I am to get 60% of my ex's 401K plan as of August 7, 2008. That amount is 388K. My ex and I wrote the QDRO and now they have a question I can't answer.

They want me to confirm whether or not the cost basis on the Employer Stock should be applied proportionately to the Alternate Payee's Distribution?

Thanks to all.

I have a plan where the definition of compensation excludes bonus and overtime. The plan is a Safe Harbor Plan with the 3% non-elective. The client has put in the 3% SHNEC on the based compensation during the year. The year has ended and the 414(s) compensation ratio test is run and it is failing. I am unsure of how this is resolved. I thought that the client would simply make the 3% SHNEC on a defition of comp that satisfies 414(s) (perhaps 415). My colleague states that the SHNEC cannot be corrected in this way and that the plan fails to be a safe harbor plan, still owes the 3% SHNEC on the base pay, and is subject to ADp/ACP testing. Comments?

Additionally, I would think it should be different if the SH was satisfied by the SH match, but I do not think that it is ACTUALLY different. Under this scenario, I think it would definately fail to be a SH plan b/c the participants did not have the opportunity to make the deferrals on the poriton of the compensation excluded from the definition. More comments?

We have a multiple employer plan, (8 separate employers) there is common ownership among them but not enough to be considered a controlled group. In 2007, we had one employer leave the plan and one employer join the plan. The question is for these employer, each wants to be tested under the plan for portion of the year that they were participating in the plan we recordkeep. Would the ADP/ACP test be considered a short plan year thus requiring the compensation be pro rated? What about the 415 limit? The employer that left joined another qualified plan and was tested for the time they were in that plan. The employer that joined was test during the time the participated in the other plan. I am not sure what the other recordkeepers did.

Any help/direction would be greatly appreciated!

Ok, I have a Roth IRA now that I fund fully $416.66 a month. My question is... Is it possible to open another Roth? I'm sking because I'd like to have a 2nd for the $ that i'm not putting into my savings account. Plus, it would be nice to have some extra savings that will grow tax free.

Thanks

It is my understanding that the IRS has finalized the IRS mortality table. Perhaps it is also referred to as the applicable mortality table.

It appears to me that this table is required for funding under 430, lump sums under 417e and maybe current liability purposes too.

I will review the regs.

What about 415?

That is, does the new mortality table apply to actuarial equivalence under 415 for benefits commencing before age 62? And for 415 lump sums? Or is it still GAR94?

Thanks.

The issue is that a 401(k) plan withheld 401(k) deferrals - and related match - on "compensation" that included bonuses, however the Plan's definition of compensation does not include bonuses. Therefore it withheld too much in 401(k) deferrals under the Plan's definition of compensation, and, accordingly, the match made was also incorrect. The amount of the bonuses is not very large, I don't think it would affect testing...but not 100% sure. This issue goes back a number of years. Example: withheld on $110,000 instead of $100,000, so 2% deferrals was $2200 instead of $2000, and 5% match was $110 instead of $100.

Has anyone dealt with this before? I was thinking to correct the 401(k) deferral should be treated as an overpayment in accordance with EPCRS's rules re overpayments in Section 6.06 (i.e., distribute excess amounts with notification that amounts are not eligible for rollover). What about the additional $10 in match? Should it become a forfeiture?

Thanks for your input.

If plan is currenly on cyle for a determination letter, and also must make corrections under a VCP submission, is it required to file a determination letter first, or can the determination letter be filed concurrently with the VCP? The correcitions under VCP do not require a plan amendment. Thanks.

A non-Profit client with a calendar year Money Purchase Plan contributes $1,000,000 during the first 6 months of the 2007 year to fund most of the 2007 expected contribution. But, then they provide a 204(h) notice and execute an amendment to freeze the plan June 30, 2007. We find out about the $1,000,000 being in the plan just recently.

The allocation conditions are 1000 hours only, no last day. So a bunch of people are eligible for allocations, but only about $450,000 worth. That leaves us with a $550,000 problem.

They are nonprofit, so I have no 404 problem. This is not a 415 limit issue either.

This appears to me that it is an operational error. They want to take the extra money out of the plan and put it into a new 401(k). We have told them that without going through EPCRS, we see no way that could be acceptable under the terms of the plan.

Q1. Could they take the money out of the plan somehow and use it in another plan?

Q2. Could they adopt a retroactve amendment, retro to 7/1/07 and only effective through 12/31/2007, to adopt a formula that is X% from 7-1-07 to 12-31-2007 and 0% thereafter? Or would the 204(h) notice requirement be violated by not giving it 15 or 45 days before 12/31/2007 (when the newly adopted formula is zero again)? Could one argue that the formula is currently zero, so no 204(h) notice would be needed to adopt a 6-month formula of X% with 0% thereafter (I think I am reaching for straws).

Q3. I am really stuck, what would you suggest to this plan sponsor?

A one person C corporation has a H&W plan.

The deductible limit under 419A for additions to accounts is computed to be $20,000.

The owner contributes $10,000 to the plan, thus it would be fully deductible.

The plan has income of $5,000 for the plan year.

So at the end of the plan year the plan has total assets of $15,000.

Is the $5,000 of investment income taxable to the corporation? Or since the total contributions and investment return is less than the 20k deductible limit, is none of the income taxable?

Thank you.

