An employee of an employer with a 401(k) Safe Harbor plan has worked for them for 5 years. They have never been eligible to participate because they have worked less than the required 1,000 hours in each plan year. Participants are required to have 1,000 hours in one year of service. They went full time last July. When will the participant be eligible for deferrals and for the safe harbor contribution?

Are they eligible right away when they have the 1,000 hours in the plan year since they already have more than 1 year of service?

Existing company with SIMPLE plan came under new ownership as of 1/1/08. Corporate name & EIN changed but DBA remained the same. Can new owner simply amend & restate plan or do they need to start a brand new SIMPLE?

I have received a comment from another practitioner that has caused me to question the use of deferrals in the ebars (when they get counted as part of the ebar). I believe we are doing this correctly, but I'd appreciate any comments.

A client has a DB plan and a DC plan. The both cover the same people, passing coverage by themselves. Neither plan provides uniform benefits, and to really lower the NHCE cost, they are tested together for 401(a)(4). The DC plan is a volume submitter plan and has the special gateway language as provided for in 1.401(a)(4)-9(b)(2)(v)(D).

For 401(a)(4) testing, my understanding is that first we attempt to pass using the ratio percentage test for each HCE rate group (I believe that the ebars for determining each employee's rate is, at this point, excluding employee deferrals)?

If that does not pass, then we proceed to do an average benefits test. Before we can get down to the test where we use the mid-point percentage, we must pass a 70% average benefits test - and that test is where the ebars include all employee deferrals. If this passes (70% or above), then we proceed to test each HCE rate group against the mid-point percentage.

So far, do these steps sound correct?

When we now test each HCE group against the mid-point percentage, which e-bar is used now: is it (A) the ebar that is calculated without deferrals included? or (B) the ebar as calculated with deferrals included? I had thought it was (A)...

Participant in SIMPLE plan is out on maternity leave for 6 months. When she returns can employer continue salary deferrals as they had been prior to the leave or does the EE need to complete a new SRA? If so would she need to wait until the next open"window" for making SRA changes?

So I see on benefitslink Congress passed a technical correction bill that among other things covers PPA 06 corrections. Assuming this bill gets signed (no reason to think it won't that I know of) does this then give the IRS the authority/clearance to issue some rules and relief for EOY vals for AFTAP purposes ?

ok- back to basics...I'm starting to forget everything including my name and it's only Jan. 8th!!

Anyway I have a client with some partners who "own" less than 5% (all partnership percentages are coded in the system). The 2006 compensation for these particular partners was less than $100,000 (but not by much).

When I run the ADP test on the plan, they are not showing as HCEs in 2007. (They might possibly "help" the ADP test if they were in the upper group.)

They are in the top 20% in 2006 for 2007; shouldn't they be HCEs in 2007?

I think I have everything coded properly in the system.....

any help appreciated!!

401k plan moved the assets from investment company A to investment company B. After the xfer the plan earned a small amount of additional interest or something in Company A. Company A did not xfer the money to investment company B. I'm guessing (don't know for fact) that Company A contacted the plan sponsor about the money and the sponsor either didn't get the notices or ignored them. Anyhow, now we are doing the valuation and are trying to find this money. The client isn't very helpful w/ this but so far can only tell us that company A sent the money to the state. I was wondering if anyone had any experience w/ this. Can Trust money be escheated? Would it go to the state where the Trust is located or where Company A is located? If there were segregated accounts, would they have escheated in the name of participants? I'm mostly concerned about our responsibility as the TPA. I just want to tell the client somehow that they have a responsibility and liability here as the fiduciary and that they need to track down this money.

If a plan does not permit exchanges is there a need to enter into an information sharing agreement?

Is a fire marshall considered a PSO and if so where can the documentation be found to support it?

Is anybody familiar with security law? I am being told that plan participants in a 403(b) plan, utilizing a custodial account with mutual funds, must receive a confirmation for every transaction in order to comply with security law. My participants don't want to receive these confirmations. Is there anything I can do?

Hello, I've been with my company for 15 years. I am completely invested in both my Money Pension Plan and a separate 401K. One of my benefits is that my company contributes all the monies (15% of salary) to both plans on a quarterly basis. I have an option of contributing to the 401K, but have never taken advantage of that option.

Due to health reasons my husband is demoting himself at work and this will affect us financially. I have asked my company for a hardship withdrawal from my Money Pension Plan; however, I have been told:

"the IRS doesn’t allow hardship withdrawals on the Money Purchase Plan. On the 401-K plan, the only monies you can withdraw for hardship is contributions that you’ve made into the plan yourself."

One note here. I work for a company that is governed by a Board of Directors .... but the President and Financial Director are married to each other and sometimes rules change and/or rules are what they want them to be.

Question 1: If I'm 100% vested in the Money Purchase Plan, and the plan allows for loans (of which I have one outstanding that I am going to have to default on), is it true that the IRS does not allow hardship withdrawals for extreme financial hardship?

