Larry Starr

Ed, in this case he's a self employed author. I' could use everybody employed on 12/31 and thereafter 1 year/SAED. I'd not worry about vesting (not sure what I'd use for date of hire). I'm going to guess he's been an "author" for a while, so I might ask him when he started as an author and use that date. as January 1 of that year as DOH. I assume that will more than meet the one year/SAED requirement.

I'm thinking it was a sole prop and what was bought was assets and the plan was not dealt with, so it is still "owned" by the estate. Query: was this a stock sale or an asset sale when the employees bought it? If the latter, I can see why it's a problem.

An interesting question and not one easily answered. Suppose the individual had a newspaper delivery route in college and earned enough to have a Schedule C when he was 19 (I did). He was a sole prop with an income at that point. Now, 20 years later he starts another business. When does service count from? Normally, this is not an issue, but it certainly can be reason for discussion. The important thing is that the sole prop is going to be 100% vested at some point anyway, so it is rarely going to be a consideration as it related to that individual.

Agreed; if the PA decides to do so I see no reason for doing so, but some might want to go that extra (but unnecessary) step. No problem if you do.

Agreed. While you don't have to remind them of the formal claim process (because it is in the SPD) if they do file a claim you can reject it for the exact same reasons I suggested earlier. I don't agree that the plan can be faulted for rejecting a formal claim when none was made formally. Here, form matters.

I don't understand your response. In this case, the participant was paid (with a check) and withholding was done. The PA knows that to be the case (the check was delivered). That cannot be reversed or restored.and I'm still not sure what restored means. But in this case, the situation is very clear.

A --11g amendment can accomplish that; it can be adopted up to the 15th day of the 10th month after the year end. That' 10/15 for a calendar year plan.

Sorry, but it just will take too much work to analyze the issue when I am not in the office. Having said that, I want the accountant to provide me the Schedule SE and explain where all the input numbers came from. If the values PROPERLY belong on the Schedule SE, then I think they will be included in the determination, but the question I can't answer is whether they are correctly included in the SE.

You do not owe here a legal analysis. The plan owes her an answer (which you provide because you take participant calls) which is: the plan does not allow that. PERIOD. You need to say: "these are the rules and they are correct and there will be no deviation. If you think there is a violation of some rule or law, then you need to pursue that on your own. It is not our responsibility to write a legal treatise for you as to why the plan is correct.". END OF DISCUSSION. Let her pay someone to either steal her money or explain to her why the plan is right. You should be done with this issue.

I'm pretty sure I wrote that Q&A answer!!

All the time. Plan effective 1/1 is perfectly fine. A sole proprietor exists FROM HIS DATE OF BIRTH!!! Yes, you read that correctly. The obtaining of an EIN has nothing to do with the issue.

And where did you hear such a discussion?

Sorry, there is no doubt in my mind that the payroll provider is deficient. If they can't do the comp limit or limit the max 401(k) deferral, they need to replaced with a payroll provider that can. I am not talking about legal responsibility here. But the error should not happen in the first place, and it is with the payroll provider that the error first happens. In our operation, we would double check the match against the comp and find this error, and then we would tell the client to change payroll vendors if the vendor can't comply. Simple.

Thank you; I downloaded them here in Prague from your posting, so I assume everyone else should be able to. if anyone has questions, go ahead and post them since I now my my outline too! :-)

Agree 100% . It's his problem; don't make his problem your problem!

You can't reverse the withheld taxes if they were withheld. He was paid; some of his distribution was withheld and submitted. I am confused about mention of the 60 day rollover; there should have been withholding and i assume there was and that it was remitted to IRS. None of that can be reversed. And since he didn't make the rollover within the window, it is fully taxable and the withholding will help with the tax bill If he lost the check, a new one MUST be issued, but no change in the taxable event that occurred when the distribution was originally made.

Yes, he can "forget" to cash the check or lose it. That doesn't change the fact that he was paid out at that original date and a 1099 is due for that payout whether he cashed the check or not. The recordkeeper has no choice but to void the earlier check and issue a new one, But that does not change the actual distribution date and the tax situation that follows from that. This is an easy one.

I'm not sure what service you provide if you don't know if they made the 2016 contribution. What did you show on the 5500? Seems to me there are some internal problems with your colleagues making decisions about admin that they do not appear qualified to make and either misleading the client or just making error by omission I would be concerned. IF they are doing the same thing for 2017 that they did for 2016, it appears that they clearly did not do it right in 2016. IT NEEDS TO BE FIXED if the dollars were not allocated correctly. If they put the money in, fine. If not, you need to reallocate what was put in for 2016 to reduce the overall contribution as a percentage to each participant, including the ones they decided to just leave out.] SInce this could not happen in our operation, I have to admit I just am not clear on what you do and how you do ti. That 5500 for 2016 bothers me a lot..

No. Give it now and you are fine.

I''m confused. A calendar year taxpayer/plan. This is September. I could MORE THAN 3 months left until 12/31. What is the problem? You are aware that for a NEW 401(k) plan, you have to set up the SH by 10/1, right? Now, that is separate from the other issue you raised, but it appears the other issue is an issue only because you think you can't have a SH plan, which you can, which I think makes the other issue go away, right?

From your original question, it appeared that this was the first time it came up and you (rightfully) are challenging it. What is this about 2016? We would assume that you are talking about 2017 allocation at this time. If the 2016 allocations were done incorrectly, the PA needs to go back and correct them.

The "burden" is simply to reference the pertinent part of the plan docs. No problem to explain WHY it is OK to be there!

You don't need a reg and you don''t have to be a lawyer for an idiot participant. What you need to do is cite the document provisions (probably also in the SPD) and refer her to what the PLAN says, If she doesn't like that, take it up with her employer. If she think it is illegal, tell her to hire an attorney who will explain to her that it is NOT! Sheesh! Don't make employee's problems your problems.

IF the administrator was to allocate nothing to that division's employees, THEN the terms of the plan would not be being followed. As long at the PA explains that the allocation of the actual contribution will be made across ALL the employees (regardless of what division they are from), then the plan is fine.

Well said; nothing more to add. 100% agreement.