One man DB plan. The client has made contributions exceeding the 404 maximum deductible contribution by $80k+. The client wishes to terminate the plan. The plan appears to be overfunded on a termination basis as well.

I understand what happens to the excess assets in an overfunded plan, but I'm not sure how to deal with the undeducted contributions. He can't jsut take them out. There was no mistake in fact which could give him a basis for applying to disallow the deduction.

Somewhere I thought I recalled amortizing them over an extended period and deducting them as an ordinary business expense, but I'm not sure where I got that from.

Anyone have any insight?

Thanks!

Employer hires an individual who produces a Social Security card. Individual works long enough to meet 401(k) plan entry requirements, but declines to make salary deferrals. Employer learns, when uniformed officials appear at their door to deport him, that the individual is an illegal alien.

Do we include him as a zero in the ADP/ACP test?

He was still employed on the last day of the plan year. Is he due a top heavy minimum contribution?

Looking for a source that explains what should be included in a Plan Document beyond what is is the SPD.

Very basic question on 401(k) deferral elections / salary reduction agreements but never really thought about it until a client just asked.

The basic plan document states that a participant may elect a certain percentage OR dollar amount to be withheld from pay. Can the plan be amended and only allow of having a certain percentage withheld and no longer allowing a specific dollar amount to be withheld each pay period?

Thanks!

In order to pass our ADP test we have to decrease the cap on our HCE deferral % from 15 to 12. This will create a problem for a select group of HCE's who are at the bottom of the HCE salary scale. With a 12% deferral cap in place they will not hit the 402g limit. My question is if the do not hit the 402g limit, where does the catch up come into play. Do participants have to hit the 402g limit in order to have catch up contributions? Does the HCE just elect a 12% deferral and because that is the max they can defer, they can also elect the catch up?

Thanks...Mike

nothing seems to fit. Some questions:

1. I read the instructions to 5310-A to require that present value of assets spun off is not less than the present value of benefits spun off and de minimus to be exempt from filing. I consistantly read others who advise that satisfying one or the other is is enough. What's right?

2. The 5310-A is required 30 days "prior to merger, consolodation, spinoff or transfer of plan assets ... " Is that 30 days prior to the spin-off date specified in the agreement (the closing date), or is it the date of actual transfer? It seems unlikely data will be available on closing date.

Thanks.

We are going through our first termination of a cash balance plan. The plan is a calendar year plan that is terminating on July 31, 2008. We are calculating a contribution based on the salaries through July 31st. The question I have concerns the interest credits. For example, assume that distributions will be done on April 1, 2009. My opinion is that the interest credits continue until the actual date of distribution and thus the final contribution amount would not be determined until April 1st. The other option would be to determine acount balances with interest credits at July 31, 2008, make the contribution based on the July 31 asset value, and then the account balances would be adjusted with actual gains and losses until April 1st. Since this is a defined benefit plan, I don't think this second option is correct, but I just wanted to see what ideas other people have.

Thanks.

Feel free to add any comments.

What is an appropriate differential between smoker and non-smoker rates? What legal requirements surround implementation of these?

Jill owns 100% of company A and owns 48% of company B.

Jack, ex-spouse of Jill, owns 48% of company B and Johnny, son of Jack & Jill, owns 2% of company B.

Company B is a manufacturing company and company A is a distributor of products made by B and other companies.

1) Are A & B a controlled group of companies?

2) Is this a brother-sister organization or affiliated service group?

The issue:

A maintains a DB plan. Does the plan need to cover the employees of B?

Does anyone know whether Form 843 or Form 5330 is the appropriate form to file for a refund of an overpaid excise tax that relates to a Code 4975 violation, i.e., a late transmittal of contribution to a 401(k) plan?

I understand the Form 843 is the form generally used for refunds, but the instructions to the Form 5330 indicate that it is the appropriate form to be used to file a refund for an overpayment of excise taxes (but does not include a "claim for refund" form to attach to it.)

Any help is much appreciated.

An employee who was covered under employer's 401(k) Plan accepted a position in another of the employer's offices. However, the new office is run by an agency. Those employees are paid by the agency which is reimbursed by employer/plan sponsor. Participant terminated employment with plan sponsor and is no longer on any of plan sponsor's benefit plans. Instead he is covered by the agency's benefit plans. Participant wants a distribution from the 401k plan. Is this a severance from employment under Code SEction 401(k)(2)(B)(i)(I)? We are asking because the individual would still have to be credited with service as a leased employee. Since this participant is fully vested, it is not an issue in this case. Would the answer be different if the participant was not fully vested and still accrued vesting service as a leased employee?

If the plan provides that the employer will make a contribution of a set amount, in this case $30,000, to an employee's deferred compensation account each year, is there any prohibition under Section 409A to the employer increasing the amount at its discretion.

The plan document provides that employer will make a contribution of $30,000 to the employee's deferred compensation account by the end of the fiscal year. Could the employer change the amount to say $80,000? If so, does it need to amend the document before the last day of the prior fiscal year?

Under the terms of the plan, the employee has no discretion to make salary deferrals, rather, all funding comes from the employer contribution.

I'm looking at establishing a Roth IRA in a Target Retirement Fund. Does anyone have a preference on which one to choose, or is there even much difference in them? Right now, I'm looking at Vanguard 2040 Retirement fund, or the T Rowe 2040 Retirement fund. Is there really much difference in Vanguard or T Rowe?

Thanks.

403b participant still working at same employer (a major university) for 30 years has built up significant pre-1987 contributions which have a RMD starting at age 75, these are commingled with post 1987 contributions which have an RMD starting at age 70. I see no documentation showing what are client’s pre-1987 contributions. Client would like to defer starting RMD as long as possible.

Is it possible for 403b plan to segregate these two amounts, roll the post 1987 amount into an IRA, and for the pre-1987 amount hold it in 403b until age 75, than roll at age 75 to an IRA?

I've heard that Puerto Rico finally changed its tax code to allow for health savings accounts. Anyone have any info on that? Is it true and, if so, what is the effective date? Thanks!

Assume you are using a standardized prototype - can you ever amend the eligibility to be more strict than it was at the outset without encountering 410(b) issues? The question has come up regarding the definition of dual eligibility. Having a document with two eligibility provisions written in, ie waiver at January 1 and one year for all others, seems to be a clear "dual" provision. Do the same rules apply to amendments?

Help!!

I have a plan that begins 6/30/08 and ends 6/29/09. According to the regs, the "lookback" AFTAP is due prior to the first day of the 4th month of the plan year. I am not sure how to interpret this for this plan.

Is the "4th Month" October 2008, so it is due prior to October 1, 2008? Or, is the 4th month in September, and it WAS due prior to September 1, 2008?

thanks

We have a client that had a defined benefit plan. Benefit accruals were frozen in 2007. Effective Jan 1 2008 the company elected to switch to a cash balance plan. They chose the A+B method where the PVAB of the DB Plan became the opening balance in the CBP.

The client now is considering distributing the initial balance/defined benefit plan portion of the plan to participants to avoid being responsible for interest credits on a go forward basis. Is this doable and if so, what is required on the employer and TPA's part?

Thanks,

RiskAdvisor

We have 2 DB plans in 1 trust

However, assets are not commingled; there are subaccounts setup for each plan. The plans have not merged.

Our attorney is saying we have a "master trust" . Our auditor is saying "no" since the assets are not commingled; each plan has separate accounting and it is not a % of commingled assets

Help!

Does one have a master trust if 2 DB plans are in 1 trust ? And if yes, does a separate Form 5500 have to be filed fo rmaster trust

What are the advantages of having a master trust?

Thanks

Lexy