If a plan is using the transition rule, ie deemed to pass coverage immediately before a corporate action, how does this impact how the ADP/ACP test is completed? Under the transition rule, the plans are treated as separate for coverage purposes, does that mean they need to be treated as separate for ADP/ACP purposes? Or can they be tested together and disregard any BRF/General Test issues that may result?

Any help would be appreciated!

Employer distributes enrollment forms to employees prior to the January 1 entry date. A couple of the employees (newly eligible to enter January 1) did not turn in their completed election forms until just now. The question is, can they go ahead and start deferrals on the next pay period or do they need to wait until the next entry date. (July 1). The employer was in the process of changing from one investment company to a new one. Assume that all blackout notices were distributed timely.

Is there any citation that I can refer to if they can enter on the next payroll date.

Thanks,

I was a Municipal employee for 18 years. I was found guilty of accepting something of substantial value ($500.00). The Retirement rules indicate that all I get is the money I contributed minus any interest. I don't think that it is fair for me to lose my retirement. Do you?

The question is how can I avoid the penalties and taxes for withdrawal. Can I roll the money into some funds like a Roth IRA and something similar?

Pretend it's a few months in the future and you have access to all large-ish US companies who sponsor at least 1 calendar year DB plan. You gather up all the discount rates used for 12/31/07 FAS87 disclosure for each plan and make a graph.

What do you guess will be the mode of the discount rate?

I have a safe harbor 401(k) Plan (3% non-elective contribution).

The employer also makes a hefty profit-sharing contribution each year equal to about 9.5% of participants' compensation.

The eligibility requirements are the usual: a year of service plus age 21, then enter on January 1 or July 1 next following completion of the service and age requirements.

The profit-sharing contribution is 100% vested from day 1.

My question: can I amend the plan to change the eligibility requirements for purposes of receiving the profit-sharing contribution to 2 years of service?

In other words, employees need only work 1 year to enter the plan for purposes of making deferrals and receiving the safe harbor contribution, but must work another year before being eligible to receive the profit-sharing contribution.

Any comments are welcome.

I live in TX. If it is advantagous to both the employer and the employee, can a Medicare eligible employee move off of a group plan to a Medicare supplement plan that is paid for by the employer. In this case the group has a high deductible and the 65 yo persons rate is extremely high. It makes more sense to put the 65 yo on a Plan J Medicare supplement paid for by the employer and then also buy a Part D Rx benefit. Can this be done legally?

With March 15 being a Saturday, it appears that the refunds need to be done by the 14th. There does not appear to be any regulatory justification for using March 17, the next business day. Sal Tripodi's book also says as much. Agree or disagree?

Hi -

In a calendar plan year 401k plan, if a participant ceases to make loan repayments in July 2007 and the loan is deemed at the end of the cure period, what is the correct date for the distribution of the 1099-R? The end of the calendar quarter would be 12/31/2007 - is the loan deemed as of 12/31/2007 necessitating a 2007 1099 or is it the first day following the end of the quarter, 1/1/2008, necessitating a 2008 1099?

Mahalo!

I have a dental practice with a calendar year Safe Harbor PS Plan. The discretionary Profit Sharing contribution is made to employees who are employed on the last day of the plan year. A participant's employment was terminated on 12/21/07. This was also the last day the dental practice was open during 2007. All employees were off the remainder of the year.

Shouldn't this terminated participant be entitled to the Profit Sharing contribution? She's already received her 3% Safe Harbor contribution.

Thanks.

I'm curious what others are doing about partial ages under the new lump sum methodology.

Are most taking the "easy" way and interpolating between ages or are "right" way using the 1440 line approach mentioned by timesup in a prior post

My first post and am hoping someone out there can help me.

I've been asked to find out if a web-based census completion tool is out there. I assume that some of the large recordkeepers have their own tool built and designed just for their use.

This would eliminate census packages for some clients and hopefully save administrative time and expenses.

Is there a "boxed" product that's out there that anyone is aware of? We could always have someone build a site that allows for this, but our company size and client based is at least a few years away from this.

Thanks for any info.

When I spoke to someone at the IRS last year, I was told that the then unwritten IRS position was that qualified plans were not required to permit direct rollovers to Roth IRAs in 2008 and later years (i.e., they were taking the view that such rollovers were optional, which was the same strained reading that they gave to the PPA provisions dealing with direct rollovers to inherited IRAs by non-spouse beneficiaries). Has the IRS officially said anything as to whether qualified plans must permit direct rollovers to Roth IRAs?

So, we've had this client for years and always have the same problem every year. They do not know how to report hours to us. They get paid by the job. Example, the employees are paid $X to be on call, $X to go pick up a body, $X to bury a body (yes they are a funeral home). I'm at a loss every year of what to tell them. They keep saying "they are paid by the job not hourly." I tell them that they need to apply an in-house "hours schedule" per job and track it for each employee throughout the year for plan purposes. This is not my call, I see it as an internal issue with their company. What would you tell them? What would the DOL say?

Employee leaves employer at age 72 in early 2008 to go to work for a new employer. Employee wishes to make a direct rollover from the old employer's DC plan to the new employer's DC plan. It seems clear that the rollover amount cannot include the RMD amount for 2008, because the employee is considered to have retired from employer #1. If employer #2's plan does not require distribution until the later of termination or 70-1/2, must the employee receive any RMD payments during employment with employer #2? (i.e., can the rollover to a new paln protect the employee from receiving RMD payments that he would have received if he had left the money in employer #2's plan?) I believe the answer is that no payments should be required under employer #2's plan, but I have not found anything definitive so far.

Safe Harbor Plan in 2006 (calendar year plan).

Determination date for Top Heavy 12/31/06, and just a smigid over 60% belongs to the key person

Sponsor of plan cannot afford to keep the plan a SH plan for 2007, so the plan is amended to stop SH.

Does he need to make the Top Heavy minimum even though the determination year was a SH year?

I can't find anything that discusses this issue. Is there anything he can do?

Any help is appreciated.

Thanks

Need help because I may be putting too much thought into this. It was just brought to my attention that we had an adp failure for 2006 and the corrective distributions have not been done yet. Today is 01/08/2008. This is my first experience with this situation.

I have been reviewing Rev Proc 2006-27. I see the Correction methods and examples Section 2.01 and One to One Correction method. Since there is a choice, of course One to One looks better. The returns total $2000. Give an employer QNEC of $2000 spread pro rata to all eligible employees. Return the $2000 to the HCE. Issue a 1099 in 2009 with a code 8. I assume the $2000 should have earnings as if deposited by 12/31/07.

Ok this seems rather simple and not a "huge" cost for such a big mistake. Am I missing something?

Also this correction shows as an operational failure where I view it as a demographic failure (401(a) 4 failure) . So SCP is ok and no need for VCP?

I wonder if this correction method described is for when the test was completed, and later discovered census information was inaccurate or something causing new test to be run that in a later year fails.

Any advice would be great because my brain is getting tired.

Is it me or is everyone haveing troouble tracking the threads. When I hit the options button I'm sent to the bottom of the page. Can't set up tracking.

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)...