I took out a 401k Profit Sharing Plan loan 5 years ago with my company for $10,000. I terminated my employment soon after and I was unable to payback the money for the loan. I couldn't get the rest of my money from the plan because their contract states that they can hold the money for 5 years after you terminate employment. All my statements up to this point stated my loan balance as $9,969.63. So what they did this year was charge me 5 years interest at 9.5 on the loan money and sent me a 1099-r that has a gross distribution of $13,921 on it for the loan. And another 1099-r that has the balance of the account $68,971.00 that I rolled into another 401k. This doesn't seem right. Why should I pay taxes on interest money I didn't receive. Can anyone explain this to me please.

Client is a partnership with two partners, no employees. It has always been our understanding that the partner's elective deferrals into their SIMPLE IRA can be made up to their tax filing deadline.

I have researched 29 CFR 2510.3-102. It says that deferrals must be submitted no later than the 30th calendar day following the month in which the participant contribution amounts would otherwise have been payable to the participant in cash.

However, since we have not yet determined what the partner's income is, what becomes the deadline for depositing the deferrals?

I have also read some prior posts, but am still having difficulty in determining when the deferrals must be made.

I was told that the "preamble to the DOL Plan Asset Regs" addresses this issue. I am having difficulty locating the preamble. Can someone please point me in the right direction. Thank you very much.

I have a plan that has always used a non-safe harbor definition of compensation. When we converted them to our company and restated their document we defined their compensation as a safe harbor definition of compensation even though this was not what they intended.

Three year have passed and it has jus now been discovered that they have been operating outside of the way we drafted their document. What is the appropriate fix here? If we go back and do a compensation ratio test for the past three years and they pass, is it necessary to file for a retroactive amendment though VCP or can an amendment be done going forward? And if an amendment can be done going forward is it necessary for the employer to do a QNEC for deferral and match that were not made on the excluded compensation pieces for the past three years?

When an employer changes from an LLC to an S corporation, what needs to be done with the plan document? There is only one employee who is the sole owner of both the LLC and S Corp.

The plan sponsor is in bankruptcy. Although the GUST restatements were sent to the sponsor in plenty of time to meet the GUST deadlines, his bankruptcy attorney insisted that the bankruptcy court needed to authorize the sponsor to adopt the restatement. Finally on February 16 the court issued this approval.

It is my understanding that the only way to keep this plan in compliance is through a VCP filing since the January 31 deadline was missed. My questions are:

1. Is the VCP filing permissible if the plan is already under a DOL audit due to an unrelated matter?

2. The restatement is on a non-standardized prototype document...does a determination letter application need to be submitted along with the VCP filing?

3. Since the company is in bankruptcy, can the VCP filing and preparation fees be charged to the trust?

Thanks for your insight.

I am working with a construction company that is considering becoming 100% owned by an ESOP. The principal owners of the company have routinely guaranteed or individually committed themselves on performance bonds for the company. If we go the ESOP route, and these principal owners are no longer shareholders, there is a lot less incentive for them to do this. I would think that similar issues exist with other types of companies, i.e., a shareholder who, prior to the establishment of the ESOP, personally guaranteed the company's debt. I suppose that we could adjust the compensation of these individuals to take into account the risk that they are taking on behalf of the company, but are there other approaches to the problem?

I have a 1500-life plan that excludes "productivity pay" from the definition of eligible earnings. By and large, it represents an annual bonus paid to mid-level and production employees, not one of whom is an HCE.

I ran a "smell test", and found that for the group that gets paid a "productivity bonus", about 2% of total earnings are not eligible. So, about 98% of possible earnings are counted toward computation of the pension benefit. On the other hand, for my HCE group, about 99.5% of total earnings (ignoring the $205k limit) are included in the pension calculation.

On the face of it, I don't think this is discriminatory, but cannot find any hard and fast rule in the Code or regs. that specifies what the threshold is for a discriminatory definition of pay.

Any thoughts, short of submitting a demonstration to the IRS?

A participant who is over 70-1/2 and is still employed has delayed RMDs from the plan until termination of employment. However he has an IRA that he's been getting RMDs from.

He'd like to roll that IRA into the DC Plan. Would he then be able to cease and delay the RMDs from the amount rolled in? If the answer is yes, what reg can I print to support the finding?

