justanotheradmin

Unfortunately no, not $20,000 worth. The client doesn't like our answer so I think she may be looking for another provider. It is her decision. Belgarath, thanks for the links! I had found the IRS newsletter, but not the charitable planning link, so I do appreciate it.

All of the deposits in question actually occurred in 2013. Any that occurred in 2014 have already been counted towards 2014.

Does anyone know where I can get a copy of Rev. Ruling 80-155? A client dumped a whole bunch of money into her plan in 2013 and now is upset that we are allocating all of it towards 2013. It is a cross tested plan, so the principals reach their 415 long before the entire amount is allocated, so the NHCE end up getting a really large profit sharing to use up all of the deposits. The deposits do not exceed the 404 deduction limit. She is the kind that need the source material, so from what I can find, Rev. Ruling 80-155 is what I need to send her. I can only find a couple of IRS items that reference 80-155, not the actual text itself. The plan document says that participants are limited to 415, and if the 415 excess is due to a discretionary employer contribution, that the contribution is simply limited to not violate 415 for those participants. If not Rev Ruling 80-155, then some other good source material? Thanks!

I have a similar situation - the client has a 401(k) Safe Harbor (3%) cross-tested plan, paired with a Cash balance. This year the testing happens to blow up and large contributions are needed to the NHCE as profit sharing because of the benefit provided in the CB plan. the actuary wants to do a corrective amendment under 11(g) to add in a recent hire who is younger and would improve the required contribution to pass testing quite a bit. I have reservations about this since the 401(k) plan is safe harbor. Do others think the 11(g) amendment would be permitted in this circumstance?

Thanks ESOP guy, sounds like your experience is in-line with what I thought was common. The distribution question is one that came up already, but I don't have an answer to as to how involved they are in that process. Could someone correct me if I'm wrong, but I thought part of the audit process was to look at the plan's processes and procedures, including those of the service providers, hence the need for a SAS70 or processes/procedures questionnaire in lieu of a SAS70. In this circumstance, wouldn't the CPA be auditing its own firm's practices as they relate to services on the retirement plan? The CPA firm is a good sized local company, not tiny, but even if there is clear delineation between departments, I don't see how that makes it independent under the DOL rules. There would be a huge chance for bias, and inadvertent partiality, no? Am I misunderstanding the processes/procedures portion of the audit? Maybe the SAS70/questionnaire doesn't actually do much good? I am probably beating a dead horse.

Has anyone seen any guidance from the DOL on what "financial records" means as it relates to item 3) in the DOL bulletin on independence? http://www.gpo.gov/fdsys/pkg/CFR-2011-title29-vol9/pdf/CFR-2011-title29-vol9-sec2509-75-9.pdf I've been reading some of the material here: http://www.aicpa.org/interestareas/employeebenefitplanauditquality/resources/accountingandauditingresourcecenters/auditorindependence/pages/auditorindependenceresource%20center.aspx and it seems the AICPA might take a rather narrow view of what financial records means. But I am not a CPA, so maybe this is typical? A plan is looking to bid out its TPA services, and one of the companies submitting a proposal is the CPA firm that provides the IQPA services for the plan since it is audit sized. The plan is wondering if it is a problem that the auditing firm would also be the firm to provide administration services. The TPA firm has clarified that they would not be providing recording keeping, just things like 5500 preparation, compliance testing, distribution assistance, etc. Maybe I am over thinking this. but I was wondering if I could get people's thoughts since in my experience small TPA firms shy away from providing audit services and small CPA firms shy away from providing TPA services on plans that they audit, because it violates the DOL rules. Can anyone clarify?

Thanks for the suggestions, particularly Effen, for the explanation. I don't know what the client will go with, just want to make sure whatever it is, that it will actually work.

Basic Information: ER sponsors a DC plan, utilizes SH Match. ER Would like to have a greater deduction for 2013. It is a calendar year plan. Only a handful of participants mostly the owner and his family. DC plan allows for a discretionary contribution, allocated on a pro-rata (across compensation) basis. My understanding is that the plan would not be allowed to change the profit sharing allocation method to something more favorable, such as cross-tested. The ER is interested in adding a DB plan, but one that is offset by the DC plan. Typically I would add a DB plan, and amend the DC plan to add language making it crystal clear what the offset arrangement it. And do it all prospectively. In this case, they want the deduction for 2013 and the prohibition against the changes to the Safe Harbor plan during the year would prevent the PS allocation method change. Would the addition of the DB plan in 2013 be considered a change, such that it would violate the prohibition against mid-year changes on the SH DC plan? I don't know if the DB and DC would be considered 1 plan, or could be considered 2 for this purpose. The DB plan would reference the DC plan and offset, but the DC plan would not, until a new amendment is effective in 2014. If that doesn't work, could the ER set up a new DC profit sharing only plan to pair with the new DB plan? The SH Match would be provided in DC plan 1, a PS contribution would go into DC plan 2 as the offset, and then there would be the DB plan. Or is all of this pointless because under ERISA they would all be considered one plan anyways and would be an impermissable change to the original SH plan? Thoughts? Advice?

we have a regular 401(k) plan that terminated as of 11/15/2013. passed out notices, stopped deferrals, signed the amendment, etc. Most participants have already returned their distribution forms. We anticipated distributions to start shortly, with assets out by 12/31/2013 and 2013 being the final year. The plan sponsor now has changed their mind about terminating the plan. Other than the participants being 100% vested,I don't see an issue. I think the plan sponsor would need to get new deferral elections because the notice given indicated that all salary deferrals were going to cease as of 11/15/2013. What I don't know is about distributions. We are after 11/15/2013 and participants have accrued a distributable event. The fact that no one has actually been paid out doesn't change the fact that participants have a right to take a distribution, and undoing the termination would presumably take away that right. I seem to think there were several threads on this topic already, but I can't seem to find them. What if they terminate the plan and then start another? I would think the successor plan rules would dictate that the participants didn't really have a distributable event, yes? or would the new plan just be disqualified? If anyone can point me in the right direction I would appreciate it.

