Is it permissable for a SH 401(k) plan to exclude employees from participation by means other then age & service (I.E. employees in the mail room may not participate) and still meet all the allocation and elgibility requirements of the Safe Harbor regs? Such a plan would exclude employees who have satisified the maximum allowable age and service requirements but would pass the 70% coverage ratio test.

My thinking is once an employee has met the statuatory requirements for eligibility any plan imposed requirements are effectively allocation requirements. And as a Safe Harbor plan can not impose any allocation requirements on recieving the Safe Harbor contribution, seemingly excluding employees in this manner would preclude the plan from being a Safe Harbor 401(k).

Why am I wrong?

An existing 401(k) plan is being amended to add the automatic enrollment feature. Rev. Ruling 2000-8 says that employees must be given reasonable notice prior to the effective date of the amendment. I'm thinking 30 days is fine, but maybe I shouldn't be so cavalier. So, I'm asking for other opinions.

XYZ LLC is owned 50% by husband and 50% by wife. LLC has about a dozen sales staff.

Subsidiary ABC is owned 1% by above mentioned LLC, and 49.5% by husband and 49.5% by wife. Subsidiary has hundreds of leased employees.

The leased employees receive a W-2 from ABC. They are hired by ABC and then leased to other companies.

XYZ wants to implement a DB plan for the two owners and the dozen sales staff. The comment I heard today was that the hundreds of other employees are just inventory.

From what I can tell it seems like leased employee issues hinge on control. If the recipient company controls the leased employee then they are a common law employee of the recipient company. If ABC controls the employee then they are a common law employee and because of the controlled group they are also going to be covered in XYZ's DB plan.

The problem is that it seems pretty subjective. There isn't any rule out there that you can point to and say with confidence that you are correct.

Any thoughts, help, suggestions? Right now I am just pissed that I have literally been proposing this case for 4 months and we are up to revision 16. Now that the client is finally ready to sign on the dotted line, I get this crap. Maybe it is ok, maybe this is not a problem. Hope, at least I can still have hope...

I have been laboring 'lo these many months with the understanding that the 3% SHNEC in a safe harbor 401(k) Plan served a "multi-purpose" function in a Plan's: (1) being able to dispense with ADP (and possibly ACP) testing, (2) satisfying top-heavy minimum contribution requirements, (3) being able to be used as part of the minimum gateway allocation for a cross-tested contribution, and (4) being able to be used in 401(a)(4) general testing with a cross-tested allocation.

A closer reading of some material that I recently came across would seem to indicate that the 3% SHNEC may not necessarily be used for items "3" and/or "4".

Just really confused (not that that's a new phenomenon!) and would appreciate any and all comments or "insights" regarding same - regarding the 3% SHNEC, that is, - not my confusion.

Thanks.

A church establishes an ERISA 403(b) for it's members and purchases what looks to be individual annuity contracts for each participant - each participant is listed as the owner of his/her contract - Due to the fact that this is an ERISA 403(b), should not these assets be held in trust and owned by the plan trustees ? Or is there an exemption to the trust requirement because it's a church - and therefore each participant may own his/her annuity even if it's an ERISA plan? Thank you all for your help.

Does a 1099R form need to be filed for a missing participant from a terminated plan who has had his account balance moved to an escrow account?

Hi Everyone,

Until this morning, I would have been 100% sure that the only corrective action for ineligible deferrals without amending the plan (for whatever reason, whether it be a suspension due to hardship or wrong entry date by plan sponsor) would be to use the deposit as a prepay in the plan and have the employer make the participant whole through an additional payroll check (to withhold the necessary taxes).

However, after speaking with a colleague, it was pointed out (and I also researched) that VCP allows you to treat these deferrals as a corrective distribution and pay the (ineligible) deferrals and earnings out of the plan and report with a 1099R??

I wanted to make sure I read and heard correctly, because it sounds very weird to me!

Thanks for your thoughts/comments.

Vicki

these are a mixed lot (not westerns)

one of them, for example is an Alfred Hitchcock

1. ZIT IN NECK AE

2. NINE GREW NO OTHER FIT

3. EXIT OLD HEART DREAM

4. HELLO NEAT PAW

5. I WON REWARD

6. RARE KIDS FOOL HEARTS

7. SIR PACK US JARS

8. BUS GETS SHORT

9. THINK WASH ON DAMPER SHEET

10. MT PONY WATER

11. IN MATH THEN

12. GOD NORTH LIFERS

Our plan permitted a participant to take out a loan. The plan provides that all loan payments will be made through payroll deductions. The 401(k) Plan administrator issued the loan check but did not pass on the paperwork to payroll to set up the payroll deduction for the repayment of the loan. In a recent plan audit we found the error. Can this be self corrected? Is it participant or administrator error or both? Can the plan sponsor deem the loan to be in default and require the participant to have a deemed distribution. What is the best path to take in this situation?

