In an ongoing profit sharing/401(k) plan, how are forfeitures handled? I understand the different ways to try and locate missing participants, and I understand that if they ever come back it must be reinstated. Aside from those issues, the plan uses forfeited matching contributions to off-set future matching contributions. The plan even provides for accounts of missing participants to be forfeited, but what then. Should they just distribute them pro-rata to all participants? Should they treat the forfeitures the same way as the matching contributions? I just don't know.

I have a participant that had a distribution from his account because of a QDRO. The QDRO was immediately payable and the wife took the money right away. When I show this as a withdrawal from his account in Datair (not as a transfer), the accrued to date calculation is adding this withdrawal back into the participants ending account balance. (Pooled PS account only).

Is this correct? I could not find anywhere that says this should/should not be included in the participant's account balance for the accrued to date method.

Second part would be: Do I have to keep including this withdrawal for any reason beyond this year?

Thanks

Rick

For a distribution to be reported on Form W2 from a non-qualified deferred compensation plan, what withholding rate for federal taxes should be taken?

I have read several differing opinions as to whether the account balance on the determination date should include 401(k) deferrals. For example, if the determination date is December 31, 2004 and the plan's last payroll date is December 31 but the contribution is not made until January 5, 2005, are these deferrals included in the participants' December 31 account balances for testing purposes?

Scenario 1: Doctor group pays full medical premium (insured plan) for all doctors, but only pays a percentage for non-doctor employees. Non-doctor employees are permitted to pay their part of premium through 125 plan. Nondiscrimination problem? What if 125 plan says that all doctors are excluded from participation?

Scenario 2: What if the doctor group was an S corp, so the 2% shareholders are excluded from participation by law? Wouldn't that help the nondiscrimination situation, as those shareholders (who are also HCEs) would be taxed on their premiums and, in theory, shouldn't be counted as part of the testing?

I've reviewed old posts on this issue and haven't found a consensus view. Thanks

COMP. "A" BECAME A MEMBER OF A CONTROLLED GROUP IN 2004. IN 2003 COMP. "A" WAS OWNED BY A CANADIAN COMPANY WITH NO 401(K). IN 2004 COMP. "A" ESTABLISHED A CALENDAR YEAR 401(K) TO PROVIDE BENEFITS TO ITS EMPLOYEES SOME OF WHICH WERE EMPLOYEED WHEN OWNED BY THE CANADIAN COMPANY.

IN ORDER TO DETERMINE WHO HCE'S FOR 2004 ARE, WOULD YOU STILL LOOK AT COMP/OWNERSHIP IN 2003? ALSO, IF AN EMPLOYEE EARNED IN EXCESS OF $90,000 IN 2003 AND/OR WAS A 5% OWNER, YET WERE NOT EMPLOYEED IN 2004, WOULD THEY FACTOR INTO THE ADP/ACP TEST? WHAT IF THEY WERE REHIRED IN 2005?

THANK YOU KINDLY.

I guess this has always bugged me and I'm hoping to get some clarity.

It was my understanding that 10% federal withholding applied to corrective refunds of excess contributions unless the participants elect out.

Now I am being told by one of the recordkeeping firms, that the 10% withholding only applies if the distribution is made after March 15.

Can anyone shed some light, share some insight.

Many thanks

We have a multiple employer DB plan. One of the companies in the controlled group wants its own plan, so we are spinning that portion out to a new stand alone DB plan for that company.

Suppose a few years from now we sell that company and it is no longer part of the controlled group. Subsequent to that, the company has difficulty and ends up in a distress termination.

Can the PBGC come back to us as the prior parent if the new entity is no longer in the controlled group when it suffers the distress termination?

Thanks for your thoughts!

Situation:

A company is spun off from a larger company in 2004. All employees were terminated and then rehired, hence we had a distributable event.

The new company has over 100 employees and participants.

Does this company need to have a plan audit done for 2004?

I thought I read somewhere that if the plan has been in existence for 7 months

or less, it does not need to have an audit performed.

Thank you!!

