M Norton

safe harbor 401(k) plan for medical practice has 3% SH NEC only to NHCEs. During 2018, physicians over age 50 deferred $24K rather than $24,500 due to clerical error by payroll person. Can they designate $6,000 as catch-up, leaving $18,000 to count toward their maximum annual addition of $55,000? Or do they have to count the first $18,500 as regular deferrals before counting any as catch-up? Trying to make room for increased profit sharing. Thanks!

company started SIMPLE IRA plan beginning 10/1/2018. The company operates on a calendar year. When calculating the SIMPLE IRA match, can you use compensation for the full year, or only from October - December? Thanks!

Outstanding response, Tom! it is DC alone, no imputed disparity, but I am saving this chart. Thanks!

When cross-testing a 401(k) plan, we have always used an interest rate of 8.5% and the UP-1984 mortality table. Are those still the best choices or are others recommended. Input welcome!

Thanks to C. B. Zeller for the suggestion #3 about a discretionary ACP Safe Harbor match. I checked the plan document and it does contain that provision, so I am making that recommendation to the plan sponsor and his accountant. Really appreciate all the input and advice!

only two participants deferring - one HCE (owner, so key employee) and one NHCE. HCE SH match fully funded by 12/31/18. Excess match for NHCE is $12.14. Cost of TH to NHCEs would be $560+. Can the plan be amended retroactively for 2018 to do the additional discretionary ACP safe harbor match? Will that still exempt the plan from TH?

Just FYI - TAGData says you have to count the hours, because the nurses are being compensated for their "on-call" time. They said, "when an employee is on-call and is being compensated, that employee is "engaged to wait" rather than "waiting to be engaged". They cited a PL ruling 8031091. Thanks to all for your input.

A very small SH 401(k) plan has five eligible participants. Two are deferring, one HCE and one NHCE. Two other HCEs are not deferring, and one (now deceased) NHCE did not defer. In 2018 the plan sponsor made the SH match every pay period (by choice - not required). The NHCE who was deferring received a few dollars too much match as of the end of the year. The extra amount equals 0.07% of the NHCE's annual compensation. So there is what amounts to a miniscule profit sharing contribution made to one NHCE which causes the plan not to meet the exemption to the top heavy rules. What are the options for addressing this? Thanks!

Non-profit organization has two full-time employees in management positions, neither of which is highly compensated. They also have nurses who are on-call and will receive $2-$4 per hour for being on-call. Each nurse is on-call 24 hours per week, which means a nurse would have 1,000+ in a year just for on-call time. A nurse may be called in on a case, and would be paid regular hourly compensation (at a nurse's regular pay rate) for those hours. The question is whether a 401(k) plan can exclude the on-call time and pay for eligibility, participation and contribution calculations. Thanks!

Medical practice sponsors 401(k) plan. A nurse practitioner terminated employment in early December, and has not worked for the plan sponsor since termination. However, the NP will receive commissions on collections through the end of December. What is the impact on the retirement plan if the NP receives a paycheck (with employment taxes withheld) as of 12/31 even though the last day worked was several weeks prior to that? Thanks!

Physician works for hospital as W-2 employee and maxes out in the hospital 401(k); same physician also operates small clinic as Sch C using off-duty nurses (1099 workers) and has SE income from Sch C. Can physician establish SEP for himself for SE income from Sch C? if yes, do 1099 workers have to be included in SEP? Is physician limited on SEP contribution due to participation in 401(k) at hospital? Thanks!

Large plan (125 participants) filed Form 5500 but failed to include an audit with the filing. Are penalties automatic or are there allowances for first-time offenders? The instructions say that penalties MAY be assessed or imposed, unless failure to file properly is for reasonable cause. What would they consider reasonable cause?

Client withdrew funds from IRA, intending to redeposit that amount within 60 days and avoid the tax. She is not going to be able to meet the 60-day deadline. Can she withdraw an additional amount, then turn around and deposit it back into the IRA to cover the first withdrawal within the first 60-day period, starting a new 60-day clock on the second withdrawal? She thinks she will have the funds to cover it before the end of the second 60-day period. Thanks!

Sponsor of large plan uses a temp agency to "test drive" potential employees for 3-6 months. After the trial period a worker may be hired to become a regular employee of the plan sponsor. We have advised the sponsor that the time while the worker was working through the temp agency must be counted toward eligibility for plan participation. Does anyone have a citation or code section that supports that position? Thanks.

Single-member LLC dentist sponsored a SIMPLE IRA for about 8 years. He sold his practice mid-2018 and all employees now work for the new dentist's company. What happens to the SIMPLE IRA accounts? Should notices be provided to the employees or to the custodian of the SIMPLE IRA accounts? Could the new dentist assume sponsorship of the SIMPLE IRA or would he need to start a new plan if he wants one? Thanks!

