preErisa

Thanks All - client will make amends with the QNEC. Just as Tom Poje thought, we only asked the compensation question and not the family relationship question. Room for improvement!

Reply to Lou S - Yes Key is 10% owner. Yes the spouse was only one allowed in early.

The Plan was amended in mid-2015 to allow one employee to enter the Plan early. The employee was described as a newly employed employee and not a Highly -Compensated Employee. Now in 2016 it is discovered the new employee is a spouse of a Key Employee (they have different last names).. We need to correct as the new employee made 401k and received matching contributions during 2015. I believe this is a Demographic Failure requiring VCP, not SCP. Has anyone had a similar problem?

Yes, we'll confirm that with the client but barring non-qualifying assets, can the audit be skipped?

The Participant count as of the first day of the Plan Year was less than 100.

An accounting firm has advised a client whose plan count has dropped below 100 that the audit needs to continue nonetheless. Barring any circumstances other than simply the participant count, does anyone know if that is true?

I have a plan with husband/wife retired, but still owning 90%, son is only other employee, he runs the business but owns 10%. Is this considered a “one-participant” plan?? There are no employees, other than son, and he is 10% owner. No other plans either. In past we filed 5500’s – it didn’t matter per se- but now with e-FAS2 I’d rather do EZ if this meets the rule, not sure.

First paragraph of letter received from the Department of the Treasury dated 2/2/07: "This letter is to acknowledge the receipt of your letter dated July 27, 2006. I apologize for the long wait of the response for your request, we are currently in a pilot program for 6 months that will end in March, only until September a decision will be made, and then letter forwarding will be input with this pilot so hopefully we will be able to work efficient, thanks for your patients." Do you think its time for us to use a lost participant service?

We have understood that an employer could hire someone and, to support the ‘recruiting package’ could offer that specific person accelerated eligibility for the retirement plan, since a new employee (unless he/she owned more than 5%) could never be an HCE in the first year so there is no discrimination. I’ve seen articles about this in the past but can’t put my hands on one now to answer questions from an attorney who is asking for the legal authority to do that. Has anyone out there heard of this technique and, if so, have you got something specific I can hang my hat on?

We have two cross-tested profit sharing plans that for their 2001 calendar plan year, want to retroactvely amend their discretionary contribution allocation formulas. In each case an addtional group would be 'carved out". One will result in an addtional contribution for a Non-Highly Compensated Employee (over and above the 3% Safe Harbor contribution) and the other results in an additional contribution for a Highly Compensated Participant (over and above a 3% of pay across the board contribution). Neither employer has made a formal approval of the contribution for 2001.

Sal Tripodi's ERISA book (1.293) says it isn't clear how corrective distributions under a 401k/401m arrangement are treated in the top heavy ratio. However it is reasonable to include a corrective distribution if it is treated as an annual addition...which would apply to excess amounts distributed to correct nondiscrimination test but not to a excess deferral under 402(g) if distributed by 4/15 deadline.

I have a 401k participant who named her son as beneficiary She is married and did not provide a spousal sign-off. She tells me her spouse is not the biological father of her son and as she is not on good terms with her spouse, she does not want to try to get him to sign off. The biological father is deceased. Attorney time?

Has anyone got current insight into the issue of whether Affiliated Service Group rules apply to a corporate director who owns less than 50% of the underlying corporation. The issue is whether that Director can establish a SIMPLE retirement plan using his Directors Fees (in addition to his coverage under the primary corporation's conventional qualified plan). I am still not sure whether a Directorship would be considered a 'Service Organization' under 414(m)(5).

At one time, any matching contribution made by a partnership with respect to a partner's elective contributions was also treated as elective contributions made by the partner...I believe this was changed. Can anyone confirm this?