204(h) Notices

Is a 204(h) notice to participants required when a 401(k) plan is terminating?

Everyone will quickly write back to me NO.

Please consider these facts before writing that quick response.

This is not a Money Purchase Plan.

This is not a plan that had a money purchase source transfer in.

This is not a Defined Benefit plan of any sort.

This is a 401(k) plan that has a Fixed matching formula of $1 for $1 up to 5% of compensation.

Does the fact that the plan has a "Fixed Match" formula subject this company to the 204(h) notice requirements?

If anyone thinks it does, please let me know the code.

THANK YOU

Ok Relius users....when you have a situtation where a participant is a rehire and immediately enters the plan on rehire date; is the only solution in Relius to hard code that date since it is a date other than the normal entry date? I have a plan with a number of people eligible on rehire and was wondering if there was an easier way than hard coding them all.

thank you in advance.

Payroll is based on the 15th of every month, but paydate is actually the 20th. For reviewing whether 401k deposits are late, is it correct that we would use the 20th since that is the actual date the monies are separated?

What's the current interest rate used for calculating interest on underpmts from a pension plan? I saw it was to use the 30 year pbgc rate as of 1/1 for each year to 2008 but what is 2009 since?

An employee termianted in 2012 with over 1000 hours in 2012

the company sponsors a DB plan and a 401k plan and combines for testing.

the employee will earn an accrual in DB plan for 2012 since over 1000 hours

401k/PS plan requires 1000 hours and last day employment so employee is not entitled to an allocation in PS plan for 2012.

The combined plan s cross tested and requires gateway of 7.5%.

It is cleaner to meet gateway in PS plan.

Since employee is benefiting in the combined plan format can PS plan simply contribute gateway in PS plan?

Or does PS plan need an amendment prior to 12/31/12 providing for an allocation to this terminated EE?

Now how would above situation change if it were a non elective safe harbor 401k plan? does this allow for the gateway in PS plan?

It seems whether it is a DB accrual or 401k safe harbor the employee is benefiting, but perhaps where employee benefits dictates where gateway can be provided.

Plan sponsor is filing a VFCP application for several late deposits. Two of the late deposits were remitted later than 180 days. Provided the plan sposnor meets the PTE 2002-51 requirements for all of the other late remittances can the excise tax waiver be claimed for all but the 2 dpeosits remitted outside of 180 days?

Thank you for any guidance.

I'm just curious as to whether anyone knows the answer to this.

I checked the IRS LRM language for 415, and I do find the language that I'm seeing in current prototypes. But for Volume Submitter/IDP plans, I've just seen two with exactly the same following language, and I wondered if anyone knows whether this is sample language the IRS released somewhere, or if perhaps one person copied language from another VS provider. Rather than specifying that one plan or the other reduces, it seems to get you to each plan reducing proportionately.

(h)(1) DC Plans with same/different Anniversary Dates. If a Participant participates in more than one defined contribution plan maintained by the Employer that have different Anniversary Dates, then the maximum permissible amount under this Plan shall equal the maximum permissible amount for the Limitation Year minus any Annual Additions previously credited to such Participant's Accounts during the Limitation Year.

(2) If a Participant participates in both a defined contribution plan subject to Code Section 412 and a defined contribution plan not subject to Code Section 412 maintained by the Employer which have the same Anniversary Date, then Annual Additions will be credited to the Participant's Accounts under the defined contribution plan subject to Code Section 412 prior to crediting Annual Additions to the Participant's Accounts under the defined contribution plan not subject to Code Section 412.

(3) If a Participant participates in more than one defined contribution plan not subject to Code Section 412 maintained by the Employer which have the same Anniversary Date, then the maximum permissible amount under this Plan shall equal the product of (A) the maximum permissible amount for the Limitation Year minus any Annual Additions previously credited under subparagraphs (1) or (2) above, multiplied by (B) a fraction (i) the numerator of which is the Annual Additions which would be credited to such Participant's Accounts under this Plan without regard to the limitations of Code Section 415 and (ii) the denominator of which is such Annual Additions for all plans described in this subparagraph.

