Hello,

A while back someone had posted an excel file for calculating a basic safe harbor match, but unfortunately the file is no longer available for download here.

Does anyone have a file or formula to calculate? Any and all help is greatly appreciated!!!

When filing form 5330 for late deposit of employee deferrals in part IV question 25a , are must people marking the discrete or other than discrete box?

A bond matures and is in excess of 5% of the retirement plan's assets. Is this considered a 5% reportable transaction?

If a DB plan was amended to freeze accrual service but allow for compensation increases, would the new formula be considered a safe harbor formula? I believe the fresh start rules call for at least a 0.5% of comp formula, but any other thoughts would be appreciated. Thanks.

In June, 2005 I transferred funds (approx. $2500) from a Traditional IRA with one broker to a Roth IRA with another broker. I now find that our AGI (married filing jointly) made us ineligible to do this (over 100k). In August, 2005, I also contributed another $1000 but put it into a different fund but still a Roth IRA with the same broker. Our AGI for 2005 was between the $150,000 and $160,000 limit. My questions are this: 1. How do I transfer back to a Trad. IR the $2500 + earnings that was ineligible for a ROTH IRA and 2. Would the $1,000 + earings I contributed to a different fund in a Roth IRA still be legal or do I need to also withdraw this amount? We have already filed our 2005 taxes.

the plan was amended so that only accounts less than 1000 can be cashed out. there are no mandatory IRA's because the limit has been reduced to 1000.

if the plan terminates, what does the plan administrator do with accounts that are between 1000-5000 if the participants don't complete distribution paperwork?

Employer is wanting to change providers but finds current individual annuity contracts have surrender charges. Employer is willing to reimburse for surrender charges for current employees but not terminated employees. What are the considerations on surrender charge reimbursements and how can former employee accounts be handled?

ERISA: Every Ridiculous Idea Since Adam

TEFRA: Taxing Every Fiscally Responsible American

got more?

A client of mine has both hourly/union employees and salaried employees that are eligible to participate in their Cafeteria Plan. Their plan documents are VERY confusing to me and I would like your interpretation of them please. The Plan Doc state:

“ELIGIBILITY (Section 2.1)

Any eligible employee shall be eligible to participate hereunder as of the date he satisfies the eligibility conditions for the Employer’s group medical plan.” (which I’m told is the day of hire for the hourly/union employees.)

“EFFECTIVE DATE OF PARTICIPATION (Section 2.2)

An eligible employee who is classified as an hourly/union employee shall become a participant effective as of the date on which he satisfies the requirements of section 2.1. An eligible employee who is classified as a salaried employee shall become a participant effective as of the first day of the month coinciding with or next following the date on which he met the eligibility requirements of Section 2.1.”

“APPLICATION TO PARTICIPATE (Section 2.3)

An employee who is eligible to participate in this plan shall, during the applicable election period, complete an application to participate and election of benefits form which the administrator shall furnish to the employee. ……

An eligible employee shall also be required to execute a salary redirection agreement during the election period for the plan year during which he wishes to participate in this plan. Any such salary redirection agreement shall be effective for the first pay period beginning on or after the employee’s effective date of participation pursuant to Section 2.2.”

Their SPD has this:

“What are the eligibility requirements for our plan?

You will be eligible to join the plan once you have satisfied the conditions for coverage under our group medical plan. …..

When is my entry date?

If you are an hourly/union employee, you can join the plan on the day you meet the eligibility requirements. If you are a salaried employee, your entry date will be the first day of the month coinciding with or following the date you met the eligibility requirements.

What must I do to enroll in the plan?

Before you can join the plan, you must complete an application to participate in the plan. The application includes your personal choices for each of the benefits which are being offered under the plan. You must also authorize us to set some of your earnings aside in order to pay for the benefits you have elected.”

My problem is this – since their group medical plan states the hourly/union employees are eligible on the first day of hire and the same for their entry date, my client is saying the employee should be effective in the Cafeteria plan on that same date and it doesn’t matter what date the employee completes their Salary Redirection Agreement form. I’m saying they’re not effective in the Cafeteria Plan until they’ve signed the Salary Redirection Agreement form.

Who’s right and if I am, can you give me some ammo to convince them of this. I’ve been fighting this battle for several years now and would like to have it resolved.

I apologize for the length of this but I wanted to be sure you had all the needed info to help me. Thank you in advance.

A self-employed individual had a SEP in 2005 and will be incorporating as of May 1, 2006. Can he contribute to his own SEP for the first four months of '06? Can the corporation then start its own SEP as of 5/1/06 and make a full contribution for him for the remainder of the year?

Or is one SEP all that is allowed per year?

Due to administrative error in 1992, retirees received overpayments equal to 5 % of their monthly benefit from that date forward. Error was just recently discovered. The Plan is considering a suit against the former actuary who never caught the mistake.

Questions...

1) Can the plan stop the overpayment now, or is there an argument that the benefit has somehow vested?

2) Can plan recoup the overpayments through future reductions in monthly checks (for those who are still alive)?

3) Is the former actuary "off the hook" due to a statute of limitations problem? 14 years is a long time.

A company has a self-directed 401(k) planm but the assets are not in individual accounts, but are held in a pooled account. TPA produces quarterly report/statements.

Would it be acceptable if each month, the employer deposits the 401(k) money in a money market or plan checking account, but only transfers these monies into the proper funds (per employee investment direction) on a quarterly basis? By segregating the 401(k) monies from the company assets monthly, they will satisfy the ASAP/15 business day requirement. Are there any other cut and dry deadlines that pertain to the actual investment of 401(k) contributions, per the employees instructions?

My company has 140k employees with 40% participation rate. 70% of our employees are hourly. 50% of the hourly employees have not meet the eligibility requirements yet. We also have a Deferred Compensation plan with a 75% participation. I am working on a project whether to add Safe Harbor and/or Auto Enrollment to our plan. I am looking to compare companies in Food/Hospitality industry or companies that have a high turnover rate.

Here are my questions:

1. How has having Auto Enrollment or Safe Harbor affected your participation rate?
   
2. What has been the increased cost to the company with the added match from Safe Harbor?
   
3. What is the percentage of the employees that have stayed in the plan with Auto Enrollment?
   

Thanks for your help!!

Silly question, but...

Client has plan that has recently become top heavy. 75% owner has 50% of account balance and is in process of transferring ownership and control to children. Owner is 70 1/2 and taking RMD's. If owner terminates, and no longer receives compensation, would his distribution still be considered an inservice distribution for purposes of top heavy distribution add backs simply due to his ownership status? 5 year look back versus 1 year.

Client is currently making more in top heavy contributions than his COBRA payments for health insurance would be.

And if it's considered a full distribution, what happens if (hypothetically) he rehires after a 1 year break in service?

Other option is to take it Safe Harbor beginning 1/1/2007 and ending profit sharing contributions. In which case plan gets amended to use forfeitures only to offset fees. But, if we are trying to maximize contributions for children we would need to use a super match formula. I know those extra matching contributions do not remove the safe harbor label, but do they get considered safe harbor contributions for top heavy purposes? They do not mind making the extra matching for staff, they just don't like making the contribution for "otherwise excludables" many of whom terminate before becoming eligible.

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?