RatherBeGolfing

IF he was over paid, the trustees of the plan have a duty to make the plan whole. If they can't get the money from the participant, and IRA refuses to distribute it (which isn't surprising since I still don't think we have been given a clear understanding of what happened, and if I was the IRA I wouldn't release any funds either), that leaves the trustee or the sponsor on the hook for the money or to go after a service provider if that is where the problem came from. As for the deposit of withholding, it is not the duty of the investment company, it is the duty of the PLAN. If the investment company wont do it (they rarely do), the plan needs to find a service provider who will. You can't pass the buck by saying its lack of procedure with the investment company. If the plan relies on an outside consultant like a TPA for admin and compliance, that firm needs to look at their procedures or at least tell the client what the law requires and tell them why it is not being followed so they can make a decision on whether to proceed with their current service providers or look for new ones. BTW, the withholding party (plan administrator) is liable for the collection and deposit of taxes. This means that if you fail to withhold and deposit the taxes, and the IRS cannot collect the taxes from the participant, the IRS can recover from the withholding party... Something to consider

Absolutely, check ALL costs before you make a decision. Pay extra attention to details when someone tells you its "free" or no charge. Its never free, they are making money somewhere and the trick is finding out where so that you can compare apples to apples. The same goes for pricing a firm to do the outside document, review ALL fees from the initial document, maintenance, and termination.

Vanguard and Fidelity will both let you open accounts with a document that isn't theirs. Many of us who post on this board have our own documents that our clients can use pretty much anywhere. Many of our clients have accounts with Vanguard and Fidelity. For Vanguard and Fidelity, it is just a matter of opening account type "A" that uses their document, or "B" that uses an outside document. An outside document will also be more flexible in what you can/cannot do, allow you to move from one vendor to another without terminating the plan, etc. The downside is that an outside document will cost you a certain amount to set up and maintain. So you will need to determine what is more important, the "free" document or the flexibility that comes with an outside document and the help of a retirement professional. When you shop around for "free" documents, pay very close attention termination fees as "free" plans usually cost nothing to start but a bundle to close down. Many times the fee to terminate a "free" plan can add up to more than what it would cost you to get a document from an outside source. Termination fees easily get up to over $1,000. Ask for a copy of their 408b-2 disclosure and read it. It is boring stuff but can save you money in the end. I hope that helps.

Most likely, Vanguard will make you use their prototype document to open the account. In that case, it should be plan 002, and would be a separate plan meaning separate Form 5500s. The big question is WHY do you want two plans? Is it just because you want to invest at Vanguard in addition to Fidelity? A "better document" would be one that is not locked to any particular investment house. For example, if I were to set the plan up on the volume submitter document my firm sponsors, I would also obtain an EIN for the plan as it is its own entity. You could then take it to Fidelity, Vanguard, Morgan Stanley, or wherever you want, and open an account in the name and EIN of the trust (the plan). Its really as simple as that, all you need is the EIN and the a copy of the plan document. In this case, you would have ONE plan, ONE 5500, but however many investments you want.

And I agree with ETA, MoJo, and Cuse... I believe we have enough for a quorum

While Vanguard and Fidelity are reputable companies, their plan documents are only as good and effective as the person who uses them. You might look at their "solo-k" adoption agreements and think that it is very simple and just a few options to pick from. But have you read and do you understand the base plan document that is the bulk of the governing document for the plan? The BPD is where the plans spell out how they comply with all the applicable laws and what the plan's default positions are. For example, the adoption agreement might let include or exclude a few items from compensation, but the BPD spells out 10 items that are included or excluded by default, and you wouldn't know what they are by looking at the adoption agreement. The adoption agreement is simply a tool that adjusts the BPD on a few points where it is flexible. You know that you can contribute 25% as an employer contribution, that is great. Do you know what is included in the compensation that is used to calculate the 25%? Not knowing or assuming that something is either included or excluded can cause you to either contribute in excess of 25% which is problem, or not contributing enough and shorting yourself. These are just a few examples of where it is really easy make a mistake, but also easy to prevent one if you know what you are doing. Like others on this board, I make good money cleaning up simple plans like this after they have been screwed up. I make very little money on the one participant plans that I actually service, but it is easy for me to keep them in line since I work with the legal framework that applies to them everyday. Ultimately, it is up to you whether you try to do it yourself with the "free" template you get from an investment house or seek professional assistance. You can probably even find a practitioner who will go along with using the investment house document over their own document, and only charge you for their time in designing the plan according to your wishes and keeping it up to date. Likewise, you can probably find someone who will only charge a few hundred each year to help you calculate your contributions, make sure they are deposited timely, other administrative issues, and government reporting that can make for an easy trap for the non-practitioner. Good luck!

