Belgarath

I enjoy hearing vacation reports - at least vicariously enjoying the vacations of others is better than nothing! If I'm not interested, I don't have to read it...

I respectfully disagree with your analysis of 1.402(c)(a)(7)(a). A distribution is in fact required for the distribution calendar year. The fact that you can delay it until April first of the following year does not alter that fact. The April 1 distribution taken in the following year is the required distribution for the PRIOR year. then you take the second distribution - the one for the current year - be December 31. IMHO you are overthinking this.

Hi Peter - here you go. https://www.irs.gov/pub/irs-utl/list_erpas.pdf

They actually have a listing. Let me see if I can find it for you.

Tough question. Presumably this is for NHC's? If so, hard to imagine that the IRS would argue with correcting as PP proposes above. I'm not certain it is REQUIRED. However, I, too, would probably recommend the make-up.

I'd add that 457(e)(16)(A) dealing with rollovers refers specifically to entities described in subsection (e)(1)A), which is of course governmental plans. (e)(1)(B) is the tax-exempt organizations, which are not named under (e)(16)(A). In case you want to see the actual citation- (16) Rollover amounts (A) General ruleIn the case of an eligible deferred compensation plan established and maintained by an employer described in subsection (e)(1)(A), if— (i) any portion of the balance to the credit of an employee in such plan is paid to such employee in an eligible rollover distribution (within the meaning of section 402(c)(4)), (ii) the employee transfers any portion of the property such employee receives in such distribution to an eligible retirement plan described in section 402(c)(8)(B), and (iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed, then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid. (B) Certain rules made applicable The rules of paragraphs (2) through (7), (9), and (11) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A). (C) Reporting Rollovers under this paragraph shall be reported to the Secretary in the same manner as rollovers from qualified retirement plans (as defined in section 4974(c)).

Yes, PTE 92-6.

I don't think you are missing anything. Q&A-1(b) very specifically says, "If an employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee retires, the employee's first distribution calendar year is the calendar year in which the employee retires." Seems pretty clear.

How does that matter? Unless I'm missing something (quite possible) there still needs to be at least 10% ownership (direct or deemed) in the B-org by one or more HCE's in the FSO and/or its A-Orgs. That doesn't seem to be the situation being discussed?

This is probably a stupid question, but have they asked the broker if, for purposes of the $500,000 minimum that the broker requires, that the separate investments could be "aggregated" solely for purposes of satisfying that minimum requirement? I assume this has already been explored and the answer was "no" but I just thought I'd ask...

Hopefully you are on a cruise and not stuck in an inner tube with only your laptop, with its failing batteries being utilized for this rather than calling for rescue. Enjoy!

Agree. However, it is remotely possible that he is actually still an EMPLOYEE of the accounting firm. Purported independent contractor status does not necessarily make it so. However, that's separate from your question.

Excerpt from the SAR-SEP form: Excess SEP contributions of a highly compensated employee who is 50 or older before the end of the calendar year do not have to be removed from the employee’s SEP-IRA to the extent the amount of the excess SEP contributions is less than the catch-up elective deferral contribution limit (see Section 402(g) Limit above) reduced by lective deferral contributions already made for the year.

I'll merely say this - I'm not judging anything without knowing all the facts, etc. - and one tiny detail can turn everything on its head. We work with a lot of recordkeeping platforms, and we find Hancock to be excellent, and far better than many others who shall remain nameless.

Assuming a couple of things, yes. 1. 401(k) Plans CAN, but rarely do any more, restrict payouts to being unavailable until Normal Retirement Date. Perfectly legal, but I haven't seen such a provision in YEARS. 2. The real question is always whether there has been a bona fide termination of employment, and the employer/employee relationship has been severed. Merely calling someone a "consultant" doesn't necessarily make them so. Odds are good that a distribution is allowable, but you will have to check with the Plan Administrator or Employer first. Also check the Summary Plan Description, which should answer # 1 above.

So in an "ordering" process, you would first distribute the 415 excess, THEN do your ADP test. And if ADP still fails, you refund the deferrals, BUT the refunded deferrals still count as annual additions for 415 purposes. That seems much more logical. Thanks for the comment.

Morning brain cramp. Say you have an ADP failure and a 415 failure for a participant. Not catch-up eligible. The ADP refund amount is still considered an "annual addition" for 415 purposes as per 1.415(c)-1(b)(1)(ii). So suppose there is an ADP refund of $5,000, and the 415 excess is determined to be $10,000. Do you have to reduce the participant's account by another $10,000, or only $5,000, since $5,000 has been distributed under the ADP refund? From memory, (always dangerous) it is the former, but I'm somehow missing the appropriate regulatory citation to support that, so I'm questioning my sanity. TGIF!

And even though that allows certain student employee exclusions, it then leads you off to IRC 3121, etc. - haven't looked at it for a while, but it is a delightful stroll through a garbage dump...

I'm not sure the answer above is applicable - as I read it on a quick skim, it says that the Federal share of the work study funds cannot be used to provide benefits. So it can't be used to fund employer contributions to the plan, or for FICA, etc., etc. However, I don't think it means that the employer is exempt from covering employees who must otherwise be covered. Just that any contributions must be employer contributions, and not utilizing the Federal funds provided to the work-study program. Just an off-the-cuff impression FWIW - I don't have time to look into this in greater detail.

I agree with CEW, but be aware that a notice saying they were NOT contributing is not required, even though many employers do it. In other words, the plan is NOT a safe harbor for a given year UNLESS the employer makes the election to make it a safe harbor for a given year. Ok, I see Kevin already mentioned this!

Hi Larry - so what does it say - for example, "This notice is for the Plan Year that begins following your receipt of this Notice" or something generic like that?

Bird - some documents (FIS/Relius, for example)allow you to exclude the HCE's from receiving the safe harbor, but also allow a "discretionary" safe harbor to be made to HCE's - as long as it is equal to or less than the safe harbor contribution given to the NHCE's. IRS pre-approved doc., doesn't blow your top heavy exemption.

I'd be very surprised if the plan document doesn't somehow address this, although it might be "sideways" and require some cross-checking, particularly if the document isn't in an Adoption Agreement format. It is clearly permissible for a 401(k) plan to allow rollover money to be used for loan purposes. If the document TRULY does not address this in some form, one way or the other, then it is the responsibility of the Plan Administrator to make the determination of what is and is not allowable under the written terms of the plan.

Well, perhaps another way to look at it is from a "risk factor." (I know, ERPA's can't advise clients based on audit risk.) Realistically, if it is corrected according to the attorney's interpretation, if the IRS does audit I'd have a hard time believing that they would consider disqualifying a plan based on this. So you negotiate, at worst pay a little extra and interest - in essence, same place you'd have been in otherwise, except for the interest, which is typically negligible. Not saying I'd do it that way myself, but it's another way of looking at it.

Revenue Procedure 2015-28 specifically mentions this "rolling" correction method. This language does not appear in Revenue Procedure 2016-51. Whether this was an intentional change, or an inadvertent omission by the IRS, I can't say. https://www.irs.gov/pub/irs-drop/rp-15-28.pdf P.S. - FWIW, I just took a look at Sal's EOB, and it mentions that the IRS informally opined at the 2015 ASPPA Conference that the applicable correction method is based upon when the operational error BEGAN.