Is an owner-only plan (i.e, the owner of the company is the only employee) considered to be top heavy? And, is the plan required to include the top heavy vesting schedule?

An employer started making contributions into the Plan on 8/1/12. However, they just had the board meeting and signed the board resolution to adopt. There have already been contributions made. Anything they can do? Can a board resolution to adopt be made retroactively?

Good morning!

Hypothetically, let's say due to an internal error, a significant lump sum payment was made from the Pension Fund to the wrong participant.

If the Fund was already notified of the error and made whole on the incorrectly disbursed funds, is there any regulatory requirement to report the error to a government agency? I.e., "Just for the record"?

Thanks!

Jim R.

Father A owns 58% of the company. He also elected out of the plan and is not counted towards any testing. His daughter also works for the company as is currently in the plan. Is she considered an HCE/Key employee even though her father is not in the plan? Or does the father have to be in the plan in order for the attribution to kick in.

I'm taking over a plan for a new client, and the prior TPA said that the plan has a class-based allocation, but they make monthly deposits and don't require cross testing.

This is new to me. I would have thought that you'd have to test each deposit. The goal of the class-based allocation is to give a standard allocation but only to certain groups of people; is it because the allocation is standard (but it isn't) that we don't have to actually cross-test? Or could I have just heard him wrong? Thanks.

a 2 participant plan has an insurance policy on one of the participants. the premiums have been paid on the policy by policy loans for the past few years, the participant is concerned that having a loan on a policy owned by the plan could be problematic. Seems as if he would have investigated this prior to issuing the loan. However, would there be any pitfalls after the fact?

The situation is a medical partnership of 5 MDs (Old 5). They terminate that partnership on a Friday. Next Monday, 4 start new partnership (New 4); 5th one retired. New 4 hires virtually all the same staff, but moves the equipment over that weekend to new office space. New 4 has a slightly different name (enough to get by the state's business entity registration folks).

Old 5 had a 401k plan. New 4 sets up a new 401k plan. Numerous factors are driving for a termination of Old 5's 401k plan, rather than continuing it as a wasting trust or merging it into New 4's 401k plan.

If Old 5's 401k plan is terminated and payouts processed, will New 4's 401k plan have to prevent those that went from Old 5 to working for New 4 be prevented from making 401k deferrals for 12 months following the payout from Old 5's 401k plan?

Is is possible to get attorneys' fees incurred in getting a court order to force a participant to sign a QDRO or otherwise petitioning the court to sign the QDRO on the recalcitrant participant's behalf? The jurisdicton is California but I would be interested in any and all on-topic comments, thanks.

If an Employer has 6 employees, all eligible for the 401k PSP, but only three are participating in the DB Plan, when you are calculating the combined deduction limit does the compensation for all six employees count since they are all participating in the DC Plan? Or do you only count the compensation for the employees who cross over and participate in both plans?

A plan is NOT top heavy 2009 but funds a pro rata profit share in 2010 for 2009.

The plan IS to heavy for 2010 as of 12/31/09.

Is there any way to include the 2009 ps that was funded in Jan 2010 as an offset employer contribution when determining the 2010 top heavy profit share due?

Assume no 415 limit issue.

Thank you for your input.

The Plan document allows the plan administrator to establish a buy/sell window during which participants may buy or sell employer stock. We would like to set up a window under which terminated participants may sell the ER stock held in their accounts to active participants. Does this raise any prohibited transaction issues? In most cases, a terminated participant will not be a party-in-interest, so would it just be a transaction between a party-in-interest (active participant) and a person that is not a fiduciary or party-in-interest (i.e., terminated participant). I'm still thinking through these issues, but any thoughts would be appreciated.

My eyes are old and tired so I prepare the attached Notice 2012-61 legend and thought it might be of use. As I'm unsure how or from where you printed the Notice, you will need to add your own page numbers.

Notice_2012_61_TOC.pdf

Have an LLC prospect that wants to do a combination 401(K) and defined benefit plan. How do the LLC members pay the elective deferrals to the plan, through a personal account, from their draw??