Post Severance Compensation

Calendar year plan

Participant terminated at end of year Dec 2007.

Paid in 2008 for hours worked in 2007.

Last check and separate check for bonus.

What year does the pay go into for contribution purposes?????????????????????

415 amendments counts compensation after DOT. (adopted 2/4/2009, effective 7/1/2007.

Has to work 1 hour to get contribution per plan document - MPP.

Participant in mpp and psp calendar year plans

Since DOT is 2007, our software system excludes from testing.

1. Should participant have been given the contribution on the bonus/ and or last paycheck paid in January 2008?

2. Should the participant be included in all the testing for ADP/ACP 415, 404, 410(b) 402 (g) etc for 2008?

3. Is compensation 2007 or 2008 compensation?.

4. What about hours worked – any for 2008?

5. If MPP has one hour of service requirement for the MPP should they get the MPP contribution for 2008?

Thanks

Pat

I know that a hardship withdrawal may be grossed up for taxes. May the participant receive the total grossed up amount in cash without any withholding at the time of the distribution? We know the participant will have to pay the taxes eventually.

Thank you.

Kate Smith

Just to reinforce myself, someone has left me with doubt in my mind.

Owner A - 4.25% ownership (father of Owner B)

Owner B - .82% ownership (Daughter of Owner A)

the remaining ownership is divided among other non-family members. By definition aren't Owner A and B Key and HCE; due to greater than 5 % ownership.

Sorry long disscussion with someone has me doubting myself.

1.409A-3(b) provides in part: "A plan may provide for payment upon the earliest or latest of more than one event or time, provide that each event or time is" [a permissible payment event].

My question relates to a plan under which, if separation is on or after age 55, benefits commence withing 90 days of separation.

If separation is before age 55, benefits commence within 75 days of attaining age 55.

Is it a problem that someone might separate, say, 3 years before attaining age 55? In other words, is 'age 55' a specific enough designation that the commencement of benefits can continue to be deferred until attaining that date, even though payment is payable on account of the separation?

In a way, even though the plan doesn't explicit say it, I guess you could argue that this design makes payment upon the earliest of termination or, if later, upon attainment of age 55. Maybe that satisfies the above-quoted provision just fine?

I think I've been reading too much fine print.

Any clarity or opinions are welcomed!

Thanks!

What happens to a Cafeteria Plan if a company dissolves mid year? What if the company merges operations with another company? Where can I find some rules and regs on this sort of occurance?

Thanks

Someone settle a "dispute" over Sch. D. We have a client that has their investments with BenefitStreet (now NextStep), and I have been trying to get an acurate balance by fund list so that I can process a schedule D. A co-worker is arguing with me that no D is needed. When i called to ask if NextStep files as a DFE, the girl didn't know what I was talking about.....she said they don't sell insurance products....

Do you guys think I should be completing a Schedule D or not? i wish I could say that a steak dinner was riding on this, but I cannot.....Thanks for your help.

There is a 401k plan I am starting to work on. There is one set of investments that do not get valued until after the 5500 is due. The cpas therefore do not sign off on the financials until after 10/15.What is the best way then to file 5500?

Revenue Sharing has been deposited into the plan and then the plan fees were taken from it.

How to show on Schedule C and H?

Thanks

Pat

Does anybody have a reference to where I can find the most current LRMs for DC and 401(k)s? Also, any idea when they will be revised?

Thanks much!!!

Company part of a controlled group was sold. No longer a controlled group.

They are on a Prototype 401(k) Plan and want to keep the other company in the plan until the end of the year per the agreement of the sale.

Since it is now a Multiple Employer Plan as of last week, what needs to be done with the plan document?

Can I keep them on the prototype until the end of the year - and then they are off on their own to set up their own plan or do I have to do an Volume Submitter plan for the rest of this year because of the change?

How long do I have to make these changes? As always - we find out after the fact.

Ideas - thoughts???

Thanks

Pat

An employer recently submitted revisions to 2006 census data. Originally the ADP test passed; but with the census revisions, it fails. Therefore, we have excess contributions from the 2006 plan year that won't be corrected until 2009. In calculating the excise tax, is one Form 5330 sufficient (i.e. 2009) or is a Form 5330 needed for each year that the correction of the excess contribution is late (i.e. 2007, 2008, 2009)?

Thanks.

