We are preparing the 5500 for small 401(k) plan that is on a cash basis and they have an off plan year (Oct - Sept). The plan made their safe harbor contribution of $85,000 for the 2004 PY in the 2005 PY. Their 2005 PY contribution of $93,000 has not been made yet. What number do we use on Schedule I line 2 for Employer contribution for the 2005 PY 5500? $85,000 $93,000 or $178,000?

We are terminating a small plan with excess assets that can be re-allocated to participants (no one is at the 415 limit).

Normally, we would re-allocate in proportion to the lump sums, but in this case, the boss wants me do a rate group test because we want to focus the excess on one partner in particular (the idea being that I can allocate the excess in any non-discriminatory manner and allocating in a way that passes an (a)4 test would suffice).

I've never done this before, and of course the boss is on vacation this week. Has anyone ever done this? My first instinct is that I would test it like a contribution on an allocation basis, but I wanted to get some thoughts to see if there were any quirks before spending a lot of time on it.

Thanks!

Dennis

I have an HCE who wants to retire with a lump sum distribution. The plan is underfunded, so he is restricted under the a4 regs. He is willing to post the necessary bond, but how is the bond obtained? Should I direct him to his regular P&C agent? I assume it's a pretty specialized product.

The board of a plan sponsor of a non-elective 457(f) top-hat which provides benefits lost under a qualified plan (due to compensation limits) wishes to push out the 457(f) vesting date (assume that this would be legit for the moment) -- and the employee has no discretion or involvement in the decision. Would doing so be considered a "deferral election" that is subject to the 1 year in advance/5 years down the line rule under 409A even though the employee is not making any election?

I have a control group of companies where there are two separate plans that must be aggregated for testing purposes. The smaller of the two plans is considering adding an auto enrollment feature. Passing the ADP test isn't an issue and so that isn't a motivating factor for them, it would simply be to boost participation levels.

Could Plan 2 implement auto enrollment and not Plan 1 or would there likely be a BRF issue?

Plan 1 has approx 445 HCEs & 2,600 NHCEs provides for 401(k), match & PS

Plan 2 has approx 55 HCEs & 48 NHCEs currently provides for deferrals & PS only

An employer provides employees with a nominal death benefit ($5,000). The benefit is paid from the employer's general assets, it is not an insured arrangement. I believe the amount is taxable, reportable on a 1099-R and potentially subject to withholding. Does anyone agree/disagree? I would greatly appreciate any thoughts/insights. Thanks.

Facts:

ABC PLC is owned 20% by five attorney's who each have their own practices (individual Schedule C's). The PLC handles all admin functions, employs the employees etc. The five attorney's and all the ee's of PLC participate in the ABC 401k plan.

One attorney leaves and will no longer own 20% of PLC. He will lease the employees from the PLC. EG the ee's will still get their paycheck from PLC and the leaving attorney will pay a fee to PLC for the services used. He does not have any equity stake any longer in PLC however.

Question:

My question is, is the leaving attorney simply considered a terminated participant from the PLC plan? The employees that continue to be employed by the PLC and are leased from the PLC to the leaving attorney (note these employees also continue to work for the other four attorney's as well) continue to participate in the PLC 401(k) plan correct? The leaving attorney can no longer participate, correct again?

This seems too simple, but on first glance this appears to be nothing more than a terminated participant situation. I just want to make certain that this arrangement doesn't continue to cause the leaving attorney to still be a member of an affiliated group.

I am not overly familiar w/ ASG rules (aside from finding them very confusing). Thank you for any opinions.

Here's a new one to me.

A Plan Sponsor/Employer has regular, permanent employees, as well as non-regular employees hired on from time to time to perform only a specific job. The non-regular employees work a full-time schedule for their duration, and are informed on hire that they will receive no benefits. They are also paid more per hour than the regular employees who receive benefits.

I know that nothing under ERISA prevents an employer from excluding certain classes of employees (like, here, the non-regular employees) from benefit.

