RatherBeGolfing

So never taken from EEs pay but deposited from Employer funds? In that case, I would move both the deposit and associated earnings to forfeiture and use for future contributions or fees.

What actually happened here? They reported too much or the HCE deferred too much? Two very different scenarios. If the HCE deferred too much the excess and interest are distributed and reported on form 1099. If they simply reported too much, there would be no contribution or interest to correct right?

It tends to be an "expensive" plan design so it doesn't work for most of my clients. I have never come across a situation where the rank and file employees did not increase deferrals when going from a 3% SH or regular SH match to a tripple stack. It never falls in the "this is how much you save if participation stays the same" column. The clients who DO use it fall into two categories 1. The client who is willing to pay a premium to avoid giving something for nothing. 2. The client who is willing to give more to those who do more for themselves. I have several clients in both categories and they are well aware that they could be paying less and still max out. the last client I had who switched from a SH Match + integrated PS to triple stack match went from a handful employees deferring to all employees deferring at least 5%. Sponsor is happy, employees are happy, adviser is happy. Not my average client but they do exist.

I agree, this would generally be considered 2016 pay and contributions. That said, it is still possible for a plan document to include "post year end compensation" in the definition of comp. In my document (if elected), Post Year End Compensation means amounts not paid during the year earned solely because of the timing of pay periods and pay dates provided these amounts are (a) paid during the first few weeks of the next year and (b) included in Compensation.

I agree with the above. That said, I have been able to get the DOL to accept a combination of their calculator and a spreadsheet. It has probably been 5 years since I did it that way so I'm not sure if they would still accept it, but it may be worth a try. For example, lets say you have 100 participants who deferred and you have one late payroll. Rather than doing 100 individual calculations,you do one earnings calculation on the entire amount and use a spreadsheet to distribute the lost earnings based on each participants "share" of the late deposit. The result can be a little different from one by one calculations due to rounding, but it is minimal and to be on the safe side you can always round up so that a participant will get a fraction of a cent more rather than less.

I don't think so. OPs plan allows for self direction. It allows for SDBAs (it actually requires it), and it allows for the participants to use a brokerage account other than the default brokerage account. At this point, the BRF are available on a non-discriminatory basis, because they all have the same opportunity (stay with default or go elsewhere). The option to select a brokerage firm other than the default is the feature, not whether Brokerage XYZ will take on Participant A as a client. What would cause a BRF issue here is if the option itself is restricted. For example, If staff are only offered the default option and the owner is offered a non default option would be a problem. Similarly, If there was a minimum balance requirement in order to have the option to use a non default broker, those employees employees with an insufficient balance would be treated as not having the option available.

I agree. My document simply states "The Company shall notify the Plan Administrator in writing of the amount of contributions allocated to each group. anything that meets that requirement should be sufficient.

In a nutshell, yes. Some of my clients will let a participant go where ever they like. I don't like this policy and caution them about their responsibilities and duties. It is still their responsibility to make sure that the broker the participant wants to use is appropriate, that the fees are reasonable, etc. Most of my clients will review a participants request on a case by case basis and it usually isn't an issue because most participants will stay with the default even when they can go elsewhere.

I agree with ETA, the rules are very clear. Do some less honest practitioners disregard rules because their clients don't like the end result? Sure. Have I lost clients/prospects because I refuse to break the law? Sure. If you are finding yourself in a position where you are contemplating breaking the law or intentionally overlooking regulations in order to obtain a more favorable (and incorrect) result for your clients, it is time to take a serious look at your practice and why you are struggling.

I have plenty of plans like this. It is a bit of a different animal from working with platforms but it isn't uncommon. I don't see any issues with how the accounts are set up (name of the trust, FBO, availability of the adviosor, etc.) So it appears that the only concern here is that while the rank and file have an FBO account with XYZ brokerage, the owner has an FBO account with ABC brokerage and you want to make sure that all participants are given the opportunity to go outside of XYZ brokerage. Most of our communication includes a simple section regarding SDBAs such as "please contact John Doe at 867-5309 for more information". Each plan then has its own procedures that controls the when/what/where/how.

What does the service agreement say as to the service provider's responsibilities? Right or wrong, the employer has made the decision that this is no longer an employee, which has created a severance from employment. The service provider should caution the employer about the possible ramifications if there is a determination that a severance of employment did not actually take place, and should recommend that the employer seek a legal opinion. Beyond that, I don't think the service provider owes a duty to investigate the employer-employee relationship.

