RatherBeGolfing

Based on that language an extra $20 a week does not sound unreasonable to me.

Check the loan policy/procedures for prepayment language. Some say no prepayment, some say only full prepayment, some say partial prepayment allowed.

I can see the merit of both arguments, but I don't think you can prove or disprove either argument based on the sources in this discussion. I have sat through many presentations and the like on earned income and contributions, and I can't remember any of them arguing for the limited position. I did find some old IRS EP training material on deductions that is somewhat interesting. Full Document The relevant section can be found on page 29. In example 2, the reference to the allocation is simply "according to the plans allocation formula". I would expect some kind of caution or mention of limiting the allocation to the sole proprietor if that was the position of the IRS.

Its up to the client, but I would still recommend filing VFCP. My view on this is pretty simple. If the amount involved and the excise tax is so low that its an argument for not going through VFCP, the failures are usually so isolated and simple that it inst going to be that difficult or time consuming to go through VFCP. If it isn't simple and isolated, then you are probably talking about many failures with very small amounts. If you have that many failures, your focus shouldn't be the small amounts involved.

The EOB section above (Ch 7 - Section XVI - Part H - Item 1) is not the only relevant discussion in Chapter 7. I think Item 11 of that same Part H gives a better analysis.

The argument is that without an enforceable agreement to repay the loan, the participant can cease loan payments for any reason. If the participant is not required to make loan payments, it is no longer a loan, it is a distribution. If the participant is not eligible for a distribution, there has been a failure to follow plan terms which is a problem for the plan. The counter argument is that simply defaulting on the loan, even if it is at the request of the participant, does not invalidate the the original loan transaction. That said, it would still be a distribution rather than a loan if the participant never intended to pay back the loan.

I assume it would be a great outcome, especially if you submit many simple matters :)

Wishful thinking, but pre-sorting cases before assigning them could lead to complex matters ending up in pile A (requires more experienced personnel to review and takes more time) and simple matters in pile B (less time)

Do you see any correlation between the complexity of the submission and the response time?

If the document does not have a deemed cash-out provision, an argument can be made for 3 above (or 6 c on the form 5500). This is what Janice said on it in the 5500 manual a few years ago.

Of course. You want your audit to tell you where/what the problems are, not just that there are problems. lets say that an audit is supposed to make sure a big report is free of errors and misstatements. Some things have so many details that it is either impossible to go line by line, or it would be incredible inefficient and cost prohibitive. Instead, you use audit sampling to draw a reasonable conclusion. If you find problems in your sample, you get a bigger sample and continue to dig until you find all problems or are reasonably sure that you have found all errors. If you don't find problems in your sample, you can draw a reasonable conclusion from the sample. This all assumes that audit sampling is appropriate for the objective and that the auditor follows proper protocol that includes risk tolerance and all that fun stuff. For example, I wouldn't just check 10 participants and say they are all good so I can conclude that all participant received their contributions.

Yea you are right, if the plan has a deemed cash out provision, a nonvested participant is deemed to have received a distribution as of the termination date Edit: In my document it is in the forfeiture section "For purposes of this Section, if the value of a Participant's vested Account balance is zero upon Termination, the Participant shall be deemed to have received a distribution of such vested Account"

I could be wrong but I thought they counted until forfeited...

Correct. A 0% vested participant is included in the count for 5(b) and 5(c) until the non-vested balance is forfeited.

at a very basic level, you set sample parameters so that that you can expect your sample to be representative of the population. If the sample is representative of the population, you would have a reasonable basis for a conclusion.

Yes. Yes.

It could be reasonable, sure. If audit sampling is appropriate to the objective, you aren't looking for absolutes, you are looking for a certain degree of assurance.

Is it really reasonable to conclude that there are control concerns with +/- 30% just because your random sample had that issue? Wouldn't a reasonable approach be that the discrepancies in the random sample trigger a larger sample?

The employer could have conflicting data in its files, especially if a lot of it is done by manual input. The employer could have given its vendors (TPA or Actuary for example) information with a typo, or the vendor got the correct information but a mistake was made when it went into its records. Now you have plan data and employer data that is different. I don't think the IQPA would have an outside source to confirm that the employers data is indeed accurate data.

Thanks all. At this point they are still doing an audit to see what looks off, but they asked me if the proposed "fix" was normal. I did suggest an attorney as well, but I have a feeling it will depend on the amounts and how far back this issue goes. Its a major benefits company so I was a bit surprised that they wanted to fix it by simply doing double deductions in 2019.

I did, but I assume it was a roman numeral pun on BGs behalf. 4 Cuban coffees might as well be an IV though ha ha

Especially when you prefer Cuban coffee like me :|

I need IV coffee sometimes...

Thank you. They are digging deeper and have found other discrepancies. Some employees who had less deducted last year actually have excess deductions this year (exceeding current and "makeup" deductions). I'm advising them to audit their books until they are comfortable with a timeline for when issues actually started. It will be interesting to see where it goes...

401(k) client has an issue with its welfare benefits and is asking me to point them in the right direction. I don't do welfare benefits at all so I figured id see with you guys if this sounds like "standard practice". I have a feeling there is fault on more than one party here, but it sounds like everyone involved are just pointing fingers at others. Company offers several different welfare options in addition to health insurance, such as FSA, dental, short term disability , etc. Starting in mid 2018 (at least) through March 2019, some payroll deductions were never made. For example, one participant did not have their dental and FSA deducted from their paycheck starting in October 2018. It was discovered in March of 2019. Dental benefits were paid for and participant was credited with the elected FSA amount, so I assume that those were paid with company assets since payments exceed deductions. The proposed solution is to just double up deductions each payroll starting in April 2019 until the participants have "paid" for the benefits they were credited with. Is this a common solution when you are talking about 5-6 months of deductions spread over more than one plan year? It sounds "fair" that the participants should pay for the benefits they received, but the participants also have a higher taxable income in 2018 than they should had everything been done right. Any input would be appreciated. Thanks.