Question 2: The comment that I can withdraw for hardship on contributions that "I've" made into the 401K plan by myself ... I've never made contributions into that plan, so I am assuming this is telling me that I can't withdrawal any money from there any because the company is the one that contributed, even though I'm 100% vested?

Question 3: If I leave the company for another position, how long does the company have to give me full access to both the Money Purchase Plan and the 401K plan? I have seen this company tell ex-employees it will take ONE YEAR to withdrawal or roll-over the funds and I have also see them get the ball rolling so other employees can have access to their money within a one/two month period. Any suggestions on what my rights are?

Thanks!

[To be sung to the tune of "Hit the Road, Jack" ]

Cut the tax, Jack, and please don't spend no

more, no more, no more, no more.

Cut the tax, Jack, and please don't spend no more.

Woo Politician, politician don't treat us so mean.

You're the biggest spenders that we've ever seen.

Pretty soon we'll be out of dough, and you'll

have to pack your things and go.

Cut the tax, Jack, and please don't spend no

more, no more, no more, no more.

Cut the tax, Jack, and please don't spend no more.

Now voter, listen voter hear what we say,

They have to cut spending, ain't no other way.

If they spend all our money that just ain't okay.

Remember if you say so,

They'll have to pack their things and go

(That's right). Hit the road, Jack, and don't you

spend no more. Don't you come tax no more.

I am a first time HCE and have just received my first paystub for 2008. It shows my regular 401(k) contribution (limited to 10% for HCEs) and my catch-up contribution, but there is no employer matching contribution at all.

My company does not match catch-up contributions, but matches regular contributions up to 4% of pay. Can they treat HCE differently regarding employer match, i.e., no match for any HCE contribution?

The cross-tested plan is on a Corbel document and is NOT safe harbor or top-heavy. There is a specific allocation group named sales people(2 fall in this group, 1 HCE and 1 NHCE) who the owner does not want to give a contribution too. Can I give NHCE a 0% contribution and satisfy the gateway minimum (he did work 1000 hours and is employed on the last day of the plan year)?

Corbel amendment states " Any Gateway Contribution made pursuant to this subsection for a Plan Year will be allocated to each NHCE who receives an allocation of other "Employer Contribbutions. It does address that the Gateway be made regardless of accrual requirements, but does not mention if they are in seperate groups.

Can I give him 0% as long as it passes the other non-discrimination testing?

Is an unusual situation as most cross-tested plans are either top-heavy or safe harbor.

Thoughts?

Thanks!

I have a participant who has passed away and the primary beneficiary is his child, who is a minor. The participant is not married. Can the money be rolled over to an IRA as an Inherited IRA? Can the distribution be in cash payable to the child or does it need to be made payable to a guardian?

Wasn't the IRS having a glitch a while back, and maybe even currently, on sending out late 5500 filing notices on 2004 5500s that were timely filed ? I think I have a client that just got one as it appears to have the normal "we didn't get your 5500 for 2004 leetter" but then there's an extra response page where you fill it out "if you did file it" using approximate dates and type of 5500 filed (EZ vs. full). Is anyone getting these ? Maybe just filling out Section I that they did file takes care of it ?? Anyone seen this ?

This is unusual (for us) and I would ask the kind assistance of a benefits professional.

Co. A has acquired Co. B

Co. A would like to merge participants in the Co. B Plan into the Co. A Plan.

Co. B was participating in a huge multiple employer plan (Big-Plan), which has many companies in a particular industry participating.

The Big-Plan administrator is telling Co. A that the only B Plan participants who will have assets transfered from Big-Plan into A Plan are those former B Plan participants who sign an authorization to transfer their assets. Otherwise, if former B Plan participants do not sign the waiver, the assets of the non-signing former B Plan participants will remain in Big-Plan.

Is this appropriate/usual/lawful, etc.

The final regs provide that certain taxable reimbursements, e.g., moving expenses for relocated employees, are not covered by 409A. What if they are made in-service, before separation (without regard to any separation from service)? I suspect it's not covered, but can't find any written guidance confirming this.

Question: Under a 401(k)(12) safe harbor, the 3% nonelective can be used to exempt from ADP testing, to meet top heavy, and in 401(a)(4) testing. Is there any basis for believing the 401(k)(13) nonelective could be used similarly (i.e. also used for 401(a)(4) testing of the discretionary cross-tested allocation)? Common sense would seem to say so, yet I'm not finding specific support for this. Thoughts?

I have a 401(k) plan where the employer contributes 25% of comp as a discretionary profit sharing contribution. One of the HCEs contributed the maximum $15,500 (roth) for 2007. He now cannot receive his full profit sharing contribution because he would exceed his 415 limits.

Since he is a HCE - is it ok to give him a smaller profit sharing contribution than the rest of the participants? To comply with 415. The HCE would prefer this to refunding his deferral.

Thank you!