Should Roth 401(k) contributions be included in the average benefits percentage test (a la pre-tax deferrals) or are they excluded (like after tax deferrals)?

1.401(k)-1(f)(3)(i) and 402A(a)(1) state that Roth contributions can be treated as employer contributions for the purposes of 401(a) and 401(k) and the reg furthermore goes on to say that they are treated as elective contributions for the ADP test. However, what is missing is a reference to 410(b) where the average benefits percentage test is.

Thank you.

Does anyone know of any site that may allow someone to stop their RMD if return to work with same employer. Example: If someone separated after 70 1/2 (say 2006) and took a RMD in 2006, if they returned to work for the same employer in 2007, could they stop the RMD until stop working again? Would it matter whether they went back as full-time or part-time?

I want to invest some money in real estate and I do not want to take loan from any bank. Recently I have heard that investment in real estate is going to pay me much more than what I invest now. Can anybody help me in my real estate investment? I have enough amount in my IRA also. Will it be legal to invest IRA in Real estate?

We just brought on a KSOP. We learned that their attorneys advised them they could not have the safe harbor provisions for ADP/ACP if they were a KSOP, so they amended it out when they made it a KSOP. This does not sound right to me. I am not sure where to look to find the rules regarding KSOPs . Can anyone shed a little light on if this employer can have safe harbor provisions in their KSOP plan and/or where I can find citations regarding this matter?

Thank You!

I want to take my Roth funds and use them to make payments to buy my sales territory and start my own company. I would pay myself a reasonable salary and put the profits back into my Roth IRA. I would then only have to pay taxes on my salary and my profits would be tax free. right?

When I called my brokerage firm they treated it like I was borrowing from my account and told me that any withfrawal would have to be paid back in 60 or 90 days.

If I do this, is my company considered to be a not for profit firm?

Thanks

Sponsor of 401(k) plan discovers that in last 18 months it has made salary deferral and matching contributions based on a definition of compensation that is narrower than that provided in the plan document: Contributions were made on base pay & overtime, but not on "other" types of compensation such as PTO, jury duty pay, bereavement pay, etc.

Sponsor proceeds to self-correct by calculating additional amounts that would have been deferred and matched on the basis of the excluded compensation amounts.

Sponsor calculates earnings on both amounts using best rate method referenced in Rev. Proc. 2006-27, Appendix B, Section 3.01(3)(b).

Presume corrective contributions are made/allocated.

For overlapping time period Sponsor also had several late deposits of employee salary deferrals. Sponsor identifies payroll periods and amounts involved and calculates earnings using the Dept. of Labor Online Calculator recommended under the Voluntary Fiduciary Correction Program.

Sponsor calculates these amounts based on what was actually deposited (late) in the 401(k) plan, NOT on what "should" have been deposited if the Sponsor correctly had calculated deferrals (i.e. base pay & overtime PLUS PTO, jury duty pay, bereavement pay, etc.).

Query: if Sponsor calculates earnings on late deferrals based on hypothetically correct deferral amounts (based on total pay not just base pay & overtime) will participants get earnings calculated twice, given the concurrent EPCRS correction?

Shouldn't the DOL correction be based on what was actually deposited, and the "incorrect definition of compensation" problem be addressed exclusively under EPCRS?

Just wondering if anyone has encountered a similar situation.

My understanding from RP 2006-27 is that making the "lost opportunity" correction (50% of the ADP) is appropriate only when the participant wrongfully has been excluded entirely from making pre-tax deferrals or after-tax contributions to a plan. The exclusive nature of this correction method is stated in RP 2006-27 at Part III, Section 6.02(7), titled "Correction for exclusion of employees for elective contributions or after-tax employee contributions," stating: This correction principle applies solely to this limited circumstance."

So I would not apply it if, for instance, an employer was making restorative contributions to reflect that employee salary deferrals were improperly based on a definition of contribution that was narrower than that stated in the plan document. I would apply the employee's actual deferral percentage to the additional compensation to correct that operational failure, and add earnings calculated on the best rate.

