RatherBeGolfing

If 1/1/17 isn't feasible on your or the clients end I can understand a different solution, but it certainly isn't necessary in order to comply with the law (and in my opinion will make things more complicated than they need to be). For purposes of the safe harbor notice, if a PSP becomes a 401(k), you treat it like a new plan because the participants are treated as newly eligible for the 401(k) portion of the plan. Therefore, if you amend between now and Jan 1, 2017, you are ok as long as the notice is distributed ASAP. You could not do this if you had an existing 401(k) plan. As for the trustee vs participant directed, that amendment is not a prohibited mid year amendment per Notice 2016-16, so you would be able to make that change during the plan year. I still think that is the easy way to go. Amend now to add 401(k) and SH feature as of 1/1/17 Distribute SH Notice with SMM ASAP after the amendment. schedule employee meetings when possible in 2017 amend from trustee to participant directed during 2017

Why not add the SH to the PSP on 1/1/17 and distribute the notice immediately following the amendment that added the SH? As pointed out above, 1/1/17 effective date is not an issue as long as you don't have an existing 401(k) plan. Add the 401(k) and SH features now and you can treat the plan as a "new" plan. Bottom line, you don't need the to wait until sometime in 2017 or 2018 to add the 401(k) feature or the SH feature. You also don't need to have two plans. The simplest solution is to amend now, distribute the SH notice now, and start as a SH plan on 1/1/17.

Great point! Perfect example of the related issues discussed above LOL

Hey! I have an Owners' (k) document :-) LOL The adoption agreement is only 6 pages (a plus), but you are constantly reminding the owner that as soon as you hire another employee AND they become eligible for the plan, then you're required to move to a full document. It IS another thing to monitor in order to prevent an automatic failure upon another employee becoming eligible. It's always good to have it amended to a full fledged document prior to the new employee becoming eligible. BTW, I cannot speak for anyone else, but I enjoy how often we go beyond merely answering the question being asked and offer insight into every related issue as well :-) That has to be worth something. Good Luck! The conversations and tangents are what makes this forum so great. I can easily look something up in the EOB or "who is the Employer", but when I do I am focused on that one thing, so to have someone else bring up a related issue I hadn't considered yet is invaluable As for the Owners (k) document, I wouldn't worry about your clients since you are a professional in this space and I know that you know what to look for and what to look out for. My concern are those people who are tossed a blank solo K adoption agreement from investment firm XYZ... I see the appeal of a super short adoption agreement. We only do one participant plans when a provider we work with needs it as a favor, so in those cases I simply use a full volume submitter and move on.

Belgarath is of course correct. I have seen some financial institutions actually draft their "special solo-k document" to only allow for one participant plans. I always shake my head when I see it since you now add a document failure for what could have been addressed by simply not filing as a one participant plan.

You correct first, file second. Yes, the correction program is VFCP. For simplicity, I would suggest using the VFCP calculator to figure out your lost earnings. Also, if you get your correction done before the end of the year, 2016 will be the only 5500 that reports the failure. If the correction is made in 2017, you have to report the failure in both years. Filing with VFCP will not increase your chance of being audited. However, taking steps to make sure that the failure does not happen again is part of your correction. If the DOL sees the same failure year after year, then your chance of an audit will increase as they will be wondering why the same failure keeps happening.

No, you cannot rely on the 15th day of the month following for a timely deposit, no matter what size you are. The deposit of participant contributions must be made on the earliest date on which such contributions or repayments can reasonably be segregated from the employer's general assets. (§2510.3-102 (a)(1)) This means, plain and simple, that you have to make the deposit as soon as you are able. In most cases this will mean the same day it is withheld from the employee’s paycheck. There can sometimes be legitimate reasons why the deposit cannot take place on the same day or maybe the day after. In those cases, a facts and circumstances test will determine whether the delay was reasonable and the deposit couldn’t have been made earlier than it was. There is an “outside window” or maximum time period for making deposits. This maximum time period is the 15th day of the month following separation from the employee’s paycheck. This does not mean that as long as you make it by the 15th of the month following you are ok. It means that even if a tornado swept up your HR person and dropped them on the yellow brick road, the deposit will never be timely if made after the 15th of the month following. The exact language is You are stuck with late deposits that you now need to correct. Don’t panic though, the correction is a fairly straight forward process. You calculate the lost earnings owed to the participants, pay a small excise tax, and possibly file with the DOL. A good practitioner will be able to do this for you for a reasonable fee. Does your plan attach an audit with it’s Form 5500? If so, I can guarantee you that the independent auditor will not sign off on the audit without correction.

The outside window applies to small plans as well. The 100+ plans are just not eligible for the 7 day safe harbor. I agree with don't panic. But they should correct and report.

