Now that the new rules are upon us, I'm curious about what financial institutions are accepting these accounts. We amended our prototype at the sponsor level to drop the force out limit to $1,000 to avoid the problem but have received questions from clients who would like to take advantage of the rules to clear out amounts between $1,000 and $5,000 for lost participants.

I have a client that offers loans and hardships in the 401k.

The plan sponsor has an employee with a $6k balance all employee deferral money (no Match).

He is requesting $4k as a hardship.

Doesn't the employee have to take the 50% loan of $3k and then take a hardship for $1k?

Or is there something we are missing that they can directly go to the hardship provision since there is not enough money for a loan?

Thanks for any advice...

Jim

One of our clients sponsoring a final average pay DB pension plan currently has a straightforward definition of pay for benefit accrual purposes. It's simply annual base compensation actually paid. Overtime & bonuses are excluded.

Senior management wants to change this comp definition to include one type of bonus. Of course this particular bonus type is only paid to certain key contributors across the company. By and large these are all HCEs.

On the surface, this would seem to create a discriminatory alternative pay definition. [under §414(s) rules I think.] I'm interested in any reactions as to whether my worries are legit. And I welcome any creative thinking for how to make this work.

Many thanks,

Cole

When paying a benefit to a guardian of an incapacitated adult, should the check be made payable to the incapacitated adult or to the guardian for the exclusive benefit of the incapacitated adult.

I was thinking we could pay to the participant directly and then the guardian could take control of the check with his guardianship papers, but another lawyer I talked to said we should make the check payable to the guardian for the benefit of the participant. So, any input you can provide would be greatly appreciated.

When paying a benefit to a guardian of an incapacitated adult, should the check be made payable to the incapacitated adult or to the guardian for the exclusive benefit of the incapacitated adult.

I was thinking we could pay to the participant directly and then the guardian could take control of the check with his guardianship papers, but another lawyer I talked to said we should make the check payable to the guardian for the benefit of the participant. So, any input you can provide would be greatly appreciated.

Have a potential client (not currently using our retirement services) who has MPPP and would like to amend it into a safe harbor 401(k) plan. Has a 12/31 YE with a 10% contribution to those with 1,000 hours of service. What advice can I give him to make sure he stays in compliance? If he does want to transfer the plan to us, what steps do I need to do to make sure we amend it properly?

A client has asked about a "461 plan" as an alternative to a 457 plan. Anyone heard of this? Know anything about it?

Must a self funded plan with fewer than 100 participants file a Form 5500?

After a plan implements automatic enrollments, do they need to provide participants with a notice of their right to make different elections? Will the SMM suffice, and if not, is there any guidance as to what this notice needs to say?

Also, would is there an annual notice requirement for this? Again, if there is, is there any guidance on what this notice needs to contain?

I have a plan that failed ADP testing and corrections will be distributed after the 2-1/2 month cut-off. Some of the ADP excess contribuions had attributable to matching (ATMs) dollars that need to be forfeited.

Are the ATMs also subject to the 10% excise tax imposed on the plan sponsor? I think not since they are not distributed and will be used by the plan to offset future contributions or reduce fees. If they are subject to the excise tax, could you provide me with a Code cite.

Thanks!

Let's say a plan imposes a 6% limit to their HCE's.

They have one HCE who contributes 6.6%.

Some of that can be classified as catch-up contributions, but not all.

Does the remaining money have to be sent back to the HCE?

We recently purchased another company and are in the process of merging their 401(k) Plan into ours. We have incurred expenses with our attorney for legal advice related to the merger as well as the preparation of the merger agreement and amendment and the Sarbanes Oxley notice.

Our plan document does allow us to use forfeitures to pay plan expenses but I'm wondering if these specific expenses would qualify to be paid by the plan.

Any feedback would be appreciated.

Plan document refers to the definition of compensation for plan purposes as that which is used for adp/acp testing. This definition is a non-safe harbor 414(s) definition. Absent specific plan language, could the plan administrator use

415©(3) compensation instead of the non-safe harbor 414(s) comp for adp/acp testing purposes or would the plan document need to be amended?

FYI - plan uses current methodology & passes 414(s) comp testing. Adp/Acp Fail with non-safe harbor definition but passes with 415©(3).

Hope this is a softball!

Have a new client with a Solo 401(k) Plan. He deferred $16,000 before year end 2004. He's over 50.

His net schedule came in at (round numbers) 15,000 and 1/2 SE tax is 1,000, so Plan Comp is $14,000.

Am I correct in assuming that $2,000 (or $3,000 for that matter) can be classified as "catch-up" and therefor no excess contribution?

Is the $16,000 deductible, or only the $14,000?

Thanks all.

My employer refuses to give me information on the plan I am vested in. What kind of information should I ask and how does the law protect my interest? The company I work for is very small (five employees) and doing well financially.

Upon contacting the company who handle the administration of the pension plan, I was brushed off.

What documentation am I entitled to have each year about my personal benefits and the plan situation? If so, Is there a publication or guide I can consult.

Thank you,

Employer has a SEP requiring 3 years in last 5, wants to contribute max allowed.

Employer is considering a 401k with one year eligibility as a safe-harbor plan.

Key is only person getting SEP for current year because other employees don't have 3 calendar years employed.

Three questions:

1. If 401k is a safe-harbor match, do we avoid aggregating plans for 401a4 discrimination testing, 401k or 401m testing?

2. If 401k is a 3% SHNEC, do we avoid aggregating plans?

3. What is effect of top-heavy?

I have a DB plan with a safe-harbor formula ; the client is proposing an early retirement window that grants 3 years of additional benefit service and adds 3 years to a qualifying participant's age.

To me this design pushes the plan outside of safe-harbor status and neccessitates the general test.

Does anyone have any additional thoughts/insights ??

I've searched without locating a definitive answer. For a self-funded health plan covered by ERISA, can you increase the retiree dollar contribution and have the employee dollar contribution remain the same? We currently use the same monthly funding amounts for actives and retirees--can a Plan use different amounts for these two groups?

Hello all,

I'm new to this forum and see similar questions but not exactly my question so here goes:

We have a safe harbor 401(k) plan with a 3% NEC. Our plan uses the "415 safe harbor compensation" excluding reimbursements, expense allowances, fringe benefits, moving expenses, and deferred comp welfare benefits.

Should severance pay be included in the compensation (just for the 3% - I've seen numerous discussions about the deferral portion)? If the severance pay carries over a plan year, would the participant only receive the 3% for the year they were an eligible employee?

Any help would be much appreciated!!

Did something recently happen that I missed about DB conversions to CB plans?