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Message Boards Digest

April 10, 2019

Here are the most recently added topics on the BenefitsLink Message Boards:

cowdogman created a topic in 401(k) Plans

Amend a Final 5500-EZ?

If a sole proprietor in 2018 [1] terminated a solo 401(k) by written resolution, [2] rolled the funds to an IRA and [3] filed a final 5500-EZ reflecting a zero "end-of-year" balance, is it possible to resurrect the 401(k). I have seen other discussions about reversing [1] and [2] above, with the consensus being (I think) that reversal is doable by a new resolution and moving the funds back to the 401(k) account. But what about filing an amended 5500-EZ reflecting the renewed status of the 401(k) -- after a "final" 5500-EZ has been filed? Any thoughts appreciated.
Number of replies posted  1 reply      Number of times viewed  42 views      Add Reply
 
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bzorc created a topic in 401(k) Plans

Refunds to Partners for Correction of ADP Failure

Just received financial statements for a partnership with 2 partners. Based on the income of the company and the split to the partners, the plan fails ADP testing (no match), and both partners will need to receive substantial refunds for their 2018 contributions. Are the refunds subject to the Form 5330 tax for failing to make the refunds before March 15?
Number of replies posted  2 replies      Number of times viewed  51 views      Add Reply

Dhaval Mehta created a topic in 401(k) Plans

Employer Missed Taking Out My Intended 401(k) Deferrals

My employer has a policy that the 401K contribution can be started only after 90 days. I joined on 8/27/2018 and I wanted to maximize my 2018 contribution so I set up a 100% deduction in November in preparation of my eligibility starting December 2018 paycheck. The payroll department could not process this election because it got confused with 100% and could not accurately calculate taxes etc. After multiple back-and-forth with plan and the payroll department, the issue finally got resolved in mid-January of this year. I see the IRS has a correction program that seems to cover my situation -- https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-correcting-a-failure-to-effect-employee-deferral-elections -- Should I be getting 50% of my missed deferral amount?
Number of replies posted  3 replies      Number of times viewed  43 views      Add Reply

mjf06241972 created a topic in SEP, SARSEP and SIMPLE Plans

Two-Partner Business Sponsors SEP, Wants Disproportionate Allocations

A 2-partner business would like to set up a SEP for 2018 (by 4/15/19). One partner wants to max out the SEP contribution to his account but the other partner wants less. Is there a waiver form or something that can be done to have different contribution amounts? There are no non-owner employees.
Number of replies posted  5 replies      Number of times viewed  42 views      Add Reply

Below Ground created a topic in Retirement Plans in General

Affiliated Service Group Here? Workarounds?

Partner A owns 50% of Firm 1 and 100% of Firm 2. Partner B owns 50% of Firm 1 and 100% of Firm [3] Business is wealth management service and all 3 firms are S Corps. Firm 1 is support staff and expenses. Firms 2 and 3 are the respective partners. Is this an affiliated service group? Note that the partners are both licensed. Final piece of the puzzle is that the one support staff working for Firm 1 is a leased employee, where the leasing firm provides a 401(k) plan with a 100% of first 4% Safe Harbor Match. That match is paid by Firm 1 (indirectly paid by Firms 1 & 2). Is there a coverage issue if Firm 2 and Firm 3 have SEPs arrangements that cover only the respective partners? If firm 2 replaced its SEP with a 401(k) covering only Partner A, would that cause a problem?
Number of replies posted  0 replies      Number of times viewed  17 views      Add Reply

PensionPro created a topic in 401(k) Plans

Impermissible Qualified Charitable Distribution from 401(k) Plan as RMD

A participant's RMD for 2018 from a 401(k) plan was calculated as $160,000. He transfers $100,000 to a charity and takes a taxable distribution of $60,000. We find out after-the-fact. How do we fix this? My initial thought is to issue a 1099-R for a taxable distribution of $160,000 to the participant.
Number of replies posted  2 replies      Number of times viewed  43 views      Add Reply

shERPA created a topic in Correction of Plan Defects

Is VCP Processing Grinding to a Halt?

We submitted one last August. As of today it's not even assigned yet. Anyone else seeing this?
Number of replies posted  9 replies      Number of times viewed  70 views      Add Reply

legort69 created a topic in 401(k) Plans

Plan Forfeitures Allocated to Participants as Fee Credit

Sponsor wants to allocate the forfeiture balance as a fee credit to participants with balances. The participants receive a forfeiture "credit" proportional to their account balance, and not necessarily with regard to the actual fees they were charged that year or over multiple years. [1] Does the fee credit have to represent actual fees incurred over time in order to be a valid reimbursement? [2] Is this a legitimate way to expend the forfeiture? [3] Should the forfeiture credit be an annual addition?
Number of replies posted  2 replies      Number of times viewed  40 views      Add Reply

Tom Poje created a topic in Retirement Plans in General

Projected Limits for Next Year: Going Up

CPI-U released today (Apr. 10) -- 254.202, a huge spike from last month (February was only 252.776). At that rate the 415 limit will be $57,000 and the comp limit will be $285,000. The rates used to determine the limits (July -- August) never have been less than the March value, so even at this early date, it's looking like the limits will increase.
Number of replies posted  0 replies      Number of times viewed  36 views      Add Reply
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