I would be interested in whether readers agree that the "lost opportunity" correction is as narrow as I read it to be or if people successfully have used it in situations other than total exclusion of a participant from pre-tax deferrals or after-tax contributions.

Thanks much.

What if it is a multiple employer DC plan? Assume many unrelated employers adopt the multiple employer plan. They all invest in various pooled accounts.

Would that satisfy the "all the assets of which are available to pay the benefits claim of any eligible employee" requirement because they are pooled accounts, or because each dollar of each fund is allocated to an individual, it should be considered "seperate funding" and therefore each adopting employer should file a 5500?

I'm looking at a multiple employer PS/401(k) plan that each employer picks their own employer ps allocation and matching formula. I'm having trouble determining if they should be filing one 5500 or if each employer should file their own 5500 since all of the money is allocated to individuals?

The Plan document contains an exclusinve benefit rule that states "All contributions made by the Co-sponsor will be used for the exclusive benefit of the Participants who are Employees of the Co-sponsor and will not be used for nor diverted to any other purpose except the payment of the costs maintaining the plan."

It seems to me that each co-sponsor should be filing their own 5500. Agree?

Plan sponsor is in bankruptcy. Under the terms of the document, the sponsor is the plan administrator. Two individuals are the plan trustees. The attorney who is the bankruptcy trustee wants to terminate the plan. As recordkeeper, it is our usual procedure to require that this instruction come from the plan trustees. The bankruptcy trustee is refusing to allow the plan trustee to sign the resolution to terminate the plan and the distribution paperwork. He says that we must accept his signature because being bankruptcy trustee makes him automatically the plan trustee. (The trustees have completed distribution paperwork to receive their own balances, so we know they are around and could sign.)

I'm confident that being appointed bankruptcy trustee for the company does not make someone automatically a plan trustee. However, as bankruptcy trustee for the plan sponsor/administrator, I'm wondering if we should accept that signature on the termination resolution. I'm unsure about the distribution paperwork.

What do others do in this situation?

These are questions, I think I know the answers for, but I need back up

for the 2008 Plan year, does that mean the 2008 Applicable Mortality Table as described in RR 2007-67? Yes

for the 2008 Plan year, any db plan that defines actuarial equivalence mortality as: the "applicable mortality table" means the table referenced in IRC Section 417(e), must use the 2008 AMT as AE? Yes

Does anyone see anything wrong with these statements?

does anyone see anything wrong with having a rotating mortality table for AE?

Husband signed up during open enrollment to participate in his company's group health insurance for family coverage. During this time he elected not to participate in his company's FSA.

His wife, during open enrollment elected to participate in her company's FSA. (He would carry the family insurance, she would use her FSA for qualified medical reimbursment expenses.)

The wife has now changed her employment status from full-time to part-time, now she is no longer eligible to participate in her company's FSA.

Does this constitue a "qualified change of status" that would allow the husband to enroll and start participating in his company's FSA right now or does he have to wait and enroll during open enrollment for participation in next year's FSA plan?

I have seen a number of post regarding the effect of PPA interest and mortality on lump sums but I can find nothing on the restrictions of lump sums in underfunded plans. I would think 204(h) notice is required. One of my concerns is that it may be temporary and end once the 1/1/2008 valuation is completed. Has any one seen any thing from the IRS on this or have a sample.

Our firm has a client who maintains a SIMPLE IRA plan. As of today, only employee deferrals have been made to the plan, as the employer usually funds their portion before the due date of their corporate return.

As no employer contribution has been made as of yet, could the company set up a 401(k)/Profit Sharing plan and just make the employer discretionary contribution for 2007 here (in a larger amount of course, as the client has a large profit for the year), and not jeopardize the SIMPLE deferrals for 2007? The SIMPLE would then cease and the 401(k) feature of the plan would commence 1/1/2008.

Thanks for any replies.

Employer sponsors a group medical plan. It will pay 100% of the premium for single coverage. The employee must pay the additional cost of adding a spouse or dependent. Alternatively, the employer will pay an employee $350 per quarter in cash if the employee opts-out of the health policy and enrolls in a spouse's plan. By not covering employees, the employer, of course, receives a savings.

