A Participant joined the Plan in the middle of 2008, and already made $15,500 in Employee Deferrals with his previous Employer's Plan.

The he made Employee contributions of $9,000 into his new company's Plan for the remainder on 2008.

This was caught at the beginning on 2009, and a refund was processed in 2009 becuase they went over the 402(g) limit.

My question is how do I account for this on Scheudle I?

Do I include the $9,000 in Employee Deferrals even thought it was not supposed to go into the Plan and refund to the participant in 2009?

The money was invetsed and is showing up as part of the 12/31/2008 balance in the Trust.

Do I need to deduct the $9,000 from the ending marking value to report on Schedule I?

Any help would be greatly appreciated.

If one wants the "PPA" statutory prohibited-transactions exemption for an eligible investment advice arrangement, ERISA 408(g)(5) requires an annual compliance audit on whether the arrangement meets the conditions of ERISA 408(g), and requires that the independent compliance auditor's written report be issued to the independent fiduciary who approved the plan's use of the arrangement.

Has anyone seen such a report? Is anyone in America doing this?

An employer has two plans, a 401(k) and DB Plan. The owner pays his two children approx. $5,000 per year however, they have never met the eligibility requirements for either Plan because they never work even close to 1,000 hours. There is one other employee who works about 700 hours per year and is paid approximately $16k.

The owner is the only participant in the 401(k) and DB Plans. Is this ok? Is there a nondiscrim or coverage problem that should be considered? Or because the other employees never meet the eligibility requirements then it is ok for the owner to be the only participant in either Plan?

Thanks for any help.

The recent thread on hardships being grossed up for taxes got me thinking (I hate when that happens!)

What if someone overestimates the amount of taxes? For example, say someone requests 10,000 in a base hardship. Then includes the 10% penalty tax (1,000). And for Federal tax they assume a 35% rate (3,500) for a total of 14,500.

What happens if the person is in the 25% bracket at the end of the year? Obviously the h'ship was more than the need + taxes & penalty.

This employer has a 401(k) Plan and a Defined Benefit Plan. He pays his two children about $5,000 each year and they work minimal hours (definitely less than $1,000). There is one other employee who makes approximately $16,000 per year but never works 1,000 hours.

He is the only participant in the DB and 401(k) Plans. Is this ok? Is there a nondiscrimination problem I should be worrying about because of this other employee? Or as long as she never works 1,000 hours or more is it ok?

I don't know much about 403(b) plans.

I understand the final regs don't allow employees to self certify hardships. However, my understanding has always been that if the employer certifies the hardship, they might inadvertently make the plan subject to ERISA. Am I missing something on this? How does a plan with hardships keep its non-ERISA status? Would having the vendor make the determination solve this issue? TIAA-CREF has offered to either have the employer make the determination or let the employer make the determination.

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?