RatherBeGolfing

I agree. I would also ask why you would want to remove the option. My personal opinion aside, it is such a rare issue in my practice that it would be much easier for all my plans to retain the option than remove it.

What kind of delay are you expecting? Contributions are not late just because they are not deposited immediately IF there is a valid reason for the delay. So in other words, if the deposit is made as soon as possible during the payroll switch, you should be fine. A few things to consider: 1. A delay can be reasonable if you are switching providers 2. The deposit should be made as soon as possible 3. The delay cannot be more than the 15th day of the month following segregation of assets, even if you have a reasonable cause for the delay. Edit: A black out notice is not needed for the timing of the contributions, but may be needed if the switch also impacts the participants ability to direct their accounts.

You are absolutely correct. It may be inconvenient and costly to recreate the wheel, but you really have no other choice. This is information they are required to have and are required to provide on the return. Absent a fire/flood/[insert disaster here] that destroyed all paper and electronic records of the documents needed, I can't think of a reason why it can't be done.

I can't put my finger on the number but I believe you can call EBSAs main line and ask for the appropriate regional office or the EBSA employee reviewing your filing.

In my opinion, no. The TPA has no discretionary authority here. All you are doing is making an electronic deposit of the withheld taxes via EFTPS. Do you add a layer of liability because you accept the responsibility to make the deposit? Yes. But as service providers we take on responsibility all the time, this is just another example of it. you should be covered for any potential loss due to employee theft under your normal professional policy (and the odds of one of your employees escaping with a tax deposit are probably extremely low)

I will echo Bird's comment. Do not use the employers EIN, it WILL get messed up when you get the point of doing Forms 1099, 945, 1096. Other than that, it is very simple. 1. Set up a bank account for your firm to use as dedicated account for tax deposits 2. Set yourself up as a batch provider with EFTPS (simple and free) 3. Have the client execute Form 8655 to authorize you to act as a reporting agent. Fax the form to EFTPS to enroll the client using the PLAN EIN 4. tax check is paid to you for the electronif deposit 5. submit the taxes to EFTPS on behalf of the client It really is very simple and does not take much time at all. We do this for all of our non-platform clients and it is a great way to show clients how you make life easier for THEM

You are absolutely correct, both on the free market correction and possible claim for damages. I can still empathize with the employer who picked a bad service provider though

You make a good point (or points rather). However, I still feel a little bad for the small business owner who gets hit with a big required contribution when its due to poor plan design and bad communication from a "service provider".

Absolutely. What I really wanted to say (but I was watching college football and I'm lazy) is that there are better ways to word the exclusion in the document so that you only exclude those you want to exclude and avoid having a surprise down the line when someone else falls into that category. To me, it is simply a matter of being clear and keeping it simple. In this case it is pretty clear cut. If she is an owner under California's community property laws, then she is not excluded. If she is not an owner under CA law, she is excluded. It sounds simple, but we also have to remember that just because it is CA it doesn't mean it is community property. So the real question is, is she an owner under CA law? J

I'm not sure there is enough information here. In a community property state, property can be owned separately, either because it was one spouses property before the marriage, or because it is treated as separate due to an agreement to treat it as such. Does she have 50% interest under CA law? If yes, then I would say she is not excluded. If no, then she is excluded. Either way, this is a perfect time to amend your plan language to remove any confusion

To take that thought a step further, if you have eligible participants in 2016 but no contribution for whatever reason, the DOL/IRS would still expect a form 5500 right? If a 5500 is required, I don't see how they can possibly say that the plan did not exist in 2016.

I'd say you are correct, the plan is not top heavy for 2017. Playing devils advocate, could the IRS/DOL claim that you established the plan with no contribution in 2016 with the sole intent of avoiding the 2017 top heavy status? Not even sure if that is a winning argument for them though, there is no requirement that you make a contribution during the first year.

More important than fairness, is understanding why it happened and how to prevent it. This type of surprise is completely preventable. This type of situation should have been considered when the plan was created, and it should have been designed to either avoid it altogether or at a minimum make it very clear to the sponsor what they can and can't do in order to avoid a "surprise". Obviously, service providers can only do so much, and sometimes the client completely disregards what they have been told. In any event, it will never be a surprise if there is proper planning from day one. At this point, you contribute what you need to contribute due to top-heavy minimums and you sit down and re-design the plan to prevent this from happening in the future.

