A 5% owner began taking RMD upon attaining 70 1/2 in 2007. The annual RMD was always taken on 03/31 of the subsequent year. I.e 2007 RMD on 03/31/2008, 2008 RMD on 03/31/2009 and 2009 RMD on 03/31/2010.

Now, the plan is terminated effective 05/01/2010 with a distribution date of 11/30/2010. The 5% owner has elected to take the remaining benefits in a lump sum and rollover the distribution into an IRA.

What is the RMD for 2010 that is not eligible for rollover:

1. Pro-rated to 11/31/2010

2. AE at 11/30/2010 using post ret rates

3. Any other method

Thanks to all those who respond

A C Corp business year end is 5/31 and the 401k plan is on a calendar year - do I use compensation paid on the W2 for the calendar year or compensation paid from 6/1 to 5/31 to compute the 25% employer contribution?

What if the C Corp business year end is still 5/31, but the 401K plan year also ends 5/31? What compensation amounts would I use in this case?

Where in the 401k plan document does it spell out the plan year (mean the plan year end)?

DOL auditor found that the expenses of Plan A were mistakenly paid with assets of Plan B. Sponsor has corrected by remitting amount Plan B mistakenly paid plus lost earnings to Plan B. DOL is satisfied with correction.

In terms of the IRS, however, based on my reading of Code Section 4975, this failure does not seem to fit squarely within the definitions of a "prohibited transaction" and "disqualified person."

I wanted to get thoughts on whether this is a PT requiring the filing of a Form 5330 and the payment of excise tax. If it is, what is the "amount involved?" Is it amount of the expenses or the lost earnings on such amount?

Thanks.

SIMPLE IRA making match each payroll all of a sudden stopped match in March. What penalties would they face if they waited until the end of the year to make up the missing match? I'm thinking none. They could just make up the match owed.

Seller spun off a business with union ees and buyer agreed to maintain "mirror" db plan until the expiration of the CBA. Within the year of the spin-off, the CBA is being negotiated. If the parties agree to terminate the plan is there qualification exposure that the plan lacked permanence? Can the new plan's short tenure be "tacked on" to the prior plan? Even if it can't, isn't the result of good faith bargaining a slam dunk business necessity rebutting the presumed lack of permanence?

Next year I will have to take a RMD. I have an IRA and that is not a problem. I also have a 403b with TIAA that is a 10 year payout annuity. The payment each year gets rolled over to the IRA. I have asked TIAA how I take the RMD from this and every time I get a different answer. They tell me just to take it from the IRA and the IRS will not bother me as long as the total works for both accounts. Is this correct? They say there is no way to make the separate RMD distribution. I guess I could direct the payment to me and then roll over the payment minus RMD within 60 days, but they will withhold 20% if I do this. Any ideas?

Good Morning,

We have a plan that is setup to exlude bonuses as compensation. This was done because the employer pays a small bonus for each employee for Christmas and their birthday and doesn't want to withhold from that bonus.

We just found out that the employer has an incentive program where if an employee meets a financial goal each month, they receive two paid days off. Would this compensation be considered a bonus? If so, would that require a special deferral election?

Thanks

I am completing Form 5300 for a plan that spun-off on 1-1-2008. On line 4d it says to put the plan's original effective date. I assume this would be the effective date of the original plan - and that I shouldn't put 1-1-08 - Correct?

I also have to indicate on line 3b if the plan has received a determination letter. The spun-off plan obviously has not - but the other plan has. I assume I should indicate yes and notate the date of the determination letter of the original plan?

Of course I can't find any guidance on how to complete 5300's on spin-off plans. Any thoughts?

Having trouble reasoning this one out.

The due date for Form 5500 for a 3/31/10 plan year would be 10/31/10. Since that is a Sunday, the due date would move to the next business day, Monday, November 1.

An extension of time to file for 2 1/2 months normally takes the due date to 1/15/11. Since that is a Saturday, the due date would move to the next business day, Monday, January 17. However, that is Martin Luther King, Jr. Day. So would the extended due date move to 1/18/11? Or would it be better to be safe and enter 1/14/11 and have a day short of the full 2 1/2 months?

Updated for 2011 cost-of-living adjustments and the new in-plan rollover provisions of the SBJA of 2010.

These charts are provided for your personal use. They may be reproduced, laminated, and disseminated by obtaining my prior written permission. Send request to QPSEP@aol.com

For laminated copies of this and other handy reference charts, contact Denise Appleby at 973-313-9877 or at Visit Her Website

Hope this helps.

--Gary

COLA_RO_2011_Feb_6_2011.pdf

Updated for 2011 cost-of-living adjustments and the new in-plan rollover provisions of the SBJA of 2010.

