the plan uses a discretionary matching formula. one of our clients is asking me why he cant contribute the matching contribution to the extent of the vesting percentage. For example if the participant is 20% vested they would only have to contribute 20% of the match. Clearly I know you cant do this but I am having a difficult time explaining to the client the reason other that contributions are allocated according to a formula and the vesting schedule is applied after the fact if and when employees terminate. Is there a regulation or rule that makes this clear?

I work for GE and to my horror, found in my first pay period that for some reason, I was not "re-upped' for my now $5500 Catch-Up contribution. I still don't know how this happened, suffice to say I will make my elections in writing in future years.

Letters to my plan administrators go unanswered. Is there an alternative means for me to take advantage of this $5500 pretax advantage? Any suggestions would be appreciated.

Has anyone been cranking out Schedule SB's on Relius govt forms system? I tried a couple, and seems like the system is rife with problems.

For starters, it carried forward last year's data into Schedule MB, even though virtually all of them had been marked as single employer plans last year. That wasn't very user friendly.

On line 3, the totals aren't working correctly in column 2. I had to override to get the proper result.

Lines 7-13, column (a): How do you enter the FSA credit balance at beginning of current PY? I think you have to override the 13(a) amount, which seems clumsy.

Lines 14-16: Can't enter funded percentages of 100% or higher, even with override. This is a major problem, since these are the AFTAP amounts.

Anyone else having these problems? or other ones?

... S

I would like to know where to find the current Gatt rate listing and how it is calculated into pension plans.

An employer wants to terminate their 401(k) Plan. There are no employees...just the owner.

The plan year is 8/01/08 - 7/31/09

The Resolution says that the plan is terminated effective July 31, 2009.

The plan has already distributed 100% of the assets out of the plan in January of 2009.

This doesn't seem right to me, as the distribution should be made after the effective date of the termination...right? How can distributions be made before the effective date of the termination?

Can someone please help clear this up for me?

Thank you.

This is a Plan I do only ADP and ACP test.

Every year, I get an Excel sheet with about 500 people on it, comp, DOB, DOH, date of plan entry, Soc SEC, NAME, comp, deferral, match paid through out the year.

I have been opening a new plan and using DER gave everyone 0 beginning balance. Then, in census, I delete, everyone with no comp this year or last., one person at a time.

Does anyone have a better way to delete people from the system?

What happens when a plan fails the ADP test and needs to refund ROTH contributions when there is a loss?

Assume Excess Contribution (all ROTH) is $5,000

Loss on excess is $2,000

Check to participant is $3,000

I understand that the taxable amount is $0 in this case.

What I'm not sure of is -

What hapens to the participant's ROTH basis? Is it reduced by the $5,000 excess or the $3,000 refund?

If it is the $5,000 excess, can the participant claim the $2,000 on their tax return? If yes, how?

What does the 1099-R look like in this case?

I've seen this before on regular K and understand how ROTH with gain works (I think) but I'm perplexed by this set of facts. Any IRS cite would be appreciated.

Thanks.

Hypothetical situation; say a taxpayer inputs the wrong plan compensation figure for an employee. The employee's allocation gets made (and, to make things easier, in this hypothetical situation, a money purchase plan figures in, with employees receiving a straight 5% of their compensation, therefore the allocation of the other employees would have stayed the same had the proper compensation figure got used), but since the allocation reflected incorrect information, the employees had a lower allocation than he or she would have gotten. Therefore, the difference between the allocation actually made and the allocation that did get made awaits funding, and the interest or gains that would have come due to this employee must also get restored.

My question; would this fall under the self-correction program? If so, can anyone give me a citation?

Let us say that a coding error happened, that all other employees had their compensation correctly computed as including all of the compensation figures that the plan documents says must constitute compensation for plan purposes.

I have a plan document that doesn't match on catch-up contributions. Don't ask why. If I fail the ADP test and reclassify my refunds as catch-ups, do I have to take away the match that was applied on these catch-ups prior to the test? My guess is YES. Please confirm.

For 2008 an HCE defers the $15,500 and the $5000 catch up, for a total of $20,500. The plan fails the ADP test and it is determined through the leveling process that $3000 is to be refunded to above HCE as he deferred the most. He will actually HAVE to take that refund, correct????????

However, if he had deferred the $15,500 and then only did $2000 in catch up for a total of $17,500 and it was determined the plan failed the ADP and a refund of $3000 was necessary, that $3000 could be classified as catch up and therefore no refund necessary. Am I thinking right?

A DB Plan contributed $100,000 in 2008. When the valuation was finalized the required contribution was only $80,000. They would like to apply the additional $20,000 towards the 2009 contribution. Can they do this? Would it not be reflected on the Schedule SB since it is not a 2008 contribution, but a 2009 contribution?

Insurance carriers are no longer giving each participant a paper copy of their benefit booklet. They are either posting them on their online systems or giving the plan sponsor an electronic copy. We just changed carriers and I want to post an electronic copy of the employee's life ins. booklet on our Intranet. Some employees on our shop floor don't have a computer at their work station. My fear is that even though I make it available to those w/computers, they won't review their copy of the booklet or make a copy and take it home for their records. So I guess I'm back to making a paper copy for everyone? Comments?

I just had a broker tell me that they have an extended date to get the 1099-R to participants of Feb. 15, and that he believes it extends to all 1099-Rs. I've searched for it and can't find anything. Has anyone else heard of this? Thx.