Purley hypothetical case:

say a taxpayer has a retirement plan for his business, and somehow some transient worker manage to attain eligibility to enter the plan and receive an allocation. However, this transient disappears from the area. The taxpayer does not know if he survives off the grid, frequents flophouses, transients hotels, soup kitchens, shelters, etc. After five years of breaks in service, this person's distributions comes due. How much effort must they put into locating this person? After this minimum required effort, what must they do?

Does the IRS offer letter forwarding services? For unclaimed distributions?

Would unclaimed distributions from a plan go to the Social Security office?

I have a client that has heard of someone getting a PLR OK'ing non-cash contributions to a DB Plan.

Any ideas on the characteristics of the asset(s) that would make the IRS rule favorably? (or other thoughts on the subject?)

Thanks

Medical Practice 1 had a 401(k) Plan (Plan 1). Company dissolved and plan is instance of terminating. Most doctors went to work for Medical Practice 2 (new unrelated company.) Practice 2 sets up own new 401(k) (Plan 2.) Dr. K had self-directed brokerage account in Plan 1 (SDA1.)

Practice 2 sent deferrals and PS contributions to SDA1 for about six months. Then Dr K established a new SDA for Plan 2 (SDA2) and all assets were rolled over from SDA1 to SDA2.

What issues should I be concerned about? Does this constitute a PT? How do you book these transactions in the Forms 5500 for Plan 1 & Plan 2?

Medical Practice 1 had a 401(k) Plan (Plan 1). Company dissolved and plan is instance of terminating. Most doctors went to work for Medical Practice 2 (new unrelated company.) Practice 2 sets up own new 401(k) (Plan 2.) Dr. K had self-directed brokerage account in Plan 1 (SDA1.)

Practice 2 sent deferrals and PS contributions to SDA1 for about six months. Then Dr K established a new SDA for Plan 2 (SDA2) and all assets were rolled over from SDA1 to SDA2.

What issues should I be concerned about? Does this constitute a PT? How do you book these transactions in the Forms 5500 for Plan 1 & Plan 2?

Does a POP (Premium Only Plan) need to file a 5500 if they have over 100 participants?

If a terminated participant is 40% vested but never takes a distribution and the plan decides to amend to 100% vesting....would this terminated participant automatically be bumped to 100%? Or could the plan still honor the 40% vested amount when the participant takes the distribution. I know a participant is essentially anyone with an account balance however I can see the plan sponsors side of this.

Hello,

I have never seen this question in this form before.

Participant wants to change his own account to a Trust. I suppose he has established a trust for all his assets and wants to change his SSN to the FID issued for the trust, and then use the name of the trust.

I know that a participant can designate a trust as his beneficiary, but changing the participant's account itself to a trust is not allowed, correct?

It seems to run afoul on two counts -

(1) the idea that he has deferred compensation and that he will owe ordinary income tax based on his individual tax situation for the year(s) of distribution. Changing to a trust would very possibly avoid or change that ordinary income tax treatment.

(2) It seems that it would be a prohibition under the Anti-Alientation clauses of 401(a) of IRC and 206(d) of ERISA, but want to make sure I am on the right track here as well. If the law allowed him to change his account to a trust, and he was the beneficiary, he could not be the sole trustee and that could potentially allow a change to a beneficiary without his authorization, thus alienating his account from him.

Thanks in advance for any feedback.

andmik

My understanding is that if a 403(b) plan is written to offer ' 'Unviersal Availability', as described in 403(b)(12)(A)(ii), that it is excluded from Title I and need not do annual non-discrimination testing.

If so, and there is no ACP testing, what prevents a school board from picking and choosing select employees to receiving a match or even an elective ER contribution?

BruceM

The IRS Q & A from the 2008 ASPPA annual conference included the following:

Question:

"A plan's audit revealed insufficient plan administrator documentation of the actual hardship distributions on file. The benefits manager disputes this responsibility, saying it is between the individual and the IRS. Are there any minimal requirements that plan administrators must conduct before allowing a hardship withdrawal?

"

Answer:

The plan must have sufficient information to adjudicate a claim. Reasonable evidence is needed. See, e.g., regulations relating to Katrina hardships for what you need to show.

I cannot find the regulations the IRS referred to. I read KETRA and IRS Notice 2005-92. Can anyone help?

Thanks!

Laura