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?

The 401(k) plan does not match catch-up contributions, yet there is a 25% match on all other deferrals. A over-50 HCE contributed $13,000 in 2004. The ADP test failed and the excess contribution is $1,000. The $1,000 was recharacterized as catch-up, therefore no refund. Is it ok that the $1,000 was matched, since it was not considered a catch-up at the time it was contributed and matched? I think it's ok, but was wondering what others thought.

An individual is employed and all of his income is derived from a "guild" where he receives 1099 income. He participates in a DB plan with the guild. He would like to set up a db plan:

(1) Can he set up a db plan for himself (corporation)?

(2) If so, is the 415 limit offset by the benefit he receives from the guild plan

Is it legal to require different employee contributions for different health plan options?

Ex. Employer has 2 different plans which are available to all employees. If the employee choses the basic plan, then the employee's actual contribution is 10% of the premium cost to the employer. If the employee chooses the HDHP, then the employee is responsible for 20% of the cost to the employer.

Is there a problem with this?

A client had me re-run a contribuiton calculation for them yesterday, and as a result, they fail the ADP test by 0.01%. This causes two HCEs to each get a refund of $3 (plus earnings, of course). Does anyone know if there is a deminimus amount for a refund, like under $10 or something? I told the client I would look into that , otherwise these two guys will get a refund check and can go to Wendys for lunch one day.

I did post this in the 401(k) forum as well. Any help is appreciated.

A client had me re-run a contribuiton calculation for them yesterday, and as a result, they fail the ADP test by 0.01%. This causes two HCEs to each get a refund of $3 (plus earnings, of course). Does anyone know if there is a deminimus amount for a refund, like under $10 or something? I told the client I would look into that , otherwise these two guys will get a refund check and can go to Wendys for lunch one day.

Thoughts?

Newly disabled client establishing a plan... wants to borrow to renovate his principal residence or eliminate 2nd mort. Can term be longer than 5 years? Not a purchase.

A participant passed away in 2002. He had been receiving RMD payments of about $1,100, but apparently not cashing all of them. The spousal beneficiary just found one that was issued in 2000! (Not sure yet, but there could be more). How should this be handled? Can we reissue the check to the beneficiary or should it be reissued to the participant who obviously can not cash it? Any guidance would be appreciated.

My husband has a Roth account which we got through our bank through Frankling Templeton. It is 4 funds, Growth (Franklin capitol growth fund), Value (Mutual shares fund), Global (Templeton growth fund) and Blend (Franklin growth fund). These are all Class B it says. The total value is 2,534 which 1.000 was invested in 2003 and 1000 in 2004.

We are getting charged a yearly fee of 15 per fund which with such a small amount invested not sure if we should keep it there.

We got a letter from Franklin stating that no longer do they accept money straight from us for class B funds and that we would have to go a financial advisor.

We called the advisor which we saw one time in 2003 and he told us that we have to buy different funds and we should do it ourselves or he would have to charge us.

We are wanting to put 3000 in a Roth soon.

What should we do? We have thought about E Trade with getting emailed our asset summary.

By the way he is 38 and we are looking at long term, we are not going to touch this money until retirement if ever, it may be given to the kids. We are looking at putting 3000 in each year, maybe the 4000 but 3 this year so far.

Thank you so much ahead of time!

Linda and Chris