Belgarath

I don't really know beans about these. Had a question about such a plan that supposedly utilizes a standardized prototype - haven't seen a document so I can't say. I was able to look up the 5500 form, and the Plan Characteristics Codes do not indicate a pre-approved document is being used. My general question is this: (I haven't looked at LRMS on this, by the way) - do you know, offhand, if a "normal - whatever that is" multiemployer 401(k) plan would require special multiemployer language, or can it use "regular" plan language? Seems like there would have to be some sort of special multiemployer language.

Right, but knowing the specific investments and trying to get the information to calculate multiple deposits to multiple investments, for almost no money, can be an "unreasonable" expense if the time involved is excessive, which it can be. Again, we've never had the IRS question the use of the DOL calculator, but we also haven't used it "unreasonably" (yet, apparently). This could change...

This might help somewhat, but doesn't directly answer your question. https://www.law.cornell.edu/cfr/text/26/301.7701-7

I've never heard that the IRS cares whether you filed under VFCP or not. At the very least, I can say that we have never had an IRS problem, and most of ours are NOT filed under VFCP. That's a DOL issue, not an IRS issue. While we usually use the DOL calculator for lost interest unless the amounts are substantial, we sometimes use plan rates if available and possible to calculate without an undue expense. Last week we did one using the S&P 500 return, because the amount was substantial, but getting the vendor to calculate plan rates for multiple late deposits would have been time-consuming and expensive, so we used the S&P as "reasonable." We always use the DOL calculator in a fairly typical situation like one payroll deposit was 6 days late, and the total amount of interest using the DOL calculator is $1.72, or something similarly absurd. No way in heck are we messing with trying to figure out plan rates, nor are we filing under VFCP, for foolishness like that. Unless, of course, the regulatory authorities force us to.

I don't have time to look it up now, but I think if it is a safe harbor matching contribution, it is a QNEC, otherwise, it is just an employer nonelective. But don't trust my memory - I don't!

Just ran across an interesting situation. Employer missed withholding a deferral here and there on several employees. They understand they have to make full missed match plus earnings. However, their correction on the missed deferral piece has been as follows: They have simply withheld the missed deferral at a later date (anywhere from next paycheck to several months later). I think in "real life" this is acceptable IF the employee does a separate written election to permit it. However, I don't think it is acceptable to do it 6 months later without a written election. Don't know if they have even gotten VERBAL approval, but apparently no one has ever complained. How do y'all see this situation handled (if you ever do see this correction method) when the correction falls outside the "normal" SCP corrections? Just curious.

Employer must contribute full missed match, plus earnings on that match.

I respectfully disagree. The employer has the OPTION to deduct a contribution deposited in 2018 and ALLOCATED for 2017, as a 2017 deduction (if made within the allowable timeframe) but may choose to deduct it in 2018 if so desired. Although this may not be supported by a strict reading of the statutory language, the IRS interprets it as optional, at least unofficially. I've seen plans get audited where this wasn't even questioned. The following from the IRS should prove helpful. Seems pretty clearly stated. https://www.irs.gov/pub/irs-tege/epche903.pdf

Austin - I'm not clear on how you avoid the 30 day advance notice? It is still "required content" in the SH notice, albeit via a reference to the SPD. OK, Tom beat me to it.

I like this solution. Larry, Can you let us know what you find out from your friend? I'm always cautious about something that seems to good to be true, but I can't see any landmines, at least in a deferral only plan. Let's assume there are matching and/or nonelective contributions, and that there are one or more HCE's. Are there any special coverage or nondiscrimination issues I'm missing here, assuming the plan provisions are identical in all other respects - other than normal coverage/nondiscrimination testing on each plan?

In a situation where there is TRULY no CG or ASG, how is it abusive? I'm not sure I quite understand the question.

Thanks, Peter, for the citation. I fully support the "spouse as automatic beneficiary unless spouse waives" law/concept, but when you see the actual statutory language and the whole QJSA/QPSA stuff, with numerous amendments, one may be tempted to agree with Mr. Bumble, "The law is a ass..." As a layman, seems like it could have been made more sensible and streamlined. For example, it never made any sense to me why a profit sharing plan should be treated differently, for these purposes, than a pension plan. On the other hand, if ERISA, the IRC, and all associated regulations/guidance were as simple as they ought to be, we'd all be out selling matchsticks or something, so I should keep my yap shut and not gripe!

Participant is at Blinky's house?

I don't see how 20% withholding could apply - maybe this is an error? It isn't an eligible rollover distribution. Consequences of a late distribution Under IRC Section 401(a)(30), if the excess deferrals aren't withdrawn by April 15, each affected plan of the employer is subject to disqualification and would need to go through EPCRS. Under EPCRS, these excess deferrals are still subject to double taxation; that is, they're taxed both in the year contributed to and in the year distributed from the plan. For any distributions, attributable to elective deferrals designated as Roth Contributions, all distributions will be reported as taxable in the year distributed. Designated Roth contributions will have already been included in income in the year of deferral. These late distributions could also be subject to the 10% early distribution tax, 20% withholding and spousal consent requirements.

If you have access to the EOB, the 2017 version on pages 7.302 and 7.303 addresses this question. Generally subject to 10% withholding rules if taxable in the year of distribution.

I'll let Bird speak for himself, but I suspect he may have meant that the insurance company can't just randomly offer any old arrangement they feel like - policies generally have to be approved by the State Banking and Insurance Departments, which requires policy language, assumptions, filings, etc., etc. - All right, I see he already did!

Guess what we just found out? They DID, in fact, have it distributed and deposited to personal checking account, then directly transferred it from the checking account to the plan. They just told us incorrectly what they actually did. Anyway, the discussion has been informative for me, so I thank you all.

What Austin said - same for us. Doing a VFCP for a situation where there is 9 dollars of lost interest seems like overkill... But, your way is certainly safe - can't get into trouble that way.

I think it is 30 days.

Right - the opposable thumb may have helped lift us out of the primeval jungles, but too many of them makes typing a challenge.

Agreed. Even after all these years, I have a terrible tendency to sometimes use the terms interchangeably. I know what I mean, but it can sure cause problems for someone else reading it!

IMHO - it will not blow your top heavy exemption. Top heavy minimums are required only for NHC. If you exclude the HC, the plan still consists only of deferrals and SH contributions, so your top heavy exemption remains intact.

Sole prop, but has employees who participate. Apparently had no other readily available funds to make contribution, so did the IRA thing. It was apparently a liquidity issue, and tax "efficiency" wasn't an issue that concerned him. I'm deducing this from snippets of information - the "why" isn't ultimately really my business. I'm more concerned with whether it creates a more serious issue. He's over 59-1/2, so no premature distribution issues.

This was sent directly - not through the checking account. But it was sent at the instruction of the IRA account holder. Never in the possession of the individual, but the IRA institution processed it as a fully taxable distribution. So a 1099 will be issued showing a distribution, and it'll be declared as income on the tax return. 'Twould be nicer if they had done it jpod's way, but it does seem like a no harm no foul situation. But perhaps an auditor would disagree. P.S. as you might expect, as usual, we were informed after the fact...

Say a self employed wants to make a profit sharing contribution. I don't see a problem with transferring the contribution from his personal IRA, AS LONG AS it is treated/reported as a taxable distribution to him, and not a non-taxable transfer/rollover. Any other opinions? I'm sure this has been discussed before, but I couldn't find anything using the search function.