Hi ,

Client dissolved corp on 12/31/2009.

There was only 1 participant (owner) in the plan and rolled it over (about 75k) on 09/15/2010.

Since 5500-ez is not yet available for 2010, I will use 2009.

Questions:

In part A, several checkboxes are applicable. Do we have to mark them all?

a1) the first return filed for the plan;

a3) the final return filed for the plan;

a4) a short plan year return (less than 12 months).

Since the plan was rolled over on 09/15/2010, my return will be from 01/01/2010 to 09/15/2010 - correct?

There are some questions about END of the year Assets/Liabilities and Number of Participants. Should I put ZERO for all (since technically all assets were transferred out)?

I have a plan that is a non-electing church plan, we currently perform the 401(m) ACP test on this plan, but they also have a few different matching formulas. Should we be checking Benefits, Rights and Features, as well? I understand that Notice 2001-46 provided relief until at least 1/1/03, has that ever been updated?

Thanks for any help you can provide.

Here's the situation I was presented:

HR Manager ("D") wants to use his self-directed brokerage account in the 401(k)/profit sharing plan to purchase "between 5% and 10%" of his company's stock. Company is an S-Corp, and the company president (and plan trustee) is currently the 100% owner. Owner is making this available to D because he needs to generate cash to put back into the business, but he does not want to make this available to all participants.

I've read a bunch of the threads here about the problems of S-Corps doing this kind of thing; it sounds like this would be a prohibited transaction. Is there any way it wouldn't be?

I mentioned that if they're so cash-strapped, how are they going to pay for a valuation of the company to determine fair-market value? That didn't thrill them.

Even if we get past that (and that's a big "if", I know), then it looks like we run into a discrimination issue, as D is getting the opportunity to make an investment that the other participants are not, and because he's buying more than 5%, it's an HCE/NHCE issue. Would limiting D to purchaing only 5.00000% take the sting out of it?

Are there any other issues I'm not addressing? I'm not looking to give them an iron-clad legal response - I'm willing to refer them to an ERISA attorney for a final answer, but I'd like to prepare them for what the issues are and what they can expect. Thanks.

I am looking for suggested reading on 401(k) discrimination testing topics.

I am particularly interest in something that goes into the kinds of issues faced by employers that maintain multiple 401(k) plans for different groups of employees where the groups are differentiated by service date for some plans (i.e. hired before and after certain date gets you in different plan) as well as by division/job (working for a particular company gets you in one plan, unless you get a promotion to a certain level of job and you get bumped into another plan).

Bonus points if it covers situations where one or more of the plans is safe harbor and the remainder are not.

Is there something authoritative I can pick up to educate myself? Thanks.

The Plan provides for an annual match.

The match has been made per pay period.

The Plan Administrator refuses to change its match method, maintaining that the Plan document is incorrect.

Is there any way to amend the Plan on a prospective manner without going through VCP??

Can employer and employee contributions be invested together or must they be invested separately? That is, is there a need to track how much of a contribution is employee money and how much is employer money? If so, who is responsible for the tracking? the employer? participant? vendor?

A 401K Plan has 3 partners who get a K-1 to report their income and 5 staff members who's income is reported on a W-2.

How do I calculate the Net Income for the 3 partners for the ADP Test?

For example, they each are showing $100,000 in Box 14 on their Form 1065, Schedule K-1 (Self-employment earnings)

Owner defers $21,000, and ADP test fails. About $400 of the 16,500 included in the test is reclassed as catch-ups before I try anything fancy.

Can I still make it all the way to 54,500?

I can allocate my employer contributions of $33,500 first

Then, I can do my 401k of 15,500 which puts me at the 49,000. So now, I have a full $5,500 of catch-up contributions ($21,000 less $15,500 included in the "sub-415" contributions), which means that only $15,500 is in the ADP test, which would be passing.

Does everyone agree with that?

Is there a required method for determing the amount of contributions and amount of earnings in a partial withdrawal from a TSA policy? A TSA participant request a partial exchange to another TSA account. How much is contribution and how much is interest? Is this determined by the investment or IRS? This is not an ERISA TSA.

Is there a way to transfer the assets and liabilities of one 457(b) plan, sponsored by a tax exempt entity, to the tax exempt parent entity, without the participant having a termination of employement?

In essence, I am trying to combine two 457(b) plans from two legally seperate, but related, tax exempt organizations. I do not want to force the participants to incur a tax liablity either with a plan termination nor will there be a severance of employment.

DB Plan, final participant terminates employment and elects lsd. If the Plan is terminated, what does the PBGC want?

A prospect has a calendar year PS/401(k) plan that has no last day and no hours requirement. The formula is integrated at the TWB.

Because of 411 protections, for 2011 we are stuck with the plan as it reads right now, I presume.

