Is a distribution of the full account balance (401k deferrals and SH) to an Owner considered a PT if there is no distributable event?

Plan has safe harbor hardship definitions.

Employee presents from the mortgagee on her residence a 'Notice of Intent to Accelerate' under the promissory note, specifying the amount needed and the date by which needed in order to avoid acceleration. The notice also mentions that if acceleration occurs, then "foreclosure proceedings will be initiated at that time."

It looks to me that it would be premature at this time to base a hardship distribution on this notice.

Any comments?

I received an inquiry about whether or not we (I work at a bank) know of anywhere someone can open an IRA and use their funds to invest in cattle from a cattle feeder.

I've been pondering the custodial aspects of such an investment but since it would be a short-term, 90-120 day type of investment, I'm not sure what requirements the regulations might specify.

Has anyone heard of this type of investment being held in an IRA, or do you know of anyone who would accept a custodial arrangement for cattle?

We have become fans of Showtime's "The Big C," a dark comedy in which the principal character has terminal cancer. She is a teacher and has not divulged her illness to family or co-workers (she appears to have no friends!). In a recent episode, she cleaned out her 401(k) to go on a shopping spree (she bought a fire engine red Mustang). Having been born toilet trained, it occurred to me that she could not have taken (a non-hardship, and shopping spree wouldn't qualify as hardship) distribution while still employed. I'm glad they gave her the money because the car was beautiful.

Easy Schedule I and I'm baffled. I have a client that has carried a receivable on the books for a couple of years. It's been included in the assets for Schedule I. This client went into Chapter 7 bankruptcy and will never make this contribution. The plan closed and all assets distributed. I need to file a final 5500. For 2010, one participant, the owner, had assets and he was distributed. However, once I put his distribution and earnings on the 2010 Schedule I, I still have that receivable contribution to contend with. I won't balance until I do something with that money. I have no clue where to put this on the Schedule I in order to have no assets. It's one thing to write it off on the books...but where the heck does that go on the Schedule I?? Any clues?? Thank you!!

Filed form 5500-SF. A form 5558 was timely filed extending the deadline, but we neglected to indicate on the form. That has happened a handful of times in previous years; we would just wait for the IRS notice & then respond with a copy of the form 5558.

With the electronic filing I'm a little more uncertain of how we should handle. Should we amend the filing and check the box on the amended filing?

Thank you for any guidance.

A husband and wife fully own a business that sponsors a profit sharing plan. Both of them and their 2 adult children are the only participants and there are no other employees. The husband and wife are the only ones who have an account balance. I have read that a bond is required when a plan covers participants other than the owner and spouse, but what if these other participants do not have account balances?

Hi,

Is Qualified Non-Elective Contributions (QNEC) synonymous with Employer Non-Elective Contributions in a Safe Harbor 401K?

Our company 401K Safe Harbor Notice states:

“… your Employer will make a fully-vested Safe Harbor Non-Elective Contribution to all eligible Participants equal to 3% of compensation…”

It goes on to state:

“The Employer Non-Elective Contributions that may be made to the Plan are subject to the following vesting schedule: 100% vested after 2 years.”

My benefits adviser in HR is telling me that we have QNEC contributions that are fully vested at enrollment and that the company doesn't make Employer Non-Elective contributions. However the Safe Harbor notice that she sent me doesn't mention QNEC at all or anything about being fully vested at enrollment.

Is there a difference between the two or is she uninformed?

Thanks,

Bryan

Prior to 2009 a 501©(3) company had two 403(b) plans.

The first plan established has always been salary reduction only (Plan 1).

When the employer decided to make matching contributions, a second plan was established (Plan 2).

A Form 5500 has been filed each year for the second plan. None has ever been filed for the

first plan as it has been considered a non-ERISA plan.

In 2009 a new plan document was adopted that merged the two plans into one. However, the

plan assets are still seperated.

The custodian of the assets (same custodian for both, but still under seperate contracts) says that

they do not have records avalable for the assets in the first plan and that the assets in that plan are

not required to be reported on the 2009 Form 5500. Therefore, they will be supplying information only

for the second plan, and will not provide information on the salary reduction only plan.

My question: Is what the custodian saying correct? In other words, even though there

is now only one plan, the accounts attributable to the original salary deferral only accounts are not

reportable on the 2009 Form 5500?

Plan has about 150 participants.

I keep hearing that that this does not take effect until 2013. However, the PPACA wording seems to say it takes effect for plan years beginning after Dec 31, 2010 and that adjustments for cost of living begin after Dec 31 2013:

SEC. 9005. LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS

UNDER CAFETERIA PLANS.

(a) IN GENERAL.—Section 125 of the Internal Revenue Code of

1986 is amended—

(1) by redesignating subsections (i) and (j) as subsections

(j) and (k), respectively, and

(2) by inserting after subsection (h) the following new subsection:

‘‘(i) LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS.—

øReplaced by section 10902(a)¿

‘‘(1) IN GENERAL.—For purposes of this section, if a benefit

is provided under a cafeteria plan through employer contributions

to a health flexible spending arrangement, such benefit

shall not be treated as a qualified benefit unless the cafeteria

plan provides that an employee may not elect for any taxable

year to have salary reduction contributions in excess of $2,500

made to such arrangement.