These charts are provided for your personal use. They may be reproduced, laminated, and disseminated by obtaining my prior written permission. Send request to QPSEP@aol.com

For laminated copies of this and other handy reference charts , contact Denise Appleby at 973-313-9877 or at Visit Her Website

Hope this helps.

--Gary

COLA_RO_2011_Feb_6_2011.pdf

Updated for 2011 cost-of-living adjustments and the new in-plan rollover provisions of the SBJA of 2010.

These charts are provided for your personal use. They may be reproduced, laminated, and disseminated by obtaining my prior written permission. Send request to QPSEP@aol.com

For laminated copies of this and other handy reference charts , contact Denise Appleby at 973-313-9877 or at Visit Her Website

Hope this helps.

--Gary

COLA_RO_2011_Feb_6_2011.pdf

We offer employees an opt out benefit equal to $100 / month deposited to an unlimited use HRA. Employees who opt-out of health coverage, will receive this pro-rated benefit. Two questions: (1) we do not ask for proof of other coverage, is there anything in the new regulations/reform that suggest we should (I am sure there is an opinion out there that suggests we should ask for proof) and (2) could we simply change the plan design to limit the HRA to dental and vision expenses and thus be considered exempt?

We've took over a plan earlier this year, and recently the trust received a wire transfer of about $1,400 representing accounts for "lost participants" where the disbursement checks were not cashed or deposited. The new CFO does not know to what extent efforts were made to locate these participants. I was thinking of just amending the plan to allow for the autorollover of all amounts not exceeding $5,000. I don't think this is a cutback issue or any issue. I would perhaps suggest that the client send out a letter to each of these individuals using addresses mined from a professional locater service.

This is a lot of work for just a few participants, so we just want to deal with it as quickly as possible.

for DC plans updated for EGTRRA, PPA and 415 are there any amendments due this year for calendar year plans?

I have a 401(k) profit sharing plan that is top heavy. The 401(k) part of the plan has immediate entry. The P/S part has one year and age 18. The company is only making the 3% minimum contribution.

Do the participants that are only eligible for the 401(k) portion of the plan share in the allocation of the forfeitures? (as part of the top heavy minimum)

5% owner dies after RBD (back in 2008), and his wife is the sole beneficiary. The wife is younger than the participant and as of December 31, 2010 is age 85.

So do I go to the single life expectancy table and calcualte her minimum distriubtion as her 12/31/09 balance divided by 7.6?? Why is this factor SO much smaller than the regular RMD table which would call for a factor of 14.8???

Did I screw up by not telling her to roll to an IRA, where I presume she would have been subject to the regular rmd tables?

Got a 5% owner participant who turned 70.5 in May 2010. He will be selling his ownership interest in the next week or so.

Is he required to take a minimum distriubtion? It becomes a critical question since I've learned once you're treated as passing your RBD as a 5% owner, you are alwasy considered a 5% owner. And his RMD's are a lot...

All I can find is references to be a 5% owner "for the plan year"

What I've found so far. It doesn't seem to say "at any time during the year" anywhere:

1.401(a)(9)-2 A-2©:

© For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 701/2.

416(i)(B)

(B) Percentage owners

(i) 5-percent owner For purposes of this paragraph, the term “5-percent owner” means— <A name=i_1_B_i_I>(I) if the employer is a corporation, any person who owns (or is considered as owning within the meaning of section 318) more than 5 percent of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation, or http://' target="_blank">(II) if the employer is not a corporation, any person who owns more than 5 percent of the capital or profits interest in the employer

One of our employee is to be made an partner of the company. My understanding is that he would no longer be regarded as an employee and would be given a guaranteed payment instead of a wage.

We have set up a Safe Harbor 401k with the matching formula elected.

My questions are:

1) Is he allowed to continue making elective deferrals?

2) Would the partnership still have to match 6% of his elective deferrals as his "employer"? Is this based on ALL of his compensation?

I apologise if I am not making sense. We are actually an Australian company that operates a LLC over in the US. This whole 401k business is different to the Super Contribution system we have in place here. It's been quite a journey learning all of this!

A particpant has contacted its employer to take an in-service withdrawal from his account.

Plan allows for in-service after age 59.5.

The participant has after-tax funds (old money, prior to Roth) as well as pre-tax and match. The amouunt of money he wants will require that some of his after-tax money be taken.

Question 1: Can you roll over after tax money to an IRA? I thought yes so long as the funds go to a ROTH account.....

Question 2: Should the money be taken from all account pro-rated so only a portion of the after-tax is withdrawn?

Thanks for your help.