I have a 401(k) plan that makes a Prevailing Wage contribution in addition to a 3% Non-elective Safe Harbor contribution. The adoption agreement specifies that the prevailing wage contribution may be used to off-set a profit sharing contribution and that the Prevailing Wage contribution is a Qualified Non-Elective Contribution. Looking at prior yr it appears the prior TPA used the Prevailing Wage contribution to off-set the 3% Safe Harbor Non-Elective.

I can't find any support for that position or any thing to prohibit that.

Any one have an idea where to look for guidance on same??

Employer set up a new enhanced safe harbor match 401(k) plan in April with a July 31 plan year end. Enrollment forms were distributed and returned in May. With the opportunity to defer in May, June and July, we're good so far.

Payroll person fails to begin withholding for NHCEs until June 30, but does deposit $15,500 each in deferrals for the owner and his wife in May. So HCEs have three months to defer but NHCEs effectively have only one month plus one pay period to make deferrals in the first year of the plan.

I've seen other threads that debate whether or not the EPCRS correction for excluding an employee applies when the employer failed to act on the deferral election. I didn't see any that addressed the safe harbor match that would have been due, had the election been followed. I also didn't see anything relative to the safe harbor requirement that employees have at least 3 months to defer in the first plan year.

The consensus among my co-workers is that the client has not met the safe harbor for this first year and should be subject to ADP/ACP testing, but we aren't able to find anything to support that conclusion.

Any suggestions about where to look?

How do you require that a participant put in a change of address? We currently have the participant put it in writing and forward it to us. We have a new employee here who thinks that it would be better to have the change of address come thru the employer... what do you all think??

Plan does not have the "cashout" rules for balances under $1000 (client has us send paperwork out to EVERY terminated participant regardless of balance).

There are a few termed participants with balances under $200 who are not responding.

Since there is no required withholding under $200 and the participant can rollover the whole amount, could the plan send them a check (provided the participant has received the special tax notice and a letter stating that non-response will result in a check being sent?)

I realize that the client can amend the plan to add the cash out rules, but I was wondering what others thought about sending a check.

But I can never seem to find the time to read them all. And putting them in a 'to be read' folder does not work as I never get back to them.

Tell it, brother. Information overload. How can I make it easier to digest, in the BenefitsLink retirement and health & welfare newsletters? Narrow the focus even further somehow, by topic or audience?

One strategy I use is to create folders in my bookmarks, in the Steven Covey way (I think): I, II, III and IV.

If I see something in a newsletter that I want to read and it's both urgent and important, I click on the item and then bookmark the resulting web page in the "I" folder. I need to go through it by the end of the day. (I haven't figured out a way to bookmark a "favorites" folder in Firefox, though. I'd like to stick a bookmark on my desk.)

If it's important but not urgent (i.e., would increase business or be a valuable contribution to the community, but it doesn't have a short deadline), it goes in the II folder. I try to schedule time to go through the II folder.

Stuff in "III" is urgent but not important... e.g., I can get a new piece of interesting software if I use the coupon by Monday (the software would be nice to have, but not really important to have). Maybe I'll get to it if I get through I and II, but I won't feel like I've missed an important opportunity if I don't get to it.

And IV is stuff that's neither urgent nor important. Maybe it's something that caught my eye because one of these days I might find it to be important (if my business takes a different direction, etc.).

I basically never get to stuff in III or IV, but it makes me feel good to have stuck it somewhere

Of course, it's not necessary to click on every item. Skimming is perfectly OK; click on only a couple that look like candidates for the I folder. Don't get stressed out because you can't analyze every item. You can always use the search engine (http://benefitslink.com/search) if you want to circle back about some issue. (Though I need to improve it further, I know.)

Another tip is to try to "handle" something only once. Putting stuff in a "look at this eventually" folder means you end up handling it twice.

I know I am in the majority when I say the BenefitsLink Newsletter is the best.

Like many, I subscribe to many Newsletters that I think carries information that is or will be of interest to me. But I can never seem to find the time to read them all. And putting them in a ‘to be read’ folder does not work as I never get back to them. So, inevitably, steps must be taken to either:

• Unsubscribe
  
• Keep those that you know you must skim through- just in case
  
• Definitely keep the very few that you will read most, if not all of it
  

Cypen & Cypen is one that I really enjoy skimming through, and often find something in it that I must read. For instance, look at today’s issue:

Light------ a little bit of funny------a little bit of commentary ----good intro to topical issues ...

I also like PlanSponsor's Newsdash and CCH

Would you care to list your favorites? It’s time to shake up my list, and I need some good ones to replace those from which I will be unsubscribing.

Plan requires that participants pay 1.45% FICA/Medicare tax (Employer matches) on vested retirement credits made to the plan. If participant is terminated for cause and benefits are forfeited, is the amount of the payroll taxes withheld refundable to the participant from either the plan or the employer?

Hello,

What does it mean when ESOP assets are non-transferable? Can it be rolled over to an IRA? Distributed from the ESOP and sold in a brokerage account?

Thanks

Our employee has custody of his nephew. We have received a national notice ordering us to provide health insurance to the nephew. The employee has custody of the nephew but not guardianship, nor has he adopted the nephew. The state is saying that because a court ordered the employee to provide coverage, we have to comply and enroll the nephew. Doesn't a QMCSO have to be for a "child" of the participant?

We have a local company maketing the follow plan. Any ideas on what they are doing? I do notice that they do not mention any tax advantage.

The advantages of the Corporate Savings Account vs. other savings and reimbursement accounts include:

The CSA is owned and controlled by the business owner, not the insurance company or the employee.

The CSA provides benefits for the business owner, other reimbursement accounts specifically EXCLUDE the owner.