Calendar year plan - we filed Form 5558 to extend the 5500 and the 5330 for a client. Now we find that the late deferrals were not for 2017 but instead were for 2015 and 2016. The client is asking to not file Form 5330 for 2017 because no late deposit of deferrals for that plan year. Are there consequences for extending Form 5330 and then not filing one? Thanks.

Money purchase plan has single entry date. If someone meets eligibility during the year, they become eligible as of the beginning of the plan year. Plan sponsor uses a temp agency to "test drive" workers. If they like a worker, they hire them after 3 or 6 months. Once hired as a regular employee and no longer temp, So it is possible for a worker to meet eligibility during the plan year and have worked as a temp for part of that plan year. The question is how to calculate the contribution for a participant who was a temp worker for part of the year. Do you have to get the compensation paid by the temp agency for that period? Or do you just use the compensation paid by the plan sponsor from the date the worker became a regular employee?

New 401(k) plan 2015 with pre-tax and Roth deferrals, enhanced SH match and integrated PS - 8 participants including one HCE. TPA used incorrect formula to calculate SH match - basic tiered match instead of 4% enhanced match. Match was contributed timely but at least three participants received less than they should have received, totaling several hundred dollars for 2017 plan year. Plan document and SH notice all say enhanced 4% match. No discretionary PS contributions made. 2017 can be corrected using EPCRS. We haven't seen the numbers yet for prior years but it's possible the same error has been made from the beginning. What options are available if SH match was under-contributed for 2015 and 2016?

Plan sponsor had late deposits of elective deferrals for multiple pay periods in 2017. Due date for Form 5500-SF and Form 5330 were extended by filing Form 5558; $19 was paid with extension for amount due on Form 5330. After preparing Form 5330, excise tax total is $19.21. Is it necessary to remit $0.21 with the form? Is there some kind of de minimis that would apply to this situation? Thanks.

EBSA FAB 2009-02 seems to allow the exclusion of individual annuity contracts for anyone terminated before January 1, 2009. A 403(b) plan sponsor (educational institution) has had a required annual audit because of the number of participants, partly because they have been including individual annuity contracts for former employees who terminated in 2008 or earlier and who have not been entitled to receive any employer contributions since 2008. In the Q&A for Bulletin 2010-01 it seems the initial inclusion of those pre-2009 terminees was optional at the time. Can the plan sponsor reverse its decision and choose not to include those contracts in plan assets now and also not include those pre-2009 terminees in the participant count? It might mean they would no longer require an audit because they would fall below the threshold. Thanks.

I have a client with a company that sponsors a 401(k) plan, The company also sponsors a Supplemental Retirement Plan for owners and select HCEs and managers. One of the owners is turning age 70 1/2 and must take an RMD from the qualified plan. Is there any requirement for RMDs from the SRP?

qualified plan adopted by plan sponsor in 1973 (now a 401(k)). In 2017, separate (related) company set up, and joinder agreement signed to allow employees of new company to participate in the 1973 plan. Can sponsorship of the existing plan be transferred to the new company? The old company will not have employees beginning in 2018. Owner wants to remove old company from sponsorship so plan is solely sponsored by new company.

We do not have a signed copy of the adoption agreement, which has an effective date of 12/31/2015. under IRC 441(f)(2)(B) Change in accounting period (under "Special Rules for 52-53-week year) it says "If such change results in a short period of less than 7 days, such short period shall...be added to and deemed a part of the following taxable year." If I read that correctly, it seems they could have included those two days for the first year and made it effective 11/29/2015 with a plan year end of 11/30/2016. But that is not what the adoption agreement says. FYI I have the same burning question you have. Thanks.

large MPP plan, single employer - sponsor has 52/23 week fiscal year ending Saturday closest to 11/30. The plan document has had the same fiscal year as the sponsor. The 2014 Form 5500 was filed for PYE 11/28/2015. Plan sponsor changed TPAs; new TPA amended the plan to be 11/30 year end, although plan sponsor still has 52/53 week fiscal year. 2015 Form 5500 prepared by new TPA shows plan year dates 12/1/2015 - 11/30/2016. What happens to the two days between the end of the 2014 plan year and the beginning of the 2015 plan year? Should the 5500 just cover those days and state the plan year is 11/29/15 - 11/30/16? Same question for audited financial statements. Thanks.

Individual works for two companies. Each company has a SIMPLE IRA plan, and the individual has participated in both plans, reaching his annual deferral limit by putting some into each plan. One company ended their SIMPLE Plan, and the individual will not be paid enough in the other company between now and the end of the year to reach his annual deferral limit, even if he defers 100%. Can he put more in the second company's plan based on prior earnings in the current year? I think a participant cannot defer retrospectively in a qualified 401(k) plan but I'm not sure about a SIMPLE IRA plan. And I can't seem to locate a cite even for the 401(k). Can anybody help with this? Thanks.