401(k) plan w/ a match. There is an hours requirement and active at last day of the plan year requirement for the match.

There are 5 participants who are not on the ACP test because they do not satisfy the match requirements, therefore they are not eligible for the match and are not included in the ACP test. They ARE however, included in the ADP test.

Assume the ADP passes and the ACP fails. One option is to shift deferrals from the ADP to the ACP. If this shifting is done, is it okay to keep the 5 participants above off the ACP test?

Since we're now including deferrals on the ACP test and these deferrals do not have a requirement, I'm wondering if these 5 people need to be included on the ACP test.

Any thoughts?

A profit sharing plan was merged into another profit sharing plan effective January 1, 2006, with "assets and liabilities ... transferred to [the surviving plan] as of that date." What is the current thinking on whether the disappearing plan needs an audit and Form 5500 for the one-day period of January 1, 2006? I found some posts from 2002-2003 on this, but wondered if there is anything more recent.

I've had a couple of situations in which a participant decides to just stop making payments on the loan, recognizing that it will be considered a deemed distribution.

What I'm not sure about is whether it is also a prohibited transaction.

Does it make a difference if the plan does not permit in-service withdrawals?

Does it make a difference if the participant is not a party-in-interest?

I'd been taught previously that this would be a prohibited transaction because (a) they are no longer following the loan provisions by not making payments quarterly, and (b) the plan does not permit in-service withdrawals, so it can't be recharacterized/offset. My co-worker says differently.

Which of us is correct?

POSTED ON 401(k) BOARD YESTERDAY (but hardships may be appropriate here as well) -

Anyone have experiences/thoughts about adopting or administering this provision. We are worried about a run on hardship distributions if it makes it too easy to avoid plan loans.

Final 401(k) Reg Section 1.401(k)-1(d)(3)(iv)(D) provides "Employee need not take counterproductive actions. For purposes of this paragraph (d)(3)(iv), a need cannot reasonably be relieved by one of the

actions described in paragraph (d)(3)(iv)( C ) of this section [insurance reimbursement, asset liquidation, stopping elective deferrals, other currently available distributions and nontaxable loans] if the effect would be to increase the amount of the need. For example, the need for funds to purchase a principal residence cannot reasonably be relieved by a plan loan if the loan would disqualify the employee from obtaining other necessary financing."

We have participants who can't afford loan repayments. They want to argue that loans would drain their cash flow and create more future hardships (or alternatively that loans would be defaulted and that would create tax liens and new hardshipt).

What do people think about how broadly to interpret this new provisions of the final regs?

What is a "Super" Safe Harbor 401(k). How does it differ from a traditional SH 401(k)? Is this referring to new comp?

Does anyone know of a pre-packaged set of DC/DB plan administration forms I could purchase? What I have in view are new business/conversion, distribution/contribution processing, information request, plan termination, testing results, etc. related documents

Thanks!

Does anyone have a recommendation for a valuation expert to prepare a valuation for the stock of a closely held energy corporation? This would be on a minority interest and they have had difficulty finding someone who understands their business.

Suppose a non-PBGC DB plan terminates with less than 100% funding. Assets were allocated per section 4044 of ERISA. Suppose the same sponsor subsequently established a new DB plan. What benefit is credited under the prior plan to each employee under the new DB plan? Is it the benefit previously accrued or the benefit previously paid? (If an employee had a $10,000 annual benefit accrued under the plan, but was paid the equivalent of a $6,000 benefit do we take $6,000 or $10,000 into account in determining what the current plan's 415 limitation is?) Is there support for your conclusion?

Thanks.

Is a govermental plan required to mail a notice to annuitants when the NET PAY amount of their pension changes?

A widow has been receiving MRD's from her late husband's retirement accounts the last couple of years. For 2005, she did not receive the required MRD. Will she be required the pay the penalty for not taking the MRD even if she is under age 70? What needs to be done?

401(k) Plan reported on Form 5500 for 2001 and 2004 amounts of 401(k) deferrals and loan repayments that were not deposited timely. (As many as 55 days late.)

Plan underwent a DOL audit. Auditor calculated lost opportunity cost and lost interest for each late payment. Plan Administrator deposited the lost earnings early in 2006 at the conclusion of the audit as per the DOL’s calculation.

We are now calculating the excise tax due. If I understand correctly, the excise tax is 15% of the lost earnings/opportunity cost. Is that correct?