54.4975-7(b)(5)(iii) has a cryptic requirement that payments with respect to an exempt loan during a plan year not exceed an amount equal to the sum of contributions (and earnings on the contributions) received by the ESOP during the year or prior years less such payments during prior years. I'm trying to figure out what the purpose of this requirement is? All I can figure is it is an old attempt to keep other plan earnings like dividends from being used to make loan payments. However as we know 404(k) specifically allows that. Back in 1985 the above reg. was in the code but the 404(k) section allowing dividends to be used for loan payments was not. Am I missing something or is the above the proper explanation?

A company has retained a large investment firm to provide plan services. Part of the package includes investment advice. However, some participants would rather use the services of local firms. Therefore, the employer has requested proposals from some local investment firms to provide investment advice only. Employees would not be able to invest plan assets with these firms. They will probably end up hiring 2 local firms for employees to chose from (other than the big firm where the assets are currently held). Employees have the option of paying for the service out of pocket or with their plan assets.

Does anyone see a problem with this type of arrangement? What if a participant gets bad advice from one of the local advisors? Since the employer hired the local firm, does that increase the company's liability if a participant's investments take a nose dive?

Would it be better if the company does not participate in hiring any local firms, but tells participants who want the advice of a local firm that it's up to them to go out on their own and pay for their services out of pocket?

An employee is knowingly claiming a dependent that isn't eligible for coverage under our self-insured GHP. Can the plan share this info. with the plan sponsor (i.e., the employer)? I can't find an exception in the privacy regs. (fraud?) but think there certainly should be one. Any thoughts? Thanks in advance.

A client forgot to contribute a participant catch-up contribution in December of 2003. The auditor found the problem and it was reported on the 2003 5500. It was deposited into the plan, along with lost interest, in October of 2004. A 5330 was never submitted. Now I have a DOL letter recommending applying under the VFCP program to receive a no action letter. I have tried to contact them but have not received a reponse.

My questions:

Could I just file a 5330 now? Would that solve the problem? If so, what year should I file? 2003? 2004?

Is it necessary to go through the VFCP program. It seems there are many risks with the program. Any suggestions on how the application should be organized?

Thank you -

participant died 3/30/06 would have been 79 on 4/24/06. last year her 2005 rmd was based on age 78 with a divisor of 20.3. calendar year plan. would i use the divisor for age 79(19.5) for her 2006 rmd and switch to husbands divisor next year. husband is beneficiary who is also 79 this year.

Have a public but bulletin board traded company client who wants to permit its 401(k) contributions to be invested in company stock. Are there limits on this? Any new legislation in this area? Thanks

Howdy pardners. go to the front of the brandin' iron class if you can unscramble all of these.

Unscramble these words and phrases to find the names of ten renowned Western movies.

1. ETHYL HAD GOOD BUG TEETH

2. LOVE RAIDS

3. ENTRANCING MIME YELL'D

4. A HIP FRIEND'S LIGHT

5. BOOM TENTS

6. WE JUST HATE SEA WOOLLY

7. TIGER RUT

8. VENT IF GAME SCENE THIN

9. DRAIN GOER

10. A THIN GRIEVIN'

In order to make a hardship withdrawal our plan states that it is allowed "when such Participant lacks other available resources". What must the participant do to show this?

We have a client that sponsors a large welfare plan. They have never filed Form 5500. It has been in existance since before 1988. We are going to file through the DFVC program. Has anyone else had any experience with filing returns that go back that far? Yuck!

Hi,

I am new at processing QDRO's. We received a signed order which our actuary determined is "qualified" however, the order permits the alternate payee to designate a beneficiary before commencement of benefits which we cannot do.

My question is do I write a letter saying it is qualified but we cannot accept said language, or do I write that it is not qualified because of said language.

Thank you,

A company has retained a large investment firm to provide plan services. Part of the package includes investment advice. However, some participants would rather use the services of local firms. Therefore, the employer has requested proposals from some local investment firms to provide investment advise only. Employees would not be able to invest plan assets with these firms. They will probably end up hiring 2 local firms for employees to chose from (other than the big firm where the assets are currently held). Employees have the option of paying for the service out of pocket or with their plan assets.

Does anyone see a problem with this type of arrangement? What if a participant gets bad advise from one of the local advisors? Since the employer hired the local firm, does that increase the company's liability if a participant's investments take a nose dive?

Would it be better if the company does not participate in hiring any local firms, but tells participants who want the advice of a local firm that it's up to them to go out on their own and pay for their services out of pocket?