Does anyone have plans that base pre-PPA lump sums on a GATT minus interest rate?? If so, how are you calculating the PPA Funding Target as of 1/1/08??? Are you using assumptions to consider the value of the "GATT minus" rate that may turn into a "PPA minus" rate?? Even if employer decides to go with straight PPA rates how should the "GATT minus" be reflected in the Funding Target calculation?? Thanks.

Calendar year 2007 DB plan will have a funding deficiency.

Employer's fiscal year changes each year based upon how weekends fall; for 2006-2007 it was 12/31/2006-12/30/2007.

5330 and 4971 tax are due when? Either today or 7/31/2009. Anybody dealt with this ahem, time sensitive issue?

It seems like 7/31/2009 but that does not compute logically and I wonder if taking deductions for calendar year 07 on the prior fiscal year return would matter.

Thanks for any help. The 5330 instructions do not help.

I have a 403(b) plan which will now be subject to audit under the new rules. The plan has over 100 participants but uses a very liberal entry schedule of 90 days.

Are you able to apply the otherwise excludable employee rules in determining the number of participants which could bring it under the 100 participant requirement?

I have almost 90% of my contribution to 401k as an After tax contribution and only 10% pre tax. If I roll over my 401k (due to job change) to an IRA and eventually to a Roth IRA do I have to pay tax again on the after tax component of my 401k when it is converted to a IRA and also during conversion from a Traditional IRA to a Roth IRA.

What is the prevalence of allowing say a grandparent or other individual who has legal guardianship but hasn't adopted the child(ren) to cover the children under medical plan?

Does anyone have any benchmarking data on this?

Thanks!

Lexy

An ER sponsors a group LTD policy for its EEs, premiums for which are paid in part by the EEs electing to be covered. The first LTD policy used offsets benefits payable by SSDI payments to the EE and to the spouse and any dependent residing with the EE.

The ER replaces that first LTD policy on 1/1/2006 with a second LTD policy, from a different insurance company. The second LTD policy offsets benefits payable by SSDI payments to EE, to spouse, or to any dependent regardless of where the dependent resides.

An EE that elected coverage (and payroll reduction to cover that part of the premium not paid by the ER) dating back to 2001 becomes disabled on 8/20/2006. EE divorces. Spouse gets custody of EE's dependent child. The dependent child receives SSDI payments.

Insurance company offsets the LTD benefits by the SSDI received by EE's dependent child that does not reside with EE, as permitted by the second LTD policy but not the first.

Neither the ER nor the second insurer distributed an SMM to EEs until well after the 8/20/2006 disability of this EE (in fact, no SMM was provided EEs until after 7/29/2007--the 210th day after 2006 when the second LTD policy took effect). EE learned about the change only after the 8/20/2006 onsent of disability, when the second insurance company first learned of the dependent child's receipt of SSDI and sought a repayment from EE.

May the ER validly enforce the change in the offset against EE given that no SMM was timely distributed?

I'm a registered investment advisor and also a W2 employee (not highly compensated) at a mortgage banker. We're looking to lower total plan costs by about 20% from current levels and institute an employee education program in making a change from the current plan provider.

Would I and/or the mortgage banker / plan sponsor be running afoul of ERISA in any way if I were a co-fiduciary for the 401k plan and receiving compensation from it? I am currently a participant in the plan but could discontinue if need be.

Any guidance would be greatly appreciated.

Thank you.

My understanding of a self directed plan is that the plan participants invest their money as opposed to the plan sponsor/employer controlling and making the investments. Is that correct?

With that said my understanding is that a profit sharing plan can be either self directed, or not self directed. Is that correct?

What about a 401k plan. Same question. Can it be non self directed, where the employee makes deferrals and the employer pools and invests the money and does record keeping?

Thanks.

An employee left 12 years ago after participating in a profit sharing plan for 15 years.

At termination of his employment, the employee was a vested participant and took a full dist'n.

Now, the employee has been rehired.

The rule of parity applies to participants who are not vested in their accounts.

In this case, because the participant had been vested, is he eligible to begin participating immediately?

If he does being participating immediately, is he considered a participant who already has 15 years of service for profit sharing calculations?

Thank you

Plan has transferred most account from brokerage firm A to firm B. One account for a terminated participant lags behind; we track down the participant and tell firm A to transfer the funds to firm B.

Firm A, for reasons that I cannot begin to fathom (I guess total incompetence is a "reason"), pays everything to the participant, who cashes the check.

The participant is entitled to a distribution, and forms have already been completed electing a cash distribution, so at least we have the paperwork needed. And I think we have convinced the participant to return the unvested money (minor detail!).

As to the withholding...I don't think there are any real consequences to not doing it. I think the participant has some kind of legal claim to force the plan to pony up the amount not withheld, but then the plan would have a legal claim to recover the same amount, so it's a wash. I don't think the IRS will actually do anything about it; the 1099-R will be filed showing what actually happened (taxable distribution with no withholding).

Has anyone had experience with this? Is there any point in putting the brokerage firm on notice that if there are any consequences, the plan intends to hold them liable?

Individual has an IRA and is also a participant in his company's 401(k). Individual is age 74 and is still actively employed by his company. Individual has been taking the MRD from his IRA but now wants to roll over the remainder of his IRA (minus the MRD for this year) to his company's 401(k) to avoid MRDs from his IRA in the future.

Any problems? Couldn't find anything prohibiting this but seems too easy to avoid future MRDs from the IRA.