If you have a 3% non-elective safe-harbor contribution that you're also utilizing in the cross-testing calculatins, can you still impute permitted disparity for the general test ? If you can't for the safe-harbor portion, can you still impute for the regular profit sharing piece ? (I realize logstically it might be a nightmare to impute for one piece but not the other, but still curious if it's available).

Under EGTRRA, top heavy accruals for non-keys are not required if no key employee benefits during a plan year.

What if the keys's accruals are less than 2%? Unlike DC plan, for DB plan, the Code says 2% regardless of the keys' accrual rates!

Just wanted to check if there is anything put out by the IRS which says otherwise i.e. the non-keys accrual can be at the highest accrual rate for the keys.

Have a safe harbor 401(k) client who offers the basic SH match to those who contribute. One participant has reached her employee deferral limit of $14,000. Will the company be required to continue the safe harbor match contribution off of her gross wages until the end of the plan year? Or, does the safe harbor match stop since she is no longer able to contribute her employee deferral amount?

HCE deferrals were limited to 8% earlier this calendar yr. Mid-yr we received a letter saying that is now up to 10%. However, even at 10% we will still be well under the $14,000 limit for the calendar yr, and would like to do a "catch-up" deferral to bring YTD deferral up to 10%. Plan administrator is saying that is not allowed. What do the regulations say? Is there a specific section of the regulations to which you could refer me?

June 30, 2005 year end, HCE defers $10,000 for the plan year. ADP test fails and $4,000 is reclassified as a 2005 catch-up contribution to avoid refund.

It appears that it would be necessary to advise the HCE that his 402(g) limit for the calendar 2005 year is now $14,000, not $18,000 as he may think. Would you agree?

If he continues to defer $18,000 for the calendar year, then it also would seem that he would have a 402(g) violation for 2005 that must be corrected by 4/15/06. Of course, unless the Plan Administrator advises him that his 05 catch-up was already used in the testing, he (and his accountant) would be unaware of the violation. Quite possibly, this would not be brought to his attention until the 6/30/06 plan year is tested. Thus the consequence would not be the "double taxation" as it usually is in the case of a 402(g) violation not timely corrected.

Am I missing anything here?

Suppose Joe has no accrued PTO, gets 2 weeks in a year from his employer, and decides he wants to donate this.

Does Joe work for 52 weeks, get paid 52 weeks of comp., with the employer paying 54 weeks of comp. in all--52 to Joe and 2 to Katrina victims?

Does Joe work for 50 weeks, get paid 50 weeks of comp., and take 2 wks. unpaid leave, with the employer paying its normal 52 weeks of comp., but with 2 of it now going to Katrina?

Does it matter--will either scenario work?

Are there other alternatives? Suppose Joe works for 51 weeks and takes one week of unpaid leave? Do the Katrina victims still get 2 wks. of comp. from Joe's employer?

Thank you.

Plan Sponsor has multiple payrolls (weekly, biweekly, semi-monthly). 401(k) contributions (& ER Match) are remitted to trust once per month, primarily to accomodate the fact that there are multiple payroll schedules. Contributions are therefore invested in participants' accounts just once a month.

Are there significant issues with DOL deposit rule re: "segregating from ER general assets in reasonable timeframe"? Payroll taxes are paid more frequently than monthly. Contributions could easily be segregated from general assets more frequently. What if contributions are remitted on payroll basis, held in a master trust account, and still invested only monthly? Should master account be interest bearing?

Anyone have any strong thoughts on this?

I am in a discussion with my client's financial advisor who says you can have a "last day rule" in a Cross Tested 401k plan with a 3% non-elective SH. This plan has age 21, one year of service for eligibility. No early entrants.

I have explained to him that all terminated participants must receive the Gateway Allocation since they are receiving the 3% SH contribution. In the case of this plan the terminees would need to receive an additional 2% PS contribution to reach the Gateway.

This financial advisor says that out of all the TPA firms he works with, our company is the only one requiring this. I know I'm not crazy, but can anyone give me a cite to show him?

I've searched several times, but haven't had any luck finding what I need to prove my point. Thanks.

