This one gets me every time. A 401k plan provides a year-end match. But in order to get a match, you have to defer a minimum of $500 during the year. As long as you've deferred $500, you'll get a match equal to 75% up to 8% of pay.

George only deferred $350 for the year, and therefore doesn't get a match. He is still an active employee - he just decided early in the year that he no longer wanted to defer.

Would George be included on the ACP test? I think the regulations say that you're included on the ACP test if you were eligible for the 401(m) portion of the plan. If there was an hours requirement on the match and George didn't work the required number of hours, then he would be left off the ACP. But I'm not sure about this situation. He had the ability to defer more than $500 - so does that make him eligible for the 401(m) portion of the plan?

My client has maintained a cross-tested profit sharing plan for many years, Under the plan, each participant is assigned to his own allocation group. I selected this design feature figuring that it would provide the most flexibility. Despite using this design for many years, the plan has always made the same contribution percentage to everyone except the owner, who was provided a favored contribution. In recent years, everyone received a 3% allocation and the owner received 9%.

The sponsor is a distributor. The plan covers about 40 employees, almost one-half of whom are salesmen who make over $110K. The "Top Paid Group" election is in effect so as to limit the number of HCEs (employees making over $110K are not HCEs unless their comp is in the top 20%). The plan is not top heavy.

Early in 2011, 7 of the salesmen left the company to start a competing business. Two of them are HCEs and the other 5 are NHCEs (again, when the top paid group rules are applied).

I am currently in the process of running my testing calculations for the 2010 plan year and presenting different contribution scenarios to my client. Not surprisingly, the client would like NOT to have to make a contribution for 2010 to those who left.

To my way of thinking, the minimum gateway requirement will require that the same 3% contribution be given to the NHCEs who left in order for the owner to be able to receive 9%.

However, the plan document seems to permit the flexibility to provide zero allocations to the 2 HCEs who left. This would not violate the minimum gateway requirement and assuming that the cross-testing calculations pass, does this get me home free? By taking this course of action, are there other problems I need to be aware of?

Thanks in advance for your thoughts and guidance.

Is there a write-up somehwre on the paid preparer rules?

Client wants to use gain from transfer of stable value account to fund account for plan expenses. The stable value fund is only one of a number of plan investment options. To me this does not pass the smell test because one asset is disporptionately burdend with plan expenses, but I am looking for some authority to back me up. Does anybody know if the Department of Labor or the courts have addressed this issue?

If not, I would guess the participant, if possible, could roll their funds over into another plan

Just processed the 2009 filing (YE November 2010, not late) for a plan using electronic filing. Plan year as defined in the document ends on the last Friday of November. Plan has been filing 5500s since the 1979 year. This generated an error message since the plan year indicated on the forms isn't exactly 365 days long and we didn't check "short plan year" (which it isn't, and at some point under the calendar would have to check a box entitled "long plan year" given this logic). Anyone else run into this situation and how was it resolved? As a side note, hopefully they get this coding fixed before 2012 rolls around.

a high school has a 403(b), in order to receive the match the SPD states"you will have met the service requirement when you have completed 24 months of service" and that was what was elected in the AA. the SPD further states that "you will have completed the required number of months if you are employed by us at any time after you have completed that number of months measured from your initial employement commencement date" which I am interpreting that if you quit after 12 months and come back, you can be eligible for the match after an additional 12 months of service.

This means that any employee, regardless of hours worked, can be eligible for the plan match, after 24 months of service, correct? Full time and part time. However, the plan excludes employees who normally work less than 20 hours per week and are aliens, so basically they would have to work just over 1000 hours a year to be eligible for the match.

A question has been proposed if direct payments to providers from an employee's fsa plan would be eligible? Excluding debit card payments. I have searched the EBIA and other resources not finding any guidence.

Morning all and greetings, I'm brand new to this forum.

My sister will be filing for divorce imminently, whilst moving out of the marital home. She's in New Orleans, and while I appreciate the rules differ from state to state and that this seems to be an NY board, an explanation of the equivalent laws in NY would be fine for the purpose of further research.

Her Roth IRA is worth slightly over $1m , and she has copies of all paperwork in relation to this. Her children are all adults and established, only the youngest remains at home. For this month she has minor credit-card debts totalling no more than $6000, but will be debt-free at the time of filing.

I have several questions in this regard;

1) Is there any way her husband could contest the divorce to deliberately prolong it beyond the initial six month period? There's been no adultery or illegality on her part;

2) Typically, what are the waiting times between the Court granting a divorce and setting a date for the transfer incident, and the actual transfer?

3) Typically, what ways can spouses delay, legitimately or otherwise, the setting of the transfer incident date, or overrun it?

