Employer is a property management firm. 401(k) Plan covers two employee groups: Group 1 consists of corporate employees (i.e., employees who work in the corporate office) and Group 2 consists of employees who work on site at the various property locations. Goal is to provide employer match for Group 1 employees only; Group 2 employees would be salary deferral only. If we were to exclude Group 2 employees from eligiblity under the Plan, the Plan -- covering only Group 1 employees -- will pass Average Benefits Test. And, we could then presumably apply ADP and ACP tests to Group 1 employees only.

Same result (I think) if we set up two separate plans -- one plan covering Group 1 and one plan covering Group 2.

Can we accomplish the same result with one plan? If Group 1 and Group 2 separately pass 410(b) coverage requirements, can I test Group 1 and Group 2 separately for ADP and ACP?

Thanks.

An employer fell behind in depositing employee deferrals into their 401(k) accounts. This was due to some employee turnover in the employer's accounting department and the problem has just now been recognized. The question is: What interest rate should the employer add to the employee deferrals due to the fact that are being made late?

Thank you,

Rene

I'm just trying to see if my thinking here is off-base.

IRS approved prototype plan. The plan always INCLUDED union employees. Then, as part of the EGTRRA restatement, the analyst inadvertently checked the box to EXCLUDE union employees. The subsequent valuation was done "correctly" according to how the plan was always administered, and INCLUDED union employees. The discrepancy was just noticed.

This will be submitted through VCP, with a proposed amendment simply changing it back to include union employees. My question is, does this also require a determination letter filing?

Section 6.05(3)(b) appears to cover this situation for an Operational Failure corrected by amendment, and seems to require that although the d-letter application should not be submitted with the VCP application if you aren't in an "on-cycle" year, it will require a subsequent d-letter application once you do reach the on-cycle year. I'm wondering, however, if a prototype, use of which which will otherwise generally allow the opinion letter to be treated as a determination letter for 2008-50 purposes, would exempt the plan from filing?

It seems to me that filing is required. However, I'd love to hear opinions on this. Thanks!!

The Employer contribution has a Fixed Match. The benefit was due to the plan by the tax filing deadline w/extensions (9/15/2009); however, it was made 12/02/09. Is this late contribution reportable on the 5330 & subject to the Exise tax?

I have a plan that swiched their payroll and a participants loan payment was doubled for a few weeks, therefore she is currently paid until 12/13/10. Is there any problem with the company skipping her loan payments until then or is there another way to fix this? Thanks.

Can units of an LLC count as Qualifying Employer Securities? That term is defined in ERISA 407 to include (i) stock, (ii) a marketable obligation or (iii) an interest in a publicly traded partnership. Technically, an LLC unit is not stock and I cannot find any advisory opinions on point.

I believe that a plan can hold LLC units, but I cannot find any specific guidance out there confirming this point.

Is this a control group for plan purposes? Company #1 is owned by Dad 34.3 %, Mom 34.3%, Brother 1 10.47%, Brother 2 10.47%, and Brother 3 10.47%.

company #2 is owned by Brother 1 33.33%, Brother 2 33.33% and Brother 3 33.33%.

Current plan covers both businesses. Current TPA wants to change their plan to cover only company #2.

TPA firm has a seprate distribution account through which they will run non-rollover distributions for various plan sponsors and then handle the tax withholding and reporting. Are there any concerns with that setup?

Thanks in advance for any guidance.

A client sent me an employee census of a Company they just acquired. The census had 17 employees none of whose last names began with the letters A-G. The odds against this are a little over 200 to 1.

Has anyone had experience working with this North Carolina consulting group on a common client's TIAA-CREF 403(b) Plan/Form 5500 preparation? My understanding is that the group is staffed by former TIAA-CREF employees who wanted to deliver customer service on a different model; they are recommended by TIAA-CREF so I am assuming there's an amicable relationship, just wondering what quality work they provide. They are at www.newpcg.com; there is another new pinnacle consulting group that is some sort of tactical weapons specialists - not what I am inquiring about!

Any and all comments appreciated.

A 401(k) plan does not allow concurrent loans. However, it does allow participants to refinance loans. The plan also allows for extended amortization for loans used to purchase real estate.

A participant took a loan 7 years ago at a much higher rate than now. He has 23 years remaining. He wants to refinance the existing loan to the current lower rate and expects the new refinanced loan to have 23 remaining years.

I could be wrong, but I contend that the new refinanced loan repayment cannot exceed 5 years. This because the new refinanced loan is not for the purchase of a principal residence at this time.

I checked the plan document and looked in other places but could not find anything on point regarding this.

Has anyone run into this before? If so, do you agree the new loan cannot exceed 5 years?