My client is questioning how (and whether) to comply with a NMSN. The facts: Client has a collectively bargained group health plan. The Plan provides health coverage for union employees and their dependents, as long as the dependents are truly dependents - that is, the employee has to provide more than 50% of the dependent's support. There are provisions in the Plan for making a determination that a dependent is in fact eligible for coverage under the Plan. Employees have to provide birth certificates or otherwise prove the required level of support. The problem that has arisen is with NMSN sparked by a custody battle, where the Employer (also the Plan Administrator) has received an NMSN for a child, and they have no record of the child's status as a dependent of the employee, so they don't know whether the child is truly qualified to be a participant under their Plan. The NMSN doesn't give them many options - it's pretty much deemed to be qualified as long as it identifies the participant and gives names and addresses. Of course, the NMSN can't require the Plan to provide a benefit that the Plan wouldn't otherwise provide, but how does the Plan Administrator communicate that to the court or issuing agency using the NMSN? How can they just request additional information without being seen as failing to comply with the NMSN? Does anyone have experience with these?

Thanks for any assistance, and I apologize if this question has been answered elsewhere - I didn't find it through a search.

forfeitures are used to pay plan expenses.

is the penalty tax considered a plan expense for this purpose?

I have a rather large client who now wants to start paying out a bunch of his previous terminees. There is a guy who terminated in 1997, but is now in prison for life. What do I do now? I can't necessarily send him his distribution paperwork. Has anyone run across this before? No one here seems to have.

Any and all assistance you are able to give me is much appreciated.

I am preparing an application under the DOL VFC program as well as seeking an exemption under PTE 2002-51. My client failed to timely make participant contributions for one employee from mid-February through the end of March, 2004. All the contributions were made by March 31, 2004. I am trying to find out who are the "interested persons" that should receive the Notice to Interested Persons under the PTE requirements - just the one employee that was affected or all plan participants. And, if all plan participants, is that all current plan participants or all participants at the time of the breach? Thanks.

Does anybody know of a case wherein retirees sued for lifetime retiree health benefits claiming that such benefits were made part of the purchase agreement? I seem to vaguely recall reading something about this in the not so distant past, but i have been unable to find a case. Any help is greatly appreciated!

What is form 11 K and do all plans with employer stock have to file it with the SEC? I did a search on benefitslink as well as the SEC, but cannot find explicit instructions as to whether all plans need to file it annually.

My plan is a 401(k) with employer stock offered to employees through all sources (through deferrals and match)

thanks!

Now that the OBRA FFL is gone, what happens to the prior OBRA FFL bases? Do we continue to maintain them?

Also, suppose if the plan hit OBRA limit in 2003, should an OBRA base be established in 2004?

Questions:

1. Can I withdraw Roth IRA contributions at any time for any reason without penalty?

2. When I retire I will probably rollover my employer 401K to a traditional IRA. To convert this to a Roth IRA my adjusted gross inome will have to be below $100,000. Correct?

3. Why does the government insist on making this so difficult (income limits and way too many rules for too many products)? Are there significant changes on the way?

Thank you for your time. Doc42

Does anyone know of any 401(k) surveys that report common practices with respect certain plan provisions? For example, X% of employers use a 3 year cliff vesting schedule, or X% of employers permit catch up contributions etc....

Thank you.

Reviewing a DRO where the terms require that the check be made payable to the Alternate payee spouse & actually seems to prevent the possibililty of a rollover. 2 issues:

1. Although it seems odd that a DRO provision would preclude a rollover; the provision doesn't require that the Plan provide form of benefit not otherwise available, so in & of itself that particular clause doesn't prevent the DRO from being a QDRO. Any thoughts?

2. Assuming a QDRO, if the alternate payee spouse wants to rollover, I'm assuming that she can't. It seems to me that clause in the QDRO has to be followed. Thoughts?

Thanks in advance.

I've got a client where one of the owners/Trustees terminated, and as part of the agreement the lawyers drew up (without consulting yours truly, naturally), was that he was to receive $X of an employer profit sharing contribution for 2005, payable immediately.

It's a cross-tested plan, so we can put this guy in his own class, no problem. There's a last day requirement for a profit sharing allocation, but the remaning owner/Trustee has agreed to amend that out (it's a small company w/ almost no turnover, so he figures that it won't cost him very much). Individual accounts, so there's no issue of shared earnings. He's over the comp limit (even for 2005), and he got $X last year, so there's no reason to suspect that he would not be able to get the same amount this year. However, the "immediately" part is bothering me. I'm sure that prefunding the profit sharing contribution for one HCE only is wrong. I said as much to their CFO, and his response was, basically, prove it in writing and we'll get the agreement changed, otherwise, I've got the check in my hand ready to deposit.

So is there a specific something I can quote that says this is bad? Or is it just something that I have to say that we advise against because it may be considered discriminatory under an audit?

Thanks.

I have a ps plan (no 401(k)) that terminated 9/04. All paid out 4/05. The plan year was 3/1 to 2/28. The plan was top heavy. If I start a 401(k) today I assume it will be top-heavy. What if the Key's sit out a year?