ETA Consulting LLC

It appears as if he is what may be called a 'casual employee'; an employee, nonetheless. I don't think it's a direct science other than what is reflected on the employment records of the company. One sure way to affirmatively end employment is to resign (or get fired). Employment doesn't begin and end like drinking (e.g. "I quit drinking yesterday, but I'm starting back tomorrow ). Good Luck!

You have to provide more detail. Failed what test? I suppose we can conclude it's 410(b) since ADP doesn't apply. To say ACP doesn't apply would not be correct, since there is no exemption from the ACP test for 403(b) plans. So, on what basis is your exemption. The beautiful thing about the term "Safe Harbor" is that it has many different uses; safe harbor 401(k), safe harbor hardship, safe harbor allocation conditions, etc... Good Luck!

No.

The DOL can request whatever they want.

Sure, as a rule one has nothing to do with the other. Good Luck!

If all of this happens within the same year, then the employer could allow the employee to increase their deferral percentages in order to get where they would otherwise have been had the deferrals not been missed. If you wished to defer 5% between January and March and that was never implemented, there's nothing precluding you from deferring 10% between any other three month period to catch back up; especially if there remains ample opportunity to defer and catch back up prior to year end. Good Luck!

Their safe harbor can be effective through termination; one of the exceptions to the rule that safe harbor must be for the 12 month period. I used to think otherwise, but was recently corrected by the member on this board. Don't remember the exact caveats. Good Luck!

True. There are some heavy-hitters here, but they don't like when you call them out by name.

Yes and no, depending on what you mean by "all". The annuity much secure the payout stream that is offer in the terms of the plan. For instance, if a participant is entitled to a life payout of $1,500 per month beginning in 2 years, then the annuity that is purchased must provide that payout for that individual participant. You will typically find that the cost of funding those annuities are considerably higher than the amounts within the plan since the actuarial assumption on which the insurance company developed their annuity contracts are different from the actuarial assumptions used for funding the plan. When a participant elects a lump sum (if offered), this cashout becomes a "virtual" wash. Good Luck...

VCP. I would not dream of trying to get out of this without a compliance letter from the IRS. We made an oversight, we will reach back out to the HCE and retrieve the funds that were improperly distributed. If the HCE doesn't concur, we will issue a revised 1099R showing those amounts ineligible for rollover based "solely" on the notion they were distributed outside of the written terms of the plan...... The beautiful thing about this approach is that you may disagree with 10 or 20 other people here on the best approach, but it's a moot point because you're working directly with the IRS (after they finally assign the case in a year or so) Remember the three umpires: Umpire 1 - I call it as I see it. Umpire 2 - I call it as it is. Umpire 3 (The IRS) - It's nothing until I call it. Good Luck!

First, You should write the SEP to a prototype and take it off the IRS Model, since the IRS model cannot be used when there is also a qualified plan. The contributions may be made to the SEP per eligibiity conditions of the SEP. The point of contention may be if there are employees in the 401(k) plan who are "eligible" and do not receive a SEP contribution, they may be entitled to a benefit under Top Heavy provisions. For top heavy, I typically do not "as of" contributions back into the balances for non-pension plans, but in this case (being the first year), it may be a conservative approach. There is nothing by statue that would preclude a SEP from being rolled into a 401(k) plan. Also, there is no formal SEP termination process like that of a qualified plan. In the end, based on the employee base, your actions could vary. It appears as if the client would've been better off not establishing the 401(k) plan. Just providing a few thoughts, but cannot provide a clear action plan without more information. Good Luck!

I do that alot. It's one of the benefits of being a CPC; always thinking and sometimes forgetting to remember the obvious.

I wouldn't do it. There's mandatory disaggregation for union vs. non-union that may have implications. With that said, you are still only moving the account balance and not testing union compensation and contributions during the year in a non-union plan (or vice versa). A major point of contention would be how do the mandatory disaggregation rules play out within the top-heavy test (which rely on account balances). I'm too lazy to look it up right now, but if the mandatory disaggregation continues to apply the top heavy, then the transfer of the balance would improperly affect the top heavy test. Just adding a little conjecture... Good Luck!

