Jim Chad

One of our tax clients has a 401(k) with Principal. This client told the CPA that he amended his plan to allow them to make deferrals through April 15th. Furthermore, on April 2, 2012 he wrote a personal check for about $10,000 and asked the CPA to amend his w-2 to count this as a deferral When I said this wasn't right he checked with "Principal" and they said everything is fine. Does anyone have nay idea what could be going on here?

I think it would have to be "top hat only". But I'm guessing here.

It is still the same employer, so this seems really odd to me.

I just received a call from an Investment adviser that suggested using Voluntary after tax contributions.... distributed in service to an IRA... then convert the IRA to Roth. I have not worked with voluntary after tax contributions in years. Please confirm my memory regarding voluntary after tax contributions: 1. Are they subject to 415? I think yes 2. Are they subject to 402(g)? I think no 3. This plan has an enhanced Safe Harbor Match? Am I still free of the ACP test? 4. If the owner is the only one to do this, do I have any coverage or discrimination problems or tests to run? How about benefits, rights or features? 5. Any other amendments needed other than allowing voluntary after tax and in service withdrawals? 6. Other?

I don't think you would pro rate. What does everyone else think?

Is extended due date for filing the 5500 for the 6-30-11 PYE, April 17th?

Instructions say that to report mutual fund indirect comp on Schedule C we only have to report name and employer ID of entity that provided prospectus. Would the entity be the employer in a single employer Plan? Or would it be the Mutual fund company? or other? (Not recordkeepper platform, just some of the money invested in mutual funds.)

I think Mbozek is right on everything he says about a redo. The question is: is this a redo or correcting a screw up at the financial institution? If the IRA owner has any paper work or correspondence showing the the original instructions were for Roth, I would push them to fix their mistake. Whether this is one year old or 10 years old, the mistake needs to be fixed. If all of the original paperwork says traditional IRA, than I think Mbozek is right.

A SEP does not actually have an exclusive Plan rule. It is only the IRS form that forbids having another Plan. If you use a mutual fund prototype for the SEP, it will probably work.

ERPA allows the client to authorize me to deal directly with the IRS.

I think they may be correct. Section 415 limit isn't 25 % of comp up to $30,000 anymore. Now it is 100% of comp up to $50,000. And section 404 says that deductible amount is 25% of total comp of everyone eligible. So I can imagine an employee getting a 30% contribution in a cross tested plan.

My Instinct says yes. I will be interested to hear what others think?

If this passes coverage, I think you are all set. It is a safe harbor formula as far as benefits rights and features go.

Sorry about your problem. Would it be better to delete the whole plan and start over?

I agree with ERISATOOLKIT and Pensionpro. As ERISATOOKIT says if you try to do mid year calculations, you will go crazy (crazier?). As pensionpro say, once the year has ended you do the one calculation for the year. Then for a part year match, you would take the fraction of the year the match was in place and apply that to the owners comp.

Was the 2011 top heavy contribution made and now we are talking about the 12-31-11 calculation saying that it is top heavy this year?

I mostly want to hear if anyone knows a way to legally do this. It seems ridiculous to me that it can't be done. But as far as I know the answer is no. And this is a big deal for the Catholic Church right now. Any ideas?

I think the reduction by the highest loan in the last 12 months only deals with the $50,000 limit....not the 1/2 of vested balance.

FWIW I think this comp is eligible for deferrals.

How will John Hancock or American Funds get the last of their fees? From my experience it has been form the assets of the last Participants in the plan. It sure seems to me that it is the trustees duty to NOT take his money out before all fees are deducted.

FWIW I agree with you completely.

I cannot find anything in the AA or Doc that says I can't do this. Am I missing something? AA says 1,000 hours for Discretionary Non-elective. Owner told part timers they would get it for 2011. He wants to keep his word. Can we pay a QNEC instead of a Discretionary Non-Elective to everyone? Would I have to track this separate from the 3% SHNEC they are getting?

Belgarath, I LOVE this idea because I am a TPA and I charge a lot for loans. No I am not serious. But it is fun to think about.

Does anyone see a problem with the 401(k) loan when the primary residence is changed to a rental? He doesn't want to sell right now because of the market. Second question: Can he take out a second home loan to purchase a home in the town he has been transferred to?

Broken record time = check the document. FWIW most of my docs allow force out and I always do. Remember to do any RMDs before rolling to an IRA..