OK, what's the latest here? I've searched and read many historical threads on this topic, but cannot ascertain for sure whether this is a poor plan design or not. Is a top heavy plan required to provide top heavy minimums to otherwise excludable employees who are allowed to defer, but are not receiving the safe harbor contribution? I believe the argument is based on the definition of "solely safe harbor" and whether or not you can claim that status since you have participants in the plan not receiving the safe harbor contribution. What is Sal's latest position?

In a 401(k) plan, what happens if there is only one employee who happens to be the sole owner (thus being Key Employee) and is contributing to the plan. The plan is Top Heavy, but how is the corrective 3% action handled?

I am working on a plan that was required to have an audit completed for the past 2 years since they have had over 120 participants. They currently have less than 120 participants, and in the near future, hope to have less than 100 particpants.

Will they be able to file again as a small plan (using Schedule I), and not have to submit an audit with the filing? Or would they still have to file as a large plan (using Schedule H), but not have the audit requirement?

Thank you!

Assume disqualified person takes loan from plan and signs a cognovit note stating that loan will bear interest of 7.5% is to be paid back within 20 months and payments are required monthly. Plan loan program is available to all participants and HCEs are not able to have greater amounts loaned to them then NHCEs. Disqualified person defaults on loan in month 12 and does not pay back balance of loan. Does the default automatically turn this into a prohibited transaction?

Can a participant in a SARSEP rollover their account balance to a 401k plan?

I have a safe-harbor 401k in which all money types are 100% vested immediately and all the employees enter the plan on their first day of employment. Since you don't have to do the ADP/ACP tests, nor the Top Heavy tests, is there any reason to request annual comp or hours worked? I can't think of any.

Just received a phone call from a client who came back from a two week vacation to find a form 5500 sitting on her desk dated October 10 . Yes, that exact form 5500 that was to have been signed and mailed last week. Now, I know that the penalties are $10 a day under DFVC and are levied back to the July 31 date, so this vacation just cost us $800. Can anyone give me a valid reason not to do the DFVC program? I know I'm grasping at straws, but is there any possibility of avoiding a penalty in this situation? or having the penalty reduced to a lower amount? Is there any hope at all for this lost soul?

I have a publicly traded company with about 60% of the stock that is privately held by one shareholder. The company's goal is to become a closely held company. The company just went through the expense of issuing a tender offer to purchase the shares that is currently being traded on the open market. The tender offer was unsuccessful. Could using an ESOP produce a different result? If we used the ESOP to purchase company stock as it became available would the ESOP have to report to the SEC?

I am proposing the above type plan for a prospective client. With regards to discrimination testing, the average benefits test must pass based on all benefits, that is the sal. deferrals, PS, and Cash Bal., correct. If the average benefits test based soley on the Sal. deferrals and PS allocations does not pass, is it ok?? The plan passes the midpoint test for PS and aggregated on an accrual basis and passes the aggregated avg. benefits test. on an accrual basis. Please advise. Thanks.

Any idea of where I can find an example of a pension equity plan?

Thank you

Today is 10/20/03 and a client wants to set up a Simple IRA. Can I set it up to be effective for 2003 still or do I have to wait and have it effective 1/1/04? She would like to put money in for 2003.

I work for a small law firm of three attorneys and 4 staff people. Attorneys A and B are partners and highly compensated. Attorney C is not currently highly compensated, nor is any of the staff.

Only Attorney C wants to use dependent care. Can the firm set up a dependent care plan for only Attorney C? Must the firm follow the normal procedures to set up a dependent care plan? Can deductions be made only from the time the plan is set up?

A company has both a 401(k) Profit Sharing Plan (employer discretionary contributions) and an ESOP Plan. In the 401(k) plan, its is cross-tested and the employer deposited money up to 16% to the HCEs during the year, therefore I would assume to pass gateway the NHCE's would have to receive atleast 5.57% employer contributions. However, in the ESOP plan the NHCEs all received a 4% contribution, can that 4% be counted towards the 5.57% that is assumed to be needed to satify the 401(k) gateway?

Can you satisfy the requirements in the ESOP Plan to satisfy the 401(k) plan top heavy or gateway contributions? There is nothing stated in the documents regarding this question.

Thanks.

And No, I was not the TPA before now!

For a solo 401(k) plan (with spouse), are the elective deferrals and timing of deposits the same as with a traditional 401(k) plan? Can the final pay period of the year reflect the maximum deferral (i.e., $12,000 apiece) and then be deposited in January 2003 or are we required to defer a certain percentage in each pay period?

If we defer some each month, can we write one check to make the deposit after year-end? It seems I heard someone say you could do it that way with solo plans.

Hello!

I have searched this board for an answer to this question but have been unsuccessful. Any help would be most appreciated.

H&W own and operate totally separate businesses. Both are 100% owners of their respective S corporations, and are not employees of their spouse's corporation. W wants to purchase an office condo in her retirement plan and lease it to H's corporation.

4975(e)(2)(G) includes corporations as a disqualified person if 50% of the stock is owned by someone in 4975(e)(2)(A), (B), ©, (D), or (E) but does not include (F), which is "family members."

So, it would seem that although H individually is a disqualified person via his status as a relative (i.e. 4975(e)(2)(F)), it appears H's corporation is not disqualified since 4975(e)(2)(F) family members are not listed as a type of improper shareholder under IRC Sec. 4975(e)(2)(G).

This does not seem logical to me.

What am I missing? Is the answer that W is deemed to be an owner of H's corporation under the controlled groups provisions in 1563?

Many thanks.

Hi,

Can a DB plan be amended before the end of the plan year to decrease the accrual rate under the plan for the plan year and future plan years? From reading the instructions to the Schedule R it seems to say such an amendment under IRC 412©(8) and ERISA 302©(8) must receive approval and must relate to a business hardship.

I have been out of the DB world for a while. Any help is greatly appreciated.

Thanks!

Controlled group. Each company sponsors its own plan. NHCE/HCE ratio of each company is similar therefore each plan passes coverage on its own when tested with the entire controlled group. In this situation can each plan can now run all other required non-discrimination tests just among its own employees? Or do we still have to include all controlled group EEs for this as well?

I am a TPA with a client who has an employee on an uppaid LOA (non-FMLA). The employer wants to know what to do if this employee submits claims to the cafeteria plan. I have read the material on the FMLA but I am still not clear on what should be done with claims submitted during the LOA. The employee has stated that she intends to return to work however the employer has doubts as to whether the employee will return or not.

Please tell me if I am wrong here but this is my understanding of this so far. If the employee terminates during the LOA, the employer makes the termination date the date the employee informs them she will not be returning to work and the employer is required to pay the employee claims dated prior to the DOT up to the election amount for the plan year. If the employee returns to work she has two options. One is to do a catch-up contribution and the other is simply to continue deferring the same amount as prior to the LOA, however the yearly election is reduced by the contributions missed during the LOA. Of course this just brought another question to mind--what about claims submitted that are dated during the LOA--it seems to me that once she returns to work and contributing to the plan that they can be paid. The last question is if she does return to work can she decide not to reenter the plan. If she doesn't reenter the plan, what claims can be paid and up to how much? Any help on this would be appreciated.

I am not an expert on the subject of 125 plans but I would think that breast pumps and lactation specialists would still not be a reimbursable expense even with Rev Rul 2003-102 unless it was a medical necessity for the health of the baby. Would you agree with my assumption?

A client that consists of 3 owners and no other employees currently has a self directed profit sharing plan. They are going to start a DB plan effective 1/1/2004 and not contribute to the PS plan. If they merge the PS into the DB, can the PS money still be self directed in the DB plan?? Thanks.