I would say the SH could be funded after the sale and after the resolution to terminate. In order for the plan to actually terminate, the safe harbor must be funded and distributed. But I agree that the funding of the SH would not hold up the sale or the merger.

The responsibility would remain with the seller unless the purchasing company agrees to take on the sponsorship and liabilities of the seller's plan.

Can you execute a resolution to terminate prior to making the required contributions? Sure. You still have to fund and distribute the contributions prior to filing the final 5500 though...

Yep. It annoys me to no end. And try having this conversation with one of their screen readers in "customer service" and see if you have any hair left on your head when the call is over...

Well that item was always part of the DOL changes rather than IRS it wouldn't have been sooner effective before the major overhaul anyway. But point well taken, that was one change I was looking forward to. Many of the auditors I know weren't as happy about it though... I also liked the idea of compliance questions rather than compliance codes as almost every 5500 i look at on a takeover has an issue with the codes...

Yea and it makes more change to do all the changes at one time (the 5500 overhaul) rather than some IRS questions, one year, then some more IRS questions the next year, and then DOL and PBGC questions the year after that. We should be good until the 2019 form or later barring another change of heart by the IRS

Yes, it is easily achieved by not using a blanket exclusion of HCEs. For example, in my document, I would use the "other" category and only exclude part of the HCE group. So what you want to do is to narrow your exclusion rather than make exceptions to the exclusion, if that makes sense.

And here is the latest update ASPPA GAC Advocacy Efforts Pay Off as IRS Drops New Compliance Questions (For Now) For those who are not ASPPA members or do not receive the newsletters, here are the highlights A recent concern in this area has been the new IRS “compliance” or “5500-SUP” questions that were originally to be required for the 2015 form but have been delayed ever since. Those delays have come principally as a result of ASPPA GAC’s lobbying work. It now appears that the IRS is finally in agreement with ASPPA’s original recommendation, which was to roll out the new questions as part of the broader Form 5500 modernization initiative which is a tri-agency project which includes the DOL and PBGC. The reason for the optimism is the recent filling by the Department of Labor (DOL) with Office of Management and Budget (OMB) of draft copies of the 2017 Form 5500, including the related schedules and instructions. (OMB approval is required under the Paperwork Reduction Act.) It is noteworthy that the 2017 form DOES NOT INCLUDE the new IRS “compliance” questions. Lastly, the herculean effort made by many ASPPA members to assist in this lobbying effort should be noted. First and foremost, the ASPPA GAC Reporting and Disclosure Sub-Committee, chaired by Kizzy Gaul, continues to do a great job drafting our thoughtful and substantive comment letters. Also critical contributors to our efforts were senior advisors Janice Wegesin and Peter “Mad Dog” Gould who both took a great deal of time out of their otherwise busy schedules to further the cause, including coming into Washington to meet with OMB and IRS. And finally, a big thank you to all the ASPPA members who wrote their own individual comment letters when rallied to the cause by Mad Dog Gould. Those letters really did make a difference. ASPPA GAC will continue to monitor developments with regard to the ongoing modernization initiative and provide additional comments as it proceeds.

Unintended consequences. Here is the thing though, when you are (or hold yourself out to be) a subject matter expert, you have to be able to discuss the theories and and conclusions with those who disagree or fail to understand your argument. This is especially true when the things you publish are meant to educate others Just about every business trying to find an edge uses SEO to generate traffic and name recognition. Blogs and semi-educational posts are very effective tools for SEO. But you have to be able to take some criticism or engage in a conversation when someone disagrees.

Dont get me wrong, I have nothing against HR or the function they fill. I'm not saying they do it maliciously or even because they want to. It is just their responsibility to nip things in the bud. Which in BGs case happens to be butt nekkid rolling in cash

Ha ha I believe it, HR are notorious kill-joys. Humor is such a great tool in education

Are you sure? I take out $10,000. Unlike BG, I don't make it rain and take selfies, I just like looking at a $10,000 stack of non-taxed cash. I then get paid $10,000 and I mix my taxed cash with my non taxed cash. I repay the loan with $10,100 ($100 interest)from the mixed stack and Im left with $9,900 in my stack. Out of my $20,000, $10,100 went to repay the loan. I only paid taxes on $10,000 out of the $20,000. How much of my loan was taxed twice?

An extra "like" for the use of wicked long time on a dragging Friday!