a plan wants to make an amendment to increase the benefit of a participant.

the plan has 3 participants, all HCEs

they would like to amend plan to increase the benefit of a deceased participant up to the 415 limit. the spouse has not yet received the pension.

So his benefit is 5k per month and 415 limit is 8k, can the benefit be increased thus increasing what the survivor will receive?

thanks

I have a money purchase plan that did not make the minimum contributions for the past two years. The plan sponsor knows that they need to make up the lost contributions plus interest. My question concerns filing a 5330 and the associated excise tax. I have come across some information indicating that money purchase plans are exempt from the excise tax. Does anyone else have this understanding?

Has anyone addressed this collossal issue yet? Some of these 403b's who have nver reproted before could have hundreds of people to report. Any relief expected? Is anyone talking about this stuff? Allso, has anyone had success getting full socials from TIAA for this purpose?

Company A has sponsored a PS plan that has covered many employees for several years. A 25% owner of co. A also owns 95% of company B, which never had any employees. Co. A figures out that its workers comp premiums would be much less if they show all of the employees working for co. B and on 1/1/11 start having co. A pay all payroll amounts to co. B, who in turn pay the employees (and, I assume, the owners). This would appear to indicate that everyone's employment terminated at co. A and they were hired by co. B on 1/1/11, and that the "same-desk" rule is not invoked since neither co. A or its assets were sold. If this is correct, all of these employees are now allowed to receive distributions even though they're working at the same location doing the same job they had before 1/1/11.

Co. A is still in existence, at least on paper, and its 3 owners haven't yet decided whether they would like to keep the plan and continue providing benefits to the employees (they may still decide to keep making small contributions in the future). If they want to keep it going, I suppose the plan can be amended to include co. B as a participating employer. Although both companies once in a while work together to perform services for third persons, each company provides less than 5% of the other company's revenue. And since providing payroll services is not a service historically performed in the service field of co. B, it appears that an affiliated service group situation does not exist.

Althought the payroll arrangement may not be legit, is it correct to consider all of the participants to now be terminated employees and the plan will not have any new participants until co. A starts paying the compensations? All help is greatly appreciated.

With respect to the 20%-level of bona fide services under the 409A definition of "separation from service," does anybody know what factors the IRS will look at to determine whether or not the (former?) employee is in fact performing less than 20% of his or her previous services?

In other words, how do they determine the level of services that were performed while working as well as the level of services performed after the purported separation from service? Time spent working? Projects worked on? Responsibilities?

What constitutes "bona fide services"?

Interested in hearing anybody's thoughts on this.

I think I know the answer but can an employer remove "partial withdrawals" and "substantially equal installments" and leave only lump sum as the distribution option? This is a 401(k) Plan.

No wonder the debt ceiling needs painting. One would think that the US has never faced more challenging problems than the two no-brainer forms.

I have a client with 5 levels of match calaculations. This is not possible to do in RA 15.x. Has the number of levels been increased in 16.0/16.1?

Thank you.

Participant is rolling out of a plan with regular deferrals & ER contributions and wants to rollover and convert to Roth IRA. I believe on the 1099-R I would report the gross distribution in box 1, taxable amount in 2a which would be gross distribution, in box 7 is a 'G', and in box 4 the amount of tax withheld.

Question is box 4 and withholding, can the participant elect no withholding or is there a 20% that must be withheld at the point of distribution? From what I have read I think that since it is a rollover they can elect no withhold does this sound correct.

It is way to early to think about 1099r's!

Thanks,

I know in the past there has never been a minimum excise tax to be filed, has this changed? Client has $15 owed

Company A has one purpose: To provide servies to Big Customer. Company A makes a LOT of money servicing Big Customer, but Big Customer has told Company A that the contract will not be renewed effective 4/1/2012. At this point, Company A will be closing its doors.

1) May Company A continue to rely on its safe harbor status through the date on which they close their doors? There will probably be wrap up stuff going on through June 30, 2012, but then nothing. It's hard to argue there is a financial hardship as large bonuses are being taklen. (1.401(k)(e)(4)(ii)). I don't the like "(g)" exception provided because I need to run the ADP test.

2) Even if everyone is terminated in June 2012, what's to stop me from terminating effecetive 12/31/2012? Everyone will be eligible for a distribution under the Plan due to employment status, so I can pay everyone out. I would just need to get resolutions signed terminating the plan effective 12/31/2012, which would allow me to file a final 5500 (only a few people have account balances). Is it that easy to get around this? What's more, couldn't they sign that resolution in June or July 2012 and be done with the Plan at that time (assuming everyone is paid out by then)??

