I closed a 401K from an old company and took all the money for hardship before the required age...therefore a penalty.

401 K withheld 20% for taxes.

Now I do my tax returns and I'm getting back the 10% withheld for taxes...I had an ordinary loss for the year...and don't have to pay any taxes...Is there any way I can get the 10% penalty back as well?

What qualifies me to not pay the 10% penalty?

Thanks!

We administer a new DB plan that is offset by account accumulations in a profit sharing plan. The arrangement is not safe harbor so we will be general testing both plans.

Our volume submitter document provides no other choice than to offset DB benefits with the actuarial equivalent of account accumulations in the profit sharing plan using DB plan actuarial assumptions.

Suppose we use 6% pre and post retirement interest and 1983 GAMU for DB benefits. Other than possibly having to submit the plan as an individual design, is there a problem using different actuarial assumptions for the offset? We were thinking UP84 at 8.5%.

Thanks.

I realize that an opt-out of health insurance in favor of a cash payment needs to be run through a Section 125 plan to avoid contructive receipt issues. Suppose we want to allow each employee who opts out of health insurance the right to choose to either take cash or to put all or a portion of the cash into a medical or dependent care flex account. I assume that, so long as this option is documented in the 125 plan, there is no constructive receipt issue related to the right of the employee to choose to take cash or to instead have the amounts placed in a flax account. ?? I have seen situations in which cash is paid to the employee and situations in which the cash is placed in a flex account, as determined by the employer, but I have not seen a situation in which the employee is given the choice. Any comments would be appreciated. Thanks.

My client neglected to refund the necessary payments as a result of the plan's failure of the 2001 ADP test. The plan is correcting this via the SCP route by making a one-to one correction in contributing the amount of the refund as an allocatioin to the NHC group. Now my question....Are these contributions characterized as a QNEC and 100% vested or as Employer Contributions that fall under a vesting schedule?

Calling all actuaries...

A plan I am working on for the first time has been frozen for 6 years and appears will not pass 401(a)(26) on prior benefit structure. It also appears that this year will not be the first year of the failure, as the issue was never brought up by the prior actuary.

The plan will need a corrective amendment, but for past years' failures it is too late under 1.401(a)(26)-7© and a VCP submission will be needed.

Thus my question is how do I perform the valuation? Do I consider any sort of corrective amendment or not, or do I run the valuation as if it is still frozen? It is already past the 412©(8) deadline, as this is a June year-end.

Any opinions are welcome.

I have a plan that is just now making the SHNEC for the 2001 plan year. Obviously there is a correction that needs to be made. I am thinking that the plan can use the SCP and deposit the SHNEC now with lost earnings and file an amended 5500 if needed. Is there anything else that anyone can think of that I am missing?

Is it permissible to specify a minimum contribution/allocation for specific classifications vs. for all NHCEs?

Ideally, I would like general language that would permit such minimums without having to be specific and amend the plan each year. Is that feasible?

Thanks!

Is it feasible to have, among others, a classification for full-time hygienists and another classification for part-time hygienists? Apparently there is a concern that a classification can't be a "disguised service requirement" and that a "part-time" definition is not acceptable.

Your thoughts?

Does anyone know how the PBGC invests the annual insurance premiums received annually from employers until the funds are actually needed for use by the PBCG ?

If a non-union participant in a top heavy DC plan transfers to a union position during the plan year, does he need to be allocated a top heavy minimum? Although top heavy minimums do not apply to union ee's, I thought it might in this instance since he was not a union ee for the entire plan year and he is still employed at the end of the year. If he does need to rec'v a T.H. minimum, would it be based on his comp for the entire year, or just for the portion that he was non-union? Thanks for your input.

A SCHEDULE C FILER WITH NO EMPLOYEES OPENS UP A SEP ACCOUNT WITH THREE DIFFERENT BROKERAGE ACCOUNTS. THEY WRITE THREE DIFFERENT CHECKS TO THREE DIFFERENT BROKERAGE ACCOUNTS FOR $1,000.00 EACH.

