Pammie57

During 2015, match was incorrectly calculated for several NHCE employees - they all received too much match money. My question is - if we move this excess to the forfeiture account - what, if any, earnings are required to be calculated and what is an acceptable method to calculate earnings? What if their account had a loss during 2015? Do we HAVE to reduce the amount moved to forfeiture by the loss? I don't think any refunds would be in order since they were not due this match in the first place. Thoughts? suggestions? Thanks!

We have a participant who has only been contributing to his Roth 401k account for 2 years. He does have a bona fide hardship (medical expenses substantiated with receipts). He has $1950 in contributions and $50 in earnings. Even if he is limited to his $1950 - is he taxed on this distribution since it's only been in 2 years, as opposed to 5 years? I read something about allocating a portion of the ROTH distribution to earnings, and that amount would be taxable, even if earnings are not actually distributed.. I am a little confused on what, if any, is taxable.

A client provided census data on their plan back in February. It turns out that they included some "historical" data (overstated some compensation and deferrals). This of course, affects the ADP test results, and it changes the refunds that should have been made to the HCE's. One HCE's refund is only overstated by $1.94, but the other one was paid $989 too much in corrective refunds. At this point in 2016, what are the options to get this corrected?

Just wondering if I am thinking correctly - NO inservice distribution allowed for safe harbor contributions.....

Thanks!

We have a plan for a sole Prop. Doctor. He has filed an extension on his 1040 for 2015. He has not funded his own $6000 catch up contribution for 2015. Is it too late or does he have until he files his 1040? I can't remember - since I guess his income has not been determined for 2015. He did contribute regular deferrals during the year.

We took over a plan with only 26 participants. The former TPA filed the Full Form 5500 for 2014 (with only 26 participants) They did complete the schedule A, I and R. What would be the reasoning for using the 5500 instead of the 5500-SF in this case?. They have never been a large plan. Could I switch to the SF for 2015 without causing an issue with the DOL/IRS?

It is my understanding that the e-signing credentials obtained from the DOL Efast 2 site are tied to an individual, not a business entity. So the question is, if the plan sponsor changes from a C corp to an LLC, and the same person is the trustee of the new entity's plan - are his old signing credentials still in effect? I would think so, but want another opinion. Thanks

I am looking for a template for the notice discussed in Appendix A of Rev Proc 2015-28. I see in Appendix A the requirements for the notice, but was not wanting to re-invent the wheel, if there was a simple example of that notice. Does anybody have one they will share - or can you point me to a site that has a notice. A large plan client is being audited by their CPAs, and they need to provide this notice to the affected participants as well as making the corrections to deferrals, match and lost earnings.

Thank you for the replies. they are totally unrelated entities.

We have a doctor client who went from practicing as a sole proprietor to becoming an employee of a larger medical practice effective June 1. His net earned income through May 31 is estimated at 171,000. So for 2016 - I am pretty sure he can only defer the $24000 (over age 50) between the two employers" since that is an individual calendar year limit. So my real question is: If he maxes out the profit sharing contribution in his practice.(in effect through May 31) ...and contributes PS of $35000 for himself ( there is NO match)....does that have any bearing on what his new employer can contribute for him as far as any profit sharing they may put into their plan? They are giving him credit for prior service in his old plan. Opinions?

I have a client with a 401k - participants may modify deferrals on entry dates and stop altogether at any time. They can start again on an entry date (quarterly)... they asked " if a participant does not want deferrals deducted from a certain check (ie vacation , bonus, final check) what do we need to do to accommodate them?" It is my understanding that they cannot pick and choose a paycheck, and if they stop then they must wait til next entry date to begin again. Any thoughts on this? They are on a prototype Sungard doc.

Yes - "distribution made be made in lump-sum; distribution upon termination as soon as feasible after termination."

A participant was terminated (fired) on May 2. She is age 56. She has an account balance of $9000 approximately. The plan does not offer an early retirement provision. Her broker's question is whether she meets an exception to the penalty. He is reading PUB 575 page 35. I was always under the impression that unless you were 59 1/2 - if you took a lump sum distribution upon termination - you paid the 10% penalty. Would she qualify for the exception and not have to pay any premature penalty if she withdrew the $9000 in lump sum? It certainly looks that way upon first reading . Am I missing something here? p575.pdf

Can a current regular 401k plan " convert" mid year to a SH plan? If so, do they go back and match the deferrals prior to the date the SH provision is effective? If not, then would there be testing for part of the year? I have looked this up many ions ago and I think they can amend if there are at least 3 months left in the year, but the specifics elude me..... and it is tax season in my world right now..... c'mon April 19....