No... Not knowing the rules is not an "administrative error". An administrative error would be something like depositing 10,000 instead of 1,000 because you added an extra 0 by mistake. Finding out that you messed up is not an administrative error.

You can't disregard prior service because you did not have a 1 year period of severance (even if that is what the employer wants to do). Because the employee returned from severance within 12 months, he is credited with service from 3/15/14 to 3/24/16, with an entry date of 1/1/16. See Treas. Reg. §1.410(a)-7(a)(3)(vi) (Service spanning rule) (vi) Service spanning. Under the elapsed time method of crediting service, a plan is required to credit periods of service and, under the service spanning rules, certain periods of severance of 12 months or less for purposes of eligibility to participate and vesting. Under the first service spanning rule, if an employee severs from service as a result of quit, discharge or retirement and then returns to service within 12 months, the period of severance is required to be taken into account. Also, a situation may arise in which an employee is absent from service for any reason other than quit, discharge, retirement or death and during the absence a quit, discharge or retirement occurs. The second service spanning rule provides in that set of circumstances that a plan is required to take into account the period of time between the severance from service date (i.e., the date of quit, discharge or retirement) and the first anniversary of the date on which the employee was first absent, if the employee returns to service on or before such first anniversary date.

Bad idea. Also, I don't think the sponsor can force a participant to set up their own account. If the participant does not act, the sponsor will have to. After establishing an account at XYZ because the participant failed to act, you would have to make sure the assets go into a suitable default investment.

No. Making deferrals and directing investments are two separate issues. If investment direction is THAT big of an issue to the employer/plan administrator , they should simply make the plan trustee directed.

I agree with Lou. HC is attributed 60% of company I's 60% which is 36%. Add that to the 40% direct ownership, we still don't have enough to meet the 80% threshold.

Ah yes, gotta love the "here is a document, put some X's somewhere and keep the copy" approach.

Correct. Years prior to 2012 should be submitted using the current year 5500. That is funny about the selection tool, it couldn't have been that much more work to code it to work for pre-1999 years EFAST2 FAQ: Q4 https://www.dol.gov/ebsa/faqs/faq-EFAST2.html

Hey MoJo, This would have been mutual funds. As I recall, the were told that they could do it, but since they never actually went through with it it is possible that it would have been nixed at a higher level. J

I had a situation that was a little different, but it may be helpful. I have a client, a fairly large medical practice with 10+ physicians and about 70 employees. The practice does very well. During a yearly meeting, the physicians asked whether they could pay all investment expenses out employer assets rather than from the investments. They never pulled the trigger on it but we verified that it could be done. We looked into it with the adviser and the record keeper and indeed, there was a way for the employer to get quarterly invoices for the amounts that would have been fees per the expense ratio. The fee would never be deducted from plan assets, and the employer gets to write them off as a corporate expense. I agree with ETA though, I don't think you can do it by reimbursing fees already paid by a participant and not consider it a contribution.

She can get 15%.

Just wanted throw this out there for discussion. Per the Judicial Branch of California website http://www.courts.ca.gov/1037.htm. Obviously this is just what their website says, I didn't look up the actual statutes that would govern annulment, but still... Not sure if that matters here, but if the effect of annulment is that the marriage was never legal, what would be the outcome if a participant who is not married elected to take benefits based on the life of the participant and a named "spouse"? Once it was discovered that this person was never married to the "spouse", would it be treated as a single life annuity or use the original calculation but just pay over the life of the participant? I suspect that no payments would be made to the "spouse" if it was discovered that there was never a marriage.

Just thinking out loud here because we only have some pieces of information to go on. IF the plan requires that a loan balance be paid off by your vested account balance upon termination, they would apply your non-loan assets to pay off your loan. Basically, if you owe $5,000 on your loan at termination, they apply $5,000 from your vested balance to pay the loan off. You are then issued a 1099-R for the $5,000 because it was "distributed" in order to satisfy your loan obligation. You don't get an actual check for the $5,000 because it was used to pay off the loan (and you already have the funds from the loan). This would be reported on the 1099-R as a code 1 if you are under 59 1/2, without the extra L that would be used for a loan default.. The "we can do it when we want" statements are odd though, I'm pretty sure you were talking to a call center.