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?

We have self-directed SEP-IRA plans with Wells Fargo, under the PMA plan (100 free trades a year per account). I am convinced that with our higher income this year, and the fact that we are both turning 50 this year, we should convert our two SEP-IRA plans to two Solo 401k plans. We are sole proprietors as husband/wife, filing Schedule C income.

I called Wells Fargo and they can open Solo 401k plans for us no problem, and then roll over the SEP-IRA investments into the new plans, all under the same PMA account. So that's good. The only problem...

In order to open the Solo 401K, Wells Fargo needs a Third Party Administrator (TPA) to provide the plan. The best I could find online are companies who will set up the plan for a fee (or not), and then also charge an annual flat fee to administer the account.

Does anyone have any recommendation for where to find a TPA with a good low-cost plan? We have a CPA and do our own investing, so we don't need any other tax or investment advice - just the plan documents, and to keep everything legal etc.

(The cheapest I've found is $195 a year for both owner&spouse, with no setup fee, at MySolo401k.net.

PenServe also looks interesting, though I can't find prices on their website.)

At some point when we slow down into early retirement we might just continue with the SEPs and close the 401k, since we'll be saving a lot less then. So if we do rollover now to a Solo 401k, can we later roll it back to a SEP?

---

If we can't find a good plan, an alternative we are considering is continuing to make EmployER contributions ONLY to our SEP-IRA (as we like the mix of funds that WF offers), and ONLY making EmployEE salary deferrals + catchup contributions to a new Vanguard Solo 401k. (The Vanguard Solo 401k is a plain vanilla plan offering 100 Vanguard mutual funds, but it only costs $20 a year.)

I've read all I can on these forums about the danger of mixing both a SEP and a Solo 401k, and having to amend the SEP form with Wells Fargo to indicate that any excessive employer contributions should be deducted from the SEP. I imagine they will think I'm a nutcase if I ask them for a prototype SEP plan, so if anyone has any more tips on exactly what language I need to insert to be legal, I'm all ears. (The Vanguard concierge told me I could NOT have both a SEP and a Solo 401k, by the way.)

Sorry for all the questions, and thanks in advance. This seems to be a very knowledge board.

PS. The deficit commission has put forward the proposal to cap the combined contributions to $20K or 20% of income anyway, so the huge benefit of the Solo 401k vs. the SEP may disappear if that recommendation is ever adopted.

I currently use EBIA as my 125 reference manual. My manager is wanting to know if there are any others available. Does anyone recommend anything other that the EBIA manual?

A 403b plan is exempt from ERISA because it is a church plan. The plan document excludes a few classes of employees. The company wants to write a separate 403b plan to cover one of the excluded classes, but the provisions will be different from Plan #1.

Do you see any issues with them doing this?

Under ERISA Section 104, a plan is generally required to provide a copy of the plan's SPD upon a participant's request. If the plan provides a copy to the participant must the plan (at a later time) also provide a copy to the participant's authorized representative if the representative makes a request?

(Assume that the participant is still living and that there is no presumable reason why the representative can't get the document from the participant.)

Traditional 401 (k) Plan. Is it possible to add a comp exclusion mid-year? The participants would have the ability to change their deferral elections, but the client doesn't want to bother with the process of collecting enrollment changes. Can this be done? Thanks.

401(k)/PS plan is new comp. 6/30 PYE 6 different groups based on shareholder percentage and comp. and non-shareholder and comp. An employee has been a shareholder for years...effective 10/1/10 he is no longer a shareholder, I know he is still considered an HCE & Key, but for the PS, do I calc. him as a shareholde since he was for a portion of the plan year??? The doc. doesn't say you must be a shareholder as of the end of the plan year or anything.

Clarification of §1.401(a)-20 Q24

Scenario: Plan requires spousal consent for loans. Participant balance is $2,000 deferrals, $4,000 Match. Total Account Balance is $6,000. Match is 40% vested therefore vested account balance is $3,600. Loan has been requested for $1,800.

Is spousal consent REQUIRED because the the total account balance is $6,000. Or is spousal consent NOT REQUIRED because the the total vested account balance is $3,600.

Sidebar: So does "total accrued benefit" mean total balance in account or total vested balance.

§1.401(a)-20. Requirements of qualified joint and survivor annuity and qualified preretirement survivor annuity

Q-24: What are the rules under sections 401(a)(11) and 417 applicable to plan loans?

A-24: (a) Consent rules. (1) A plan does not satisfy the survivor annuity requirements of sections 401(a)(11) and 417 unless the plan provides that, at the time the participant's accrued benefit is used as security for a loan, spousal consent to such use is obtained. Consent is required even if the accrued benefit is not the primary security for the loan. No spousal consent is necessary if, at the time the loan is secured, no consent would be required for a distribution under section 417(a)(2)(B). Spousal consent is not required if the plan or the participant is not subject to section 401(a)(11) at the time the accrued benefit is used as security, or if the total accrued benefit subject to the security is not in excess of the cash-out limit in effect under §1.411(a)-11T©(3)(ii). The spousal consent must be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent is subject to the requirements of section 417(a)(2). Therefore, the consent must be in writing, must acknowledge the effect of the loan and must be witnessed by a plan representative or a notary public.