An employer does not deposit a profit sharing contribution for 2 years. The participant statements have included the contribution as a receivable. Can the employer now make the deposit? What are the ramifications of this?

What happens if he deducted the contribution 2 years ago? What if he did not?

Any assistance is appreciated.

My understanding is that SIMPLE IRA funds can't be rolled into a 401k SH plan after SIMPLE is 2 yrs old.

Can a SH 401k plan be started mid year as a new plan and terminate SIMPLE IRA (contributions have been made to SIMPLE this year) or does 97-9 require that everything starts first day of the calendar year following amendment to terminate SIMPLE.

I appreciate all input.

Thanks

TAG

401(k) plan - implements 3% non-elective safe harbor plan - however, they do not make the 3% to all eligible employees - only to those who have a year of service.

The prototype sponsor/adminstrator (one that we all know) has taken the position that, because the safe harbor rules are not being met, they have to do testing, but they are only testing the group that should have been included under the safe harbor rules that have been excluded (ie, they are only testing the employees who are eligible employees, but do not have a year of service as these are the ones that are not receiving the 3% contribution that, under the safe harbor rules, should be receiving the contribution).

Is there authority for this? I would have thought that, by excluding the eligible employees with less than a year of service, the safe harbor rules were totally blown, and that 401(k) and 401(m) testing would have to be done as if there were no safe harbor plan. ??? In advance, thanks for any responses.

Company A owns 80% of Company B. Company A & Company B have separate 401(k) plans. Company A has 4 benefitting HCE's and 44 benefitting NHCE's. Company B has 5 benefitting HCE's and 6 benefitting NHCE's. It seems to me that Company B's plan can't pass 410(B) on its own and thus the plans must be aggregated for testing.

We have just taken over the administration of Company A's plan only; Company B remained with the prior administrator. I have nondiscrim. tests from the past 5 years. The plans have never been aggregated. I have a copy of Company B's test for 2001 and the administrator did not aggregate. (The other administrator involved is national investment firm. I know they are aware of both plans; the same people actually administered both plans until now.)

Am I missing something? Don't they have to be aggregated?

A plan fails the MUAT for 2001. The employer intends to make a QNEC to raise the NHCE ACP to remedy the situation. Can staturorily excludible employees be ignored in the QNEC calculation since they were excluded from the ADP and ACP tests?

We just terminated a 1 participant DB and received a favorable Determination Letter. Initially, the client approached us about a DB because she received a $2 million referral award from a law firm. She was age 63 and a sole proprietor. We set up the DB to have NRA of 65 and 3 years of participation. We also suggested she incorporate as an S-corp so she could carry back the losses created from the large pension contribution to the year she received the high income. This probably saved her $200,000 in income taxes.

Two years ago she needed some money to remodel her home and tapped $50K from her IRA. Of course, this had the effect of reducing the loss carried back to the high income year by $50K.

Now, after all is done, she wants to sue us for the $24K in income tax she paid in relation to the IRA distribution. Nobody in our office recalls talking to her about any IRA distribution. She claims we did not properly counsel her regarding the taxation of her IRA distribution.

Anyone have any experience with such a matter?

Thanks

We administer a 1 participant / 1 employee DB that was adopted and effective 1/1/00. The owner (100% shareholder) sold his old company to another firm that purchased the assets of the company. The 3 employees he had, terminated employment in 1999 before his new corporation adopted the DB plan. The income he is using to fund the plan is flowing into his corp from the sale of his old business. Payments stopped in 2001 so we amended his plan to reduce the benefit to prevent any funding requirement in 2002 (the year he will have less income). We changed the benefit from 60% of FAC to 10% of FAC.

He now wants to somehow provide a benefit to one of his former nhce/ non-key employees. I thought perhaps we could amend the plan to get rid of eligibility and change accrual to one hour of service. He could then hire his former employee for one day and provide the tax-deferred benefit he wants. We could acheive this by having a benefit formula for non-owner employees of say 50% of FAC. FAC is defined as the highest 3 consecutive years of all years including years with a predecessor employer. I dont see a problem passing 401(a)(4) in 2002 as we should pass using the annual method.