A small employer pays for health insurance for several of his employees. Most only need single coverage, but one employee needs to have family coverage. He might not want to pay for family coverage for everybody though when the time comes. I think the employer can purchase health insurance for some, but not all, of his employees, and I think he can pay for the extra coverage in the case of the employee who needs a family plan without being in trouble for discrimination. But then I started wondering if any of that changed under Health Care Reform. I'm not talking about a welfare benefit type plan -- just an employer who's willing to purchase health insurance for some of his employees. I would appreciate your comments.

Does anybody know when the IRS is going to announce 401(k) contribution limits for 2011? I would like to get my Safe Harbor Notices out to participants by November 1st but I can't see that they announced the limitations.

Client received an IRS letter stating that the IRS was unable to locate the 2007 Form 5500, could they file their return again. Even though they are refiling their 2007 form, it must now be filed electronically since they are no longer accepting paper returns. We prepared the 2007 Form, converted it to Efile format and the 2007 form was Efiled by the client and received an "Accepted" status.

The client has just received a Proposed Penalty Notice ($15,000) because the 5500 "Return was not signed". I thought that when a client Efiled, their User ID and PIN were their signature. Other than have the client sign a form, I attach it as a PDF and EFile as Preparer, I do not know what the IRS is looking for. Has anyone else run into this situation?

Ok - this question is directed toward those who used Ft William 5500 software for the 2009 filings (Mr. Poje?)

Anyway - we use RGF but did not use the Relius Web Client. We prepared the forms in RGF, exported the *.xml file and downloaded that to EFAST@ (IFILE). The form could then be signed by the client or we could sign and file after obtaining authorization and signature pages from the client. This actually went pretty smooth, all things considered.

What is the procedure for Ft William 5500 filing and signing? Most of my clients obtained their filing credentials and signed the form on EFAST2 by signing on to the EBSA website. If we switch to Ft William 5500 software for 2010 does that mean I have to give my clients yet another website instead of having them sign on to the EBSA website to sign and file the form?

any info appreciated!

I have a potential client who sent me an illustration from a competitor. They called the plan design a "Multiple Match401(k) Program. I have seen many illustrations over the years but none quite like this. The plan is set up as a profit sharing plan with the safe harbor match provision. Then, on top of the 4% match they allocate a 100% match titled "Fixed Required Match". The next allocation is titled "Optional 4% Match" where they allocate an additional 4%. Under this scenario the client ends up with a deferral of $16,500 and a match of $32,500.

The claim (according to the potential client) is that since the additional matching amounts are based on the original safe harbor match then the whole matching contribution amount is not subject to testing. I see both a failure to provide Top Heavy minimums since the plan is providing more than the 4% safe harbor match along with a failure of the ACP test.

Has anyone heard of any such loophole in the regs?

I am curious how people are counting hours of service for colleges specifically. Example:A plan requires a year of service for match (or even it requires 6 months of service for match and I want to determine who is otherwise excludable for ACP).

If I have numerous adjunct faculty who are being paid a $3,000 salary per 3 credit class, how do you determine the number of hours that employee should be creditied with for each class they teach? Many colleges use formulas such as 3 hours of prep time for each credit but these are merely standards they use to determine eligibility for other benefits they provide such as insurance.

I find nothing in the Regs stating that you are permitted to use an alternative approach for counting hours so all there is to fall back on are the DOL equivalency methods such as 45 hours for each week they perform an hour of service.

We're considering to go all electronic to distribute Plan Documents, ADP/ACP reports, etc. and collect census data. I'm looking for standalone system suggestions that clients will find easy to use. Sorry if this is not posted in the right forum, but I would imagine that I would get the most responses in this forum. Thanks.

Plan is a temp agency excluding employees who work off site for recipient employers exclusively (all NHCEs) and has a SH 3% non-elective and has passed coverage using average benefits test for past 3 years. Looks like 2011 will be a close call on 401(k) coverage to pass the average benefits test.

If I put in a safe harbor 3% using the wait and see approach for 2011 and the plan fails 401(k) coverage, would it be ok to do a 401(a)(4)-11(g) amendment to include enough of the excluded employees by providing them a QNEC equal to the NHC ADP% to permit the plan to pass coverage and then make the safe harbor contribution. I assume I would have to make the sh contribution for the employees I added to the Plan via 401(a)(4)-11(g).

A client has two non-owner plan participants who would be subject to the RMD rules for 2010 except they are still working. Plan provisions allow participants to delay start of RMD until after retirement. Both of these employees are working maybe one or two days a week. Is that sufficient to allow them to postpone taking the RMD?

Thanks for any input on this!