Can anyone help me understand Notice 2011-86 and §7528(b)(2)? I don't want the client to have to pay the $2,500 user fee if it isn't necessary. I am trying to prepare a Cash Balance plan determination letter request. It is a Cycle C filer that is due Jan 1, 2014. There was previously an issue that caused the plan to do a VCP submission and off-cycle DL filing two years ago, which did result in a favorable DL. The plan was first in existance 1/1/2003. Most things seem to reference a 5 year period for the fee exemption, but Part III provides "the Service will treat an application as having been filed by the last day of the remedial amendment period with respect tot he plan beginning within the first five plan years if both the following conditions are met: (1) the application is filed with the Service by the last day of the submission period for the plan's current remediate amendment cycle, and (2) the plan is first in existence no earlier than January 1 of the tenth calendar year immediately preceding the year in which the submission period for the plan's current remedial amendment cycle begins." Since the plan was effective 1/1/2003, and that the cycle ends 1/31/2014, it seems to be that the exemption applies, and no user fee is due. Is there something I'm missing? I can't seem to find anything that indicates it has to be the initial DL submission for a plan. Does the fact that this plan has had previous DLs affect the fee exemption? Thoughts?

My understanding is that if the RMD failure only involves Owners - there has to be a really, really good reason for the IRS to agree to waive the excise tax. I did get the excise tax waived on through a VCP on two owners who had missed RMDs, but there was also one rank and file terminated participant's whose RMD was missed, and it was a matter of the distribution paperwork being submitted timely, and just not being processed. I haven't been successful in getting the excise taxed waived through VCP if the only missed RMDs were for owners. But its been awhile since I tried, so maybe something has changed.

Is this written anywhere? Like in an example from the DOL or IRS? Or does it just come down to understanding the meaning of "present value of any nonforfeitable accrued benefit" and since the prior distribution amount is no longer in the account, it is not part of the "present value" ? the prior distribution is part of a "prior value" ? What would stop an employer from doing force out distributions in chunks then? For example, terminated participant has $800 vested account, gets a cash distribution under FO rules a few months after termination. ER decides to make a discretionay Match contribution of $400 at year end, ER does FO distribution #2. then 6 mos after that ER decides to do a discretionay PS, Participant gets $3800. ER does FO #3, this time to an IRA. Thoughts?

Quick question, I have a plan with 3 people, two owners, one non-owner employee. All are HCE. The non-owner EE (we'll call them EE1) receives a large bonus, the owners do not. The plan wants to exclude bonus. Since all are HCE, it would pass 414(s). The plan does a 3% safe harbor to satisfy top heavy. They used to have NHCE, but don't any more, but kept the 3% SH. As far as I know, since the compensation would pass 414(s), the 3% SH contribution on just the non-bonus compensation would be fine. Anyone disagree? My concern is the top heavy. Does anyone know, or know where I can find, some guidance on this? Would the change of the plan definition of compensation, no longer allow the SH 3% to do double duty and satisfy the Top Heavy minimum? What I read in 416©(2) requires 415 comp. But 416(H)(i) provides the Safe harbor contribution exception. which defines comp 401(k)(9) as 414(s). Slightly different option(I think is simpler): The owners really seem to like receiving their own 3%. But lets assume they didn't mind not receiving it. Is there any problem with using the ability to exclude the HCE from receiving the 3%SH? Exclude HCE from SH SH would satisfy ADP, owners could defer max. Plan would still satisfy TH with SH contribution, though none would actually be given unless a NCHE was hired. Thoughts? Something I'm missing?

Has anyone else gotten a slew of IRS late notices this past week? I have had numerous clients receive late notices already. They all seem to be in error as 5558s were timely filed, and the 5500s were as well. Some of the notices are dated before the 15th, during the middle of the government shut down. I know much of the notice process is automated, I guess I didn't realize that they would be going out even during the shut down. Regardless, they don't appear to be correct, and are a pain. Thoughts?

Thank you everyone for the responses. My 2 Cents, yes, that is what I was trying to say both in regards to the HCE and the amendment question. I wondered if the amendment timing was problematic. I am less concerned about the permenancy issue as the plan has been around since 2002, and my understanding was the IRS was more concerned for plans that were less than 5 years old. But please correct me if I've misunderstood that. Effen, yes, the accruals had no discrimination issues when earned, so I am just concerned about the amendment removing the future benefits to the NHCE.

Is there a discrimination issue with freezing a CB plan where the only HCE/Key has fully accrued benefits, and the other participants have not? It is a small plan, just a handful of participants, and the owner won't receive any additional benefit accruals, so any contributions will really be going towards the other participants. No accrued benefits would be cut back, but I feel like freezing the plan would disproportionately affect the NHCE since they would be the ones losing out on the possibility of future accruals. But I seem to think that it doesn't matter, since the plan could terminate, in which case the result would be the same. I apologize in advance, my knowledge of cash balance plans is obviously very limited. Thoughts?

What is the correction when a sponsor signs a 401(k) plan document (after the stated effective date in the document), but then never sets up accounts or arranges deferrals? Is it simply the missed opportunity to defer under EPCRS? What if the plan also happens to be a SH (3%) plan?