Here's a situation I'm currently working with.

An individual with an IRA through a bank made a withhdrawal in late 2008. The individual requested that $2200 be withheld. Instead, due to a bank typo, only $200 was withheld.

What options does the bank have to correct this?

Can the individual pay the bank back the 2000 to have that count as withholding and then have the bank issue a corrected 1099-R?

thanks!

I'm pretty sure I know the answer to this but was hoping to get a second opinion.

Match formula is 100% of 401(k) up to 6% of compensation.

Definition of compensation is standard W-2 comp.

Payroll takes 401(k) from all pay except for a special bonus at the end of the year which is included in W-2.

Therefore, the 6% cap on the match is based on pay which includes the bonus, even though no 401(k) was taken from it.

Sound right?

Pay used for 401(k) 100000

401(k) - 8% 8000

Bonus 20000

Total Pay 120000

Match 7200 (which appears to be 7.2% of pay used for 401(k)

Has anyone ever heard of an opt-out notice that requires a participant's signature, stating that such participant needed to "opt-out" if they didn't want to invest OUTSIDE of the plan?

Does WRERA prohibit a participant from taking his 2009 RMD? RMD's are the only exception to lump-sum distributions in a lot of the plan documents I handle and I can't imagine telling retired participants they have to take $25,000 or nothing instead of the $1,000 they want. And can a participant still elect not to have the 10% (not 20% mandatory) Federal Taxes withheld?

Is a 204(h) notice required to a group of employees who are going to be transferred from the parent company to one of its subsidiaries and will no longer be participants in the Company's DB plan. The subsidiary has its own benefit plans and a DB plan is not one of the plans. Thanks.

We have a transaction where several plans, some underfunded and a few overfunded, will be merged. Does anyone know whether merging the overfunded plans with the underfunded plans raises any fiduciary issues?

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The sole owner/employee of LLC #1, which sponsors a DB plan, also owns 50% of LLC#2. The DB plan has paid LLC #2 to assign his 50% ownership in LLC #2 to the plan. I'm guessing that both LLCs are a controlled group due to the effective control rule since the owner of #1 would still be considered owning the 50% interest in #2 since he's the only participant in the plan, not to mention that the "assignment" was probably a prohibited transaction. As a result, the employees of #2 could be eligible for benefits under the plan due to the CG situation. Is all this a correct interpretation?

Another issue (that may be very small compared to the PT and CG ones) is whether this assignment runs afoul of the rules regarding how much of an employer a plan can own. It's my understanding that a plan can hold qualifying employer securities if their value doesn't exceed 10% of the plan's assets at the time of the transaction (assignment was more than 10%). But since qualifying employer securities are defined as either stocks, marketable obligations or public partnership interests and both LLCs are small, privately-held firms, does this rule not apply here? Thanks in advance for all help.

30 person 401(k) at record keeper platform

IC called me to ask vesting on a Participant. Since plan has never had anything but deferral and SHNEC, I said 100%.

I found out that the Employer had sent distribution forms straight to investment company instead of to me. I then confirmed that he had retired 2 years ago and asked her to send me copy of the forms

When I went through my checklist, I saw the form asked for just $10,000 of a $60,000 account. The Plan Doc only allows for lump sum distributions. It is a Corbel volume submitter with an adoption agreement.

I am thinking that asking for the money back isn't going to work. And I think the EPCRS fix would be to amend the Plan to allow partial distributions, at least for this year. He was never an HCE, so there would be no discrimination issues.

What do you think? Besides, telling the employer please always send the form to me, what would you do? Would anyone feel comfortable ignoring this as a one time mistake?

A Terminated Participant took a distribution from a Non Qualified Deferred Compensation Plan in 2008.

The participant was not working for the company in 2008.

Should this distribution be reported on a W-2 or 1099 Miscellaneous?

I have a pretty big issue with respect to a Plan that has a 401(k) feature. There are maybe 200 employees effected. Basically, the payroll people for the company and the 401(k) administrator messed some elective deferrals up... a lot. One pay period, the payroll company would deduct an amount for an employee deferral. That same pay period, the 401(k) administrator would not defer the amount. Then in subsequent pay periods or even days, the 401(k) administrator would contribute amounts to the Plan for the effected employees. Sometimes they would get it right on the first try, sometimes not.

