Company X sponsore a 401(k) plan. Participant A has elected to make 401(k) deferrals in the amount of 5% of compensation, which is contributed during each pay period. After the payroll has been run and A has been paid, Company X discovers that during the pay period, 6% of compensation was deducted from A's most recent pay period. How does Company X correct this situation?

Company X sponsors a 401(k) plan for its employees. Employees are eligible to make 401(k) deferrrals on the date of hire. They are eligible to receive a match after 1 year of service. The plan includes a one-year holdout rule for eligibility and vesting breaks-in-service (i.e., employees who have a break-in-service do not have their pre-break service unless they have completed one-year of service following their return. At that time, they must be retroactively credited with pre-break service, but also service from their date of reemployment). Employee A has completed two years-of-service and then has a two-year break-in-service. Upon rehire, A resumes 401(k) deferrals. A completes one year of service after her/his return and begins to receive matching contributions after the one=year of service is completed. Does Company X have to retroactively make a matching contribution during the one-year period beginning on his/her date of reemployment?

If a profit sharing plan has individual insurance policies for the participants, and one of the participants has terminated employment and not due any further contributions from the plan, how should the insurance premiums be paid if the participant hasn't taken a distribution of his vested account balance?

Our client has a 403(B) Plan subject to ERISA. The document and investments are provided by one of the Big Providers. The plan permits loans. The Big Provider has asked the Employer to sign a loan contract that's between the Big Provider and the Employer.

I don't understand why there needs to be a contract between the Big Provider and the Employer. In all our 401(k) plans there is a loan policy and supporting documents that are between the Employer and the Participant. There's no contract between the Employer and the brokerage firm that provides the document and the investments.

Is this common for 403(B) Plans and why is it necessary?

In determining if there are late quarterly interest charges due for the 2002 calendar plan year, when are the prior year's RPA liabilities redetermined?

I am thinking that in accordance with 412(m)(7) and 412(l)(7)©(i)(III), if you use an OBRA interest rate for the 2002 valuation which is above 6.00% (the limit at 105% of the range), you MUST redetermine last year's RPA liabilities using 120% of the range as in effect on 1/01 (i.e. 7.10%). If at or under 6.00%, then don't redetermine the liabilities.

I am less than certain.

Additionally, I looked at the Sch B instructions for 2002 and it replaces MUST with COULD, effectively. Meaning that you might not be required to recompute.

I have an Employer (A) with a 401(k) plan. ER A is willing to count service with ER X for eligibility, vesting and allocations. However, ER X is part of a controlled group (ER Y and ER Z).

Must ER A also count service with Y and Z if anyone should get hired from those companies? He only wants to count service with ER X, not the other two.

California does not permit social security numbers on anything mailed to a customer.

Does anyone have any first hand experience with whether using a substitute like xxx-xx-1234 would be acceptable?

A welfare plan (severence plan) recently lost its tax exempt status (510©(9) and all plan assets had to be distributed. All assets were distributed with 26K remaining. What can this money legitimately be used for?

Any help is appreciated.

As a real estate salesperson, my wife is an independent contractor. As such she can contribute to both a Roth IRA and a SEP-IRA. Since assets in a SEP-IRA can be converted to a Roth IRA, is there anything to prevent her from contributing the maximum to both and then converting the SEP-IRA assets to her Roth. Assuming that we qualify and that it makes sense for us to favor a Roth IRA over a SEP-IRA, isn’t this, in essence, a legal way to exceed the normal $3,000/$3,500 cap on annual Roth IRA contributions?

Is there a procedure for requesting a copy of a prior approval letter from IRS? We have a takeover plan that was submitted for a favorable letter for T/D/R, but nobody has a copy of the FDL. I want to submit the plan for a GUST letter, but I have a "hole" in my data.

A company has set up 2 plans. One (A) for its Partners and office staff. One (B) for its Associate Attorneys. The plans are the same except that the Associate plan gives everybody 3% while the main plan gives the Partners 12% and everybody else (including some HCEs) 4%. There are NHCEs in the Associate plan.

Both plans are part of the Testing Group under 410(B) due to permissable aggregation. Shouldn't both plans also be combined when utilizing the "gateway" rules so the Associate plan NHCs get 4%?

A plan excludes hourly paid employees - the company has a total of 9 employees who meet the eligibility requirements - 3 of whom are hourly paid.

The plan is a 401(k) plan and will not pass coverage testing. If my documnet has failsafe language to add participants back - if I add back these hourly employees can I allocate a contibution to them - i.e. a QNEC equal to the average of the other non-highs to the 401(k)?

I need to confirm my interpretation of this. The provision in the regulations that allows a Plan to use rate banding (Quantech's term) to test for nondiscrimination does not apply in cross-testing?

Am I understanding it correctly that the use of rate bands (grouping of allocation rates) only applies when testing the allocations and not the allocations as converted to benefits.

I'm not sure if I have made sense here.

For Quantech users, the scenario is like this. Cross tested plan. When running the nondiscrimmination test select the following options: Accrual (versus allocation) and rate banding.

Thanks.

Is it permissable to use the current year data for the ADP test and the prior year data for the ACP test for the same 401(k) plan? Other details: my client's 2001 NHCE ADP is greater than their 2002 ADP. They introduced a matching contribution in 2002.

a check was cut and a 1099 was issued for 2002 but the participant never received the check. should we issue a corrected 1099 for 2002 and issue a 1099 for 2003 the year the participant receives the check? for some reason i think you stick with the 1099 for 2002 along the lines of a constructive receipt thoery.

I have a C Corp that is, for all intents and purposes, converting to an LLC. The LLC is going to check the box, that is, make the election to be taxed as a C Corp. The two owners of the C Corp want to establish an ESOP and do a section 1042 transaction in a few years. I have no issue with them converting back to a C Corp at that time and establishing an ESOP. I'm comfortable they can tack holding periods. However, do they have to go through that conversion? Can an LLC that checks the box sponsor an ESOP and can the owners of the interests sell those interests to the ESOP as "employer securities." I'm aware of the line of PLRs that discuss LLCs as members of a controlled group of corporations for purposes of ESOP participation, but am looking for something more definitive.

Would a 412(i) be a good option for an owner, age 45, who is currently earning $600,000 annually, but whose income level will be tapering off over the next five years?

Is the brother of the one and only owner (100%) also considered an HCE?

Other than the seven factors (and related examples) listed in Rev. Proc. 2002-47, is there any guidance available on what qualifies as a "significant" versus "insignificant" operational failure?

We have been asked to advise a plan which underpaid matching contributions to some of its participants over the last several years. The error resulted from calculating the contribution on a bi-weekly (payroll) basis, rather than on a plan year basis as required by the plan document. Only 5 to 10% of the participants were affected each year, and the correction for each year is equal to approximately 5% of the total contribution made for that year. We believe a reasonable case could be made that the failures in this case are insignificant and can be corrected under the Self-Correction of Insignificant Operational Failures program. Because it exceeds the two year requirement it is ineligible for correction under the Self-Correction of Significant Operational Failures program.

Any thoughts or suggests on "significant" versus "insignificant" operational failures would be greatly appreciated. :confused:

We have some commission sales people who only get paid at the time that a transaction is completed. At times this causes ee to go without a paycheck for several months so there is no money from which to deduct the employee portion of the healthcare premium. Can we discontinue coverage for ee and/or dependents? If so what reqluirements must we meet. We have a 125 POP plan.

Thanks.