Hi,

Question regarding auto enrollments, if participant is auto enrolled and then opts out and receives distribution, I am assuming that they are considered as 'to never have deferred' for ADP purposes, so they are zero for tests?

Also, since it was auto enrolled, then opted out, a contribution will show going into/ out of trust. How is this reflected on the 5500? Do they negate one another and therefore not shown as a contribution or as benefit paid?

Thanks,

Jasofk

A small employer with only 3 participants in a PSP goes ot of business. Each of the three participants still have an account balance in his/her PSP account.

The business no longer exists, the former owner has moved to Flordia, and the three plan participants have found employment elsewhere.

I realize that plan still exists because it has assets. The three participants seem to have no desire to request a distribution. And the former owner (who is also the sponsor/ administrator) tells me that he does not have to file any more 5500's because the business no longer exists.

Can anyone tell me the consequences to the owner (fiduciary) if he fails to continue to file 5500's for the PSP, as long as the PSP still has assets? I want to inform (scare) him into realizing that just because his business has closed, he still has fiduciary duties.

The owner tells me that the plan automatically terminated when the business closed. He is wrong, isn't he ?

Also, would the $1,000 per day penalty for not filing have to be paid personally by fiduciary or from the plan's assets?

Thanks

A corporation is dissolving and terminating the plan July 31st due to substantial business hardship. They currently have an end of year 3% non-elective safe harbor feature.

Since the plan is terminating due to a substantial business hardship it is my understanding they can eliminate the 3% non-elective contribution and use the ADP test.

Does anyone see a problem with my analysis?

DB plan has employee contributions. Participants wants to receive monthly employer benefit and withdraw employee contributions+interest and then rollover only the interest portion. In that case, no part of the cashout will be taxed now, however, am I correct that since taxes are spread out between cashout and monthly payments, the basis is different from the rollover amount in this case? Here is a simplified version of the calculation:

Post tax employee contributions 10,000 Already taxed

Interest 20,000 Not yet taxed

Total 30,000

Monthly Benefit

EE Part 500

ER Part 1,500

Total 2,000

# payments 210

Excludable from tax 2,500

Taxable 27,500

Total 30,000

Excludable from tax (10,000 - 2,500) / 210 = 36 (of monthly benefit)

So, although $20,000 is rolled over, only $2,500 of that is actually taxable upon withdrawal?

A small employer has a calendar year. They have never had a plan and want to adopt a safe harbor 401(k) plan for 2009.

1. It is our understanding that if the plan is actually adopted 7/15/2009 as a new plan, safe harbor notices can be provided just before that date.

2. Must the effective date be 7/15/2009 or can it be 1/1/2009 with safe harbor provisions effective 7/15/2009? In this case SH NEC's would be based on salary for the entire year.

3. If the plan is adopted 7/15/2009, must comp limit and 415 limit be pro-rated for the short year?

Thanks a million!

We have a Corbel SUngard plan document for a pension client where such document includes a resolution to adopt the plan. The plan also had a tack on amendment (and separate resolution) to reflect changes due to EGTRRA, PFEA and Rev Rul 2001-62, which also was provided with the plan. And subsequently we added another amendment to adopt the 415 regulations, along with yet another resolution for that amendment.

All the above materials are provided by the Corbel system.

We are now in the process of preparing a plan restatement that Corbel provides that allows for the plan to be amended to include an automatic annual plan freeze provision, where the plan can be unfrozen at any time to provide accruals and then automatically frozen again at the end of such year.

The question is regarding document logistics.

I expect to provide the newly restated plan with a resolution, along with the tack on amendments for the 415 final regulations (and separate resolution) and the EGTRRA (et. al stated before) amendment with separate resolution. And if it is appropriaate I will add yet another tack-on amendment (and separate resolution) which is for PPA.

Does anyone have comments regarding the appropriateness of the above approach? Of coourse I could consider preparing one resolution that applies to the restatement and all tack-on amendments.

Thanks.

I have a Plan Document that was Amended and Restated as of 1/1/2006.

The vesting on the ER Match and Profit Sharing Contribution was a 7 Year Graded Vesting Schedule.

When was the Plan required to go to a 6 year graded Vesting Schedule?

Took this on 6/26-Passed

Many QDRO questions, lots of 415 limit, 2 questions on calculating future balance in Cash Balance plan. Relatively few math questions.

Test needs a GOOD spell check and grammar check!

The client has not funded their 2007 non-elective SH contribution. If we run the ADP testing the test fails and the owner will get a refund of $14,000.

I understand we need to contribute the 3% SHNEL ($20,000) with earnings. Do we also need to run the ADP testing and process the refund, pay the excise tax on the late withdrawal?