The catch here is that the plan sponsor didn't make the plan CLEAR that such non-regular employees would be inelgible for retirement plan.

The employer's goal is to fix this problem without having to include the non-regular employees as benefits-eligible.

I'm thinking that the plan sponsor could amend the plan to document their actual intent. No need to tell the non-regular employees.

The other option I see would be to go through EPCRS, actually include the employees, and make QNECs, as needed.

The employer wants to get a waiver from the non-regulars stating that they waive benefits. I think that's like waiving a red flag in front of a bull. They'll start asking question, and claims could follow.

Anyone with me that a quiet, retroactive amendment, together with documentation that the amendment reflects the employer's original intent, would be ok?

In 2006, all employees of the employer, including the employer, terminated on May 1st (calendar year plan). Plan has not been terminated (not sure why). There was no contribution for 2006, however, a former participant was paid out and forfeited $8,500. Forfeitures are added to ER contributions.

Plan has a 1000 hour/last day rule. Since no one was there on last day, should we use the fail safe provisions and allocate first to those with 1000 hours and then those with the next highest hours? There are 4 NHCEs and 1 HCE. 2 of the NHCEs worked 1000 hours, 2 worked less than 1000 hours but more than 500. The HCE worked 1000 hours. Could we allocate to the HCE and 3 NHCEs to pass coverage?

Thank you.

Client is a partnership. Only two partners made over 150k. 3 more made 140k. If two of those three are considered officers then plan is not top heavy. If all three are considered officers then plan is top heavy. None of the three have any more or less real authority than the others. Partners regularly meet to discuss budgeting issues, hiring and firing decisions and such. However, majority owner makes final decision. So the word discussion is really that...a discussion. None of other partners have more than 1% stake in company.

Does such an arrangement and ownership structure preclude any of the others from being named as key employee so long as those three other partners don't earn over 150k? Since officer status is based upon facts and circumstances, it seems to me that majority owner can claim the minority partners have no authority and thus shouldn't be included and it would only come to light in an audit situation and even then only if documentation doesn't support his position.

We have a doctor age 70 who is still working. The market value of his DB plan is about 4.8 million. The actuary has calculated he is @ the 415 limit. The maximum distribution, according to our actuary, he will be permitted to take is roughly 2.7 million. The dr. has not contributed in years. The excess "balance" is totally due to wonderful investment return.

There are 3 employees who are low paid and work for him a few years.

We are a TPA firm. The plan has been with our firm for many years. I don't believe the dr. is aware that there is a maximum amount he can withdraw from the db. It appears (by reviewing the file) he plans to roll the entire balance over to an IRA.

Help! Any TPAs out there that have faced this situation? I'm a DC person. Any suggested remedies anyone can think of??

Facts : Cash Balance Plan ("CBP") covering only HCEs is cross-tested with a 401(k) plan. Both have 6-year graded vesting schedules. In 2008, the Pension Protection Act will require CBP vesting schedule to be changed to vest over 3 years. Will the vesting schedule in the 401(k) plan have to be changed to a schedule as least as favorable as the CBP to avoid a discrimination problem under 1.401(a)(4)-11©?

Would the answer change if the CBP covered both HCEs and NHCEs?

Any thoughts would be greatly appreciated.

The link below mostly addressed a question, but I was hoping for further clarity:

Company A sponsors Plan A and has a match safe harbor 401(k) plan. Company B is unrelated and sponsors Plan B which is a 401k but not a safe harbor.

Company A buys Company B and wants to merge B's non safe harbor plan into A's safe harbor plan in mid year (7/1).

From what I've read and linked to, this cannot be done without Plan A losing its 2007 safe harbor status. Is that correct? If so, does the employer still have to make the safe harbor contribution even though it is not a safe harbor (I would assume so since it is in the document)?

