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.

Employees receive commission upon the sale of the employer's product. The commission is considered compensation for purposes of our 401(k) plan and deferrals are withheld from these amounts when they are paid. Sometimes employees terminate employment prior to the payment of the commission.

So, my question is do we withhold deferrals from commission checks paid after termination of employment? These individuals are no longer employees when the amounts are paid, so how can we contribute deferrals to the plan for non-employees? Alternatively, the commissions are technically earned while employed. Please help.

I posted this under the ESOP board but didn't get anywhere...

I am looking to update my file on the SEC communication requirements for a plan with Employer stock. I know that the SEC issued Release No. 33-6867/34-28094 (June 11, 1990 Federal Register #23909) back in the early 1990's. Has that been updated? Does anyone know where I can get a link/copy to this? I have general information regarding what we are required to distribute but would like to look at some of the source documentation to make sure we are still meeting requirements.

Thanks in advance for your help.

PAL

Is 5500 required for cafeteria plan offering medical reimbursement, dependent care reimbursement, and group health with fewer than 100 participants? The employer remits the participants contributions to us, we hold in a segregated account with the account title being "Employer A Cafeteria Trust" and then make the reimbursements to the participants from this account. The group health premiums are deposited into the account and then sent back to the employer. Each employer has their own account and our plans are reconciled back to the balances in these accounts.

Also, if it is necessary to file the 5500, is an independent auditors report required?

Can a non-key HCE be prospectively excluded from a top heavy db plan when he has already accrued benefits under the plan? I dont think so.

I think it is a different story if he was excluded from participation right from the effective date (i.e. he never accrued a benefit under the plan). Then as long as the plan passes 401(a)(4) they are OK.

Anyone disagree with this?

Thanks

A small company is thinking about adding a 401k feature to their profit sharing plan. For himself personally (but the option would be available to all), the owner would like to use the k feature as an end of year activity rather than a regular monthly transaction, and inquired about whether or not her could defer $0 out of all regular paychecks, and then defer up to $16,000 (over age 50) out of his bonus, which is more than large enough to handle a maximum 401k contribution.

Does anyone see a problem with this? Is the obvious answer - that being he elects not to defer all year long, then elects to start deferrals just in time for the bonus, and then ceases deferrals again for the next 12 months, a little too impractical to keep in place?

Thanks

I have a plan that was amended, effective 09/01/2001, to change the plan year to 12/31.

I have a short plan year for 09/01/2001 to 12/31/2001. If an employee had 1,000 hours during the period 01/01/2001 - 12/31/2001 they got 1 year of service and if they had 1,000 hours during the period 09/01/2001 - 08/31/2002 they got 1 year of service.

My question is: Do these year of service requirements apply to employees who were hired after the short plan year? For instance, one employee was hired 03/14/2002 and worked enough overtime to have 1,000 hours by 08/31/2002. Does he get that year of service, as well as the year of service for the 01/01/2002 - 12/31/2002 plan year?

We had someone come to us that currently has a SARSEP - they are looking to transfer reps - however they think they may have over contributed for the owners in 2003.

1. I know you take the average NHCE deferral, do you take the AVERAGE highly comp deferral - or individually. For example...

John Doe - Owner - Contributed 5.5%

Jane Doe - Owner - Contributed 6.5%

The NHCE average deferral was 5% X 125% = 6.25%.

In the above situation would John Doe be fine and Jane Doe have to be corrected - or could you take the average to make 6% and they both pass?

2. Let's say they fail either way - what are the correction methods and/or penalties?

Before we do anything with this, we want to make sure that all is correct with the world! Thanks for the insight!