Similar things happened with matching contributions. Payroll would deduct an amount for matching contributions but the 401(k) administrator wouldn't and later would correct it with contributions.

My question is, how do I correct this? Do I use EPCRS, and if so, what sections apply to this kind of mistake? Or do I use VFCP? I'm a bit lost on how to correct such a big problem. Thanks

Client has 3% SHNE and a match of 50% of deferrals. It fails ACP Test. Do I forfeit or return the money from the ACP test? Can I test anything over 4% of compensation. NHCE has a match in excess of 4%.

Hi: Great board. I have a 401k plan that wired money into their Holding Account back in 2008. They generally use this money for funding their non elective contribution. For plan year 2008 they have decided not to fund this discresionary non elective contribution. Furthermore, they want us to send the money back to them. Is this possible? I didn't think we could remove money from the Trust. Please advise -thank you.

Is there a penalty for sending out a 1099-R after the Feb 2 deadline mentioned in the instructions? If so, what is it?

The instructions say:

Furnish Copies B, C, and 2 of this form to the recipient by February 2, 2009.

...but that's it.

Does anyone have any thoughts as to whether it would be permissible to enter into an agreement with a construction industry employer to waive his assessed withdrawal liability so long as he paid contributions that he would have paid on behalf of his employees during the period from which he initially withdrew from the plan and the time at which he signs a contract with the union again? In other words, for all practical purposes, the agreement would create the fiction that he never withdrew from the Fund in the first place.

Can a spousal beneficiary who is a participant in the same plan as the deceased participant, rollover the participant's loan balance into her own account and assume repayments?

I found this in the ERISA Outline Book:

I also found this in the ERISA Outline Book:

So, I take this to mean that if the plan allows participants to rollover loans (which I know isn't all that commone) then the spousal beneficiary would be able to rollover the loan and assume payments. Is that correct? Doesn't feel quite right.

Any thoughts would be appreciated!

If the non-HCE's are classified as "not otherwise excludable" or "all" and the "not otherwise excludable" group provides a better ratio (2.39% as opposed to 1.9% for all) would I start my targeted QNEC calculations using the lowest paid in the "not otherwise excludable" group?

I work as a Compliance Manager for a large custody bank. We are the trustee and custodian for approximately 17,000 small 401(k) plans recordkept by a reputable recordkeeping shop. (As you've probably assumed, we don't custody the assets on a "participant or a plan level - it is one omnibus account in the recordkeeper's name). The plans are on a standardized prototype sponsored by the recordkeeper. It was recently discovered that a formalized KYC program was never put into place for these plans. We do sign a standardized trust agreement with all plan sponsors since we are trustee for their plans - (the plan sponsor is required to sign and a bank officer also signs). Each new client is required to complete a "Plan Application" as mandated by the recordkeeper. The Plan Sponsor must provide the official company name, address and EIN on the Plan Application. The new clients also (obviously) provide account statements so the plan can be converted to the new recordkeeper. My question is: are we (the bank and the recordkeeper) already fulfilling our KYC requirement by collecting a signed trust agreement and the recordkeeper collecting company information through their Plan Application? If not, what additional information would be required? I know 401(k) plans are considered very low risk for KYC purposes because they are probably the most tightly regulated type of account. We're hoping that what is already collected is sufficient because the recordkeeper is not to keen on trying to solicit more information from their clients. Also, these are extremely small businesses/companies who may not have documents like "articles of incorporation" readily avialable. I was thinking there are other banks who are in the very same situation Any help that anyone can provide would be greatly appreciated!

Thanks ahead of time.

I have a client who is unsure of whether they actually filed their 2007 Form 5500. Basically, we prepared the 5500-EZ and mailed it to them instructing them to sign it, send a copy to the DOL and send us a copy of the signature page. We received a copy of the signaure page but now the client is asking us to verify with the DOL that he actually mailed it to them!

I'm afraid that if he didn't actually file it and I alert the IRS due to my inquiry we have issues. Is there any way to determine if the ifling was actually received w/o creating this type of issue? Has anyone ever done this before?

Calendar year 401(k) has been using the current year testing method for all years since prior year testing authorized by the tax law. For 2008, employer determines that, due to the volatility in the equity markets, many NHCEs stopped contributing to the plan altogether. If the 2008 ADP/ACP tests show a failure, but the plan would pass based on a prior year testing methodology, what is the deadline for the plan to be amended to adopt the change in methodology?