Improper Allocation

[thepensionmaven]

Accountant asked for a consult on a client's 401(k). Prospect apparently did not review TPAs allocations of SHM and contributed an amount equal to the SHM plus an amount equal to employee deferrals as the SHM contribution.  Upon instruction from bookkeeper, the difference was allocated to the profit sharing portion of the plan.

His client discovered and hit the ceiling, insisted the money be returned to the company, although he was told by the fund holder the money could only be returned with their check to the Plan, or held in an unallocated account.

Client insisted on a check to the plan, which he endorsed as trustee and deposited into his business account, although he was advised of the ramifications of so doing.

Apparently the profit sharing doc called for a new comparability allocation, which was done.  The fund holder, upon instruction from TPA, reallocated the funds, but apparently improperly.

Accountant asking for advice on how to clean up.  I would think the under-age or coverage that was taken from each participant's account would be reallocated to the affected participants on W-2 for the year of correction, not the year the contribution was made?

I ain't doin' it.

[Bird]

It's not like I really followed this but concluding that this somehow affects participants' W-2s does not make any sense at all to me.

The whole post is incoherent; sorry, but while you probably didn't want to waste any more time on a black hole all I have is a vague idea that someone put money into a plan that they didn't intend to, took it out, and participant's accounts were affected.

This is the accountant's client that you are now calling your prospect?  Was the entire "profit sharing" piece pulled out?  What do you mean by "reallocated" - were the monies not deposited by source? 

[Larry Starr]

4 hours ago, thepensionmaven said:

Accountant asked for a consult on a client's 401(k). Prospect apparently did not review TPAs allocations of SHM and contributed an amount equal to the SHM plus an amount equal to employee deferrals as the SHM contribution.  Upon instruction from bookkeeper, the difference was allocated to the profit sharing portion of the plan.

His client discovered and hit the ceiling, insisted the money be returned to the company, although he was told by the fund holder the money could only be returned with their check to the Plan, or held in an unallocated account.

Client insisted on a check to the plan, which he endorsed as trustee and deposited into his business account, although he was advised of the ramifications of so doing.

Apparently the profit sharing doc called for a new comparability allocation, which was done.  The fund holder, upon instruction from TPA, reallocated the funds, but apparently improperly.

Accountant asking for advice on how to clean up.  I would think the under-age or coverage that was taken from each participant's account would be reallocated to the affected participants on W-2 for the year of correction, not the year the contribution was made?

I ain't doin' it.

I am in agreement with Ed; I haven't got an idea of what you are talking about or what was actually done.

[thepensionmaven]

That is all the information I was given.  This does seem entirely too confusing and either more information is needed or suggest they seek another opinion.

[Larry Starr]

3 hours ago, thepensionmaven said:

That is all the information I was given.  This does seem entirely too confusing and either more information is needed or suggest they seek another opinion.

Wondering what you thought we could do to help if what you have is "entirely too confusing" for you.  Seeking another opinion with the same faulty data will not be  helpful.  If you want to help out this CPA (which could be a good thing), you need to secure the necessary understanding of what actually happened so you can apply all the many rules and processes that we have as our resources.