He will terminate the plan in early 2003.

Anyone see a problem with this?

Thanks

I have contributed to my IRA traditional 2001 in february 2002 and the fee for the transaction goes to my IRA in 2002 ($25), the problem is I can't have traditional IRA for 2002 since I am enroll in 401k since march 2002 and my income (filed married) overpass the limit for a traditional IRA how do I need to do with this $25in the IRA, maybe I can transfer for a Roth IRA and what do I need to do?

Thanks.

A client is safe harbor for testing

They have after tax.

Can we include the safe harbor match in the ACP test ? Or must we only include the after tax in the ACP test?

The Multiemployer Plan that I work for is looking at enforcing a provision in the Trust Agreement that charges contributing employers a fee for failure to comply with information requests. The Trust Agreement is incorporated by reference in the CBA. My question is: Would such a provision be enforced as a 301 Taft-Hartley action for breach of a collective bargaining agreement, or could it be enforce under ERISA section 502 (a)(3) as equitable relief to enforce a plan term? I would really appreciate any input. Thanks in advance for your help.

Working on 401(k) cross tested plan. Employer makes QNEC to satisfy ADP. QNEC in excess of amount needed to pass ADP. My understanding is that any QNEC used to pass ADP cannot be used in rate group testing. What about a QNEC not used to satisfy ADP? Can that be used in the rate group testing. First time dealing with QNEC. This is not a safe harbor plan. Would appreciate any comments. Thanks.

Anything wrong with a sole proprietor with one employee doing the following:

In 2002, Safe Harbor Match at 100% first 4. Sole Prop. puts in $11,000 and employee puts in $0.00. Sole Prop. gets the $8,0 00 Safe Harbor match(NEI over 200K). Meanwhile, the employee so far Still gets $0. Anything wrong with this? Under EGTRRA if I read it correctly, this is OK? I assume a P/S contribution can also go in.

Have a few clients which have comingled MP/PS assets. One I'm merging has no NHCEs. I'm toying with the idea of drafting currently dated minutes stating the MP and PS were merged, effective retroactively to 12/31/01.

Just trying to get a final 5500 in 2001, otherwise 2002 is fine as well. We don't want to back-date anything.

Any thoughts?

Chip Brown

What prevents the sponsor of an overfunded DB plan from terminating a plan, taking a partial reversion, transferring a portion of the surplus to a qualified replacement plan, paying the reduced excise tax, and then re-establishing a DB plan covering the same people and providing comparable benefits?

There must be something preventing this (other than a permanency issue), perhaps the exclusive benefit rule. Is that it, or is there something else?

What is the purpose of having a 401(k) Plan under a Cafeteria Plan umbrella (or, can this be done?)?

Company gives ESOP participants right to elect to receive dividends on ESOP shares in cash, or to reinvest dividends in the plan. Those who elect cash will be paid quarterly, and TPA will charge a $5.00 fee (per participant) for each check. There are over 300 participants. Any reason why the Company could not require each participant who elects to receive cash to pay the fee (deducted from the amount of the dividend, from account balance, or otherwise)?

AMB

Under the new SPD requirements for health SPDs there are content and disclosure requrements that must be in place 01-01-03 - would these requirements apply to all employer sponsored medical plans - we have 2 self-funed medical plans and 26 fully insured HMO plans.

Does a distribution to an ex-spouse have to be made at the direction of a Qualified Domestic Relations Order, or can a distribution be made to an ex-spouse based on a Final Judgment of Dissolution of Marriage/Marital Settlement Agreement?

Just because an employer signs a certification to extend the GUST remedial period, are they obligated to use the document specified or can they use it to adopt another document? Any IRS notices, announcements or rev proc's to back up? Thanks.

Just because an employer signs a certification to extend the GUST remedial period, are they obligated to use the document specified or can they use it to adopt another document? Any IRS notices, announcements or rev proc's to back up? Thanks.