Two unrelated sub-s corporations have merged and formed a new company effective 1/1/2007. One company sponsored a SIMPLE and one company sponsored a non safe harbor 401k plan. The new company wants to sponsor a safe harbor 401k plan.

Does the fact that one of the companies had a non safe harbor plan create problems for the safe harbor arrangement in 2007? No contributions have been made to either plan in 2007, if that is relevant.

And if the 401k assets of the old plan are transferred over, does that create issue relative to the safe harbor status for 2007?

Are there any firms with SEP prototypes that can be used by an employer in addition to their defined benefit plan?

thanks,

Jim

Non-J&S, plan and SPD silent. Can we allow a participant to specify a dollar amount to a beneficiary with the remainder to another beneficiary.

It sounds unusual, but is it legally permitted?

I am over 50 and an active employee. I was told I need to double the amount of my total monies in a new Roth Ira (approx. $2,100) and send it to the IRS by 4/17/07, so the amount would be allowable for sure. Is this true? I thought there was no yearly minimum deposit. Also, can one still put monies into a Roth Ira if they retire early, until they desire to take them out? (after the 5 yr. non-distribution period of course)

[Found on the net:]

A group of alumni, highly established in their careers, got together to visit their old university professor. Conversation soon turned into complaints about stress in work and life. Offering his guests coffee, the professor went to the kitchen and returned with a large pot of coffee and an assortment of cups - porcelain, plastic, glass, crystal, some plain looking, some expensive, some exquisite - telling them to help themselves to the coffee.

When all the students had a cup of coffee in hand, the professor said: "If you noticed, all the nice looking expensive cups were taken up, leaving behind the plain and cheap ones. While it is but normal for you to want only the best for yourselves, that is the source of your problems and stress. Be assured that the cup itself, adds no quality to the coffee in most cases, just more expensive and in some cases even hides what we drink.

"What all of you really wanted was coffee, not the cup, but you consciously went for the best cups... and then began eyeing each other's cups.

"Now consider this: Life is the coffee, and the jobs, money and position in society are the cups. They are just tools to hold and contain Life, and the type of cup we have does not define, nor change the quality of life we live. Sometimes, by concentrating only on the cup, we fail to enjoy the coffee God has provided us."

God brews the coffee, not the cups... enjoy your coffee.

We're starting to do quite a few DOL plans, and need to find a competent check-writing software to make the production of monthly benefit checks easier.

Participants need to be maintained within each plan, summary/detail reports available for each check run, etc.

Storage & printing of a digital signature would be a nice feature.

Can anyone recommend a good software (or, conversely, recommend a software to avoid) for this purpose?

Thanks!

Mark

Is anyone familiar with software used to calculate the Sole Prop? I'd like to license a version, but am having trouble finding vendors.

I had an interesting question from a client today on the new PPA rule where a participant can request a hardship for a designated beneficiary.

The participant wants to designate two primary beneficiaries to get his death benefit. He want to designate 99% of his death benefit to his spouse and, with spouse consent, he wants to designate 1% to his son-in-law. Hw wants to do this to be able to gat a hardship distribution out of the plan to help pay his son-in-law's medical bills.

IRS Notice 2007-07, III Section 826 of PPA '06 defines a primary beneficiary as an individual who is named as a beneficiary under the plan and has an unconditional right to all "or a portion" of the participant's account balance under the plan upon the death of a participant.

While it does not appear to be kosher, it looks like this can be done.

Any opinions??

Thanks.

A plan that were are taking over administrative responsibility for is a 401(k) safe harbor plan. It provides for the 3% nonelective ADP contribution and a required match of 100% on the first 5% of compensation deferred. The match has no accrual requirements but is subject to a vesting schedule.

The current TPA has not been performing the ACP test, noting in the year-end reports that it is automatically passed due to the safe harbor status of the plan. I know that a discretionary match, to avoid the ACP test, must be limited to 4% of compensation.

1) Since this is a required match and under 6% compensation with no accrual requirements, is the ACP test thus automatically satisfied?

2) Is the vesting schedule on safe harbor match permissible?

Thanks.

