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Yes, that is the correction method as cited in Appendix B of EPCRS.

PATA, that is correct. Quinn, you are correct as well, except in this situation PATA said "1/1 until now" which is more than 3 months of the year.

The company must make a QNEC in the amount of the average ADP of the NHCEs (assuming he is an NHCE) and another QNEC for the average ACP of the NHCEs. You would only base this on the period in which the participant was excluded.

To add to what Katherine has said it depends on what exactly you are wanting to do. If it is for recordkeeping purposes then I think you have your answer. It sounds like you are wanting this for your financial statements for an accrual basis client. If the paycheck the deferrals relate to was received before March 31st then you should count this as a receivable on your financial statements.

It still depends. If you are talking about a daily plan then no they would not be included. If you are referring to balance forward plan, testing, etc. then yes they would be included.

That depends on whether the plan is on cash basis or accrual basis.

I do not believe this to be correct. I have filed 5500s without the audit report attached. I will get a notice saying that the client has 30 days to supply the missing audit report before the 5500 is considered late. This can buy you an extra month or two. Katherine beat me to the punch!

Start by reading Notice 98-52 and 2000-3. For the most part this will give you the basics.

Yes.

I guess it would fully depend on what the document said. I can't think of any regulation that would make you pro-rate his earned income over the year.

Why not think of it another way. I am assuming your client earned at least $20,000 in the last quarter. Why not just say he decided to defer $12,000 to $14,000 of that $20,000?

If he can pass coverage without them then he can.

Yes.

If the contribution was deposited in 2004 you could reclassify that part as a contribution for 2004. If you do this then you would not include it on the 5500 for 2003.

I am assumming that this contribution is a discretionary profit sharing contribution. The full amount should be shown as the employer contribution on the 5500. However, there is no forfeiture as a result of the calculation including ineligible employees. You will need to allocate the full amount of the contribution in accordance with the plan document. This is not forfeiture money.

I am assuming that "processed" means they didn't actually send the deferrals to the trust until 3/04. These would be included in the 402(g) limit since they are included on their W-2s. The employer will also have to make up lost earnings for late deferrals, file Form 5330 with excise tax, etc.

The excess deferrals are computed as part of their 415 limit unless they are recharacterized as catch-up contributions. Unfortunately I do not have a cite. Hopefully someone else can give the cite you need.

You can't find it because there isn't anything. He has to be bonded for the full amount. If it helps just tell him that the difference in price for a larger bond is minimal. In some cases the premiums might not change.

That is correct.

Use the 2002 form 5500 for all plan years that started in 2002.

The regulations permit you to do it either way as long as you do the same for all employees under similar situations. See 1.415-2(d)(5)(ii)

The excise tax is 15% of the lost earnings.

I am on version 9.0.2 and I had the same problem. I called Corbel and they sent me a script to run to fix the problem.

Yep, wasn't thinking. What Tom said.

In that case one of the HCEs did make deferrals, the wife. So the answer to your question is yes they would have to make a top heavy contribution.