Thanks

Is anyone familiar with the following scenario:

U.S. employer sponsors a 401(k)/profit sharing plan. Presently, none of the U.S. employer's wholly-owned foreign subsidiaries have adopted the plan. May the plan be amended to provide that only employees of adopting employers who are citizens or permanent residents of the U.S. will be covered by the 401(k)/profit sharing plan? In other words, could the plan exclude nonresident alien employees from coverage?

Thank you for any comments.

D.L.

We have 2 office location, in VA and PA

I am familiar with the federal FMLA requirements

Can you refer me to a good source of state family leave & pregancy disability leave laws

Live-in boyfriend of an employee in our PA location will be undergoign substance abuse treatment and will undergo tretament in a facility for the next 30-60 days

Employee was wondering if she can take FMLA leave to care for the boyfriend's child who is in need of daycare while he is in the facility ; she wants to leave 1/2 hour early each day to be able to pick the child up from a daycarecenter

Woudl this answer be differnet if boyfriend was a common-law spouse?

thanks

DB practitioners know that, in addition to amortization bases, the reconciliation account is eliminated when the ERISA FFL is reached ; but how do we know that ?

officially that is ?? Anybody have a cite ??

I have a cross tested plan which is also top heavy. This plan allowed a special entry date of 11/01/03 for deferrals and entry into the profit sharing plan.

It is my understanding the final regs (1.401)(a)(4)-9b(b)(1)(vi)(b) made an important clarification of what comp could be used for the one-third and the 5% test. That being at least 5% of section 415 comp, measured over a period of time permitted under the definition of plan year comp, thus allowing the 5% test to be satisfied by limiting comp to the portion of the plan year that the participant was eligible.

If this plan is top heavy and participants are getting a top heavy allocation of 3% on full year comp, can you test the allocation on mid year comp for the 401(a) general test as well?

I know this has probably been asked before, but I have searched the boards and looked through the Pension Answer Book and Sal's ERISA outline book and can't seem to find this exact Q&A...If a profit sharing 401(k) plan has a discretionary profit share, can the partner's elect to contribute different (lessor) amounts? Here's the example. Doctor plan where the Doctors are too young and the staff too old to make crosstesting work. However, the highest allocation percentage to any one doctor is only 16.3%. If I give the staff 16.3% and the one Doctor 16.3%, can the other 4 partner Doctors contribute less than 16.3% for their discretionary profit sharing piece? It seems as thought they could, but......Thank you in advance.

I have a client who added a 401k feature to the reitrement plan in 2003. The employer accidently sent in the full $40k for 2003 as a profit sharing contribution. The employer foregot to designate $12k as salary deferral. The issue is the PS is not self directed and the 401k is self directed.

Can $12k be reclassifed as a deferral? ( Assuming the W-2 is changed. ) If there was a gain/loss on the funds in the PS how would that be handled?

Would this better handled as an excess addtion?

The TPA firm is telling him that the money cannot be re-classified and it cannot be returned to the employer with or without a penalty. The TPA is telling him that the funds must be allocated to all other eligible particpants.

Thoughts???

Are the dividends from employer stock held in a 401(k) qualified? The employer shares were originally rolled into the 401(k) from an ESOP and the dividends are distributed directly to the acount holder. When I asked the 401(k) custodian about this, I was told that the company decided whether the dividends were qualified or not. Obviously I'm no expert, but that doesn't sound right.

To the extent that San Francisco, CA and Sandoval County, NM have begun issuing marriage licenses to same sex couples, does anyone have thoughts about the options for a plan that allows employees to enroll their "legal spouse."

(1) Are the couples "legally married"?

(2) Does a plan now need to have a procedure to track the gender of spouses (or whether they are dependents for federal tax purposes) to determine whether the benefits are taxable or non-taxable?

(3) To accomplish (2) does a plan have to ask for information about all employees or just couples with at least one gender-ambiguous name.

Any opinions (other than whether or not such licenses should be granted in the first place) would be appreciated.

Does anyone have or know where I can get a COBRA notice for a multiemployer plan?

the plan is cross tested safe harbor 401(k) and top heavy. the participants in question are terminees that have not satisified the plans allocation conditions (1000 hours and last day rule). do the terminated participants receive the gateway contribution?

Can an employer allow employees working past age 65 the option of electing Medicare A&B or a Medicare HMO instead of the employer sponsored health care plan and provide an employer contribution toward the premium for the HMO and/or the Medicare Part B premium