The CSA allows for two levels of reimbursement, one for the owner and one for the employee.

The CSA is a custom benefit plan with unlimited options. Other savings and reimbursement accounts are pre-packaged with only one or two options.

A participant in a US defined benefit plan has Canadian real estate as an asset in the plan. He knows that if he takes the real estate out of the plan it will be a distribution for US tax purposes. But does anybody know what the tax consequences would be for Canada?

Does an impending sheriff's sale of a primary residence fall under the category of eviction for purposes of a hardship withdrawal? We are assuming it does, but can not find a solid answer. The sheriff's sale is a result of not paying township/county taxes.

I don't do any safe harbor match plans so forgive me if this seems too basic.

Employer uses the safe harbor match of 100% of the first 3% and 50% of the next 2% for everybody, including HCE's. Is that a problem? He is being told he has to give more to the NHCE's if he gives anything to the HCE's

Company X provides a severance plan for those employees whose employment is involuntarily terminated. Upon the execution of a release which becomes final, an employee is entitled to continue his/her medical and/or dental coverage under COBRA, with the employer providing the same subsidy that it provides for its active employees for the first 6 months. In addition, if the employee was at least age 50 and had completed at least 20 years of service, the employee would become eligible to continue coverage under the employer's post-retirement welfare plan. The severance plan was recently changed to provide that if an employee is severed and is within 6 - 12 months of satisfying the age and/or service requirements needed to obtain post-retirement welfare benefits, the employee is given the additional credit needed to become eligiible for post-retirement welfare benefits.

In analyzing this under Section 409A, it would appear that the COBRA subsidy should be excepted from Section 409A since it is provided on a nondiscriminatory basis under a self-funded medical plan. With respect to the ability of the employee becoming eligible for post-retirement welfare benefits if the employee is severed after having attained age 50 and completed at least 20 years of service, as well as being provided with 6-12 months additional credit needed to satisfy the age and/or service requirements to become eligible for post-retirement welfare benefits, does anyone have any thoughts on how this should be analyzed from the standpoint of Section 409A?

When I do a mail merge to send a letter to many of my clients, I have always saved a photocopy of the letter in their file. I am taking (baby) steps toward going paperless. Does anyone know how I can end up with seperate files for each letter?

Registered User

Group: Registered

Posts: 481

Joined: 23-October 98

Member No.: 521

A one participant corporation has a 401k plan.

Their fiscal and plan year end are 1/31/07.

The owner/participant took compensation of $50,000 all taken in January 2007.

The owner now wants to make a 401k deferral for the 1/31/07 plan year end that would thus be a reduction to his income for the 2007 individual income tax return for this individual.

My understanding is that the elective deferral should have been made by Feb 15, 2007 to be applied to the 1/31/07 plan year.

A pension attorney says that in this case the owner/participant can wait until the due date of his corporate return (with extensions) of 10/15/07 to make the 401k deferral to the plan since it is for the owner. As opposed to a common law employee.

Does anyone know the correct answer and know where the authority on this matter is (i.e. code, reg, etc.)?

I believe for an unincorporated self employed person (using Schedule C of 1040 for business) he would have up until the time of his tax return is due; this works nicely because we are dealing with the same one return, that being the 1040 so that makes some logical sense. But I don't know that such a liberty is allowed for a incorporated business as discussed above.

Thanks.

I hope someone can help.

Small governmental county clinic has a 401a with 414(h)(2).

2+ years ago the clinic was taken over by the hospital (501c3 but not governmental) which is part of an alliance through a leased arrangement. So ee's are technically leased by the group to work for the hospital.

At this time the former clinic ee's came into the groups 403b since they were no longer eligible under the prior plan to contribute 414(h)(2).

2 questions -

1) can the plan be terminated?

2) should they file a 5310?

the ee's just want to be able to combine their assets to eliminated multiple statements.

sincerely,

THIS IS POSTED IN THE 401(K) FORUM!!! - BLINKY

A one participant corporation has a 401k plan.

Their fiscal and plan year end are 1/31/07.

The owner/participant took compensation of $50,000 all taken in January 2007.

The owner now wants to make a 401k deferral for the 1/31/07 plan year end that would thus be a reduction to his income for the 2007 individual income tax return for this individual.

My understanding is that the elective deferral should have been made by Feb 15, 2007 to be applied to the 1/31/07 plan year.

A pension attorney says that in this case the owner/participant can wait until the due date of his corporate return (with extensions) of 10/15/07 to make the 401k deferral to the plan since it is for the owner. As opposed to a common law employee.

Does anyone know the correct answer and know where the authority on this matter is (i.e. code, reg, etc.)?

I believe for an unincorporated self employed person (using Schedule C of 1040 for business) he would have up until the time of his tax return is due; this works nicely because we are dealing with the same one return, that being the 1040 so that makes some logical sense. But I don't know that such a liberty is allowed for a incorporated business as discussed above.

Thanks.

Under the Death Benefit section of a plan document, it says:

...The following participants shall be covered by this section...Each vested participant with an hour of service after the enactment of the REA of 1984, and in the case of a participant who performed no service after the enactment of the REA of 1984, each Participant qualified to elect a qualified preretirement survivor annuity under section 303(e) of the REA of 1984.

Is it possible that a vested participant who terminated prior to the date of that enactment (not sure what date that is), would not be eligible for a death benefit?

As you probably know, there are compelling arguments to be made that the Mass cafeteria plan requirement is preempted by ERISA.

How are your clients reacting to this ambiguity? Are most taking a wait-and-see approach, hoping for preemption, or are they complying with the Mass requirements pending ERISA litigation?