My client wants to set up a phantom stock plan that would allow cash bonuses to be converted to phantom awards and then they are eligible to take 20% of their awards in cash 5 years after the initial award. If they don't take it they can defer but if they leave for any other reason than death, disability or retirement they forfeit any awards they haven't converted. It is also nonelective. It seems to me that they can decide to defer 12 months prior to the scheduled payment for 5 years. During that 5 year period if they were to die, become disabled or retire, they would get their awards in their account but otherwise it would continue to be subject to the substantial risk of forfeiture. If they leave during that 5 year period of subsequent deferral they would lose everything. Does anyone see a problem with my analysis or compliance with 409A?

I ERISA 407 includes "marketable obligations" as a qualifying employer security.

IRC 409(l), which applies to ESOPs, defines "employer securities" to include common stock.

Does that mean an ESOP cannot hold a marketable obligation as a "qualifying employer security?"

is anyone familiar with the substantial business hardship exception for terminating the safe harbor nonelective contribution portion of the plan? client had would like to keep the 401(k) portion of the plan going but in order to do so would need to qualify for the substantial business hardship. there are several factors listed in the code but the list is not inclusive of all factors. i am wondering if there is other guidance. ie. if you use the definition of substantial business hardship in 412 do you also need service approval?

A collective bargaining agreement requires an employer match for that employee group. The employer stops making the match.

The HR manager testifies that ERISA prohibits the company from making the match for that employee group unless it makes a match for all employees in the plan.

I know of no such provision, do you?

Is the employer retention of the match money a prohibited transaction?

Your thoughts and comments are greatly appreciated. Thank you.

An employer excluded many temporary employees for a number of years. If the employer filed a VCP application and corrected by making corrective contributions the cost of such corrective contributions would be extremely expensive and beyond the company's means. In addition, the company is reluctant to make such corrective contributions because the employees would not likely have participated if given the opportunity.

Has anyone proposed an alternative correction method, under VCP, for the failure to include eligible employees?

Any ideas would be great!

Thank you.

Our client has a prevailing wage element in the 401k plan. The plan also has a discretionary match. They have some unofficial 'it seems so' guidance that the match can be counted against the prevailing wage contributions, as long as they are fully vested.

The VS document we use is somewhat vague, silent and otherwise unhelpful in making the call. The client has provided a 6/29/1990 Field Operations Hanbook and cited Sec 15f13 as some sort of support.

As the match is discretionary and non-vested I believe the Davis-Bacon deposits can't be offset.

But this is a rare circumstance and I hope someone out there wants to take a shot at the answer.

Thanks

If a plan provides for the continuation of healthcare coverage for employees who experience a COBRA qualifying event for the duration of the applicable maximum coverage period (for example, an employee who terminates employment would continue coverage for 18 months following the termination date with employer paying the premums)- thereby not having an obligation to offer COBRA since the event didn't result in a loss of coverage prior to the end of COBRA's maximum coveage period - Should the plans' SPD still provide information on COBRA coverage since it is a group health plan or can it be silent on the COBRA issue. Please assume that the plan would be drafted to account for all COBRA scenerios, divorce, disability, etc. and extend coverage to the participant/dependents accordingly. Also kindly assume that the plan cannot be talked out of doing it this way! Any comments would be appreciated.

Does anyone know anything about the abatement of withdrawal liability and reentering a plan? Employer withdrew from a plan in one city and later became signatory with another plan in another city. However, the employer will be doing work in the original city using union employees from both cities and so will have to contribute to the original plan. Can this amount to reentering the plan under the abatement requirements? Does the employer have to be signatory to the original plan to qualify for abatement?

thanks

Accounting for Roth 401k contributions must be separate from that of pre-tax elective deferrals, but do the actual contributions have to be in separate accounts? We have several Roth/401ks that are self-directed but pooled (don't ask:), and therefore all plan monies - roth, 401k, PS, match, etc - are held in 1 place. I believe that as long as their is separate accounting for all the different money types, that is sufficient.

Also, Roth 401k contributions were initially set to expire when EGTRRA sunset in 2011. Was this obstacle for Roth 401k contributions removed when the other sunset provisions were eliminated last year?n

Thanks

Does anyone have any insight as to when in March the final 409A regs will be issued? Thanks!

Corporation of 2 employees/ 50% shareholders has a 401k plan. Both Shareholders receive W-2 income. Both Shareholders also individually receive 1099 income separate from the Corporation. One shareholder wants to stop the 401k plan. The other shareholder wants to have his own 401k plan.

Would it be better to amend and rename the Corp plan to the one individual or would it be better to start a separate 401k outside the Company for the one individual and then terminate or merge the Corp 401k plan?