a 401(k) plan has immediate entry. there is a participant who never has 1,000 hours in a plan year, yet he participates. Can I put him in the "otherwise excludable" group for ADP testing even though he's been employed for several years?

Should the participant and or trustee complete a rollover form (other than a beneficiary and/or fund election form if a new account or a service provider form if applicable) when a participant rolls into a plan? Thoughts????

If a 100% owner and his spouse (who is an employee of the corp.) are divorced during the current year, is the spouse considered an hce for the current year? I would think so, because even though the stock attribution rule no longer apply after the divorce, they did apply before the divorce.

When does stock attribution no longer apply after a decree of divorce?

Client has employee who participates in dependent care 125 plan. Wife of employee (who does not work for same employer) is on maternity leave. Couple decides to keep kids at home during maternity leave, thereby no daycare costs are incurred during leave.

Employee continues to work for employer full time during leave.

TPA for cafeteria plan has advised employer that ee must cease dependent care deferrals during time wife is on leave because there is a requirement that dependent care deferrals take place during same time daycare costs are incurred.

Does anyone know of any reg or other documentation which supports this interpretation?

I believe TPA is incorrect.

A guy dies

He is not married

He has a Trust as the beneficiary

Can the full value of the account be rolled to the Trust with no withholding (since, as there is no spouse, the benefit cannot be rolled over)?

What if he is married and has a Trust as a beneficiary? Since it could be rolled over are taxes required to be withheld?

Thanks

As inducement to leave employment, employer promised small number of employees certain benefit features under plan that plan document does not provide for. If employees leave employment b/c of such promise, can the plan make such benefit features available? Could the promise be considered a de facto amendment available only to those employees induced to leave employment?

Participant made excess contribution over the 2003 $12,000 limit. Contribution and earnings refunded by March 15. Form 1099-R for 2003 prepared for excess contribution. Form 1099-R will be prepared for excess earnings for 2004. Does Form 1096 have to be filed by March 1, 2004 for the Form 1099-R for the 2003 Form 1099-R?

Does anyone have any information about accountable plans? For instance I have a client that wants to reimburse his employees for tools. Do i need a document? What are the filing requirements, etc.

Company A acquires Company B in a merger April 1. All employees of Company B will be employees of Company A and integrated into A's payroll system on July 1. Company A has a flexible spending account (FSA) with a limit of $2,500. Company B's FSA limit is $5,000. Does the $5,000 limit have to be preserved for Company B employees when they are integrated into Company A's plan a based on two senarios: 1 - If Company B's plan merges with Company A's plan or 2- The employees of Company B are terminated as of the effective date of the sale.

A participant borrowed 28,000 from her 401(k) plan, and after making 8 payments, wants to pay off the outstanding balance. How is this calculated?

Has anyone had experience with submitting a cross-testing amendment to a plan on a 6406? Will the IRS kick it back looking for a 5300?

If a plan with matching contributions fails the ACP test, can a plan sponsor recharacterize the excess matching contributions as catch-up contributions for participants over age 50?

Plan says catch-up eligible participants may elect to make catch-up contributions. The Plan does not say excess contributions will automatically be converted to catch-up if ADP test is failed.

2003 ADP test is failed and Plan requires QNEC to NHCE's. Several of the HCE's who have excess contributions did not elect to make catch-up contributions.

Can the excess contributions of the HCE's that did not elect to make catch-up contributions be automatically "reclassified" to catch-up contributions even tho the participant did not elect to make catch-up contributions under the plan ?

The reclassification will have no impact on the HCE's but the NHCE may argue they did not get the QNEC they deserved because the plan inappropriately reclassified excess contributions as catch-up contributions.

The preamble to the 414 regs. implies excess contributions are automatically reclassified but 1.414(v)-1(a)(1) seems to require the Plan to treat the excess contributions as catch-up and not automatically reclassify excess as catch-up.

Hyper

I know the law says you can only have one of the two prescribed types of ER cotnributions in a SIMPLE, but can you exceed the 3% match limit or the 2% nonelective limit if you want to?

Thanks

There are two HCE's in Plan X Participant A who is 52, and his brother Participant B who is 48.

They both deferred $7,000 into a 401(k) Plan failed the ADP test, and are now getting refunds of $ 600.00.

I reclassified Participant A's refund as "catch-up" for 2003.

My question is - Can I reclassify more of his deferral as catch-up to lower his ADR so Participant B will not get a refund?

I also have a question on the forfeiture and how long do I have until I cannot use what is in the account towards Employer Contributions. For instance:

We have x$ amt in the forfeiture account from 2003 and can use it towards fees or Employer Contributions. I just completed my February Employer Match and would like to allocate the forfeiture funds to cover the Employer Match. However, since we will still have a balance in the forfeiture account afterwards, I'd like to use it again next month when I do the March Employer Match. Is this possible even after the first month or two of 2004 has gone by?

Also, the balance in our forfeiture account contains monies that were from 2002. Would I be able to use those monies for 2004 expenses as well?

Our client manager has given us information, but I'm still not comfortable with everything. I want something in writing from him as to the proper procedures and timelines, and I'm not getting that. it seems this is a gray area

Thank you for your help!

Elisa

In a situation with a 401(k) plan where the employer didn't stop making "matching" contributions on behalf of 2 HCEs after each employee reached the statutory deferral limit of $12k, would these additional contributions be required to included in the ACP test? The matching contributions were made on a per payroll basis and since there were $0 deferral contributions how can there be an associated match?

It seems to me these excess contributions will have to be forfeited.

Any thoughts?

I have had a Roth since 1998 and have transfered it to three different fund companies over the years. What is the best way to calculate my contributions just in case I may need to dip into them some day and how long do the previous fund companies maintain the account information? I don't plan on taking any of the money out, but I want to get my records in order in case I have to take out some of my contributions some day (I never plan to touch any gains). What records are needed for the IRS to prove that only contributios were taken out. Thanks.

Can you add a new comparability contribution to an already established safe harbor match plan in mid-year?

Treas. Reg. 1.411(a)-7(d)(5) provides two methods for calculating vesting after a distribution in which the employee is less than 100% vested. After refunding money to pass the ACP test, in which money is also forfeited since the employee is less than 100% vested, our recordkeeping system shows the remaining balance for the employee at 59% versus 60% which he was prior to the distribution. Customer argues that the regs don't work for ACP refunds because of the forfeiture issue.

Does anyone have this issue? Our recordkeeping system is a Sungard product. I don't think the system is straying away from the reg as it is written, but applying the logic in the reg to excess aggregate contribution refunds may not be correct either.

Unclear? Try to explain the reg to a customer who understands it less.