Bri

Obviously I'm 4 days late to the discussion (Mexico was nice) but Larry's got it spot on - just issue the check from a PLAN checking account rather than a SPONSOR checking account.

They obviously changed up the requirements - back in the 2000s it was just a matter of taking the C-3 and C-4 exams after getting the QPA. But those had essay questions to them, too, if I recall.

If the definition of compensation is full year, then the 3% for the staff needs to be for the full year. If you had used only "while a participant in that component of the plan" then you could have limited it to 3% of the last three months' worth. And if that were the only contribution, you'd have gotten away with it for top heavy purposes, too.

And if you're the participant, of course you'd rather get 4% of the full year's pay!

Are you sure you have to give 5% for top heavy for a second plan that employee's not a participant in? I can see the argument for a 5% GATEWAY for testing purposes, but not a top heavy increase for someone not eligible for both plans. Or if the plan documents say otherwise, too, in their carefully-worded meshing of the top heavy requirement between the two plans.

I know Larry's a stage buff, his allusion might not transcend to everyone

I would want to ask, how are you eligible for a $50,000 distribution from the plan at an age less than 59½? Is this other-source money such as match or profit sharing where the plan permits the earlier withdrawal? If you are eligible indeed under such provisions, then I'd double-check that the loan balance really did originate from 401(k) money (as opposed to match / PS). If so, then the fact that you have a distributable event for whatever source is going to fund the 50,000, leads rise to the potential to discharge the defaulted loan note off your balance. However, if the loan money was 401(k) money specifically, the Regulations won't let the plan to offer you an out before age 59½, so the loan would stay. If your plan does let you take the 50,000, then you certainly could remit the loan balance still due (with interest) back to the plan. The only benefit, really (since you've already had the taxable income back six years ago), would be the ability to clear your loan slate and start over with new ones. Otherwise you're just creating a taxable basis in your account.

I was wondering the same thing, six years later. Both 5500-SF and 5500-EZ indicate that the plan sponsor is signing under penalty of perjury that any actuarial schedule has been completed as well. So I think signing the 5500 earlier than the SB would be legally problematic.

Definitely not a CG - he's a smaller than 50% partner in the "big" LLC. I don't think the industry qualifies as an FSO, either, for affiliated service group consideration, too. The "side" (small) LLC is definitely the plan sponsor. Basically we're trying to figure out if the lack of a tax form from the small LLC to the sole proprietor, is enough to substantiate a salary of $0 (to keep DB funding low), or if the small LLC's K-1 received from the big LLC, is enough to state that there's income to the actual individual.

I don't know what to make of this. Client set up an LLC for himself. He's also a partner in a larger company. That LLC issued him a K-1 for his income, and then also issued his own separate (single member) LLC a K-1 as well for a separate source of income from the larger partnership. It's that "smaller" LLC that sponsors his plans. The first year, he had a Schedule C to reflect the payments from the smaller LLC to the individual. Since then (the past 2-3 years), the income is not being shown as flowing through the smaller LLC - he just received it on a second K-1 issued by the larger company. So I think that's wrong to use for purposes of funding his plans. But - is it enough for the big LLC to pay the little LLC on that K-1, or does the little LLC then need to turn around and issue a Schedule C every year? Or, is it enough that as the single member, the earnings on the K-1 (from big LLC paid to little LLC) enough to count as income for the individual himself? We're trying to figure out if the CPA needs to re-address past years' tax statements, in terms of how the payments were reported, before we get into tracking what sort of benefit he's actually due under the DB plan. thanks in advance.... --bri

-11g amendment up to 9.5 months after the end of the year.....lets you increase benefits to employees (including those not currently eligible) on a non-discriminatory manner. So pick an NHCE you like (who's also not terminated already with no vesting in such a new benefit), and bring 'em in.....

You're not going to just amend to "turn off" the Roth going forward? Does the W-2 for the employee show Roth deferrals, or pre-tax? I'd go in under VCP - tell the IRS, hey we never expected there to be Roth, nobody (other than this guy) even asked about it, etc. If all your other documentation supports the fact that the document was done with the mistake and there was no other expectation, they might give you the okay. I guess there's some difference to the appeal you'll make, depending on the rest of the fact pattern regarding how those amounts did go in.

I did just take advantage of the email address for PRA comments to the DOL embedded in those extra paragraphs. They got a small chunk of my mind, but hopefully not too big a slice.

Okay, but then how does that reconcile with Mr. Gulia's discovery above that the Federal Register version does NOT include the PRA statement?

The link from the DOL's site itself featured this, and ASC's online portal to generate the notices included the PRA statement as well. https://www.dol.gov/sites/dolgov/files/EBSA/.../form-sar-pension.docx So perhaps it was the DOL's requirement on their sample to include the PRA statement, but it wasn't supposed to be picked up by a software vendor as part of the actual notice? (I can only get so intrigued by the topic, of course....)

And of course, if he's a terminated participant, the real question is whether he terminated prior to the year he attained age 55.

You should double-check the language to see if it says the employer WILL make a 3% contribution, versus MAY make a 3% contribution pursuant to a supplemental notice issued 30-90 days before the end of the current plan year.

So hey, anyone see this new addition of a Paperwork Reduction Act notice to the DOL's model Summary Annual Report? Not sure how half a page of unrelated text reduces paperwork. Also.....is there a deadline where this becomes mandatory? It's enough of a slog to get an SAR to fit on one page after it's been generated by our software. I feel like deleting it until something more obvious and official dictates it has to , has to, be in there. What say the rest of ya? Thanks! --bri

So it's 5.5/12ths of 30,000. Seems straightforward, now..... Holy crap this question is 20 years old.....

Someone could be transferred to an ineligible class of employees, and have no current balance under the plan. Like if you start at Division B on 1/1, which isn't eligible for the plan. And you have no past balance from when you worked at Division A.

I suppose you could follow the standard missed-allocation rules that would apply if ANY eligible employee were skipped over for an amount due, no? (In which case I agree with the earnings-after-day-90 thought you had there.)

The plan sponsor is basically tasked with rewarding its employees with the extra amounts per the Davis-Bacon rules. Sometimes that means additional wages, sometimes it means additional benefits like health or retirement. When the D-B obligation is met via additional wages, then sure, they're on the W-2. If they're used to provide plan benefits instead, then they'd not be wages. So in your case, it sounds as though their regular wages and total D-B obligations come to $2,000 for the week. In that case, if $200 is going to be used for a plan contribution, and notwithstanding the use of the D-B for any additional welfare benefits or what-have-you, then $1,800 would be the wages component that'll eventually reflect on their W-2 at year end. And if your deferral definition of compensation includes full wages, then you'd want to apply the employee's election on the $1,800.

I only meant to combine the two parts of the argument, first that the loan requires 5 years, and second where it defines a grace period. "For purposes of section 72, a deemed distribution occurs at the first time that the requirements of Q&A-3 of this section are not satisfied, in form or in operation. " The loan didn't fail 72p because the loan had an actual term longer than a 5-year term, so I'd argue that it failed 72p only then when the level amortization (of 72p2C) went out the window, but that only occurs as of the end of that cure period.

I'd think you can combine them on part 1, no? The final loan payment was due within 5 years, and each payment (including the final one) has its own grace period for timeliness. I think A-10 in the 1.72(p) regs is good enough for that.

I gotta agree. Clients don't typically self-report a single number for the asset value, but will give us asset statements for 12/31. My one plan with gold kugerands gives me a unit value as well as the total value.