RatherBeGolfing

Agreed. Using the facts from the OP, 2018 is not a required distribution year.

@Appleby The ERISA Outline Book by Sal Tripodi

Hope you are doing ok over there Larry.

Here is what the EOB says RMD has to be taken out if it is a required distribution year. Since she is still employed, an RMD is not required for 2018. If she terminates during 2018 after the distribution has been made, 2018 will become a required distribution year, with no assets left to make the RMD. If that happens, the distributing plan is still treated as having satisfied its minimum distribution requirements, but the the recipient plan will have received an invalid rollover amount.

Yea its one of those areas where just because you can do it doesn't mean its a good idea...

Sure it can. If I have age 21 and 1 month of service and change it to age 21 and 1YOS those who have not met age 21 and 1YOS are excluded until they meet the new requirement. I'm not 100% sure if the same applies to a change in entry dates but I can't find a good reason why it wouldn't.

What about the folks hired in July and entered on August 1? Quarterly entry dates are still earlier than the statutory requirement, so they should be able to exclude them as well. Im not sure what they will gain by excluding them for 10 days, but I still think the could if they wanted to.

It is also a good idea to let your clients know that they will most likely get a late notice even when they are entitled to the tax relief, and to forward any such notices to you ASAP so that you can respond. We got a bunch of those after last year's storms for taxpayers who should have been "automatically detected" by the IRS

Since you have never filed a 5500, does the government even know the plan exists? Did you file for a determination letter? Even with a det letter and no 5500, I think the chances of an audit are pretty much non-existent. I would wait and do it all at the same time.

Sort of. 411(d)(6) protects the right to benefits that are already accrued, not the right to accrue future benefits. So, a participant could be excluded until they meet the new eligibility. For a change in the current plan year, you cannot take away the right to a benefit that already accrued when the change is made.

Perfect. Thanks Mike

Yes you are correct. Its fewer than 100 at BOY and 80-120 rule does not apply, so you could have a small plan audit exemption but not qualify for the 7 day safe harbor under §2510.3-102(a)(2) EDIT: You are correct in questioning the 7 day safe harbor for a plan with 100 or more participant at BOY. The timing of the deposit could still be reasonable, you just can't rely on the safe harbor.

This is sort of a follow up question to a recent post on funding deadlines. - Client has a calendar year 401(k) plan with a SH match, no profit sharing contribution in recent years. - Client initially wanted to do SH only for 2017. 2017 corporate return was filed with the deduction for the SH match. - Client now wants to reconsider the profit sharing allocation for 2017, but the CPA has some concerns since they already finalized the 2017 return and would need to make the deposit today in order to deduct it for 2017. I'm considering the available options and the first that comes to mind is to make the contribution sometime between now and 10/15, which would let me allocate and count the PS for the 2017 annual additions but take the deduction in 2018. If I do that and max my principals out at their 2017 annual additions, I can still max them out for their 2018 annual additions and deduct both in 2018 as long as the total contribution deducted in 2018 (2017 PS and 2018 annual additions) does not exceed 25% of 2018 covered comp right?

so between 9 and 23 business days from pay day? As long as none of the deposits went past the 15th business day of the month following and the employer was unaware that the delay would be that long you probably have a pretty decent argument. If they knew ahead of time that it would take over 3-4 weeks between payroll and when they could make the deposit, they probably should have established a plan account for the deposit rather than let it sit in an employer account, and I would argue that that is a late deposit even with the change in recordkeeper.

No worries, you are certainly entitled to do things your way as long as you stay within the law and your clients are happy. I was just letting you know that your understanding of the rule is incorrect. Here is the thing, you are not required to take advantage of the 7 day safe harbor for small plans. If an employer wants to pay more lost earnings and excise taxes than they have to, they are allowed to do that. Using a company average for plans that cant take advantage of the safe harbor is common practice and is usually fine, the key is to document and being able to defend it if the government comes knocking. That is assuming that the company average is reasonable to begin with of course. Have a great weekend.

How late were the contributions? Also, I agree with Kevin that if they knew there would be a long delay between recordkeepers, the contributions are late.

You are getting the general rule and the safe harbor mixed up. The safe harbor for a small plan is that deposits made within 7 business days are deemed to be made on the earliest date on which such contributions could reasonably be segregated from the employer's general assets. You do not lose the 7 day safe harbor just because you normally deposit the contributions in 3 days. The general rule is that contributions have to be deposited on the earliest date on which such contributions can reasonably be segregated from the employer's general assets. Anything beyond what is reasonable is late. If a pattern can be found, say 3 days, anything beyond 3 days should be looked at to see if the delay was reasonable. Also, just because the employer normally takes 3 days doesn't mean that 3 days is reasonable if it could have reasonably been done in 1 or 2 days. There is also a maximum time period for deposits to be considered reasonable. A contribution that is deposited later than the 15th business day of the month following the month in which the contribution would have been payable to the participant in cash is by definition not reasonable.

The worst part is that SSA will probably still screw up and send out a "you may have some $$$" letter for each plan....

No, you have to remove them with a D in the original plan and add them with a C in the second plan

FL gets 5% and CA gets 8% is fine Fl gets 0% and CA gets 8% would not be fine if everyone is in their own group because it has the same effect as an exclusion by name, which is not a reasonable classification. @Mike Preston Would a nominal allocation to FL solve the issue? FL gets $100 and CA gets 8%.

I'm not so sure that is correct, but the wording in the instructions contradict the wording on the Form 8955-SSA itself so it isn't 100% clear. The Form itself says "Code C — has previously been reported under another plan, but who will be receiving benefits from the plan listed above instead." To limit it to a plan of another sponsor doesn't make much sense since the 8955 is plan specific. Code C simply signals to SSA to transfer the previously reported benefit (a P with code A in prior years) to a new plan so that they can reference the correct plan when they send their "you may have a benefit" letter out. If the balance of a participant who has been a code A in the past is going to be paid out from plan 002 rather than 001, the participant should be a code C for 002 and a code D for 001. So no need to use code C for anyone who was not a code A in the past.

I don't think its completely clear if the participant continues to refuse the check. In that case, there is an argument to be made that that restoring the withholding is the correct approach, even if it just to make sure that the withholding and payment is done in the same year. It certainly can be done. The taxation issue has been included in a couple of the recent comment letters on missing and recalcitrant participants as well as a GAO report earlier this year so it is worth mentioning. Also note that I'm not saying its the right thing to do, only that it can be done.

That is a very good question. Probably, since their argument would likely be that they wouldn't have issued the coverage if they had known of the applicants prior bad acts.

I seriously doubt it. It wouldn't surprise me if the forms included some kind of self-certification though. Check here to certify that you have not been convicted of X or barred from serving as trustee bla bla bla

I'm not super comfortable with it but I have done an almost identical setup for one client with his ERISA atty's blessing. We treat each option as a Designated Investment Alternative. The plan information part of the disclosure isn't different from any other disclosure, we have the general information an explanation of the fees associated with the DIA and so on. The more difficult part is the investment performance related information.