We administer a 401(k) profit sharing plan where the plan sponsor is a real estate agency (corporation). Several of the agents in the office have the opportunity to purchase shares of the corporation. One of the sales agents wants to purchase shares with his account in the 401(k) profit sharing plan (this sales agent is a non-owner and does not have an operational title).

Does this constitute a prohibited transaction?

Any thoughts would be greatly appreciated.

Thanks!

Can hardship distribution be take from Employer 401K safe harbor contributions?

Document says yes but insurance company says IRS says no and will not allow.

Small employer with 4 employees (1 owner and 3 employees) who were all employed on 12/31/2008. It's time to file the 2008 Form 5500 and make the 2008 3% safe harbor contributions, but the company is out of business and there are no corporate assets. The owner has filed personal Chapter 7 bankruptcy. Do the participants become creditors for their 2008 safe harbor contribution? Do they have to file something with the bankruptcy court?

We recently took over a 401(K) plan and the definition of compensation is W-2 Gross (Box 5).

The client also sponsors a Section 125 plan.

The previous TPA was using W-2 box 5.

The plan document states that the ADP/ACP tests shall be based on Gross W-2 w/o reduction for employee deferrals or employee contributions to a 125 plan.

Client wants to reduce W-2 by contribution to the 125 plan.

Would this be OK??

Section 504 of PPA 2006 requires plan sponsors to begin posting their 5500 forms for all plans subject to Title I (retirement and welfare) "on any intranet site maintained by the plan sponsor." If the sponsor is a member of a controlled group of corporations and all members of the controlled group participate in the plan, do the controlled group members need to post the 5500 on their intranet site? They are not the sponsor but their employees participate in that plan. Would anyone like to opine?

2008 calendar year plan. SH match plan to start the year, but SH match was suspended 3/31/08 after proper notice. After the amendment to suspend the SH match, a discretionary match is available for 2008, requiring 1,000 hours and employment on the last day of the year. Two new participants enter the plan 7/1/2008. They complete 1,000 hours in 2008 and are employed on 12/31. No discretionary match is made for 2008 and no forfeitures are allocated. They were not participants while the SH match was in effect, so they get no matching contributions for the year.

Are these two considered as benefiting or not benefiting for the 410(b) test on the 401(m) portion of the plan?

Our valuation software counts them as benefiting, but I'm thinking they should be counted as not benefiting. I don't see them as being directly or indirectly eligible to receive an allocation of matching contributions since there is no match for the portion of the year they were participants.

Anyone else have an opinion?

A plan sponsor adopts a new defined benefit plan effective 1/1/09. The plan's benefit formula grants prior service credit. As such, each eligible participant has an accrued benefit as of 1/1/09. The purpose of granting prior service credit is to create a cushion amount and increase the maximum deductible contribution. Lets assume the following:

Funding Target as of 1/1/09: 200,000

Target Normal Cost for 2009: 0

Assets as of 1/1/09: 0

Shortfall Amortization Balance as of 1/1/09: 200,000

Since the plan grants prior service credit, the benefits are accrued as of 1/1/09 and there is no target normal cost for the year. In this case, each participant accrues 1/10 of the 415 dollar limit as of 1/1/09.

Two questions -

(1) Does it make sense that the Minimum Required Contribution is the amortization of the $200,000 shortfall amortization balance (or lets say about $40,000)? If the plan had not granted prior service credit, the Minimum Required Contribution would be $200,000.

(2) The AFTAP as of 1/1/09 is 0% (0/200,000). Is there an exception for new plans or would the plan have benefit restrictions the first year?

Under a partial plan termination, vesting of the affected participants is required TO THE EXTENT FUNDED. I take this to mean that vesting is granted to non-vested affected participants only if the plan's assets exceeds the Priority Category 5 plan termination liability. Is this a correct interpretation? If so, I would guess that in the current environment, not much extra vesting will be happening. Or said another way, if the assets are below the PC5 liability, who cares if a partial plan temination has occurred?

Does anyone have or know of any spreadsheets that show all the calculations for cross testing a dbdc combo. We are trying to create one for plan design use and thought maybe we wouldn't have to invent the wheel all over again.

Has anyone dealt with the situation where the actuarial value of the remaining distributions to a DB plan participant is not sufficient to recoup an overpayment? Our participant has been overpaid by almost $30k. The actuarial value of the remaining distributions is only enough cover about half of that.

I know EPCRS generally permits a fiduciary to recoup overpayments by reducing future benefit payments, but does this include reducing them to $0? If not, any thoughts on where the floor is?

Our options seem to be either: (1) start paying the correct benefit amount and try to recover the $30k from the participant, or (2) cease paying benefits altogether and try to recover the $16k from the participant.

Thoughts?

I have a client who forgot to default a loan during 2008. They discovered this and want to know how to correct. Can they issue the 1099R in 2009 showing the correct amount of the loan default, or do they have to do a late 2008 1099R and have the participant revise his tax return for last year?

Plan currently doesn't allow for a distribution prior to actual retirement or separation from service even if the participant has attained normal retirement age.

One of the partners in the firm has attained normal retirement age and would like a distribution. If the plan is amended to allow for in-service distributions upon attainment of normal retirement age, is it an issue if no one else has attained normal retirement age? Is that a benefits, rights, and features issue?

Why does the IRS insist upon pain of sanction that one may not maintain a model SEP alongside another retirement plan?

If any? COBRA?

If 2008 AFTAP (using 2007 data) was above 80% but when preparing the 2008 schedule SB you can "see" your 2009 AFTAP (using 2008 Sch. SB data) will be below 80% and burning the CB will bump AFTAP back above 80% (less restrictive category);

Do you burn the 2008 CB before using any CB to reduce the 2008 minimum funding ?

OR

Do you burn the 2009 CB before using any CB to reduce the 2009 minimum funding ?

Assume 2009 AFTAP not formally prepared or certified yet if that makes any difference.

We used the Carve Out Method to run the ADP test which eliminated the

"otherwise excludable" employees from the test. The ADP % for the 15 NHCE's

(the main NHCE group that was not carved out) was 4.14% (there were 4 ee's

who were carved out)(Total NHCE's were 19)

Question

---------------------

When using the QNEC correction method, does the excludable employee group

need to be taken into account in determining the new NHCE % after the QNEC

is made? (ie does the test have to be re-run without using the carve out

method and use that ADP% which will be even lower to base the QNEC

correction on?) 2. If we can base the correction on the ADP test which only

included the 15 ee's, does the QNEC correction need to take into account the

"otherwise excludable" ee's?

In 2007 the employer accidentally submitted several payrolls twice resulting in an over deposit of the 2007 deferrals. Can they remove the excess deferrals from the EEs accounts place into forfeiture account and then reallocate as a PS contribution at year end?

Other options?

I'm preparing my first SB and was hoping to get an answer to what may be an obvious question. Regarding the weighted average retirement age (line 22), in a small plan where both participants' NRAs are 65 (the document defines NRA as age 65), is the attachment described in the instructions needed? Are the instructions implying that it's only needed if particpants retire at different ages? All help is greatly appreciated.

Running a 1/1/2008 val (just switched from EOY val since 2008 contribution too high). A deemed election will occur to bring the AFTAP to 80%. Say this deemed election reduces the carryover balance by $30,000. So, carryover balance is reduced from $50,000 to $20,000.

Is the remaining $20,000 carryover balance used to calculate the 430(f)(4)(B) assets for the shortfall amortization payment? I would think so but just checking.