Well you shouldn't ignore the outside window, but I would say that there is a better chance of a blizzard in Florida than the DOL concluding that a months delay due to an oversight is timely because it fit the outside window... My understanding is that the outside window was never meant to determine what was timely, but rather determine what is never timely. Anything outside the outside window is deemed to not be timely, no matter the facts and circumstances.

None taken. If I were you i would call the IRS to get an explanation. Don't risk your ERPA on your 10/1/14-9/30/17 interpretation.

No but the FAQ and the Publication 5186 may help clear it up for you. Your renewal cycle is 2014-2017. 2014 is your first year. You start in January unless it is your first renewal and your initial enrollment was mid year in which case it is 2 credits per month active. Second year is 2015, third is 2016. Your renewal application period is April 1, 2017-June 30, 2017, and the IRS will issue your renewal before September 30, 2017.

I'm not an actuary, nor have I ever played one on TV. However, I have been told by several actuaries that I consult with that this is not a permanency problem.

LOL, no worries. I had the same questions last renewal cycle so I spent a lot of time getting clarification from the IRS.

1/1/2014 - 12/31/2016. It would only be different if it is your first renewal.

Yes, it was explained to me that as long as you satisfy your ERPA CE requirements you are deemed to satisfy your ASPPA CE. In practice, you will almost always meet your 40 credits for 2 years with ASPPA if you also meet your 16/year 72/ 3 years for ERPA.

I think the chance IRS accepting a session that cannot or will not offer a letter of participation is questionable at best. I wouldn't feel comfortable with that risk knowing I could have gathered the credits elsewhere. Since you are an ERPA, you automatically satisfy the ASPPA CE requirements and if audited by ASPPA you just provide your current enrollment card.

How is the auditor challenging the entry dates? Are they saying someone should be enrolled on their eligibility date because the payroll company can calculate immediate changes to deferral rates. I have had my share of arguments with auditors but this one has me scratching my head. Basically the auditor is looking at entry dates and payroll dates. They believe any payroll date after the entry date should include deferrals unless the participant has opted out. (And I agree with this interpretation.) The payroll company is looking at entry dates and pay period end dates. Because payroll is 5-6 days later than the end of the pay period, some people are being started one pay period later than the auditor thinks they should be. And the payroll company is also randomly starting some people earlier than they should. Ok. I don't envy your situation. I would call the inconsistency an administrative delay, but that may not pass the auditors test.

I disagree. No such thing as a 1099 employee, so the CFO would be a terminated employee just like any other employee. I agree. It is a BRF failure, and a failure to follow the terms of the document. Bottom line, can't be done in the manner proposed.

How is the auditor challenging the entry dates? Are they saying someone should be enrolled on their eligibility date because the payroll company can calculate immediate changes to deferral rates. I have had my share of arguments with auditors but this one has me scratching my head.

I don't think you can get more than one PIN. And they are probably not using a PIN for the plan EIN since it is de-activated, right?

Personally, I would just sign up as a batch provider with EFTPS, get a "Reporting Agent Authorization" (form 8655) from the client, and make the deposit for them. After that, you would be prepared to handle the issue if it ever came up again. It is free and simple to do. I have never had a broker who was actually allowed to do a tax deposit if it wasn't done through their corporate channels. That could simply be because of the brokers I work with, but I have always been told that they are not allowed to assume that liability. As for deposit coupons, can you even do that anymore? I thought they were phased out after the electronic deposit requirement and after a certain point they would no longer accept coupons...

Yes you can file the 5558 now There is really no reason to NOT file it now if you know you will need the extension. I know TPA firms who submit all their calendar year 5558's in early February. No, it will not create a flag in the IRS system, other than extending your form to 8/15/17. you are correct. You mark the 5558 if no 5500 has ever been filed, you mark the 5500 when no further 5500 will be filed.

Yep. Not arguing that it should be done, just that it can be done. 99.9% of the time I would advise a client to stick to the 30 days and make change next year.

I am going to respectfully disagree with ETA to a certain extent. As practitioners, we generally speak of the deadline for the SH notice as 30 days before the plan year, or December 1 , 2016 in this case. However, the law simply requires that the notice is distributed within a reasonable period before any year. A notice distributed 30-90 days prior to the beginning of the plan year is deemed to meet the reasonable time period requirement. That does not mean that a notice does not meet the reasonable time period requirement because it is less than 30 days. You would need to satisfy a facts and circumstances test to show that your notice period was reasonable. I am not saying that it is reasonable in the OPs situation, but if the circumstances were right, it is possible that it can be.

Professional Limited Liability Company. Basically an LLC for licensed professionals. (Edit: not irrelevant at all. As far as I know PLLC would be taxed the same way as an LLC. In some states, I have seen clients that were partnerships switch to PLLC. I believe the use of an PLLC is common when an LLC is not allowed for your type of business.)