RatherBeGolfing

The point of the safe harbor is that the fiduciary is deemed to have satisfied his/her duties with respect to the selection of the provider. You present an interesting hypo, but as long as the safe harbor is met, the analysis is complete. If I take bids from 5 companies and pick the first one that meets the safe harbor standard, I have fulfilled my obligation. The fact that there was a better performing or less expensive option is irrelevant.

How was it reflected on the W-2? included as deferral in Box 12 and excluded as comp in Box 1?

Yes I think so, especially in plans offered by payroll providers and bundled plans. Yes. But I would also say that a loyal and prudent fiduciary could make the opposite decision: The probability of a screw up that results in non-compliance (even if the end result is not disqualification) is greater than the small burden of documenting hardship distributions correctly. I don't think there is a wrong or right way here, there is doing it by the book or using a short cut and hoping you don't slip up.

lol yea until the doo doo hits the fan

Whats worse is that legally the memo really doesn't change anything. It is a directive for the examiners to treat a non-compliant plan as if it was compliant if certain conditions are met. Why risk it when you could just do it right?

Total comp for the EE in your example is $466.40 The $42.40 should be listed as deferral on the W-2 and thus excluded from compensation The $424 non-cash comp (iPad plus tax) should be included as compensation

If it was paid as compensation (included on the W-2 right?) and deferred, it came from the EE.

It isn't a corrective contribution. Non-cash comp gets tricky when you don't coordinate with employee benefits. They simply grossed up the bonus to defer on the non-cash bonus. The deferral is compensation that is paid and immediately deferred, it is an employee contribution. FWIW, most employers would miss that they have to defer on the non-cash comp, but I would accept the calculation of 10% on the iPad plus taxes or a calculation that was also grossed up for the deferral. Most auditors I have dealt with would be fine with either. You have to treat it as deferred comp, because that is what it is. The fact that those who already reached the 402(g) limit didn't get the extra is fine because they didn't need to defer on that comp since they already reached their limit.

I would be very careful with self certification even after memo. It doesn't make self certification compliant, but says you should treat it as if it was compliant if certain steps are taken. If you fail to take those steps, you are once again not complaint. I spoke to some ERISA attorneys and auditors at luncheon last week and none are recommending self certification.

What Bill said :)

I agree with the above. I just had this conversation with a fellow industry professional last week. He didn't agree with #2 since the bankruptcy laws don't really track with QP law. Specifically, his concern was that the IRS making it more difficult to obtain det letters will erode QP protection against creditors unless bankruptcy laws are amended to fall in line. I'm not as concerned as he is (yet) but it is an argument to keep in mind.

Yesterdays e-News for Tax Pros included a webinar with 1 free CE Credit for those of us who need it. Working with the IRS Office of Appeals – What to Expect CPE Credits You may earn 1 CE Credit for Federal Tax. To receive a certificate of completion (if applicable to this show), you must: View the presentation for at least 50 minutes from the start of the program for one CE credit. View the presentation while signed in using the same email address that you used to register (you will not receive credit by watching on someone else’s computer). PTIN Holders : In order to get your CE credit reported to the IRS, ensure that your first name, last name and PTIN match your account. Your PTIN begins with the letter P followed by 8 numeric characters. If you don’t have a PTIN or your name and/or PTIN are entered incorrectly, you may receive a certificate; however, your credit will not be reported to the IRS. Other tax professionals will be sent a certificate and may receive credit if the broadcast meets their organizations' or states' CPE requirements. Only registrants who watch the live presentation may qualify for the certificate of completion and CE credit. You will receive your certificate of completion via e-mail about one week after the broadcast.

I agree with your point, but are investors necessarily rational?

I don't do them either but I know some local attorneys who do. From what I understand, it isn't the plan itself that causes the problems its all the circumstances around the plan. Also, I think the IRS still REALLY doesn't like them, because most of them are not done right and are pushed by some seriously flawed promoters... Nothing wrong with them if properly done though.

I agree with all the above. I was just thinking out loud whether the HCEs who deferred the maximum ($18-24k) would still get the benefit of being able to distribute those deferrals as a rollover rather than refunded for a failed ADP test. This is of course assuming that the IRS does not disqualify the plan making refunds/rollovers a moot point.

Well the participants would be made whole, just not on time... But what if the SH is never made (Employer out of business)? ADP test doesn't matter since all assets become subject to taxation at plan disqualification?

We had a plan that used "the last day of the last week that began during the plan year". It was a pain...

(2017 online edition) EOB Ch 11 Section XIV Part B Item 7 (timing of Safe harbor contributions)

If that is what they want to set it up properly on their side, what is the harm? It will take you 5 minutes to prepare the SS-4 and 5 minutes to get the EIN online...

RBD for a non-5% owner who reaches 70 1/2 before retirement is April 1 following the end of the calendar year of retirement (termination). Participant in the example terminated 12/31/16. RBD is 4/1/17

Which electronic delivery rule are you referring to? DOL? IRS?

If corrected by 4/15/2017, the excess is NOT an annual addition. § 1.415(c)-1(b)(2)(ii)(D) Excess deferrals that are distributed in accordance with § 1.402(g)-1(e)(2) or (3) do not give rise to annual additions.

1. A change in the policy does not mean that existing loans are somehow invalid because they don't fit the new policy. The existing loans are contracts between the plan and participant. 2 &3. I agree with ESOP Guy. If the amendment or new policy does not specify how to handle those issues, PA should use discretion and apply the new policy uniformly. On the other hand, it might be better to take care of that in the amendment or write it in to the new policy (not part of the amendment) to eliminate any confusion.

Was it known that he would be an HCE for 2017 when he was allowed to participate in 2016?

If the plan allows for catch-up contributions and the participant elects 7%, and 7% is within the allowable limits for the participant, can you justify not doing 7%? Are the instructions/forms clear on the issue when the participant elects what to defer? If you vendor cannot do what your plan permits, you need a different vendor...