pmacduff

It's time for the 1099-R on this one and I just want to confirm that the 1099-R goes to the Participant and I believe the IRS Code is "2" so that the 10% excise tax does not apply, agreed?

GMK caught me for typing too fast...I did mean 12/31/2011 value which was $0 for the 1st RMD calc! Sorry!

If I am understanding the original post correctly IMHO it matters not if this is an owner or non-owner. The 1st RMD definition for everyone is the same: "April 1st of the plan year following the plan year in which the participant attains age 70 1/2". If this participant is 70 1/2 as of 10/01/2012 then the 1st RMD is due by April 1, 2013. The 1st RMD, however, can be taken by 12/31/2012 (based on the 12/31/2012 value) in order to avoid having 2 RMDs paid out in 2013.

yes - I was referring to getting just the compensation from the client for Dec. I already had the $5,500 information from the deposits made to the vendor. I went back and looked at the plan specs....there is one for "allocate excess employee deferral" that was not checked. I checked that box and then reran the eligibility and contribution transactions. After that Relius is using the $18,860.48 amount in the ADP test and caveating the $5,500 as catchup; showing a total of $24,360.48 for the participant - even when I check the "apply deferral limit" and "apply 415 limit" boxes in the contribution transaction. This plan isn't even close to failing the ADP test and I feel like perhaps I'm making a mountain out of a mole hill - just want to be comfortable that I am giving Relius the correct information to properly perform the ADP test.....SIGH...

This is the first year with this issue because this participant was hired in Aug 2011; did not enter the plan until December 1st, 2011. No one else in this plan has ever come close to reaching any of the maximums, individual or plan. I have only plan year data at this point (annual - one payroll entered). I suppose I can ask the client for the December data for this one individual and then run multiple transactions (as you mentioned) just to be sure that it's working properly for him. thanks again

thank you for all of the replies. I may not have comunicated my question properly. I'm not concerned with the calendar year limits for this individual, although they have not been exceeded. I'm looking at the off calendar plan year and ADP test that I am performing for the 2011/2012 plan year. I never get the W-2 information for this client since this is an off-calendar plan year that uses plan year wages. I realize that the $5500 contributed in December of 2011 is NOT catchup for the 2011/2012 plan year; there is no "catchup" until the participant exceeds a plan limit. I wanted only to explain why this participant contributed $5,500 in December of 2011 and that he personally sees that $$ as catchup for 2011. That being said - I was trying to clarify that it is ok that the participant contributed $24,360.48 for the 2011/2012 plan year; that the proper contributions are showing in the ADP testing. When I reviewed Sal's off-calendar example it pretty much mirrors my fact pattern so I'm now comfortable with the results.

He did contribute exactly $5,500 in December of 2011. He was hired by my client 08/01/2011 (eligibility is 3 mos of svc and enter on 1st of the month following) and had contributed $16,500 at his prev. Employer. For the calendar year 2011 he wanted to maximize and therefore did the $5,500 "catchup" under my client's plan when he became eligible. I did find an example in Sal's book but right now it is too late in the day for me to read/comprehend properly, so I'm going to go over that tomorrow. Again - I just want to be sure that Relius is performing the ADP testing properly with regard to this person; using only the $17,000 and indicating $5,500 in catchup. I believe that it is esp. since this participant is a NHCE and not HCE employee.

I have a plan year that runs from 12/01/2011 through 11/30/2012. A participant contributed his catchup of $5500 in December 2011. In 2012 from Jan - Nov 30th he has contributed $18,860.48 making his total for the plan year $24,360.48. He will not exceed $22,500 in either calendar year (2011 or 2012). When I run the ADP test in Relius it is testing $17,000 for him and shows $5,500 as catchup. What is happening with the other $1,860.48? He is a NHCE so I'm not concerned about a failing test. I want to be sure that this is working properly. It's been so long since I had this scenario, my mind is befuddled! Thanks in advance!

also many of the big 401(k) vendors we work with do not require participant signature to process RMDs, only the Trustee or Plan Administrator. As MoJo mentioned - it is required of the Plan to pay out the RMD, not optional.

I actually have a plan like this; we handled just as you describe. That plan went through an IRS audit and all was well.

What if the client didn't (or says they didn't) receive the "approved extension notification" and did not send the extension request certified? Any ideas?

way over...about $900K

ok everyone - FYI - I sent this question in to the EBSA and here is my question and the response: -----Original Message----- Is there a filing deadline for an amended return? This would be a 2011 filing that was filed timely but now needs a minor correction. Response: Hello, Thank you for your inquiry. In reference to your inquiry regarding amending a 2011 return, page 6 of the 2011 Form 5500 instructions states: "File an amended return/report to correct errors and/or omissions in a previously filed annual return/report for the 2011 plan year. The amended Form 5500 and any amended schedules and/or attachments must conform to the requirements in these instructions. See the DOL website at www.efast.dol.gov for information on filing amended returns/reports for prior years." There is not a timeframe referenced in this instruction. If you have further questions, please call 866-463-3278. EFAST2 Contact Center 866-463-3278 efast2@efast.dol.gov

Profit sharing 401(k) Plan: owner has retired but left his balance in the Plan. He is taking the required minimum distributions. Is he required to take his entire balance out of the Plan because he is no longer working or can he leave it in and continue to take minimums? Someone in our office thought that he has to take the balance out because he is over the NRA of 65. I thought perhaps that only applies to Defined benefit plans?

