We just found out that the agent had a disability waiver of premium rider included on a policy for a 412(e)(3) plan. Would appreciate thoughts on if this should be allowed?

Thank you!

Our company has a policy to match 20% of an employee's 401k contribution up to 6% of their annual salary. One of our Sr. Managers is questioning the fairness of the policy. As he points out:

Employee A makes 100,000 and contributes 10,000 during the year....we will match on 6,000 for this employee...thus the employee will get a matching contribution of 1,200

Employee B makes 60,000 and contributes the same amount, 10,000....but this employee will only receive a $720 match (6% x 60,000 x 20%).

This Sr. Manager's stance.....if both employees are contributing 10,000, then they should both receive the same match.

A couple of questions:

1) Does anyone else have a match that isn't capped by % of 401k wages....he is looking for a matching calculation that is based on a flat rate contributed by the employee and not capped by a percentage of salary

2) How would moving to such a matching formula impact testing?

Would be curious to hear some thoughts on this concept.

Thanks.

We have a client that filed a 5500 for 2011, since they had over 100 participants. As of 12/31/2011, they fell below the 100 participants. Do they just stop filing the 5500 for 2012 and going forward until they go over 100 participants again?

I work alone and I'd just like a second opinion (or more) on this. Is there a brother-sister controlled group in this situation?

Son (over 21) owns 100% of Company A and 49% of Company B.

Father owns zero percent of COmpany A and 49% of Company B.

Other 2% of Company B owned by unrelated individuals.

Thanks!

Anyone provide anything specific as to why a husband cannot rollover his 401(k) into his wife's retirement plan? I know (or at least believe) that he cannot because the TIN or SS has to be the same, but I cannot find anything that directly confirms this in the Code or Regs. Any insight welcome.

We recieved a check for the proceeds of a lawsuit for a mutual fund plans was invested in. Some of the plans have terminated and the companies went out of business before we received these procedes. What do we do with it? Also, do we need to track down plans who also are due a portion of the proceeds for the lawsuit that have since left us. We also have cases were the company still exists, but the plan no longer exists. I wish this never happened!

Can we just escheat the money to the state?

I have a plan year that runs from 12/01/2011 through 11/30/2012.

A participant contributed his catchup of $5500 in December 2011.

In 2012 from Jan - Nov 30th he has contributed $18,860.48 making his total for the plan year $24,360.48. He will not exceed $22,500 in either calendar year (2011 or 2012).

When I run the ADP test in Relius it is testing $17,000 for him and shows $5,500 as catchup. What is happening with the other $1,860.48?

He is a NHCE so I'm not concerned about a failing test. I want to be sure that this is working properly. It's been so long since I had this scenario, my mind is befuddled!

Thanks in advance!

Am I correct that a plan that covers only the owner and spouse plus their child cannot file a 5500-EZ (due to the child being in the plan)?

We took too much money out of a participant's paycheck for 401(k) deferral. This happened twice.

Once the money was put into the plan, but we immediately realized it and corrected it (same year) by taking the money out of the plan and returning it to the employee in a later check.

Another time the money was not put into the plan, we realized we deducted too much and paid it back to the employee in a later check.

Are either of these a plan failure that require correction under EPCRS? They were both minor errors and both corrected soon after the mistake was made.

Any help is appreciated.

Can a Money Purchase be restated to a Profit Sharing mid plan year without the mandatory contribution? I THINK it can be restated retroactively to the beginning of the plan year, yes? I know a Section 204(h) notice is required and full vesting is not required. This is a small plan with a plan year end of 8/31.

Thanks

Is there a definite definition of fringe benefit? Plan excludes fringe benefits from compensation. Employees earn a "trip award" based on their performance. TPA has excluded from compensation, accountant is questioning.

How do we determine if this is a fringe benefit or just a bonus?

Thank you.

Kate Smith

I have an old profit sharing plan ( sole proprietor ) for a physician who left private practice several years ago.

Prototype document.

There is still one employee in the plan.

