RatherBeGolfing

Ha ha, I say the same thing about Florida, but we also have that no state income tax thing :)

We used to do a lot of quarterly testing plans 10 years ago. I don't think we have a single one today. I do see an argument for quarterly testing if you have coverage or ACP test issues.

Thats true

I was going to say the same thing with a small addition. if you can't reverse the payroll or the recordkeeper gives you a hard time, maybe the sponsor can give the participant a small extra paycheck so that the participant has the same "cash in hand".

You always use the 1099-R for the year of distribution. For 2015, the excess could have been distributed prior to April 15, 2016 with two 2016 1099-Rs. one with the excess and code P (prior year) and one with the earnings which are taxed in the current year (2016). After April 15, 2016, the full amount is included as income in the distribution year. The participant therefore had to include the 2015 excess as comp in 2015 since the excess cannot be excluded from comp, and then again in the year of distribution (including earnings) For 2016, you can correct by April 15. You issue a 2017 1099-R with code P and another 2017 1099-R for the earnings. You will issue 3 2017 1099-R. 1. 2015 excess plus earnings. Participant also owes 2015 taxes on the excess if they were not paid but that is a different issue. Taxable in the year of distribution. 2. 2016 excess with code P for prior year. Taxable in the year of excess. 3. Earnings for 2016 excess. Taxable in the year of distribution.

My pleasure

Good question :) I had do some extra reading for this one. It is not exactly on point, but it sounds like you should be able to treat the employee as benefiting with a 0% contribution rate for the ACP test... 2017 EOB (Ch 8, Part B, Item 4)

What was the timeline between the EE submitting the second deferral election and the "excess" deferral? How much extra was deferred?

OP, you were given good advice (limited due to the lack of specificity in your post) by someone who is very knowledgeable in this area. Why would you dismiss it with a comment like that? If you choose not to get an attorney who knows how to handle QDROs out of principle, you probably wont get the resolution you seek. That is pretty much what it comes down to.

It could be. A few years ago I had a 1099 with an incorrect SSN. I was not able to E-file because the IRS was unable to confirm the 1099 info on my return with the bad SSN. I was forced to either file a paper copy or wait for the issuer of the 1099 to file a corrected 1099. Sounds like this is the same type of situation. J

Yep. I see it all the time with self directed brokerage account plans. It is one of those "yes we can do it but it won't be cheap" features. I don't really care what a provider charges as long as the plan isn't paying for it. If the sponsor wants to pay $700 a pop for QDRO reviews, that is their business. When participants pay for it, not so much... If a plan wants to spend that kind of money on a fairly common service, they should spend the money to get an independent fee benchmarking first.

Using language like this does a huge disservice to the plan sponsors (current and future) and participants who lurk these boards. There is no such thing as a no cost plan. The ones who market themselves as such are riddled with proprietary investments, termination fees, and other hidden costs that if properly taken into account would show that they are anything but "no cost". But effective marketing using terms like "no costs", "free" and "soloK" has created the appearance of a free alternative as long as you use a certain broker or investment house.

Ok the $700 attorney fee was a stretch. I am assuming the OP is talking about DC plans since the original question asked if could be payed by the plan and whether the fee had to be allocated to certain participants. Even in the more expensive markets like NY and CA, I doubt $700 as a flat fee would be reasonable. There could be individual cases where it is reasonable, but not as a standard fee. Your mileage may vary.

Those are the same steps we all have to take when we receive a DRO. Except for very rare cases, it is a fairly simple process and I'm sure your TPA has form letters they use with the DRO/QDROs. I still take issue with a flat fee of $700. Heck, the attorney who drafted the DRO probably charged less. If you want to pay $700 as the plan sponsor, have at it. I don't think a flat fee of $700 will ever pass the smell test when it comes from plan assets.

Can a fee for QDRO review be paid with plan assets? YES Can the fee be paid as general expense (all Ps share)? YES However, any fees paid using plan assets have to be reasonable and necessary. I would have a very hard time justifying a flat $700 fee for a TPA to do a QDRO review. Others may disagree.

You are very welcome

Participant A is not eligible to participate as of 04/01/16. Whether they started contributing doesn't matter for eligibility. A has a balance but cannot continue deferring until the new eligibility has been met. A couple of incidental notes: For purposes of the 5500, A still counts as a participant, but not an active participant Since A has a balance, s/he must receive all applicable notices, disclosures and statements such as SMMs, SPDs, etc...

To clarify, we file an annual return for all of our one-participant plans, regardless of assets. Doing so starts the SOL for the plan year and eliminates any need to track limits or whether the plan is still exempt. In my opinion, there are no compelling reasons to rely on the exemption.

Same here.

Participant A enters 3/1/16 when plan had immediate eligibility On 4/1/16 the plan is amended to require 1 year of service for anyone hired after 12/31/2015 As of 4/1/16, Participant A is no longer eligible to participate until s/he satisfies 1 year of service. Did the plan allow A to keep participating after 4/1/16?

no retroactive applicability, anyone in the plan will stay in the plan even if they don't meet the new eligibility.

The short answer is yes, you can "un-participate" an employee who has not met the eligibility requirements (or by excluding the employee by classification), even if you let them participate in the plan when you had less restrictive requirements. There is no protected right to continued participation. From the 2017 EOB (Ch 2, Section VI, Part E) If you don't want to exclude current participants who have not met the new eligibility requirements, simply make the amendment prospective. Keep in mind that this could create a discrimination problem if it favors HCEs. I hope that helps.

Hmmm well I was able to drag and drop as well but it attached as a picture rather than and attachment

Absolutely, it all depends on what you want to accomplish. I do think it is important to point out that you do not have to do it prospective only though, as there seem to be some confusion in this area. Of course, just because you can does not mean that you should.