How was the orginal rollover processed? Direct or in-direct? If it was a direct rollover (under 401(a)(31)), then the 60-day rule (under 402©(3)(A)) doesn't apply. In that case, the participant either needs to make the IRA company consult w/ its own legal department or needs to find a different IRA company. The following PLR reaffirms that a direct rollover is not subject to the 60-day rule: http://www.irs.gov/pub/irs-wd/1005057.pdf Thank you. There was clearly no constuctive receipt of the funds by the participant. Even if it weren't a direct rollover, the participant could easily establish they never received the check due to it being lost. Remember, the 60 day rule is actually from the date the participant 'receives' the funds; which opens this door for checks that were lost. Good Luck!

I think the fact that a loan was actually used to pay the expense implies that the hardship was satisfied with funding from an outside source. Remember, there are two standards; 1) if there is a hardship and 2) if a distribution from the plan is necessary in order to satisfy the hardship. You can debate item 1 by arguing whether repaying a loan used to pay safe harbor event is the same as paying the safe harbor event, but you would appear to automatically fail item 2. Good Luck!

I think that is pushing it, but not inconceivable. There would need to be a substantiated fact pattern showing this is the case and there are no other alternatives available. It goes to how preemptive will you be in "Preventing" forclosure; so preemptive that there never was a realistic threat? If there is proven to be a significant risk of forclosure and the restructuring of the loan would prevent that, the there could be an argument to provide a hardship. Again, I would base it on the ability to document the severity. Ultimately, the IRS agent will do a smell test. It may look bad, but in the end the question would be how bad does it smell.

No, you know better than that

Flip a coin. I probably would because it is easy to do. And, you don't want your corrected numbers to trigger an audit for some reason like appearing to have a partial termination or something. I still think it's a coin toss. Good Luck!

I didn't look it up, but the Safe Harbor Provisions are in section 401(k)(12) of the IRC. It would appear then, that any Regulation pertaining to the Safe Harbor provision would be in a section 1.401(k)(12). Just a quick thought, because I never heard of what you are suggesting Good Luck!

The first distribution from the qualified plan will be treated as RMD, and therefore not eligible for rollover. You are not going to find anything to make the plan administrator change their position (because they are right). Good Luck!

This has actually been the subject of debate within the industry for the past 15 years. The argument goes to a situation where there is a forfeiture balance that is used to reduce as opposed to reallocate at year end. Many practitioners argue that if the employer contribution is discretionary, then you can retain the unused forfeiture balance in the plan since their is no contribution to reduce; as the employer's discretion was not the provide a contribution. Other practitioners, including myself, would argue that there is still an employer contribution, but it was reduced to zero by use of the forfeiture balance; to do otherwise would seem to fail to meet the requirement that contributions are made pursuant to a definitely determinable allocation formula. May seem like a stretch, but it's the argument I chose to subcribe to. With that said, I do understand and see your argument

I would argue no if anyone has already met the accrual requirements for receiving a match. Even though the document says used to reduce, I believe the mere existence of the forfeiture balance would entitle such employee to a matching contribution for the year. To amend to have forfeitures pay plan expenses during the year would then seem to create a prohibited cut-back. It's just one of those amendments I would make effective for the beginning of the year. Good Luck!

Catchups are determined at year end; either calendar year or plan year. Since the amount is question was not determined to be a catch-up and calendar year end, then it will become one at plan year end; which makes the difference. The only way those amounts could be catchup for 2010 was if the determination was made during a plan year or calendar year (that's right), ending in 2010.

This is, definitely, one of those contingencies

Let's suppose there weren't any deferrals between January and June, and the only deferrals were made at the later half of 2010. You could then give a $49,000 Profit Sharing and the $5,500 in deferrals will become catchup. You're now saying that the individual could then defer an additional $22,000 between July and December of 2011, because that $5,500 catchup would've applied to 2010. You see how inconsistent that is? Because it was deferred in 2010 doesn't make it a 2010 catchup. It is a catchup based on the limit that was exceeded; and 415 is a year end limit. Let's get the usual suspects on this one; KevinC, Sieve, or Poje to chime in