Do we have to fund the SHNEL plus a QNEC? If a QNEC is required, would that be calculated under a scenario for late correction of ADP/ACP testing (with refund of the HCE’s deferral, as described in EPCRS), or would it be the QNEC that would have been required to bring the NHCE’s to high enough percentages to pass ADP testing without refunds?

This seems to be a bit of a grey area and not specifically addressed in EPCRS. Any help would be appreciated.

Thanks,

401(k) Plan has match formula of 100% of deferrals up to 1% of compensation with last day and 1,000 hour requirement and allocated on the last day of the plan year.

Owner wants to suspend match August 1, 2009 and pay match through July 31, 2009.

Based on the discontinuence of safe harbor match contribution guidance I believe it is ok to use compensation and deferrals up to July 31, 2009 to determine the match but how would you deal with the last day, 1,000 hour requirement:

1. Allocate the match to those employed on 12/31/09 with 1,000 hours using comp through 7/31/09 OR

2. Allocate the match to those employed on 7/31/09 with 583 hours using comp through 7/31/09.

Any thoughts on the above options or different ideas would be appreciated.

Thanks

Medical practice has a 401(k) plan.

The plan operates on a calendar year basis.

One physician retired as of 6/30 but will be receiving payments based on A/R receipts for 18 months.

Plan defines compensation as 3401(a) comp.

A/R payments are included in the physicians' W-2 income.

Should the plan continue to treat the A/R payments as compensation for this physician under the plan even though he is no longer working?

Thanks!

Does anyone know of any other companies BESIDES Newkirk that produce either generic or customized 401k enrollment materials? Thanks in advance.

An employer has two plans. Neither is exclusively a union plan.

One covers employees out in the field and the other is for office employees.

The plan that covers field employees is a safe harbor matching plan. The office plan is not a safe harbor plan and has a discretionary match and profit sharing plan. The office plan has most, if not all the HCEs in it, but nonetheless, the field plan has a couple of HCEs.

Other than passing coverage testing separately, does anyone see a prohibition against this sponsor providing for a safe harbor arrangement in one plan and testing the other under ADP/ACP rules?

Thanks in advance for any feedback.

I have an auditor of a pension plan asking me if there is any regulation (specifically DOL) that requires the Plan to maintain supporting documentation for employees who are eligible but elect to defer nothing out of their pay check. I've looked and can't find a regulation...has anyone here come across a regulation like this?

I guess I always thought that it was just "best practices" that the Plan Sponsor should try to maintain these forms so that they have themselves covered in case a participant comes back and tries to say they did want something taken out of their pay they have a signed document that "proves" they elected "$0".

Any help would be appreciated.

I have a daily valued 401k Plan and we're making some changes to the investment lineup. Removing a couple funds and mapping to like funds. Is there a 30 day notice requirement? I can get a communication out to employees very shortly but it won't be 30 days- more like 20 days. There will be no blackout. Please advise- thx in advance.

Hi,

I am trying to straighten out when the participant statements are due to them per the PPA...

For 'pooled' or non-participant directed, plans that have valuations once per year, when are the statements due ? What about semi annual valuations ?

For plans that have individual accounts, such as smith barney, and the participants receive monthly statements, however, the valuation is only done at year end, when are statements due ?

For those plans that have online recordkeeping, I believe that since they are receiving yearly vesting data that they provide them quarterly..

For plans that have quarterly valuations, I believe that they have 45 days after the quarter end, is this correct?

I remember reading an article that originally yearly valuations also had 45 days but that was extended... however, I cant find the article again....

The participant statement and PPA notice (with vesting info and such) are one in the same for the due dates...correct?

Any help would be greatly apprectiated

Thanks!

J

Company A will soon go public. Some of the executives will be allowed a number of shares proportional to their annual production, other factors and the balances in their 401k plans. The plan allows for in-service transfers and several qualifying executives have taken them. Is there any prohibition of the firm considering the in-service transfer balances as part of said employees' 401k accounts for the purpose of allocating the shares among the various executives? It is assumed that all in-service balances were recently transferred and that no comingling with other rollover monies has taken place.

Need to distribute Roth dollars for ADP corrective distribution. Will be distributed beyond the 2 1/2 month deadline. Have always withheld 10% federal for these. Is this required? Not sure if there were any changes to this when the rules changed to be taxable in the year distributed for distributions made prior to the 2 1/2 months.

Can I use the SHNECs (which are QNEC's) in the ADP test?

I know I need to include it for the HCE's too, but in some cases, it might help...

Is an in-service distribution of employer contributions subject to a 10% penalty if it's before 59-1/2?