Safe Hargob 401(k) Plan for calendar year end 2008

W-2 form reports $1536.90 as 401(k) deferral

401(k) deferral deposited into investment account $1626.10

$89.20 excess deposited into 401(k) account.

EE has since been paid out his deferral , so he was paid out too much.

What do we do now?

The plan still needs to receive the PS and SH Match which will be deposited sometime before April 15th.

The terminated participant is still due about $700.00 in SH match ...should we tell the employer to deposit $610.80 for that employee with the justification that he has already received 89.20 of it? The terminated participant is not a highly or related to a highly.

I don't see anything in the document that addresses this issue.

Any guidance would be appreciated.

Thank you.

On what line under item 2 would insurance premiums paid for policies in a DC plan be listed on the Schedule I?

Looking at line 20 on 2008 Schedule SB and 20(a) asks if plan had a "funding shortfall" in prior year. Since prior year was 2007 what do we use for the "funding shortfall" calculation (substitute current liability for fdg target ??).

Then it asks on line 20(b) if Quarterly Contributions were made in a timely manner ? In this client's case they were not, but I don't see any place on that same page, or any other page of the Schedule SB, where you add the additional late quarterly contribution charges. I thought maybe they just lumped it in with TNC or the Net Shortfall Base installment charges but reading the line-by-line instructions it doesn't appear to be included (added) to these components.

Does anyone know where the 2008 late quarterly contribution interest show up on the Schedule SB ?

If it does not show up on the 2008 Schedule SB, then are they really required for 2008 ?? (e.g., kind of like "if a leaf falls in the forest and no one is there to hear it did it make a sound").

Plan's investment committee decides to replace some funds in a participant directed 401(k) Plan.

What type of notice is required to plan participants? Is there is a specific notice requirement that includes a timing element (e.g. 30 days before or after the change is made)?

How long must a plan be a safe harbor plan to avoid testing?

We have a client who gives their employees a phenomenal match, but are still failing their testing. When during a plan year can it be switched to a Safe Harbor Plan, if at all?

In December 2008 Employer adopts resolution to terminate DB Plan effective 1/1/09.

Employer wants to prolong the date it distributes benefits pursuant to plan termination as long as legally permitted - say to beginning of 2010.

If a participant terminates employment during 2009 (after the effective date of the plan termination), is the participant entitled to a distribution earlier than he otherwise been entitled to one due to the plan termination?

Does the cost of a bus pass to get to work qualify under the qualified transportation expense program? I would think so, but want a second opinion.

Has the IRS issued any guidance on this?

What if, as is the case for 2008, the return on assets is negative? Is the credit balances reduced!? I hope not!

I know that credit balances are to be adjusted using the actual rate of return on the plan investments, but there are a couple different ways to come up with a rate of return. Does anyone have any thoughts on a reasonable way to calculate this?

I've heard that some think some sort of weighted average rate of return would be appropriate. Has there been any sort of guidance I've missed?

2 Companies in a Controlled Group - each have their own Plan - administered by different TPA's. For the Plan the I administer, I cannot pass coverage on my own, so I must ADP/ACP Test the combined group. My ADP Test fails and corrective distributions are required to some participants of the other Plan. However, they pass coverage and they ADP/ACP Test on their own (only their group) they pass ADP and ACP. Do I still correctively distribute, to their participants, based upon my test?

Assume a Participant does not have a designated beneficiary. If he dies prior to his required beginning date his entire interest must be distributed under the 5-year rule. What if he dies after his required beginning date? Does the 5 year rule apply there as well?

I have a client that gave me the following information. John Doe is a vendor w-2 paid gross wages. The w-2 for him only had box 16 (State wages, tips, etc.) completed. No other box for wages or taxes withheld was completed. He has a US address on the w-2.

Is he considered an employee of the company or is he a vendor that is paid by a w-2?? Can a vendor be paid by w-2?

In negotiating terms of an agreement allocating responsibility for performing administrative chores (Treas Reg § 1.403(b)-3(b)(3)(ii)) between an employer that sponsors a 403b plan funded with individual contracts and one of the 403b contract vendors, an issue has arisen over the administration of RMDs (required minimum distributions). The vendor does not want to agree that it will make the RMDs, but simply that it will notify the contract holder of the RMD requirement and amount for the year (as computed by the vendor).

IRC § 403(b)(10), IRC § 401(a)(9) and Treas Reg § 1.403(b)-3(a)(6) requires each employee’s 403b contract to satisfy requirement minimum distribution requirements found in Internal Revenue Code § 401(a)(9) per rules otherwise applicable to IRAs set forth in Treas Reg § 1.408-8.

If one 403b contract that is part of the funding for the employer's 403b plan does not provide by its terms that RMDs will be made, does that poison the whole 403b plan or just the 403b contract in question?

Similarly, if in the 403b contract's language that RMD's will be made but a vendor does not, does that operational failure taint the entire 403b plan or just the 403b contract in question?

I have a one person plan with an AFTAP of less than 60%. Can the participant take a loan from the plan, or is a participant loan considered a prohibited payment under Section 436?

Although a loan is not necessarily a distribution, it could become a "deemed" distribution if in default, so it would make sense to me that it should be prohibited. However, regs and code not specific on this matter, and I thought I heard at some prior webcast that loans should be prohibited.

Any input would be appreciated.

Thanks.

We have a client with DB and PS plans. His father (already at RMD age) has accumulated a lot of money in the plan over the years, and we only yesterday found out that in 2007 and 2008 he took out a total of over $530,000 dollars and rolled it over to an IRA.

Since we were never told of the distributions, there were, of course, no 1099-Rs preparerd. At this point, both 2007 and 2008 are late. But since all three distributions were rollovers and therefore not taxable events, we felt the best course of action might be no course of action.

What are people's thoughts on not preparing 1099-Rs for IRA rollovers???

Have a new plan in 2008 which utilizes Top Paid Group. None of the employees are owners. Only one employee made over 100k while working for the Company last year. One person times 20% equals point 2 - can I round my top paid group down to zero?

OK, so the SH Match discontinuance notice is sent out 3/18/09, and there are weekly payrolls. 30 days later is 4/17/09. There is a pay-date on 4/15/09 and 4/22/09. Which pay-date is the final pay-date for the SH Match?

I vote for 4/15/09, because the 30 day period expires on 4/17/09, so it's OK to discontinue the match after tha date (i.e., to have no match on 4/22/09). So to confirm, any pay-dates after the 30 day period need not have any SH Match.

Don't mean to be disrespectful, just trying to help us smile thru the pain:

1. "Don't worry your job is secure!" or "Your job is safe."

2. "By the way, is your laptop in your office?"

3. "We're giving you a one-time opportunity to expand your resume."

4. "Wouldn't it be great to spend more time with your family?"

5. "Where do you see your career going with us in the next year?"

6. "We're not laying you off; we're just not rehiring you."

7. "Are you going to be here this Friday? Say...around 3 p.m.?"

8. "So how's your wife's job going?"

9. "We are re-sizing our global footprint."

10. "Could you close the door, please?"

What do you do when an small employer does not pay premiums and the group health plan terminates due to non-payment? Hipaa protection is removed IF the policy termed due to non-payment of premiums. There is an individual going through some major medical procedures when the policy terminates.

On what basis can an employer mandate that full-time employees must be covered under a health-care plan of some sort (e.g., provided by the employer, or on a spouse's plan, or on an individual plan)? Does the fact that the employee must pay for employer-provided coverage change the answer?