Yes. Balances allocated as of 2015 count towards TH determination for 2016. The late contribution is a separate issue.

A solo 401(k) is just a marketing term for a one participant 401(k) plan. There is nothing in the regulations that require you to have a special plan for a one participant plan or even to close it down when you hire employees. Some firms add this to their documents because they either cannot or do not want to handle a plan with employees due to the testing and non-discrimination requirements. Do yourself a favor and establish your plan with a professional who will talk to you about plan design and how you think your business will grow. A professional will take this into consideration and design a plan that will accomplish what you need it to do right now and at the same time not cause problems if and when you hire employees. You may be able to save some money with the "do it yourself solo 401(k)" offered by some financial institutions, but in the long run, you will be better off with professional advice.

Happy to help

My emphasis. They also discuss money market vs. stable value fund (as a capital preservation option) earlier in the complaint.

Is that the only change? It is adding a new contribution, I would do a new SHN. Is the sponsor large enough where a supplemental SHN would be costly or time consuming?

I'll re-read the complaint this evening, but as I remember it, the claim was that it was imprudent to select a money market fund for capital preservation because a stable value fund could reasonably be expected to outperform a money market fund. That would put both in the same category but claim that it was imprudent to select one over the other. The judge of course disagreed.

But as we have seen over and over in these cases, large sponsors still manage to not follow its own well written IPSs, to the point where you sometimes wonder if they even tried...

As I recall, one of the claims in the Chevron case was that they included a money market fund with modest earnings rather than a stable value fund. I think that claim was based on expected and actual investment performance rather than self dealing or expenses. The claim was dismissed, but it is the closest I can think of that fits your question.

I agree with Tom. The term "may" in this context means you rely on the ADP test result that excludes the improperly excluded employee, even though you would normally have to include any eligible employee in that test. It also says that you have to correct ADP and ACP test failures before you apply the correction for the improperly excluded employee. So you get to exclude the $0 deferral and match for the improperly excluded employee from the ADP/ACP tests, but you do not get to rerun the tests after you allocate a QNEC for that failure.

I will second what ESOP said. Clear questions with as much fact and little emotion as possible will get the most accurate answers. Things like whether you were full time or part time will be important, and any plan related information you can get will be very helpful.

Agree to disagree. Some of my most enlightened and caring clients realize that their plan is probably the only savings their employees will have in addition to SS, so they limit withdrawals to death, disability, and termination of employment.

Congrats Mike!

I'll take the road where many of my plans do not include ANY loans.

Yea I see more plans (and platforms FWIW) that will not allow loans to be rolled over than plans that will accept loans. It probably would have been nice to at least get the opportunity to pay it off with with outside money rather than trigger a taxable event and a 10% penalty though...

The end result would be the same as an offset. Both taxable and subject to the 10% penalty

Hi Angie, It sounds like what happened here is what is known as a loan offset. The loan has been repaid by a reduction of your vested account balance. This offset is treated like an actual distribution from your account, which means that it is included in your gross income. If you take a distribution prior to attaining age 59 1/2, a 10% penalty may apply for an "early distribution". Since the offset is treated as a distribution, and you are not yet 59 1/2 (my assumption based on the original post), you owe a 10% penalty on the offset amount. I hope that helps.

I have plenty of pooled plans in the 25-30 participant range. Investment committee is normally the owner(s) who in turn gets an investment adviser to handle the investments. I never recommend that an owner to actually make the investment decisions, but they do pick the investment adviser. One of the goals (or at least my goals) is to get participants and owners as far away from making investment decisions as possible.

No, you will be fine. If you file it without marking it as the initial return they will come knocking for sure though...

The plan has to have an amendment procedure, look at your base plan docuement. I doubt the amendment procedure says that the vendor has to produce it or that it has to be typed. That said, I'm not 100% sure that crossing out an option and signing in the margins of the document is necessarily a valid amendment either. We are even further removed from amendment by resolution that ETA mentions above. I would also look for a new service provider as they are clearly not meeting the needs of the sponsor.