A company maintains a Profit Sharing plan and has two co-owners (A & B). Co-owner B has 2 sons that also works at the company. Co-owner A steals a large portion of the plan assets and disappears. There is now a judgement against the plan requring the plan to make the affected participants whole. There is enough money remaining in the plan to make all the employees whole but co-owner B and his 2 sons want to just forfeit their account balances rather than the company having to replace those balances in the plan. My questions are:

1. Is this even possible for the company to not replace the portion of the plan assets that belong to co-owner B and his 2 sons?

2. If they forfeit their account balances do we show it as a distribution? Do they have to get 1099's?

This is not a situation I've come across before and am looking for some ideas on how to handle.

I appreciate any suggestions!

A management LLC provides management and administrative services to 4 LLCs. The LLCs provide day care services. The management LLC provides services such as hiring, firing, payroll, etc. to each of the 4 LLCs The ownership percentages of any one person is nowhere near 50% in any of the companies and there are at least 8 other owners (non-family members) with ownership percentages varying between 10-20%. It has already been determined that there is not a controlled group between the management LLC and any of the 4 LLCs and there is not a controlled group amongst the 4 LLCs.

In looking at the affiliated service group rules, I believe this is not an A-Org because there is no FSO (professional corporation). I also believe there is not a management affiliated service group because there is no common ownership between the 4 LLCs and the management services are split about 25% per company. The question is on a B-Organization. Would this be considered a B-Organization? A signficant portion of the management LLC (over 10%) is services to each of the 4 LLCs, and the management services are typically performed by companies in this industry. And, I believe an FSO is not required to be a professional corporation for a B-Org.

Am I missing something? Do you think this could be a B-Org? Thank you so much. By the way, I'm told the ERISA attorney has told the client that there is no ASG under any of the three. When I inquired about B-Org, I was shot down.

Moody’s Investor Service warned mutual fund clients that the impasse was threatening money market mutual funds. “Direct risks include the potential for a missed interest or principal payment on government bonds for a short period of time, as well as incremental weakening of the overall credit quality of money-market fund portfolios that have U.S. government exposure," the New York-based ratings company said in a statement.

http://www.nytimes.com/2011/07/27/us/politics/27fiscal.html

And to think I used to reassure employee's that the plan's Govt money market was the safest investment in the plan and if the MM ever lost it's value, there'd be a lot bigger problems to worry about (because the whole world would surely be in chaos, crisis and war before it happened).

So the plan terminated 4/30/2011. That was the pay out date.

so the SSA is due 7 months later, or 11/30/2011. which is before the due date for the 2009 and 2010 SSA filings! Go and figure!

and there is no 2011 form, much less even a 2010 form. And I'm not crossing my fingers on an early release date of that form.

but I'm still suppose to report the prior terminated people as "D" on a 'timely' basis.

Gotta love it!

Maybe I need to print it on glow in the dark paper just so it won't get 'lost'.

I have a plan that has about 15 physician owners. One of them is contemplating selling off his ownership interest in the company to allow him to take a distribution from the 401k and DB plans. He wants to sell his ownership interest but continue to work for the company (in some sort of non-partner capacity). He brought up the legality of doing that because of the "same desk" rule. That rule was changed in 2000 or 2001 but I'm not sure what he is wanting to do would fall under either the old or the new law. He would still be working for the same company, no merger or acquisition, just change in ownership. I see this as if he terminates he can take a distribution and if he is rehired later he will become a participant again. Am I not seeing the big picture or is he trying to do something that just won't work?

Due to the economic conditions over the past 5 years, our sales, employment, and the number of participants in our 401(k) have dropped dramatically. We had audits from 2006-2009 because our participant total was above 120. At the beginning of 2010, we still had 106 eligible participants, but by the end of the year that number dropped to about 85.

Our last audit cost about $12,000 which was paid for by the company because the plan has less than $1 million in assets. That $12,000 is a very steep cost for us this year. Clearly, we won't need an audit for 2011 since we have less than 100 participants.

Is there some type of hardship exemption from an audit for a situation like this?

We administer a one participant plan (Form 5500-EZ filer not subject to Title I of ERISA) where the owner did not deposit his 2010 401(k) deferrals timely. Is he required to file a Form 5330, pay the excise tax and deposit lost earnings?

....................thanks all for your feedback!

A man rolled over his account from one companies 401(K) Plan to another. If I have to count this rollover, the Plan is Top Heavy for and not Safe Harbor. He was 100% owner of the old company which went broke. He is now 50% owner of the company which bought the assets of the prior company about 10 years ago. Is this rollover account counted for Top Heavy?