If a plan defines 1st year eligibility as something like "Anyone in employment on xx/yy/zz enters immediately. Anyone employed after that date enters on the next entry date after completing 21/1", no one is excludable for purposes of 410b/401a4 for the first plan year. What if 21/1 also applies to to the "Anyone... on xx/yy/zz"? Are those employed after the magic date now excludable? In other words, are the entry dates relevant? Or do I now have an amendment that may discriminate in favor of HCEs?

We have an opportunity to get a 401(k) Plan with over 100 participants. We generally specialize in small plans with higher assets. The investments are with listed mutual funds. Can anyone tell me if there are different rules that apply when there is 100+? Or direct me somewhere to find out? Is there a special audit that needs to be done? etc... Thanks!

I would like to open a Roth, but a financial advisor from a company I don't consider to be completey on the up-and-up (they were just in trouble with the SEC) said I do not qualify because I do not work.

Can someone clear this up for me, or point me in the right direction? Do you have to have a minimum income for a Roth IRA? TIA for any help.

I am trying to decide between my company's 401(k) or 403(b). We have 401(k) matching contributions of 3 percent if we put in 4. Company contributions are not vested until 3 years of service. I do not plan on being here for 3 years. If I take the matching contributions and lose it when I leave, who gets to keep the earnings from the matching contributions? Will they get back only their contributions and not any money earned from it or do they get both?

Thanks,

Stacey

My company paid 100% of my tuition a year ago. Because I was a "temp" employee they were only supposed to pay 50%. I didn't know this until the next time I was reimbursed - about 5 months later. The HR woman noticed the mistake, but said it was their error.

Now that I am entitled to the 100%, and am waiting for payment on 2 classes, the same woman is trying to get the overpayment back from a year ago because they were audited. She also cannot show me in writing where this is legal. Is this legal? It was their error, and it was a year ago. Is this legal?

A little birdy told me that for purposes of eligibility to participate in a 403(b) plan, TIAA-CREF will credit prior participation in another TIAA-CREF-related 403(b) plan. In the context of a plan with a year of service requirement, this alleged policy would carry over years of service under another, unrelated plan and credit them against the service requirement in the new plan.

I am confused by this because I am not sure how TIAA-CREF can impute years of service from one employer to another, unrelated employer, at least not for purposes of their plans (which, despite the long arm and undue influence of TIAA-CREF, are nominally sponsored by other entities, not TIAA-CREF). I guess it is possible (or maybe not--haven't thought it through) for an employer to count years of service for unrelated employers towards its plan's service requirements, although I suppose you'd have to do so uniformly. Not sure why you'd want to do that, unless you wanted to let a new employee into the plan more quickly. Dollars to donuts, that new employee would be highly-compensated, too.

All I can come up with is that TIAA-CREF would prior credit years of participation in TIAA-CREF investments toward any eligibility requirements that it imposes on investment products it offers under another plan that an individual subsequently participates in.

Anyone ever heard of this "policy" and if so, what gives?

Thanks!

Notice 2005-1 is confusing me as to 457(f) plans (among others!). What is the effect if 457(f) sponsor rolled risk of forfeiture prior to enactment of 409A, but next vesting date is at point after 1/1/05 (under 457(f) and 409A)? What can be done to mitigate problems to the extent there are any?

Thanks.

tpa recently received a request from a child support enforcement agency to provide a participants account balance statement for an impending qdro.

is the tpa required to provide this information? or is the tpa required to protect the information unless instructed otherwise by (1) a court order or (2) the participant's certification authorizing its release?

any input is appreciated.

Is it allowable to base the Facts and Circumstances test on benefits but base the average benefit percentage test on allocation percentages??? Thanks.

if the participant is from DC and receives a distribution from their 401(k), do you have to send a copy to the district of columbia?

Previous to the American Job Creation Act - 2004, a leveraged ESOP in an S-corporation could use distributions on unallocated ESOP shares to repay a plan loan, but not allocated shares. The AJCA changed this by allowing distribution on either to be used to repay a loan, just as in C-corporation ESOPs.

In a C-corporation there are special rules for the exclusion of interest paid on a plan loan when testing for annual additions (415©(6)) as long as no more than 1/3 of the contribution is allocated to the HCEs. This use to only apply to C-corporations.

My questions is did the AJCA change this 1/3 rule to now apply to an S-corporation as well as a C-corporation?