doombuggy

Thanks for the laugh....I could use it when I still have about $2200 in vet bills from my diabetic cat and now am facing a $2500 deductible for my 3 day sudden hospital stay right after Christmas. The allocation is comp to comp, and if owner has comp that is less than his expenses, then it's $0 for him and $7200 spread to two newbies. Not really fair given the circumstances. Now that was as of 12/31/13. I don't know if we terminated the plan in 2014 if he has comp greater than expenses, the answer would change, but these two newbies would still get money. and the owner is still stuck taking out his RMD. I guess the only other solution is to keep the plan going until the forfs are all used up in fees. gotta run, IRS phone forum...

I am trying to figure out what to do with this plan's forfeitures that should have been used long ago, long before I came to work here and took over this plan. the broker/cousin has indicated that the client would not be happy to reward such a large sum of money to two employees who are new. I am trying to find some other avenues to spread these forfs as they should have been done in the past. I guess I will have to bring this up at next week's Sungard conference.

No, the plan has a 6 year graded schedule. Of course, if they terminated the plan, the vesting would excelerate to 100%. I guess the only other option for the money is to return to the plan sponsor and they would have to pay the 50% excise tax, but I really don't want to go that route.

Sorry, I can't seem to edit my post. The other employee terminated in 2010 and was paid out. I forgot to type "terminated" int he sentence...

Well, the two employees who are currently eligible (one on 7/1/13 and the other on 1/1/14) are new and the owner was not interested in giving them an allocation (according to his cousin the broker). In 2007, the plan consisted of the owner, his 2 sons, his sister and another employee. In 2009, the plan had the same make up. The other employee & was paid in 2010, the sister was terminated and paid in 2011. currently, only the owner and the sons have assets in the plan. There would not be a problem paying out anyone (such as the former ee and the sister) from the pooled account, even if the balance was small. I don't think they want to give these forfs to these two new employees. My thought on looking back to 2007 and 2009 to correct is because that is when the forfs should have been used - the bulk to 2007, when there wasn't an allocation at all and then the smaller allocation in 2009, again when there was no allocation (but there was for 2008, go figure). I think they would be happier if we went back and "self - corrected" by allocating it for those 2 years, as it should have been done. I just have never done something like that before (cause I always get rid of forfs after that year is up!) and wasn't ever sure if it COULD be done that way?

Apparently, once any forfs are used to reinstate an account: any remaining Forfeitures may be used to satisfy any contribution that may be required pursuant to Section 3.8 or 6.10, or be used to pay any administrative expenses of the Plan Our fees aren't going to amount to $7200, even if they do terminate this plan, which is highly likely. Our thoughts were to allocate the forfs to those that would have gotten them in say 2007 (the year after the initial deposit) or 2009 (the year after the 2nd deposit, much smaller amount). or maybe both?

I have a plan I took over that has over $7200 in forfeitures that needs to be used as an allocation/spread to the plan. the last year this profit sharing plan made an allocation was 2008. the principal owner is basically retired and his current Sch c gross is less than his expenses. His 2 sons terminated 12/31/2008 and operate as sole props. Owner pays the 2 employees of the office. the bulk of these forfs occurred in 2006 plan year with more being added in 2008. the account has gained since 2006. How do you think we should allocate the forfs? This is a bit ugly....thanks for your thoughts

Client terminated their plan effective with 2012 PYE of 8/31/13. The 5500 needs to be amended as they apparently had a bond and "no" was checked to this question. Can we still file using the 2012 form, or do we need to use the 2013 form? I still have to file their final for 2013, as they have liquidated all assets at this point.

My new employer has thrown some 403(b) plans at me - what testing is required for them? The plan I am currently trying to work on is deferrals (traditional and Roth) only. thanks for your help - I can't seem to access our online version of the EOB, so i gave up and came to the experts!

I was trying to post a poll but I am not sure if it worked. We currently use Relius for Documents and Government forms, but ASC for reporting/report writer. I used Datair for the past 8 years, half of that time the DOS system, but since 2009, the WIN system. I was wondering what you use in your office?

So the plan contact had an outstanding loan that he received a 1099R for in January from American Funds, as he was not making loan repayments. Apparently (he says) when the plan moved over to my new employer and to a new carrier (AF), "somehow the loan repayments for me stopped" and for another person he mentioned. He wants to know if he can start repaying the loan. My answer would be no, since he received the 1099 already and the info was submitted to the gov't back in February; I don't think there is a way to "undo" the default...or is there?

