I have a money purchase plan which I must contribute 8% each year. I also have a SEP for each employee. This year I am going to have a bigger profit than in prior year. I am thinking of establishing a 401K. Is this allowed. Thank you.

Hello,

Company sponsors a safe harbor 401k plan. Plan document excludes "executives" from receiving the safe harbor match. In this case "executives" will always be HCE's by comp except for the first year of employment.

Question: company hires a new employee (immediate eligibility just to make this simply). Employee is hired as an executive and falls into this excluded group. However, this employee is not a HCE the first year of employment. I am thinking this employee will be required to receive the safe harbor match even though she is part of the executive group. Otherwise wouldn't we have a higher rate of match for HCE's, who are not excluded because they are not executives, than we would for this one executive who is currently not an HCE?

Thanks

If a participating employer wants to terminate their portion of the plan, is the only way to do that by creating a spin-off plan and terminating it? Is it possible instead to simply terminate the participating employer's portion of the plan and allow those participants to take distributions? Terminating the participation agreement does not allow participants to take their monies from the plan and this is what they want to do. Thanks.

Company offers two carriers for medical coverage. Each one has about 60 employees signed up. The sum just reached over 100 for 1st time as of 12/31/11 so the question is if there is a need for a 2012 5500. I see some plan sponsors file 5500-s for separate carriers as separate plans but I am thinking that this is one plan because they both offer medical coverage. Only difference is one includes dental and vision and the other does not. what is the general consensus on how to treat this? also, if combining the two carriers for one 5500, does there need to be a wrap document even though they offer the same benefit?

Is it acceptable to have a definition for eligibility of 6 consecutive months with 500 hours. Notwithstanding the foregoing, an employee who has completed one YoS shall be eligible?

I thought this was ok, but a colleague said something was said about not allowing consecutive months at ASPPA.

Fun topic for a Friday afternoon....

We have a client that wants to include employees working in Guam in their US retirement plan. Is this permitted? Their outside counsel seems to say yes, but they would need a separate trustee for distriubtions (similar to PR plans).

Assuming it is permitted, how are they handled for non-discrimination testing? Are they included in the US plan? Do they need separate testing?

Related Question: If a US employer has employees in Guam or other US territories (besides PR) and they are "excluded" from the US plan, do they need to be considered for coverage? Would they be non-benefiting, non-excludable?

Any thoughts would be greatly appreciated...

We have a 401(a) money purchase pension plan that has a provision for which I'm trying to find the source. If a participant continues working after his/her required beginning date the employer would continue making plan contributions to the employee's account. But the plan has a provision that requires those post-required beginning date contributions to be distributed to the employee by December 31 of the first calendar year following the calendar year of the contribution. Is there an IRC or tax regs requirement for that provision? If so, please supply the cite. We are a governmental employer, if that makes a difference.

Thanks,

Ken Davis

Employer has a phantom stock program for employees subject to 409A. Payout is upon a 409A change in control. However, upon a separation from service prior to a change in control, employer has a 90-day option to repurchase the employee's vested phantom stock units at the then fair market value and pay the repurchase price to the former employee in cash immediately. If employer does not exercise this option, former employee holds his vested phantom stock units until there is a 409A change in control (if there ever is one). Doesn't the 90-day option to repurchase violate 409A, and doesn't it violate 409A even if never exercised?

Plan allows safe harbor hardships.

The participant has medical expenses from 2012 that are not covered by insurance.

When the hardship was submitted to the recordkeeper, they denied the hardshsip stating the IRS requires the invoices be within 3 months or less.

Is that true?? If so, is there a site I can refer to regarding this matter.

I am correcting a missed nonqualified deferred compensation distribution under the IRS correction procedure. Pursuant to the correction, I'm allowed to treat the distribution that should have been made in 2011 as if it had been made this year (it's below the 402(g) limit). We have also decided to reimburse the employee for the 20% penalty.

We are reporting the distribution for the former employee on a 2013 Form W-2. How do we report the amount we're giving to reimburse for the 20% penalty?

Because he is no longer an employee, I'd normally think we'd report on a 1099. But since we're already issuing a W-2, should the reimbursment also go on the same W-2? Should we withhold FICA/FUTA/SUTA?

Hello,

After much searching I need to ask for some help. An employee terminated 20+ years ago. He recently receives a letter from the SSA stating he may have a benefit due under the plan. There are no records dating back 20 year ago from the sponsor or the recordkeeper. The sponsor has no proof he was paid and cannot find any. The sponsor thinks this person was paid out but they just forgot to list him as a code D the following year.