Many thanks,

Jaybee

Small ESOP owns 50% of company stock. Remaining 50% is owned by President of the company. President has decided to buy out the ESOP to create liquidity for the aging workforce. Is it necessary to put the transaction to a vote by the ESOP participants? Since it is not a merger, liquidation or dissolution of the business, I'm thinking not.

Secondly, once the stock is purchased is there any reason the plan cannot then be merged into the existing 401(k) plan? Vesting is not an issue, but President does not want to give distribution options to the younger employees if it's not necessary. I'm thinking a merger would be okay to avoid a distributable event for all participants.

Thanks for any input.

All suggestions are appreciated.

Vanilla DB plan, Vanilla LTD plan (but I don't have the detailed contract).

The latter contains the common long-term disability provision that offsets for anything the EE receives from the DB plan.

Suppose the disabled EE is age 60 and eligible for monthly early retirement benefit, and the DB plan pays a lump sum (rather than an immediate LA). What is the most common administrative practice in the LTD plan: offset the entire lump sum until "used up"? offset the monthly equivalent? other?

Does anyone actually have a mass submitter, volume submitter, or prototype cash balance plan?

Seen a lot of cash balance plans that are using an Adoption Agreement and some sort of volume submitter base plan document, but the opinion letter for those documents is for a defined benefit plan, so really it looks like practitioners are customizing volume submitter defined benefit plan documents to accommodate a cash balance plan's provisions. Am I right that these aren't really volume submitters anymore, but individually designed plans?

I seem to remember the IRS saying something about a program to formally approve cash balance plan documents - does anyone recall exactly where and when they said that?

401(k)

Safe Harbor Nonelective

Top Heavy

Company bought out.

Plan terminating 8/31

Participant Compensation

Safe Harbor Nonelective made for the 8 months to all eligible. Participant Compensation used for 2 new employees entering 7/1.

I know that the Compensation limit needs to be prorated 8/12 * 245000 = 163,333.33

Two questions

1. Do the two EE's that entered mid year have to have additional contributions because the plan is top heavy and the 3% was only on participant compensation?

2. Does the 402(g) limit need to be prorated? 415 Limit?

I haven't had a plan termination in years - so just wanted to make sure I didn't need to do 1 or 2 above.

Thanks

Pat

Not sure which is the best forum, but I will try this one. If an LLC elects to be taxed as a corporation under the "check-the-box" rules, is it a "corporation" for all purposes under the 414(b) and © rules? The logical answer seems to be clearly "yes," but I don't recall ever seeing any confirmation of that.

Let's say there are NO participants required to be reported for 2009. Does anyone have a problem with me voluntarily reporting my 2010 people in the 2009 plan year in this situaiton? I have good reasons for doing it this way, so please don't say "why don't you just report them in 2010?"

When I go to the IRS FIRE website I get a message that there is a "certificate error" with the site and I should not sign on. (I'm going to "https://fire.irs.gov" per the instructions)

I'm not very computer literate...can anyone tell me how I should address this issue?

thanks in advance!

edited for outcome...

I sent an email to the IRS help for the FIRE system and was advised that I would need to contact our ISP about the security settings we might have that would cause this error.

They said that a lot of people have this issue.

I was under the wrong assumption that certificate errors meant a problem with the website but apparently that isn't so.

Assume an employment agreement provides for payment on either (i) involuntary termination, or (ii) voluntary termination within 90 days following a change in control. Is it permissible to revise the agreement to delete the second payment trigger, such that the amended agreement provides for payment only upon an involuntary termination, or does the substitution rule somehow prevent the attempt to ensure that payment is only made upon a substantial risk of forfeiture?

Also, is it permissible to add the language providing that each payment will be deemed a separate payment, so as to allow stacking of the short-term deferral and separation pay plan exceptions, or does that language have to be in the first and original version?

Thanks.

To what extent is it permissible for non-excluded union employees to have separate provisions in a plan?

I believed that it was permissible, if the benefits were collectively bargained, but I am unclear as to what limitations there are, and would appreciate any guidance/direction to the appropriate reg. or authority.

Conversely, if different provisions are not permitted, I would appreciate knowing that also.

Specifically, in a plan, there is no exclusion for collective bargaining employees. The plan would like to permit the union employees to be able to have in-service withdrawals. In-service withdrawals are not otherwise permitted nder the plan, and the plan sponsor does not want the non-union participants to be able to take in-service withdrawals.

Is this permissible?

Thank you

A father and his adult son (over age 21) each own 50% (profits and voting) of a small company with a score of employees.

The son owns 100% of another company with a handful of employees. The son has no children or grandchildren. The companies don't do business together, but the son works and is paid wages from both companies (mostly from the company he owns 100% of).

The attribution rules generally say: If the parent or the adult child owns more than 50% then the smaller stock ownership is attrributed to the other.

So, if one of them owned more than 50%, then it would be a controlled group. But an exact 50/50 split is not - is that correct?