Thanks Tom. I knew that amended filings could be filed anytime, I guess I was more concerned if there were any penalities involved if there was some type of filing deadline.

thank you BG5150....any cites?

Thank you but I have already read through these instructions. Nothing there specifically states the due date for an amended return; just that "the amended return must conform to the instructions". Now I suppose that could be interpreted to mean that the filing deadline for the amended return must also be October 15th (in this instance) in order to "conform to the intructions". That's the same verbage I found in many of the past years instructions that I have in *pdf files. I was looking for something alittle more concrete.

A 5500-SF was filed timely on October 12th, 2012 with approved 5558 extension for a calendar year plan. It has now come to light that the Participant contribution amount and subsequently the EOY asset information is overstated by approx. $22,000. (assumption was made that the owner made the max 401(k) when in fact, did not make any contribs). I can't seem to find info in the 5500 instructions on the EBSA site but recall in the "old" days that an amended return still had to be filed by the original due date plus extension (i.e. October 15th). Since that date has passed do we wait and correct when the 2012 SF is filed or is it necessary to file an amended 2011 SF now? If we do file an amended now would there be penalties involved? I should know this and shame on me for not but I haven't had to amend a return after the final filing deadline in many years (if I have ever had to do so!). Thanks in advance.

The McKay Hockman article (as well as the IRS phone forum info) states TPA Man's option as the 2nd option. They both mention, though, that using that method can possibly create issues with the matching contribution calculations as well as other issues if the employee terminates before the full 6 months has been completed. For those interested - if you google "failure to suspend deferrals after hardship" you can get both the IRS forum info and the McKay Hockman article. J4FKBC has a great idea, but in this case the plan definately uses the safe harbor hardship rules and I wouldn't want the client to take the chance. (This client is actually under audit for a prior plan year, so I think we'll make this correction as "right as possible" ) Thanks for all the replys!

I did go through 2008-50 but cannot find anything relative to this situation. I even searched "hardship" and "hardship suspension" within 2008-50 and found nothing on point. UPDATE: I was able to find an article from McKay Hochman as well as the information directly from an IRS phone forum which outlines the 2 possible correction methods; the first being the return of the deferrals (adjusted for earnings) to the employee.

If an Employer neglects to stop the participant's contributions for 6 mos after a hardship withdrawal of deferrals is the proper correction to (1) return the contributions, plus earnings to the participant and also (2) forfeit any associated matching contributions plus earnings to the plan forfeiture account? The Plan Doc does utilize the safe harbor hardship rules.

BG5150 that is my point precisely in reference to the timing gap - why would the new vendor expect the Trustee to do something so blatantly in opposition to the rules? No, the old vendor will not take the contributions after the blackout goes into effect. That is why we have the plan set up with the new provider, get the enrollments in and start sending in current contributions. No lag whatsoever in contribution deposits. As I mentioned in the OP, this is the first time we have had a vendor tell the client that they won't take current contributions until the old funds transfer over.

ok folks...we are running into a strange situation for the first time in our many years in business and want to know if others are having the same experience. Let me start by saying we are a "nonselling TPA". A broker recently sold a plan with a vendor we had not worked with before. The vendor stated that it will not take ANY current deposits until the assets of the plan have transferred from the former investment provider to them. We thought this was odd since our experience has always been that the new enrollments are completed and, once the participants and investment elections are set up on the new platform, the client can begin to put current deposits into the plan and not have a period of lapse in deposits (which we all know is a good thing because of the 401(k) deposit timing rules). Now we have another new plan with a different investment vendor (that we DO work with on other plans). This vendor is also saying that it will not take current deposits until the funds have transferred from the prior provider - but they did in the past. I understand blackout rules on the side of the vendor the assets are leaving...but why on the new platform? What's up with this?!? We have vendors that have taken months to transfer the assets to the new provider...who would have the client hold up deposits for that?!?! This is SO contrary to the whole DOL/IRS deposit timing rules that I can't even express it! Anyone else running into this issue?

This situation does not meet the exception rules. It makes sense to me that each would take the employees of that entity on the separate Sch Cs as indicated by mbozek. Thank you for the replies and thank you david rigby for posting the information from the link.

I can't access that link Bill, it says I don't have permission when I click on it.....