I am looking at a 2008 K-1. Line 14 has two separate entries: Code A = 200,000 and Code C = 450,000.

Per the instructions, Code A is net earnings from self-employement and Code C is gross non-farm income.

What do I use to calculate the pension contribution?

Think I've got myself confused here with the revisions et al.

Consider a Plan as of 10/1/2008 (first year of PPA funding). Benefits were previously frozen so no Target Normal Cost.

Funding Target = $467,345

Plan Assets (w/o reduction) = $459,050

FSA Credit Balance (now Carryover Balance) @ 10/31/2008 = $52,677

Applicable Threshold in play for 2008 is 92%

FTAP originally is (459,050 - 52,677) / 467,345 = 87.0%

No annuity purchases so AFTAP = FTAP. However, I read that since the FTAP computed w/o reduction for credit balances is 459,050 / 467,345 = 98.2%, which is above the 92% threshold for 2008, so my final AFTAP that I certify is 98.2%.

One, is this adjustment correct or what should I certify for AFTAP for 2008 87% or 98.2%?

Second, appears that recent change to law means that when setting up the SAC, I only take 92% of Funding Target into account. The brain cramp comes in:

a) do I get a free pass (i.e., no Shortfall Amortization Charge set up for 2008) since my AFTAP is over 92%?

or

b) Does my FSA for 2008 look like this instead:

Shortfall Amortization Base = 92% of 467,345 - (459,050 - 52,677) = 23,584

for sake of argument, say TAF = 5.93816 so Shortfall Amortization Charge = 23,584 / 5.93816 = 3,972.

I then can offset this 3,972 by my COB of $52,677 (allowed since AFTAP over 80%) so no minimum required contribution.

Hi,

We have a plan that has 415 excess? The match formula is 50% up to 100% of deferrals. (very generous these days!) A participant has $500 excess. If we return the $500 plus ATM of $250, I believe we have over corrected? Or would you correct $333.34 in deferrals and $166.66 in match?

Any insight would be greatly appreciated.

My fading memory tells me there was a change in the law which required that at least one trustee of a plan must be a 'U.S. Person'. I remember having to add individual trustees to some of our plans where the trustee was a foreign national and not a U.S. citizen.

Trouble is, my adeptness at running search engines approaches the level of -0-.

Can anyone provide the cite? Code or Reg? Thank you.

DUI - TEXAS STYLE

From a county where drunk driving is considered a sport, comes this true story

Recently a routine police patrol parked outside a bar in Austin, Texas . After last call, the officer noticed a man leaving the bar so apparently intoxicated that he could barely walk.

The man stumbled around the parking lot for a few minutes, with the officer quietly observing. After what seemed an eternity in which he tried his keys on five different vehicles, the man managed to find his car and fall into it.

He sat there for a few minutes as a number of other patrons left the bar and drove off.

Finally he started the car, switched the wipers on and off--they worked fine, dry summer night--, flicked the blinkers on and off a couple of times, honked the horn and then switched on the lights.

He moved the vehicle forward a few inches, reversed a little and then remained still for a few more minutes as some more of the other patrons' vehicles left.

At last, when he was the only car left in the parking lot, he pulled out and drove slowly down the road.

The police officer, having waited patiently all this time, now started up his patrol car, put on the flashing lights, promptly pulled the man over and administered a breathalyzer test.

To his amazement, the breathalyzer indicated no evidence that the man had consumed any alcohol at all!

Dumbfounded, the officer said, I'll have to ask you to accompany me to the police station. This breathalyzer equipment must be broken.'

'I doubt it,' said the truly proud Redneck. 'Tonight I'm the designated decoy.'

Should we calculate "gap period" earnings for determining how much to distribute from the plan for excess deferrals over $15,500 (for 2008 under age 50)? Or did the PPA get rid of the gap period earnings for excess deferrals? Or did they only get rid of the gap period earnings only for ADP excess contributions???

A client has a non-ERISA, employee contribution only 403(b) plan that become frozen effective 1/1/09.

The employer forwarded on the employee contributions of four employees to a particular fund and these checks reached the fund custodian after 1/1/09. The fund custodian responded that, due to the freeze, they had a "hard deadline" and could not accept the contributions after 12/31/08 (so the money never got into the 403(b) Plan, per se).

Checks have been returned to the employer.

I advised employer that the returned money should be returned to employees and 'taxed accordingly.'

Now client's payroll department wants details on whether 'taxed accordingly' means to pay through payroll and tax in '09, or whether W-2C's must be issued with respect to '08 (the latter answer would make client grumpy, not that I'm too worried about that).

I'm not expert in this area, but is the right answer that the employer can simply pay the money through payroll in '09 (imposing tax in '09), and just needs to issue a 1099-R (by 1/31/10)?

This is not an 'excess distribution,' as I understand it, because no 402(g) or 415, etc. limits have been surpassed, but it seems to make sense to return the amount as if it were an excess distribution (but without any excise tax, etc). Therefore, I have looked at Rev. Proc. 2008-50, Section 6.06(1) ["Treatment of Excess Amounts"], which refers, in turn, to Rev. Proc. 92-93 (which is where I saw the 1099-R reference).

I believe that's correct, but I bet somebody on the boards knows for sure.

Can you confirm (or redirect me?)

Thanks!!