‘‘(2) ADJUSTMENT FOR INFLATION.—øAs revised by section

1403(b) of HCERA¿ In the case of any taxable year beginning

after December 31, 2013, the dollar amount in paragraph (1)

shall be increased by an amount equal to—

‘‘(A) such amount, multiplied by

‘‘(B) the cost-of-living adjustment determined under

section 1(f)(3) for the calendar year in which such taxable

year begins by substituting ‘calendar year 2012’ for ‘calendar

year 1992’ in subparagraph (B) thereof.

If any increase determined under this paragraph is not a multiple

of $50, such increase shall be rounded to the next lowest

multiple of $50.’’.

(b) EFFECTIVE DATE.—The amendments made by this section

shall apply to taxable years beginning after December 31, 2010.

Which or what is the correct interpretation?

I have a plan that was filing on the form 5500EZ but now has a couple of NHCE's as participants, so they are filing a form 5500SF for 2009, dumb question of the day is do I need to mark the 5500SF as the 'first return' for the plan? I am thinking I don't need to but any thougths.

Thanks all.

We have a plan that failed the ADP/ACP Test. The deferral correction amount was recalculated as Catch-up. But I still have to refund the excess match money that was deposited for this participant to correct the test. The match refund is going to be transferred to the Plan Forfeiture account to be used to offset future employer matching contributions.

My questions is do I need to calculate the gains associated with the match refund amount and transfer that to the forfeiture account?

Thanks

The PBGC Regulations permit "majority owners" to forgo receipt of their benefits in connection with a distress termination. The regulations generally define a majority owner as an individual who owns 50% or more of the entity, taking into account the constructive ownership rules of 414(b) and © of the Code. Assume 5 family members collectively own 50% of an entity and their ownership interest can be attributed to each other under 414 of the Code. Does that mean that they are all considered "majority owners" and each can forgo receipt of their benefit?

If a client elects funding relief under PRA10 for 2009, do you think that should be marked as a method change in the SB?

I think not, but I'm trying to figure out how to alert the IRS that they took the relief. I will designate it on an attachment where I illustrate the amortization bases, but I'm wondering if I should do something more?

This client made a formal election to accept the relief.

I have a Plan who is undergoing a (non-random) audit. Plan withheld deferrals in 2009 from salary but never submitted them to the custodian/record keeper nor did they submit any required SHM contributions. Yes, I have it documented up the "wazoo" telling them that they needed to, etc. The company was in major financial trouble (NOT that that is an excuse).

The DOL got involved and is making an arrangement for them to fund the Plan in 2010 with the missing deferrals (and, I assume, lost earnings, penalties, etc.) and possibly other SHM contributions. I have no idea when the DOL will make them pay this though I assume it will be in 2010.

The 2009 census they submitted indicates deferrals but the recordkeeper and custodian have none. Should the 2009 5500 be completed showing 2009 deferrals or not? On the one hand the "Plan" never received it. On the other hand, as soon as it was segregated, it became a Plan asset. Also, should a 5330 be submitted as I don't even know when the contributions will be made?

Thanks, in advance, for any assistance.

From time to time, including this afternoon, I'm getting a Submission Failed status when transmitting the 2009 5500 for a client. When I check back on the status the next morning, the status changes to Filing Received. Is this situation unique to Relius, or are others seeing this condition with the alternate vendors?

If a healthcare FSA participant has a 24 year old son living and working in another state and the son is not a dependent for tax purposes, but would be considered an eligible dependent under the new changes with healthcare reform, could the FSA participant pay for the son’s new eyeglasses with FSA dollars?

I feel that the old ruling stated that eligible expenses had to be incurred for the participant or a tax dependent. However, once the new HC reform kicks in, I feel like this senario would be acceptable. Is that the case?

Thanks!

I will begin by saying that I am on the payroll, not benefit, side of things. Our 401(k) plan is going through the annual audit. Our last payroll of 2009 was paid on 12/31/09. We uploaded the file to our 401(k) TPA's website on 12/30/09, the same day we processed the payroll. Our TPA is responsible for initiating the ACH to our bank account to fund the contributions. They always take a few days to do this, so the ACH was not initiated until January 5, which is the day they credited the contributions to the employees' accounts. They are showing these contributions as belonging in 2010. Our auditors are now telling us that because of the mismatch between what we show on W-2s and what our TPA shows for the year, going forward we should not process any payrolls late in the year that our TPA cannot post within the same calendar year. Does this make any sense? Is the TPA required to show the contributions as belonging the year in which they received the funds from us? Or is this an error on their end?

do you consider negative investment returns for the entire investment portfolio when calculating lost earnings?

Two of our clients had employees in the past, but now the plans

cover only the owners(s). Plans are either sole-proprietor or partnership.

All previous filings have been small plan Form 5500. All previous participants,

other than owners, are terminated and their plan assets distributed.

Since the plans now are considered "one-participant" plans, can we switch

to filing 5500EZ?

If the answer is yes: Is a "final" Form 5500 required before filing the first 5500EZ?

Thanks.