RatherBeGolfing

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.

Restore would mean getting the withheld taxes back from the IRS. The IRS has a process for it. In this case the payment to the participant went stale / uncashed. If he continues to not cash the payment you have a recalcitrant participant rather than a missing participant, but in the current missing participant debate the two are frequently lumped together.

If anyone is interested, we discussed the proposed changes in this thread

The proposed changes were put on ice pretty quickly due to lack of funding, and 5500 modernization is not high on the DOL priority list at the moment. From what I can recall from a Janice Wegesin session, it would likely take 2-3 years from when changes are approved so its not going to happen any time soon. Some of the changes could happen outside of the 5500 overhaul, but I haven't heard of anything specific going on right now.

Reverse was a bad term, the appropriate term would be restore, and it can definitely be done. The IRS addressed the issue back in 2003 because the PBGCs missing participants program requires the full benefit to be transferred rather than 80%. It is commonly done with missing participants but could possibly apply in this case if the participant continues to refuse to accept the check (recalcitrant rather than missing). In the current missing participant debate, some are even advancing the argument that failure to recover withheld taxes from the IRS (for a missing participant) is a possible fiduciary breach.

The loan payment is a plan asset as soon as withheld right? It is never an employer asset.

You can reverse the withheld taxes, but I don't think they want to. It sounds like their position is that the plan followed its terms and cashed him out at under $1,000 and they won't re-do that distribution to let him roll over to an IRA. Completely reasonable in my opinion.

I agree with Bird. Can you run it through VCP? Yes, but I don't think that you have to. The participant made the loan payments when they were withheld from pay. The fact that the employer did not deposit the loan payments on time is a different issue. If a participant defers $18,500 today, and the employer makes the deposit to the plan in January of 2019, were the deferrals made today or January 2019? Why is this any different? The problem will be to get the RK/admin to understand the issue and take appropriate action, that is sometimes easier said than done.

asppa 2016 annual.self employed.IRS forms.pdf asppa 2016 annual.sole prop outline..pdf these show up and work on my end. If have problems downloading them, just message me your email and I'll email you Larry's outlines

The plan can start 10/1. The SHN should be distributed within a reasonable period before the beginning of the plan year. If the plan is established on 9/25, is it reasonable to distribute the SHN 25 days before the plan was even established? Larry and Kevin are both correct. You have until 10/1 to start the plan and 30-90 day period for the SHN is when it is deemed reasonable. If you establish the plan during September and don't drag your feet on the notice, you are fine. Personally, I wouldn't rush to crank anything out. Let it take the time it takes to make sure nothing is missed. There is nothing worse than rushing something out and having come back to bite you because you overlooked something. Call FTW support and ask to speak to the document department. They have excellent people there and they are very quick to call back if they are not available.