One of my non-safe harbor plans here at my new job did not send me the census data for 2012 until after 3/15. the plan does fail the test. So I am sitting here with a 5330, trying to figure out which "section" number this falls under. I have only completed this form once, and not for this reason. the excise tax I need to caluclate is 10% of the total refund (which includes the earnings), correct?

I have moved to a new employer and was given a plan that has 4 possible loan defaults. One of the participants who was terminated, has taken a distribution this year and should be receiving a 1099-R for his defaulted loan. One participant is terminated and did NOT take a distribution from American Funds, where the assets are held. Two other participants have loans that have not had repayments made in 2012. I do not know if these participants are terminated or not, as we receive the census annually. It is possible that the employer has stopped sending in loan repayments (whether or not they are being withheld from the paycheck). No deferrals were made in 2011, not sure about 2012 (this is for the plan as a whole). Should these three participants be receiving a 1099-R from American Funds for their outstanding loans in January?

You might want to post this on the ERPA group on LinkedIn. Is the check still outstainding? that might go along way to helping you "prove" that you sent it before the deadline.

We have a new client that created a profit sharing plan effective 1/1/2010. He was the only person eligible in 2010 and he rolled over about $232k in IRA money into the plan. He was told he didn't need to file a 5500-EZ, since the account had less than $250k in it on 12/31/10. The problem is, he anticipated putting in a $45k profit sharing allocation for 2010, which put him over the $250. He didn't have a TPA working for him at the time, so there was no one to tell him he actually SHOULD have filed that 5500-EZ. We have been hired by him as the TPA and I want to get his filings straightened out. He has an employee that came into the plan in 2011, so he is required to file a 5500-SF now. I am concerned that fact that there is a beginning balance (over $250K) on 1/1/11 on the SF will trigger an audit. There was another thread that was started by someone else, but gave me an idea for this plan. Since 2010 was the first plan year, and the plan only covered the owner, and the plan (on a cash basis) had under $250k in it, no filing was required. If I show the "cash" basis as a beginning balance and count the 2010 profit sharing that was paid timely in 2011 as an additional contribuiton (either in the er contribution line or on the other line in #8) along with the contribution for 2011 (we usually treat all plans on a accrual basis here) would that suffice as a correction? Or how else would you recommend to correct?

I have the same problem as the OP. I got a plan from an old ER of mine (BISYS) and the 2010 5500 is on a cash basis. The plan sponsor deposits the s/h annually, and did so timely in 2011 for 2010. But we treat the plan as accrual, so I need to account for those deposits in 2011 on the 2011 5500. I was thinking of putting them on the "other" line as well.

OK, I see in Chapert 11 of the EOB (2009 edition) that I was correct about the due date deadlines. I am going to confirm with the client that their corporate is also 6/30 fiscal year end and that he is filing as a corp. I had one of my other 6/30 fiscals trigger a prohibited transaction but he files as a sole prop on a claendar year basis, so the 5330 we filed was not late (filed recently instead of by 1/31 like I thought it needed to be). Still looking for any correction thougths, assuming that the corp is on a 6/30 fiscal....

I have a fiscal year plan that I discovered made their 2010 PY (which ended on 6/30/11) safe harbor match deposit on 5/16/12. Our records indicate this PA files as a corp and they are also on a fiscal year. We were having a discussion as to when the SHM deposit needs to be made. I thought it was required to be made by the end of the following plan year (6/30/12 in this case) but to be eligible to be deducted it needed to be deposited by the time the corporate tax return was due, including extenions. The company currently has a sole owner; the partnership was disolved in December and he's taking on a new partner next week apparently. I am reconciling the plan's assets a little early since the owner is asking for a loan and I noticed this deposit. If the deposit is considered late, what is the correction? Thanks for your thoughts!

We have the 2007 and 2009 versions and I was able to find what you quoted above, thanks. I have since found out that they have an intreanet, but will forward all info to him so he can decide how he wants to provide the SAR. Thanks again!