WE want to close it out and rollover to an IRA for him ( and this is also what the employee wants to do )

Other than sending the tax notices and distribution forms to each of them and doing the distribution to close out the accounts is there anything else that needs to be done ( plan amendments, notices to anyone, etc ) ? Do they need a spousal waiver for a profit sharing rollover ?

I know a final 5500 will be needed.

Just wondering what else I need to do to avoid any IRS/DOL problems down the road.

Many thanks !

One of our client's advisors has recommended a type of age weighted or new comp matching contribution. We have never heard of such a thing.

Could anyone point me in the right direction for research?

Thank you.

Kate Smith

We are the TPA of a large 401(k) plan. One of the former employees has ignored all communication about his RMDs for the past several years. Mail is not being returned and his phone is still in operation with an answering machine message that gives no clues. Because the employer has not been able to reach him by phone, nor had any other response, they do not know if he's disabled (perhaps senile), deceased, doesn't understand that a 401(k) plan cannot be aggregated with IRAs for RMDs, or is just stubborn.

I'm thinking of having the employer instruct the record keeper to process the distribution without the participant's signature. I'd appreciate any feedback about why this should or should not be done.

I have a dentist with a profit sharing plan who will be terminating the plan in the next year.

He will not be making a contribution for 2012.

I had him execute a SIMPLE plan and distribute the required notices by October 1, 2012. He will be making a 2% non elective contribution for him and two emplolyees for 2012. He is self empllyed so will me making a salary deferral contribution for himself for 20112 in 2013 before he files his taxes.

Does this all sound correct to do ?

THank you!

ABC Corporation has existed for several years and does not maintain a retirement plan. ABC became part of a controlled group with XYZ Corporation on October 1, 2011. XYZ has maintained a calendar year plan for many years.

ABC will adopt the XYZ plan effective January 1, 2013 (the end of the transition period).

May XYZ consider October 1, 2011, the hire date for all ABC employees and NOT count prior service with ABC for purposes of eligibility and vesting?

It seems this should be acceptable, but I can't quite find an affirmative answer.

Thanks for any insights.

We have client who contributed and deducted on tax return approx. $10,000 more than 404 limit. Ideas for correcting?

Are we suppose to report the actual amount paid for health insurance or the amount deducted?

We are paid biweekly and because of this, the amount deducted is just sligthly difference from the amount paid.

In most cases it's off by 8 cents.

We have a plan that is union only plan. The plan makes a QNEC contribution to its members/employees. The plan is currently not passing the ADP test. If I bring test the entire QNEC for both HCEs & NHCEs, the plan still does not pass. If I test the QNEC for NHCEs only it will pass.

Is this possible? Since it is a union plan, it is not subject to coverage or other 401(a)(4) testing.

Thanks!

I have a plan the has mutliple sources. The elective deferral and match sources have a 1 month wait entering on the first day of the month following. The safe harbor and profit sharing sources have a one year wait and enter on the first day of the month following. Here is a quick example. Ptp is hired on 7/15/2011. He would enter the plan (elective deferral and match source) on 9/1/2011. Presuming he completes his YOS, he would enter the SH and NEC portions of the plan on 8/1/2012.

The plan also calls for compensation while a participant in each specific source. Based on my example above of the 2012 calendar year plan year, the comp for the elective deferral and match source would be for the entire 2012 plan year. The compensation for the SH and NEC portions of the plan would be from 8/1/2012 -- 12/31/2012. Now for the question:

When performing the gateway testing, I known that you can use compensation while a participant to perform the 1/3 of plan comp test or the 5% of 415 test. My question is am I permitted to use compensation while a participant in the plan as a whole or can I use comp while a participant for the portion of the plan year in which the participant is eligible for the SH and NEC portions of the plan? My understanding has been that the compensation for the gateway testing can be for the SH and NEC portions of the plan, but I am having trouble confirming it.

Next, we recently upgraded versions of Relius to 17.0. My recollection of version 16 and prior was that you could define comp for gateway while a participant, but I can no longer find that option in the newly designed plan specs. if anyone knows where it is, I would greatly appreciate being told where it is.

Thanks in advance.