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Good morning to all, I have been asked to research the following: " Is it acceptable for salary deferrals to be funded well after the end of the plan year for self-employed individuals, i.e. sole proprietors. This is in the case of an ERISA plan, not a solo 401(k) plan. " Your thoughts, opinions, and explanations of your practices are appreciated, as always.

hello - I have a client where the payroll dept allowed an employee defer into the plan prior to meeting eligibility. The Trustee does not want the participant in early. Therefore, i need to distribute the mistaken deferrals. It does appear that a correction method is to have the investment company return the deferrals adjusted for gains or loss. There is no mandatory withholding. I've read that some have done it as EPCRS or as a 402g. Which is correct way to complete? Thank you!

Good afternoon to all, I have been asked to get your input on the following question: "Can a " 3508 direct seller" person participate in a 401(k) Plan? They are paid by way of a 1099 rather than W-2 and are recognized as "Employees" for some benefit purposes. We do not have experience with this type of "employee". If the plan defines compensation as W-2 income then they have no compensation to defer from. Maybe they make Roth deferrals or Voluntary Employee Contributions? Any thoughts or comments are appreciated." The questions is being raised on behalf of a plan sponsor who DOES wish to cover such persons if a way can be found to do so. Thank you as always.

Good afternoon to all, Have any of you ever calculated the earnings on a series of slightly late deposits (between a few days and 6 weeks each) for a client and found that some participants are only going to get a very little bit of money? I just had to do this for a school with about 45 participants. While 19 of their 26 deposits during the year were late, they weren't THAT late, and the total interest on the late deposits per person just isn't much. Some will get a few bucks but many will get less than a dollar. Why did I bother with it? Because some of the employees found out that deposits were being made tardy and demanded to know what our client was going to do about it. He's in the unhappy position of having to prove that the rules have been followed to the letter. So he will have to pay us more than the interest and penalties involved to find out what he owes. The toughest part to figure out is what to do when the participant has already terminated employment and been paid out. How does our client manage to pay someone as little as 13 cents after they are gone? Do these tiny payments have to funnel through the platform provider or can the school just write a check to the terminated employees and mail it to them? Your thoughts, ideas and experiences are greatly appreciated, as always.

We had a new earnings code used for group of associates on our last payroll that was not setup correctly as 401k eligible. It was caught after 1 payroll and will be corrected on the subsequent run. So while everyone who elected a deferral had their deferral calculate on part of their earnings, there were some whose contribution did not calculate on all of their earnings due to this code. For example, base salary $500, new commission code $100, 10% deferral should have been on $600, but we took on $500.00 Proposed correction method is letting everyone who was affected know that they can increase their deferral to make up for any part on their end, and let our match true up catch anyone who missed a match contribution. (safe harbor plan, match contributions every payroll with true up at year end) Comments? We at first thought we had to do QNEC on match, however, would get double match at true up time.

A plan allows dollar deferral amounts, ie. $50, $40, etc. What should occur if the employee does not make enough in their paycheck to cover the deferral amount? The plan sponsor has be netting them down to $0 in this occasion in the past.

An LLC shareholder taxed as a sole prop wants to contribute a deferral but he gets no paycheck. How is that accomplished?

This seems like a ridiculous question. However, I'm suffering from pre-holiday brain cramp... Suppose your plan defines comp as W-2. Further suppose that the employer buys shoes for its factory workers, and, I don't know, maybe something like gym memberships. The employees don't have the option to receive this money in cash, but it is still taxable compensation, and included on the W-2 because it is a "nonaccountable" plan according to the employer's CPA. I proffer no opinion as to whether that is correct or not - I'm assuming it is correct for purposes of this question. From a practical viewpoint, how would this be handled when calculating the deferral amount to come out of the employee's paycheck? I assume this is really a payroll/employer problem. For example, base pay that would otherwise be paid to the employee for the year is $10,000, and employee defers 5%. But, there is TAXABLE fringe benefit of another $1,000, and the employee's W-2 is going to show $11,000. Does the employer/payroll company, at some point, have to withhold another $50 from the employee's paycheck? Or, since the employee could never have elected to receive this compensation in cash, is it simply ignored for deferral purposes?

Sorry if this is a newb question, but any help would be appreciated- given the new overtime rules going into effect I am concerned about some clients increased responsibilities if they don't exclude overtime my question is - If you only exclude overtime for matching contributions, do you still run compensation test? If so- assuming you pass - do you use that for ACP? or is there flexibility? I really want to make sure of what happens if we are only making a compensation adjustment to matching contributions. Thanks

If an age 50+ participant contributed $18,000 for the 2015 Plan Year, can the employer make a Profit Sharing contribution of $41,000 and remain in compliance with 415 limits? The participant had elected to contribute the maximum 401k + catch up limit of $24,000 for 2015 PY, however the payroll company ceased withholding Oct 2015... end result is only $18,000 deferred in 2015. Starting Jan 2016, withholding commenced again. In light of the fairly recent IRS 3 new safe harbor procedures correcting missed elective deferrals, this employer seems to meet the 3 month correction period, therefore no makeup contribution required. To make this participant whole, the employer would like to contribute $41,000 in Profit Sharing provided the $18,000 deposited can be characterized as $12,000 401k and $6,000 in catch-up by making such a contribution -- the reasoning being the "recharacterization" is necessary to comply with 2015 415 limits. Thoughts? Thank you.

What are people's thoughts about starting a new 401(k) plan (or adding a CODA to a PS only plan) , when the deferral effective date occurs late in the year, after October 1. Clearly it is permissible until October 1(for a calendar year plan), as evidenced by the 3 month rule written into the SH regulations. What about for non-safe harbor plans? Effective availability for benefits, rights, and features? I'm not concerned about an employer that is 100% highly compensated, nor am I concern about an employer with zero highly compensated. I'm concerned about a classic small employer with a mix of highly and non-highly compensated employees who would be eligible to participate in the plan. I have my thoughts on the subject, but I'm curious to hear others' thoughts.

I have a plan that includes overtime, bonuses and commissions in compensation. The document specifies participants may defer up to 100% if their bonuses. It does not mention commissions. A client gave a participant a commission check and withheld 401k deferrals and matched it. Is this okay to do? The document does not address this.