One suggested alternative was to freeze Plan B as of 6/30, allow B's employees to participate in Plan A as of 7/1, and merge Plan B into Plan A on 1/1/08. Plan A would remain a safe harbor at all times. Do you agree with all of this?

Thanks very much.

http://benefitslink.com/boards/index.php?s...c=32952&hl=

I have been trying to find out how the IRS/DOL will be handling the filing of the Schedule B when they go to the required electronic filing. Everything I have read from the DOL website still says that an original copy of the B needs to be filed.

Has anyone heard if they plan to adopt anything like the PBGC filing where you can have the actuaries certification on file?

Is it just me or is this defeating the purpose of electronic filing/paper reduction? What would be the benefit of filing electronically if you still have to send an original Schedule B in to the EBSA.

Under PPA 2006 for the 2006 plan year. Plan has 2 participants.

My understanding for a single employer DB plan is that the 404 limit is u p to 150% of current liability.

My understanding for a DB plan and a stand alone 401k plan (no matches, etc.) is that the 150% current liability still applies.

My understanding for a combined profit sharing, DB plan situation, the combined plan DB limit is the minimum up to 100% current liability (if greater than 25% of pay) and that a profit sharing contributes 8% of pay, subjects 2% of pay to an excise tax for 2006.

Now here is where things get a little dicey for me.

If we have a combined profit sharing, DB plan situation, and between 1% and 6% is contributed to the profit sharing plan then is the plan DB limit:

the greater of minimum or 100% CL (assume greater than 25%) or

since profit sharing contribution does not exceed 6% is the combined DB plan limit ignored and the single employer limit of 150% of CL applicable?

Thanks.

I am looking at a possible takeover plan that calls for immediate entry for all employees who are at least 21 when they are hired. The plan was established in 2005 with no employees. In 2006 they hired several employees, but did not offer them the option to defer because they thought they had an "owner only" plan that did not allow employees.

The EPCRS correction calls for making a corrective contribution based on the average deferrals of the NHCE group for a non safe harbor plan. Since no NHCEs have ever been permitted to make deferrals, how would that percentage be calculated?

One of our clients uses a trust company that offers IDA or SDBA or whatever you want to call them. After finally getting the statements for 2006, we determined that the trust company made an impermissable hardship distribution to a participant by distributing more than allowed. I can't find a correction for such an error. The amount in question is about $400. Can the participant pay back the excess amount or is there some other correction?

I recently read an article that the IRS is planning to limit the number of HCE rate groups based on the number of NHCE rate groups. However, no amount of my searching gets the article to appear. It may have been in Dave's newsletter within the last 2 months.

Anyone else remember reading this, and more importantly, a link to it? Thank you.

I have a small firm that benefits husband, wife, and 3 employees.

The husband is at the full 415 dollar limit and hits normal retirement age this year. The plan allows for in service distributions at normal retirement.

The hubby would like to take out his lump sum on his normal retirement date, but keep the plan so that his wife can accrue her full benefit.

The client has the ability to make a contribution that will release his benefit so that we avoid any restricted distribution issues (must be nice!).

My question is if he takes a lump sum based on this year's 415 limit, and there is an increase in the 415 limit in some future year, will he then earn a benefit equal to the increase? or is he just done because he was fully paid out at the maximum benefit at the time he took the distribution.

Any thoughts or leads that I could research would be great!

Thanks!

we have several HCEs who are also card-carrying union members. the "office plan" they participate in allows HCEs to participate but excludes union EE. (i don't know anything about the union plan but assume that it would allow these HCE/union members to participate). for some reason, this year they decided they want to start participating in the "union plan."

as far as the "office plan" is concerned, is there anything other than being aware of contribution limits that we need to be thinking about? i went throught the 410(b) regs and 404 regs re disaggregation and deductibility but am not sure if i have explored the universe of worrisome issues. (i am sure i haven't, which is why i woke up at 4:30 this morning.)

do you have any insight(s)?

already a sleep zombie,

lexi.