In a controlled group situation where 2 of the 3 entities adopt a single nonstandardized 401(k) plan, for contribution allocation purposes would you have to consider compensation from all three entities for employees who receive compensation from more than one entity?

My experience is almost primarily with DB plans to this point, but have a couple of fundamental points I would like to verify regarding a 401(k) plan that I am working with.

Background - This plan has only provided profit sharing allocations and 401(k) elective deferrals. The plan has 1 owner/HCE and 18 NHCEs.

Questions for verification -

1. Is it correct that the profit sharing allocations are tested for non-discrimination under 401(a)(4) and the 401(k) elective deferrals are tested under the ADP test? That is tested separately and independently of one another based on their respective testing procedures.

2. Can the profit sharing allocations section be amended to provide an allocation to a few groups where one of the groups has the names of 3 specific NHCE individuals?

Thanks.

Does anyone know if it is possible to obtain a listing of who the SSA currently has as being due benefits from a pension plan (as reported on Schedule SSA)? Can the plan administrator request that information from the SSA?

Sure, living on Earth is expensive, but it does include a free trip around the sun every year.

I have 2 clients-both declared bankruptcy in January 2005. Both companies were then purchased by another company effective March 1 in an asset only sale. The companies had an affiliation but were not in a controlled group. Both maintained separate 401(k) plans.

Company #1 is top heavy. For 2004, the 2 key employees had deferrals and match. These are the only contributions to the plan. The match for other employees was not enough to cover the required top heavy minimum, so an additional contribution of about $4,000 is required. I suggested that the 2 key employees be refunded their 2004 and 2005 deferrals and forfeit their match so that no top heavy minimum would be required for 2004 or 2005. The bankruptcy attorney said their is no money to make the top heavy contribution and endorsed that solution, but, surprise, surprise, the 2 key employees were not happy about it. Can anyone think of another solution? The plan has fewer than 10 participants and the goal is to terminate the plan ASAP.

Company #2 is not top heavy. The plan contributions are deferrals only. The new company has said that they can continue to maintain the 401(k) plan, but the cost to the new company must be $0. The new company has not formally agreed to assume sponsorship at this point, but their formal approval is being sought. The matter should be resolved in the next month or so. Apparently, the fate of the plan was not a part of the purchase agreement. My question-should deferrals continue to be withheld from employees while the plan is in limbo? What are the possible ramifications if the new company decides to terminate the plan? What else should I be considering in a situation like this? I have not dealt much with bankruptcies and am interested in learning what to look out for.

A plan that we administer is top heavy. The client makes a 3% Non Elective contribution and also makes a profit sharing contribution. Will the 3% still satisfy the top heavy min even though a profit sharing contribution is made?

What is the correction method if an employer does not stop taking mandatory contributions when an employee's compensation reaches $205,000 (for 2004)?

This is a 403(b) plan with a 2% mandatory contribution (mandatory as condition of employment). Since mandatory contributions are generally treated as employer contributions, can any excess be forfeited and then paid as additional compensation outside of the plan? Cites?

Regarding Rev Proc 2000-40 Section 4.02 - Fully Funded Terminating Plan, what does the term "benefit liability" mean for a non-PBGC DB plan covering only a husband and wife? At DOPT the assets are 1% less than the 417(e) lump sum. I want to switch to a BOY val.

I am generally aware of the various methods of handling the val and FSA in the year of plan term. I can still go back and revise 2004 to a BOY val but I just want to focus on the "benefit liabilities" term and to see if there is any wiggle room due to the circumstances?

Hi-

I'm new to this board and haven't been able to find the exact infomation I've been looking for.

I am drawing very little income in 2005 and, therefore, will be in the lowest tax bracket. I live in Texas. I am 58 and married, wife is also retired and without income.

I have about $500,000 in a mostly pre-tax 401K. How do I determine if it is a good idea tax wise to convert this money to a Roth? Can I even do it?

Thanks,

Tony

Can the Plan Document or Amendment say that Accrued Benefits less than $5K "may" be paid out, does it have to be "will" be paid out?????

Basically, can the document give the option of Mandatory Cash-outs, without making them a requirement???

My company has wrapped many of its welfare benefits. The basic plan document is the wrap shell, with the individual benefit programs SPDs as attachments to the plan document.