Is there any IRS guidance that says who is responsible for proving the benefit still exists? The sponsor wants to take the stance that the "participant" should prove it. The "participant takes the stance that the employer should prove it.

Any thoughts or references (if there are any) would be appreciated.

Thank you.

There is some discussion and disagreement among some of us as we have seen different firms use different approaches - wondering if anyone can settle these 2 questions:

1. If you are preparing a 2012 Valuation and a participant has a loan payment receivable (due in 2012 but doesn't get deposited at Fund company until January 2013). Do you show the payment receivable in your 2012 Valuation as a receivable and reduce the loan balance by that payment? OR Do you report the loan balance as of 2012 without the receivable payment?

2. It is 2013, you are working on a 2012 Valuation. You notice there is a participant that has incurred a 5 year break in service (as of 12/31/12) who needs to have a portion of their account forfeited. Do you show the forfeiture on your 2012 Valuation, have the Fund Co. forfeit the person in 2013, and then make adjustments to the forfeiture account for the gain/loss in 2013 OR do you leave the person as is on the 2012 Valuation, have the fund company forfeit the unvested portion in 2013 and show that forfeiture on the 2013 Valuation?

TIA

Distributions are processed manually on balance forward plan.... Participant elects lump sum distribution to herself - It's $1200 - Inadvertently, a check is sent to the participant for the full $1200 with no withholding - therefore $240 in required FIT was not withheld - process the 1099-R in January '14 showing full amount taxable with no taxes withheld and move on or work with the participant to obtain the $240 and make the FIT as soon as practicable...

Is a terminated ESOP required to extend diversification rights to terminated employees? Terminated ESOP provided diversification through plan sponsor's 401(k) plan which is also terminated.

Client has a calendar year 401(k) plan. Owner writes a check for $3,500 on 12/31/12 representing his final salary deferral for 2012. This is the amount that will bring his total deferrals up to $22,500 for the year. Unfortunately, the check was intentionally held up and wasn't sent to the brokerage firm until 1/29/13.

Questions:

1. Do we agree that a PT has occurred?

2. Do we also agree that going back and changing his 2012 W-2 and his 2012 tax return would cause a

legal problem?

3. Would doing a DOL VFCP submission take care of "everything?"

4. Would an additional submission of some kind to the IRS be required?

Thanks for the help.

I have a large plan that is split into 5 divisions. My question is pretty basic...when I put employee numbers into Relius can I have employees under different divisions that have the same employee number? I was thinking that Relius is SSN driven for the participants so I should be ok.

There are a number of them though so before I did all the imports and data entry I wanted to check with others.

FYI - what usually happens to me - I answered my own question just after I posted:

I was entering a rehire & tried to put her employee number in. That number was already used by someone in another division & the system said "NO - eenumber already in use"

We have a SH plan that is top heavy. They have only put in the SH match since amending to add 401(k) provisions. This year the CPA wanted to put in a $7000 PS. This contribution amount is not sufficient to integrate. Can we reduce the PS for the owner and his spouse so that all of the non-keys get the TH minimum or can we allocate the $7000 on a pro rata basis and then increase the PS for those who didn't get the full 3% with the prorata allocation and SH Match. I have reviewed the plan document and it only addresses when there is more than necessary to integrate, not less.

We work on a plan that covers two 50% owners of a corporation, no other employees. One owner has not paid himself W-2 compensation in the last two years.

In calculating the 415 compensation limit, should he receive credit for these two years of service in which he was not paid. He worked, but chose not to take compensation.

In other words:

415 compensation limit = 10% x 3-year Average Comp x years of service

Should years of service include the two years in which he did not receive compensation?

Thanks!

disregard

Ok folks - looking for some brains on this one. Just came over to a company and I am trying to do some clean up. the 12/31/2010 PYE Filing had a zero balance and zero participant count EOY. Turns out the 2011 Form 5500 was filed as a zero beginning and zero ending count and a zero beginning and ending balance. 12/31/2012 would appear to be the same way.

As the 12/31/2011 was failed to be filed as a Final Return Report I was going to work with the client to get it amended reflecting a Final Return Report.

But now the client has awoke and is saying he may be having participants once again who will contribute during the current year.

My question is - can a Plan exist for that long with zero participants and zero assets? Trying to keep this client however it seems to long to exist this way.

Any help is much appreciated.

Ray