Client just asked me if he can email this form to his participants. I am getting ready to leave for an appointment, but was on my way to check the instructions. Would he be able to do this as long as they could respond that they read it (you kow, that option you can click in Office that requires that pesky box to pop up when you receive the email)? I don't think they have any terminated participants, as the plan just started last year, but I would assume that he must mail those. In this electronic age where we even get notice of paystubs online, is this ok? I do not know if they have a company intranet, now that I posted that comment about viewing the paystub from my other job online. I can view it on the company intranet, since I have direct deposit.

The client called me yesterday to tell me he got the distribution form and was puzzled. His broker & CPA told him that he did not have to take an RMD from the plan since he was not retired. I asked him if he was a more than 5% owner of his company - his answer was yes. My response was then "yes, you have to take it because you are more than a 5% owner, regardless of your work status." He then proceeded to tell me that he rolled a great deal of IRA money into the plan this year. While I calculated an RMD on his 12/31/11 balance, shouldn't someone calculate an RMD on that IRA money that he has now rolled into the plan? It was in an IRA (assuming just one, but don't know for sure) on 12/31/11 and you have to take an RMD from your non-Roth IRAs, correct? We are talking close to a million dollars apparently. I received a voice mail from the broker who is on vacation watching his child graduate from law school....can you believe this?

This year seems to be my problem year with clients. I handle the 401(k) PSP for this client. They also have a DB plan which has terminated. In fact, my co-worker sent the distribution instructions out earlier this week to find that the funds were already issued out. My plan is valued annually at year end. it allows for deferrals and has a safe harbor match. These monies are placed into individual accounts held by the broker at Schwab. The plan has a pooled acocunt for the profit shairng allocation. While waiting for the client to confirm the contributions for 2011, I was working on reconcilation of the plan. I had previously ask for an explanation as to why one of the participants took $1000 out of her individaul acocunt right before Christmas, but never got an answer (which didn't surprise me, this client is .....and the broker/CPA is no better). The client has asked to terminate the plan in 2012 and we have not started that yet, as we were trying to finish up the 2011 year first. I did some recon for 2012 and see that on 3/1/12 the client allowed the same woman to take an additional $2312 out of her individual account. I emailed the brokers & CPA about this and the response I finally got was there was a letter of instruction from the client/trustee authorizing that the distribuitons be made. Not the broker/CPA has confirmed that no 1099-r was issued by them for her $1000 distribution done in 2011. The plan allows for hardships only - no loans and no in-service w/d. She continues to make deferrals of $69 per pay it looks like (there are deposits going into her individual account, and the SHM is paid annually). The disbursements total about $200 more than the deferrals she put in for 2010 and 2011 (she became eligible for the plan in 2010). It is possible that she put enough deferrals into the plan in January & February 2012 to make that difference up (we only receive the census data on an annual basis). What are your thoughts on handling this situation? If it is 2 hardships, she has violated the requirement of stopping the deferrals. I am making an assumption that the money was for one of the 6 h/s reasons, but knowing this client, it could be for any reason, she just asked! Or do you think these are prohibited transactions and need a 5330 for each? Edit to add that the plan allows for you to take a h/s on the non-elective but only if you are 100% vested, which she is not. She doesn't have any r/o money in the plan from which to take a h/s from either.

I have cranked out many RMDs (more before the changes of 1996), but I can't ever remember one so close to the end of the year like that. and I do agree with Tom. I usually encourage my first year RMDers to take the first one by 12/31 for the same reason he sited. thanks for your thoughts!

The plan is made up of the owner, his son and an employee. the plan is a 401(k) with safe harbor non-elective. they have individual accounts at Valic, but we do only annual administration on this plan. Owner was born on 6/23/42. This means that he turns 70 next month; it also means he turns 70 1/2 on 12/23/12. So the question is should his Reuqired Beginning Date be 4/1/13? If I am going to caluclate his RMD, I need to use the 12/31/11 balance then? It just didn't sound right.... Thanks for your thoughts.

I have to say here that I recently ran a contribuiton calc for a 401(k) PSP that had a person retire in 2011 and as such, she was entitled to a P/S allocation. She was born in 1945 and retired in September 2011 at the age of 66. She reached NRA the year before (age 65) but continued to work. I did not import the original census, but I am guessing that our president (who wokred ont his plan over the New Year's weekend for the owner, as they have a cash balance plan also) marked her event date as "retired" since that is what she actually was. If that had NOT been done, this woman wouldn't have gotten the allocation, as the plan has a last day rule. It's been 8 years since I have worked on Relius - I alwyas felt it was better, but our actuary doesn't.