reliance on the prototype opinion letter. Some may debate whether a determination letter at this point will provide any value, but that would be my approach. Good Luck!

Shooting from the hip, but I think it's section 402© of the IRC that describes the eligible plans for receiving rollovers. ESA isn't one of them. Good Luck!

Wow! Back when I learned it many years ago, I think a procedure is already in place to keep track of the RMD for non-vested amounts and then distribute as they become vested. I'm just shooting from the hip, but I always understood that to be the procedure; and think it becomes a non-issue with respect to what the IRS would think about it. I would not file for a determination letter. With that said, let's look at all angles. The S&P just lowered the country's credit rating (good, bad, or indifferent) for basically not raising taxes. So, the business owner would have to manage interest rate risks in that his RMD would accumulate to be distributed in a year that his tax rates are higher. Just playing along

No. There is no 5500 reporting for SEPs. Good Luck!

I agree with everything that jevd said. Interesting thought about procedure, now that you posed the question. The IRS really forces the taxpayer to provide their non-deductible amounts by tracking them on the Form 8606. When a taxpayer hasn't maintained proper records, the IRS will take a automatic position that everything is taxable since no after-tax basis was tracked. This further reinforces what jevd is saying. A CPA will understand this and engage in the necessary back an forth with the IRS to protect that basis. Interesting how things may appear simple at first and always end up more complicated than they originally seemed. I guess this is what attracts us to the industry Good Luck!

I like the way you think Just to ensure you don't get caught up in semantics when reading the technical stuff, the taxes in a Roth IRA are deferred until the time they become exempt. This becomes a reality when you take a distribution that includes earnings that do not meet the conditions for being a qualifying distribution. A good way of looking at it is: "tax deferred" would be a fruit where "tax exempt" would be an apple. An apple is a fruit, but a fruit isn't necessarily an apple. I'm trying the analogy thing, hope it works. Good Luck!

That is the point. Mathematically, you would provide contributions to each employee to the resultant amounts will be consistent with the uniform allocation formula. It won't be as simple as providing everyone 1/2 a percent, but it'll be close. You make a good point.

1) No document requirement is correct. 2) Churches are exempt from universal availability, meaning you can cherry pick your participants. If you want pastor only, you may with no problem. 3) The 403(b)(7) paperwork will typically have the needed provisions. The Vanguard Representative should provide you all of this. If not, align with a service provider that will make this process as easy for you as possible. It appears as if you have done good research; I'm impressed Good Luck.

You may have to contact the IRS for that one. You're looking at a rolling 6% penalty each year on excess amounts not distributed by the tax filing deadline each year. Good Luck!

Well, you have already identified the issues and they're obvious. Failure to operate according to plan terms by providing a contribution not reflected in the document. Also, the contribution provided is not a uniform allocation formula and likely failed non-discrimination that wasn't corrected within 12 months of the following year. Just file VCP; the likely correction would be an allocation of an additional half-percent of compensation to everyone below the TWB. I think you've considered it all from your analysis. Good Luck!

No bearing on the plan. The good news is that the employer make-up contributions will be based on roughly 52 days of pay. Good Luck!

The easy answer is to follow the terms of the plan. I'd doubt any written language within the Plan's document would require spousal consent; leaving this an arbitrary decision by the plan administrator. The limit to spousal involvment, in my view, would be to consenting to allowing the participant designate someone other than the spouse as beneficiary. Then challenge then becomes a claim by the participant that the sponsor is failing to enforce their rights to distribution under the written terms of the plan. Good Luck!

On the surface, a distribution to any participant of any property (distributed at fair market value) is not a prohibited transaction. I would, however, take possible exception to the fact that the property has a mortgage on it. I can see instances where that could be construed as a prohibited transaction. Good Luck!

I see what you're saying. I read it to say there wasn't a bonus-only election under the plan; the election in place for regular deferrals should've applied to bonuses as well. This would be the basis for saying that there was an election, but it wasn't honored. It does help to know the specifics in order to determine which equation applies. Typically, in the opening question, we end up guessing as to what the true fact pattern is

The term "missed deferral" has different definitions depending on the circumstances. In your case, it appears as if elections were actually made in one form or another and simply not implemented. In that instance, the missed deferral would be 50% of the elections that were in place for each employee. This would be different if an employee was eligible to defer and not even given a chance to make an election. Good Luck!

Typically, any reasonable method would do. You can count the days in the year and divide by 365. 72.87% of $245K would be $178,547.95. Any calculation will fall within a range that is very close. Good Luck!

You are correct. The last thing you would want is someone other than the employer (or employees) making contributions to a plan. The contributions, as made, would be tax deductible to the employer. The Recordkeeper and typically reimbures or issue a fee reduction, but that will be a transaction between the recordkeeper and the employer, not the recordkeeper and the plan. Good Luck!

Sure, I see this all the time. The key to realize is that it takes a well organized HR department. From the Recordkeeping (TPA) side, you won't even notice it. Another way would be to provide the special election (one-time election) to change the bonus deferral from the regular rate to the special rate. So, you're saying that unless you elect a different percentage, your regular election will apply. This helps the employees because many would want to make the deferral as the bonuses are typically subject to 40% withholding anyway. So, if you can make an election that you know will pertain to only that bonus (i.e. 50%), you won't run the risk of the 50% deferral tapping into your regular payroll and causing you to fall short on rent and utilities. It's a good HR department trying to do what's best for their employees.

If it were me, and the account current cash balance in the plan were enough; here's what I would do: Let's assume you have $100,000 in cash plus the current outstanding balance (i.e. $15,000) that is close to default: 1) Roll the $100K directly into the new plan. 2) Offset the $15,000 outstanding loan balance. 2a) Since this is a cash-less distribution, you have no withholding. 2b) The $15,000 loan offset (not a default) is eligible for rollover within 60 days. 3) Immediately take a $15,000 loan from the new plan under a new amortization schedule. 4) You now have cash available to roll over the $15,000 loan offset from the previous plan. Good Luck!

This is something that you would prorate. Good Luck!

You make an interesting point. The rules defining principal residences are outlined in Section 121 of the Code (and explained in details in the Regulations). Interestingly enough, the facts and circumstances on determining "Principal Residences" does not require ownership. For the $250K special tax treatment when you lived in the house for two of the last five years requires both 1) Ownership and 2) Principal Residence. Therefore, the code and the Regs appear to differentiate actual ownership with principal residence and suggest that ownership is not required. To further support this, it's not even a requirement that the loan is secured by the residence. It will still remain secured by 50% of the vested account balance. So, if the facts and circumstances are there to prove this is a principal residence, then I could see that loan being extended. My only point of contention that continues to get me is the fact that it reads "principal" and not "primary". Principal in my mind has always implied ownership, but that's just me and my limited vocabulary. Secion 121 appears not to create that link, and implies that principal simply means primary and does not imply ownership. I would issue the loan. Good Luck!