QUESTION: DOES THIS PERSON HAVE THREE SEP PLANS FOR ONE BUSINESS. I WAS TOLD THAT THEY DO AND THAT I WOULD HAVE TO CALL THE VOLUNTARY COMPLIANCE OFFICE IN WASHINGTON

D.C. TO GET THIS FIXED. IS THIS CORRECT? CAN A SELF-EMPLOYED INDIVIDUAL HAVE ACCOUNTS AT MERRILL LYNCH, PRUDENTIAL, AND CHARLES SCHWAB, AND HAVE IT STILL BE CONSIDERED ONE SEP PLAN. ALL THE ACCOUNTS ARE UNDER THE ONE BUSINESS NAME. IF THIS PERSON IS CORRECT IS THERE A SIMPLE WAY OF CORRECT THIS?

THANKS FOR OUR INSIGHT

Can classifications in a Tiered Crosstested profit sharing plan be based on compensation?? and if so, are there any special rules like smoothly increasing bands, etc.?? Thanks.

Scenario:

If for some reason a govt plan is about to go insolvent, does any entity jump in to help out? I know that these plans are typically not subject to ERISA or DOL but I can't determine with certainty whether or not the EBSA (f/ka PBGC) would step in under this situation.

If the EBSA doesn't step in, what protections do the participants have if the plan is insolvent and the plan sponsor is teetering on bankruptcy?

Tx for any insight.

Mark.

We have recently taken over a plan which is a tax exempt organization under 501©(3) and ADP testing has never been performed. I did not think that 501© organizations were exempt from testing are they?

Are there any rules about how to assig a "plan number" when completing IRS Form 5500 for a master trust?

This language is copied from one of our restated DB plans within the definition of compensation.

Compensation Limitation Election Available To Certain Participants: Except for purposes of determining Minimum Top Heavy Benefits in Section 4.7 or Code §415 limitations of Article 6, any Participant who is a Key Employee, an Owner-Employee, a Self-Employed Individual, or a Highly Compensated Employee may elect for any Plan Year, on a form prescribed by the Administrator, to limit his or her Compensation for all purposes under this Plan.

I thought the ability to limit compensation, which effectively reduces a person's accrued benefit, was not allowable anymore, yet I see this language in this document with a determination letter. How can this be or am I mistaken?

In determining "otherwise excludable employees" under a 401(k) plan, must the plan determine whether an employee has completed a year of service using the plan's method of crediting years of service (e.g. elapsed time) or may the plan use the actual hours method?

For example, plan eligibility is 3 months of service and the plan uses the elapsed time method of crediting service. Participant has been continuously employed since 1995, but has never completed 1000 hours of service during an eligibility computation period. May the employee be considered an otherwise excludable employee for purposes of the ADP test based on the actual hours method of determining a year of service, or is the participant required to be included because he has completed a year of service based on the plan's use of elapsed time?

412(l)(6)(A) says that "This subsection shall not apply to any plan for any plan year if on each day during the preceding plan year such plan had no more than 100 participants."

412(l)(6)© says that "For purposes of this paragraph, all defined benefit plans maintained by the same employer (or any member of such employer's controlled group) shall be treated as 1 plan, but only employees of such employer or member shall be taken into account."

Has this ever been clarified anywhere exactly what (6)© means?

Here is my situation:

Company A has 150 employees. They maintain a DB Plan that has 60 participants.

Company A is a member of a controlled group with company B. They qualify as QSLOBs if that matters. Company B has 500 employees. Company B maintains a DB plan with 450 participants. None of Company A's employees participate in B's plan, and none of Company B's employees participate in A's plan.

Does the DB Plan of Company A have over 100 participants for DRC purposes?

An employer has offered pre-tax benefits (fully-insured medical and 401-k) to its employees for years. Everyone is happy. The employees are fully aware that their premiums and deferrals are being withheld "pre-tax" from their wages.

The employees obtain coverage in the medical & 401(k) plans by simply filling out a standard "group enrollment form" furnished to them by the insurance company (medical) and the trustee bank (401-k). Neither form constitutes a cafeteria plan "election form". Neither of these documents mention anything about "cash or deffered arrangement or pre-tax"

In other words .... the employee participants are never given an "election form" by anyone, on which they can officially choose to receive cash or the pre-tax benefit . It's all verbal. The employer simply tells eligible employees to "fill out the medical group enrollment form and bank forms if they want these pre-tax benefits".

Is there any IRS or ERISA rule that written election forms have to be used. Or is verbal agreemnet legal ?

What is the best way to run on 8.0 a basic safe harbor match, a fixed match and a discretionary match all under one plan. # different transactions?

Also, what are others doing with safe harbor match? Safe harbor match account and a regular match account?

thanks