Now, my real question: Do we have to file two Forms 5330, one for 2001 and one for 2004? If so, wouldn’t they both be considered delinquent, creating additional penalties? Also, instead of completing Part IV manually, can we just attach the spreadsheet showing each date and amount?

Thanks for any and all responses.

We are talking with a prospective client about their 401(k) Plan.

They want to change the eligibility in their plan from a one year service requirement to no service requirement. Their current provider is telling them that they can't do this without terminating the plan.

I was under the impression we could amend plan eligibility.

what am I missing? thanks.

Company started a new 401(k) plan, effective 1/1/05 for all employees. However, we've come to discover that they in fact had a prior uni-401(k) plan, effective 1/1/2002. At the time the uni-401k was adopted, the owner was the only "employee". But when he started to hire employees, her was lead to believe that the uni 401k was only good for the owner, and that to have a plan covering everyone, a new plan would be needed.

I am still awaiting a copy of the uni-401k plan document, but am I correct in that uni-401(k)s are really open to everyone (have to be)? I also realize we will have plan termination issues if the uni-401(k) was not terminated properly. But if the existing 401(k) had identical provisions to that of the uni-401(k), would that alleviate any potential problems of starting a 401(k) so soon after terminating a previous one?

Thanks

In a traditional 401(k) Plan, we have a participant who passed away and never changed her beneficiary from her ex-husband.

Therefore according to the singed beneficiary form, he is entitled to her benefit, but not to roll it over since they were no longer married. According to the Plan Document, he must have money out of the Plan by fifth anniversary following the participant's death.

Does he have any other payment options available to him as a non-spouse (ex-spouse) beneficary?

Just curious if anyone can guide me to the proper source. Thank you.

Client is Self Employeed at Age 78, is there anything he can contribute to?

IRA, SEP, etc.??? Any ideas for this old folk, this request you dont see happen every day.

Also, since he is over 70 1/2, I understand he would also have to begin taking is RMD regardless.

Any Thoughts?

Anyone have experiences/thoughts about adopting or administering this provision. We are worried about a run on hardship distributions if it makes it too easy to avoid plan loans.

Final 401(k) Reg Section 1.401(k)-1(d)(3)(iv)(D) provides "Employee need not take counterproductive actions. For purposes of this paragraph (d)(3)(iv), a need cannot reasonably be relieved by one of the

actions described in paragraph (d)(3)(iv)© of this section [insurance reimbursement, asset liquidation, stopping elective deferrals, other currently available distributions and nontaxable loans] if the effect would be to increase the amount of the need. For example, the need for funds to purchase a principal residence cannot reasonably be relieved by a plan loan if the loan would disqualify the employee from obtaining other necessary financing."

I have a plan that states in the document that deferrals are limited to 6.5%. There are some HCE's that deferred over 6.5% and are not eligible for catch-up contributions, so the tests fails. It is my understanding that even though the deferrals of the HCE exceeded the plan limit, they are required to be tested b/c they are HCE's. Any thoughts....the plan would pass if these HCE's had deferred the limit and no more. Do I have to include this $$ in the test...please say no or let me know of a loop-hole that might get me around it!!!

This seem worng...I would not be happy if I had to take money back beacuse someone else deferred over what the plan allowed....

Thanks

Carson

I have searched the prior posts regarding the imposition of a "spousal carve out" rule by

a self funded health plan. I know some states prohibit such rules for fully insured

plans, but aside from that is anyone aware of any other obstacle that would prevent

a health plan from adopting such a rule?

My reason for asking is that one of our plans has been put on notice that a

suit is forthcoming. I cannot figure out what the basis of such an action would

be.

Any updates would be appreciated.

Company A is planning on spinning off subsidiary Company B. Company B will have a new start up plan to which affected employees' 401(k) accounts will be transferred from the Company A plan. Both have calendar year plans.

Our concern is affect on the new start up plan. I believe Company B would run non-discrimination testing for the short year from effective date through 12/31. If no employee has ownership in Company B, does this mean there are no HCE's for the first short year?

Also, must the 415 test aggregate the accounts under both plans for 2006 calendar year?

A plan with two active participants is implemented on 1/1/2004.

The plan is not considered a one-participant plan and thus is not eligible to file a 5500EZ, so must file a 5500.

In the first plan year the corporation has no profits and pays no compensation and thus no benefits accrue and there is no funding requirement for 2004.

However, one of the participant's rolls $50,000 into the plan during 2004.

The client just now provides us this information regarding a rollover and never filed a 5500 for 2004.

Any suggestions on a strategy for this situation?

Thanks.