Does anybody have a good excel worksheet to calculate SE net income ? or can you point me to a site that has something to build upon?. I have a partnership (2 ptrs), and neither made way over 265000, so I need to calculate their income - taking into account their share of employee profit sharing contributions. Thanks!

if a client files an extension on their corporate return for 2015, (they are an S Corp) - do they have until the extended due date to fund the profit sharing contribution to be able to deduct it for 2015? I think so, but want some back up. Thanks..

I have a client who sold off part of their business during the plan/calendar year. Several HCE's were part of the sale and got distributions of 100% of their account. One of them rolled his $$$$$$ to an IRA. The 1099R's were prepared and sent by the platform they are invested in. The plan failed the ADP test....refunds were due to one of the terminated HCE's. I researched and found that he should have gotten two 1099R's - one coded for the corrective distribution as an 8 and one for the amount eligible for rollover. He originally only received one 1099R in January. This is an issue because who does ADP tests mid-year as a rule? Other than corrected 1099 R's - what type of correspondence is the plan sponsor/plan platform/TPA responsible for sending to the terminated participant? is there a standard letter, notice. I assume this should come from the platform, but I found the issue....we are the TPA but have no control over funds. Sorry for typo in title of topic.....

touché........point taken. Thanks for the help. and the HCE's are under 50 so.....I see refunds in their future.

So since nobody deferred in 2014 - then the NHCE percentages are 0% for 2015 test...I assume...then there is no way to pass since HCE's did defer in 2015?.

The 401k Plan became effective 9/1/2014; it is a calendar year plan so a SPY for 2014. Nobody deferred anything until February 2015. During 2014 there was only rollover money put into the plan. Plan eligibility: waived for anyone there on 9/1/2014 Normal eligibility: 6 mos svc and age 21 - monthly entry Plan using prior year testing method for ADP; there is no match to consider... 815 employees worked in 2015 with lots of turnover - not the best plan design ever. There is NO 2014 ADP rate because nobody deferred during the Short plan year. (9/1 - 12/31). So for 2015 - anybody employed on 9/1/2014 is in the test - anybody who meets the 6 months hired after 9/1/2014 is in the test. we know to use the statutory exclusion provision to test those who had worked less than a year. HERE is the Question: **** Could we assume the 3% ADP rate for all of the NHCE's in 2015? (test based on prior year) I hope this makes enough sense that somebody can give me an opinion....Help!

When a participant is receiving a rollover distribution of both Roth and Non-Roth monies (match and profit sharing) are there two 1099R's required? (one for Roth rollover and one for non-roth)...Thanks!

Plan is a 401k with CT PS contribution. When plan first started in 2010, elgibility was 6 mos and age 21. Participant A came in during 2010because she worked 6 months/age 21. She has never worked 1000 hours though (been employed since 2010) until 2015.... The PS contribution requires a year of svc and employed on last day. in 2015 since she finally worked over 1000 - is she eligible for 2015 PS or 2016 PS? There is some disagreement amongst our ranks. Eligibility has now changed to age 21 and 1 yos (since 2012). Comments..cites...

I am never sure when trying to determine who is an HCE - for 5% owners - do we count people who own exactly 5% or people who own more than 5%. I seem to see it described loosely in my reference material. I think it is the latter. (more than 5%). In an ADP test I am running. I have an employee who owns exactly 5% and earned 124,000 in 2015. She is an officer and earned 180,000 in 2014. She is in the process of retiring and socked away the maximum...which if she is still an HCE makes them fail big-time. I think she still belongs in the HCE group for 2015, but am hoping I am wrong..... Any thoughts/guidance/what am I missing here comments would be welcome.

Is it possible for a public school system to adopt a regular 401(k) Plan? If so, are they exempt from filing a form 5500? I don't have any experience with school systems so if anyone has - Id love your feedback. Thanks