Solo k recordkeeping

[Craig Garner]

I am aquiring a solo k plan that crossed over the $250k limit on 1/1/12. The sponsor wants a TPA to do the EZ, review the contributions/limits (currently calculated by a good CPA) and help make sure the doc stays compliant. The plan has been around for years and is invested with a mutual fund company. The plan assets consist of both 401k contributions and profit sharing contributions. But, no recordkeeping has ever been done to independently keep track of the money sources. Assuming there are no hardships and withdrawal restrictions are the same, is there any reason to try to go back through time and split the money sources? Or recordkeep the sources into the future, for that matter?

As a TPA, it just feels wrong not to recordkeep the money sources.

[ETA Consulting LLC]

I think it is always a good idea to recordkeep the money sources. You would obviously want to differentiate a rollover source (which allows for immediate distribution) from the deferral source (that is restricted by both statute and the written terms of the plan). Upon taking over the plan, it's always a good idea to "draw a line in the sand" to ensure proper administration going forward. Now, if the owner is above 59 1/2 and fully vested in all sources; I "probably" wouldn't bother.

Good Luck!

[Bird]

As a TPA, it just feels wrong not to recordkeep the money sources.

I agree with you. But there is no requirement to do so, and if there are no differences for withdrawals then at the end of the day it won't matter. (But it could matter and that's why we want to do it right.)

It's actually more of a business decision as to whether you want to be bothered offering a different level of service. My experience is that when you try to "just" do something an "easier" way it doesn't turn out to be that easy. I mean, just thinking about it is a nuisance, right?

[Mike Preston]

Especially when Congress changes the law so that the different sources are treated differently in ways that aren't on our radar at the moment. Then where will you be? Sued by your client?