Jim Chad

I would love to her ideas on this. What does everyone do when they takeover a Plan and no one has a signed copy of the doc starting the Plan? In this case the Plan was started with a Gust doc in 2008 and then an EGTRRA Doc later that year. Two similar problems. One Plan has 8 employees and the other Plan has 230 employees.

FWIW I would think that it would be the same as 401(k) excess deferrals. If not removed by April 15th of the following year, they are taxed twice. They are taxed in the year the deferrals are made. (Yes this would mean going back and amending tax returns.) And they would be taxed in the year distributed. Does anyone know why a SIMPLE plan, IRA or 401(k) would be different?

I agree with the other postings. One more big problem will be someone leaving mid year. At year end, you are going to have to redo a lot to make this legal. And it is likely there will be major problems, not just a lot of work. I sincerely wish you good luck. And you may want to talk to him now about billing by the hour to correct this FUBAR

It is possible the document is written in a way that this might be OK. Is everyone in their own category?

Thanks for the confirmation, Kevin.

Many companies have employees in house do this. FWIW My opinion is that these are services historically performed by employees. What do you all think?

I think I know the answer but can an employer remove "partial withdrawals" and "substantially equal installments" and leave only lump sum as the distribution option? This is a 401(k) Plan.

A man rolled over his account from one companies 401(K) Plan to another. If I have to count this rollover, the Plan is Top Heavy for and not Safe Harbor. He was 100% owner of the old company which went broke. He is now 50% owner of the company which bought the assets of the prior company about 10 years ago. Is this rollover account counted for Top Heavy?

My understanding is that hardship Distributions from deferrals are not eligible for rollover and are subject to voluntary withholding. What do you all think of an administrative policy (not in 401(k) documents) that mandates 20% withholding because it is " so much easier to explain and process". There have been some long conversations with an employee about how much should she have withheld. What do you all think?

A Participant in a SEP is eligible for a first year contribution of $3,000. It is a long story but I want to charge as much as $450 to look for him and if necessary set up an auto IRA. Can anyone tell me if it is legal to take this fee of up to $450 out of his $3,000 contribution?

FWIW I think so. I am looking forward to hearing what others think.

If there is no other common ownership, either directly or indirectly, I believe they are unrelated as stated. If you were 100% owner of both companies, than the rollover would be related.

I agree with 12AX7. A common example is when someone moves to a division that is excluded. They do get kicked out. In your example, unless there is wording in the amendment to grandfather them, I believe some people who were eligible will become ineligible. If they have money in the Plan they will still be counted as Participants for the 5500. In your example, the new rules count unless grandfathering says old rules apply to anyone employed on ______ date.

I am bidding on doing TPA work for a new client. The document says that automatic deferral is 3% with no escalation. I have read and heard a lot about the safe harbor programs. But with no escalation, I don't think this can be a safe harbor Plan. (There is no SHNEC or SHMAC). What notice requirements would they have? Do they still get to distribute within 90 days?

One time when I faced this, I asked what the charge would be for copies of what the client should have kept. I went with a certified check to pick up the documents and she was very nice and helpful. I don't think it is reasonable to expect him to spend the time digging this stuff up for free. FWIW

You said 20 employees are not in it. How many people are employed at this company?

Bird is right. SARSEP is one of the things I was thinking of. I was also thinking about eligibility requirements. They may be very liberal or somewhat restrictive. And you won't know until you read the document.

First, it is not true that everyone must participate. In fact it is likely that not everyone CAN participate. SARSEPs are simpler than 401(k) Plans. But they are NOT simple. The first place you need to start is to look at the Plan document. On the other, I work for a CPA firm and one of the services we perform is to do a compliance check on SEP's. If there is real concern maybe you want to pay someone with some expertize, a few hundred dollars to take a look at this Plan. The IRS started auditing these plans 4 years ago. And some of those audits have turned out very badly.

Did you get margin of 45% of the page?????

ERISATOOLKIT is correct about that rule. The 401(k) Plan does not have a problem that I know of. The question is "Does the creation of the 401(k) Plan disqualify the SARSEP?" And that is a really good question. Does the Plan document say that you cannot have another Plan at the same time or does it say you cannot have another Plan the same year?

What exactly is the problem? Is the TPA now saying that you cannot have a SARSEP and the 401(k) in the same calendar year?

Thanks for the Chuckle, 12AX7. That's what I thought. Next question: They just changed eligibility to 1 year and 1,000 hours. Does this mean that those people that have never worked 1,000 hours in a 12 month period are no longer eligible to defer? This seems to me to be sort of like excluding a division where some employee were eligible to defer. Is being a "Participant" a protected benefit?

If we make ineligible the employees of one department, where most employees work less than 5 hours per week, what do we do with the few people with account balances?

I don't know whether to laugh or cry.....

Correct. There has never been an employer contribution. Needless to say the HCE's and Keys have deferred very little. From what I have seen so far, the testing has been done correctly.