Or, could the current plan be amended to remove nonelectives, then they adopt a 2nd plan, a profit sharing only plan, that allocates nonelectives in a more favorable fashion for their goals. After 12/31/2011, they merge the 2 plans. Is there a problem with that, or can it be accomplished in a less cumbersome way?

Under Code Section 432(f)(4), for a critical status plan, during the rehabilitation plan adoption period, the trustees of a Pension Fund are prohibited from accepting a collective bargaining agreement that provides for a reduction in the level of contributions, suspends contributions for any period or service, or results in the direct or indirect exclusion of younger or newly hired employees from participation. This prohibition does not technically apply once the rehabilitation plan adoption period has commenced (unlike for endangered status plans). Has anyone seen a Pension Fund that allows such provisions once the period has commenced? It is my understanding that there were once proposed technical corrections that would have applied the restrictions for critical status plan once the period commenced (just like for endangered status plans). These were never enacted. Under these restrictions, would a new provision in a collective bargaining agreement requiring employer contributions only after the new employee has completed 1,000 hours of service be allowed (assume the Pension Fund allows initial participation only after the completion of 1,000 hours of service)? I assume the restrictions would prohibit the establishment of a new plan for new hires. Would the IRS rule on a potential provision that may violate the prohibition? Thanks.

i remember hearing once a plan had to be paid out a certain amount of time after termination. does anyone know that time or the place where this was stated?

In January of 2010 ownership changes in what was once a controlled group of 2 employers participating in one plan such that the plan is now a multiple employer plan. For ADP/ACP testing, can we rely on the 410(b)(6)© transition period and still test the two companies together in 2010? If the plan uses prior year testing, once we do test them separately, I imagine we'll have to go back to the previous year and split out the NHCE's of the separate companies, correct?

And how about Top Heavy testing...does a transition period apply there as well or must we test each company separately immediately for 2010?

Company A has a non-safe harbor 401(k). Company B has a safe harbor (3% nonelective) 401(k). Company A purchased Company B (still remain as separate entity) and want to merge CO. B's Plan into Company A mid plan year (calendar year for both).

Can CO. B's plan even merge into CO.A's? Understand that CO. B can cease the SHNEC only if they prove substantial business hardship or terminate their Plan due to a 410(b)(6)© transaction (and fund the SHNEC up until that time and test). Proving substantial business hardship doesn't appear to be a possibility so that leaves termination.

If CO. B terminates their Plan are they REQUIRED to offer participants distributions, or can the Plan fiduciary decide the CO. B Plan assets will be transferred to CO. A Plan?

And if distributions are required then I assume there is no problem in CO. B participating in CO.A Plan within 12 months of distribution because of the Corporate transaction?

It's assumed that everyone knows the answer to this question..I don't... and neither does the ESOP Plan Administrator .

I terminated my employment due to illness in 1990, although Social Security did not estabilsh my date of disability until 1996...so when I received early distribution(in 3 installments of $10,000.00 1991, 1992 &1993) I paid the 10% penalty plus state and federal taxes.

Social Security added 1991 to my Social Security Earnings Record, but are now requesting W-2's for the other two years. All I received was 1099R's with no indication of FICA taxes being withheld or paid.

Did Social Security make a mistake?

I accepted a lower wage because of ESOP and free medical benefits not knowing that this deferred income may not be eligible to be added to my Social Security earnings...other employees don't have a clue about this either so it is important to know for the future planning of retirement.

Your answer to my question is very important to me...I am disabled and poor and cannot afford a Tax Expert and I have got to get this straightened out with Social Security...they keep writing to me, but I cannot provided them with documents that don't exist.. and they seem to know less about ESOP than I do.

Please answer to the best of your ability and I thank you so much.

I have this "theory" that people who WANT to defer take their forms home and never get around to filling it out because it is a lot of information to stew, particularly with respect to selecting an investment.

So my theory is this: Send out enrollment forms, pre-filled with names and all other indicative information. The deferral election section will indicate that unless "I have decided to make alternate elections to invest in one of the other investment options in section 2, I have affirmatively elected to be invested in the Balanced Model" or soemthing to that affect.

I just think that this one little thing (i.e., all I need to do is say how much I want to contribute, and sign) would be enough to break the resistance enough to increase participation.

Any thoughts on whether this constitutes an investment election eligible for 404© (i.e., and avoid the QDIA rules)?

How is a QDRO distribution to an alternate payeee reflected in the top heavy testing?

Is this considered a distribution to the participants account or alternate payee's?

Is it considered an in-service subject to the 5-year look back, or like a distribution in the current year to a "terminated participant" subject to 1-year look back, or is it ignored altogether?

Is there anything in section 416 Q&A that I'm missing on this, I didn't see anything directly on point.

Does anyone know if there are rules about whether a trust or estate can be designated to receive a lump sum death benefit from a defined benefit plan?

If there aren't specific rules, is this very common?