Now the company needs to amend some of the individual benefit programs (i.e., we need to change the elimination period for long-term disability). How, logistically do you create such an amendment? The wrap shell doesn't go into elimination periods, but the attached LTD SPD does describe the elimination period. So, would my amendment be to the overall Wrap Plan, but just reference the portions of the LTD SPD that are being changed?

Please help.

My company has wrapped many of its welfare benefits. The basic plan document is the wrap shell, with the individual benefit programs SPDs as attachments to the plan document.

Now the company needs to amend some of the individual benefit programs (i.e., we need to change the elimination period for long-term disability). How, logistically do you create such an amendment? The wrap shell doesn't go into elimination periods, but the attached LTD SPD does describe the elimination period. So, would my amendment be to the overall Wrap Plan, but just reference the portions of the LTD SPD that are being changed?

Please help.

I recently came into about 20K and want to put it away. I want a good return (of course), but I don't want to be penalized for withdrawing if I have to. Without this money, I am financially sound. I make enough money at work to where I don't need to access these funds for bills or anything like that. I will, however, likely be getting married in the next 12-18 months where a little bit of that money might be nice to have. Anyone have any tips on where I should start looking to put my money? (I'm just looking for advice. If I end up making bad investment choices, its my own problem...I know that) thanks

P.S. If I put a lot of it into a 30, 60 or 90 day CD and just continue to roll it over until I decide its long term use, will that be bad?

I found a post about this question but it was 5 years old so I wanted a fresher response. A participant is requesting a hardship w/d under the safe harbor provision of medical expenses. However, he has indicated that he has already paid these expenses but now he is encountering a heavy financial need because he already paid the expenses with credit card and/or savings. My first thought is that he should not be granted a hardship because he has already paid the medical expenses and now his financial need is due to the lack of ability to pay his normal bills. Agree?

OK, when determining whether or not a refund has been processed prior to March 15, does the IRS look at the date of the check to the participant OR the day the amount was withdrawan from the plan assets?

Ex. withdrawal made 03/13 but the check is dated and mailed 03/17.

I have a participant who fits the definition of disabled. The volume submitter plan document allows optional forms of distribution as follows: "1) lump sum or 2) substantially equal monthly, quartly, semi annually or annual cash installments over a period certain that does not extend beyond participant's life..."

At this time he is not sure whether or not he will take a distribution. He wants the option to take a distribution in the future for whatever amount he desires (when the need arises). The options articulated above do not allow this. Can the plan be amended to accomodate this and if so can he still avoid the early distribution penalty?

An employer who has 3 classes of union employees runs a SIMPLE plan for their non-union employees.

Can the employer elect to include in their SIMPLE plan the union employees who are only covered under the national contributory DB plan?

If so, would the portion of compensation that is held out of their paycheck for the db plan be used in calculating the overall deferral limit of $14,000? Is the limit actually $10,000 due to the SIMPLE limits? Is it $10,000 minus their contribution to the db plan?

Any help would be greatly appreciated.

I would like to know if my company can include the company's potion of payment on the medical plan in the employee's pay check and be on a cafeteria plan, have it be deducted through this plan as payment for the medical plan, and still be able to write it off as a company expense for the company's taxes?

A participant takes a hardship withdrawal and is suspended from hardships for 6 months in 2004. The employer unwittingly continues to take deferrals from the participant's pay. The vendor returns the money to the employer in 2004, but the employer doesn't cash the checks or take any action. Now it's 2005. How is the tax reporting handled? Are the 2004 W2 forms amended? Are the participants' federal and state taxes amended?

When has a distribution of excess contributions occurred? Does it mean that the plan's account is actually debited, when a check is mailed to a participant, when a check is received by a participant, etc.?

Two HCEs in a client's 401(k) plan have excess contributions for the 2004 plan year (which is a calendar year plan year). The client has yet to issue checks to either HCE, but has been told by their benefits counsel that a "distribution" of excess contributions occurs if the check is dated March 15th or earlier--even if the check is issued after March 15. The client wishes to accept their lawyer's advice and issue checks to both HCEs now dated March 15, 2005 (so that (1) the HCEs will report the refunds in their 2004 taxes and (2) the client will escape the 10% excise tax). Is this OK? We have to prepare the 1099-Rs and want to make sure that we can, in fact, use code "P" instead of code "8".

We have always interpreted the regulations to require actual payment by March 15th which we think means the plan must mail the check to a participant no later than March 15th.

Thanks in advance for any comments.