An employee has come forward and explained that the coverage under her spouse's plan will increase on Jan. 1 and will cost $500 per quarter. Rather than paying the $150 extra per quarter (the difference between the $350 and $500) the employee is going to enroll in the employer's plan.

The employer is wondering whether it can have a policy that provides that if the premium under the spouse's plan is greater than $350 then the employer will reimburse the difference up to the amount of single coverage under its plan.

The question was raised whether this is discriminatory and unfair?

I am not convinced that this is a plan issue. This is all compensation outside of the plan. People choose cash or medical benefits. I think the question is whether the employer is willing to pay different compensation for people. ???

Is some type of plan created through this arrangement (such as a cafeteria plan except with no employee contributions)?

I am so confused, so any help would be greatly appreciated!!

Thank you.

This is the only 457 plan we administer so I have limited experience w/ them. I need to make certain we are handling the maximum deferral limitation correctly (outside of any catchup provisions). The plan has a 6 year graded vesting schedule. If an employee is already at 100% vesting, is it correct to say that the total "deferral" amount subject to the limitation is the employee's deferral amount and the ER nonelective contribution. There would be no adjustment for gain/loss. Is this correct?

Example: 12/31/2006 PYE EE defers 12,000 ER match contribution of 4,000. Gains during 2006 are 2500

The total for limitation purposes is 16,000

since the limit for 2006 is 15,000, excess is 1,000.

Thank you.

I have read an ESOP is not favorable to an S Corp company. Was this the case years ago or does it still apply? The article did not elaborate.

Employer wants to establish a SIMPLE IRA effective January 1, 2008.

Since it is already mid-November, will the 60-day notice requirement be met for 2008 if employees can make (or change) salary deferral elections on a "daily" basis - versus only as of January 1st?

I have been asked to draft a 401k s.h. match plan that will only cover hces' (7 hces)as the nhce's (2) will be covered in a 412i plan. no hce's in the 412i, just the non-highlys

another tpa will be administering the 412i plan (actuary)

I know that you can set up plans that just cover the nhces using a s.h. 401k plan to load up the db plan for the hces., but this is a new one to me. I know that coverage should pretty much pass.

they are telling me the excluded staff aren't excluded by any classification of employee in the s.h. plan; I don't know if they will be cornering them in the parking lot to make them sign an enrollment form not to defer or are actually expecting to just exclude them altogether.

this type of design just seems fuzzy, maybe its the 412i portion for funding? any comments would be appreciated.

Can the employer adopt the SH Match for the Non HCE's and at year end decide if they can afford to make the same or a lesser amount to the HCE's? I can't find anything that says you can't do this? Please let me know if you have anything on point?

Just trying to get a feel for "industry practices" with regard to 5 year participant loans (not residential loans). The regs require a maximum repayment period of 5 years from the loan date. As an example, say the loan is issued 4/14/05; it must be paid in full by 4/13/10. We have run across lately several takeovers (from several different TPAs) where the prior administrator set up the loan payments for 60 months (for example), with a 3 week delay between the loan date and the first monthly payment. Effectively, this makes the loan go past the 5 year requirement. They've all said this is common industry practice. Our feeling is that in order to comply with the 5 year requirement, you would need to reduce the number of monthly payment to 59 (for example) instead of 60 if there's a gap between the loan date and the first payment date. Three questions:

1. IS this common industry practice to count the five years from the date of the first payment rather than from the date of the loan?

2. Has the IRS given an opinion on this practice (other than to say that the loan date could be changed to the date of delivery of the loan proceeds to the participant)?

3. Given that these loans are already issued, what is the client's and/or participant's liability? The INTENT was to comply with the 5 year requirement, but in actuality will not comply since the 5 years was counted from 1st loan payment date rather than loan issuance date. (Which is different than a loan intentionally being amortized over more than 5 years) Will the loans be considered prohibited transactions with the attendant possible disqualification of the plan unless they are corrected through EPCRS?

Thanks!