dmwe

IMHO I would reject the DRO and ask them to supply a specific date at which the assets should be valued for the purposes of establishing the transfer to the alternate payee and also make sure the DRO states that the account for the alternate payee will be adjusted from that date for gains and losses. Since the brokerage account fluctuates on a daily basis, you're taking on market risk that will probably make one of the parties upset and you shouldn't be put in that position. Have them specify the valuation date. I've never had a problem requesting/demanding that language in the DRO.

Wouldn't the first question be whether or not the "split off" company established a new plan at that point in time with those "split off" employees participating in the new company. If that happened then the multiple employer plan issues don't exist.

I've had a few inquiries this year on that as well. I think as people are using tax software it's expecting someone to enter data directly off of a 1099R they got in the mail and then will drop those figures into the 1040 where it wants the income to fall. I think some people have entered dummy 1099R data with a code saying "Current Year Refund" as if they received a 2007 1099R so that the software would pull it into the current return.

I agree that I don't think your payroll system is handling your deferral properly. It should be a percentage of your gross.

I've seen discussions about the changes to Schedule C for more detailed reporting of all fees (income) by providers but am unclear if these changes will be incorporated into the 5500 for plan years starting in 2008 or 2009. Does anyone have that answer for sure? Thanks

I think we'll see more guidance or clarifications here in 2008.

A company we work with in Lincoln, NE named Centrix Solutions helped us with a secured website so that we can post spreadsheets there for clients to access, save census data and then we can pick it up and import it into our Relius system. It works pretty slick and is very secure. You should be able to find there name in an internet phone book.

This rule change is for plan years starting in 2008, so refunds processed in early 2009. Gap period income also goes away in 2009.

I think there are more questions to ask here. ADP testing might not necessarily have much to do with the 402g test results. 402g should be calendar year test. So at this point all you can look at is 2006 data. For fiscal year plans any dollars over $15,000 in 2006 are automatically called "catch-up". You should lower your fiscal year deferral total for HCEs by any amount that was classified as "catch-up" in 2006 and run ADP using the net amount. Sometimes this can help significantly. Once you get to the end of 2007 you can test 402g for 2007 and if 15,500 or 20,500 is exceeded you can refund in 2008 within IRS deadline. Fiscal year testing is tricky. You should consult Sal Tripodi's manuals for specific examples and a walk-though on how testing should be handled.

Would normal termination distribution options apply then for the 401k money? Participants could take the taxable distribution or roll over?

Lexi, In response to your question about "How do you know all this stuff?", I'd suggest you get a copy of Sal Tripodi's manuals for retirement plans. Everything you'd ever want to know about qualified plans is in this 5 volume set. Plus they are updated each year for current legislation. His company is TRI Pension Services, or I think you can order them through ASPPA website. It's the bible of the business.

What about Roth money to an Inherited IRA (Roth). Is that going to be allowed and what are the distribution requirements from the Roth?

Thanks for all your help folks.

I'm trying to assist a person who quit her company, Worrell Newspapers, Lynchberg, TN, back in 1986 on disability but the newspaper was either sold or closed in 1995. She's never received her vested balance from the plan and I'm trying to help her track down information on the termination of the plan. I don't think Freeerisa probably has 5500 info going back that far. Does anyone know where there might be a database of information on old plan sponsors? The DOL wasn't much help to this lady but that may be her only resource. Thanks

I have a relative who works 20-25 hours per week, exceeding 1,000 hours in a year and has been, up until now, excluded from participating in her company retirement plan. She'd like to request an SPD or copy of the plan document but is nervous that it may negatively impact her employment. Does anyone have a good suggestion on where to go next for this information? Should she get the DOL involved and have them ask for an SPD for her? She may be in a classification that is excluded from participating but until she sees the SPD, she doesn't really know. Any suggestions are welcome. Thanks

We're the trustee, custodian, record keeper, tpa but we're generally the ones called on to produce the data from years prior. Thanks

Not from a regulatory perspective but from a practicle one, how long should record keeping reports, enrollment forms, distribution forms, etc. be kept in storage. Since software changes every few years and there may not be a way to go back on the computer to pull up old information, we feel that we should probably keep the hard copies indefinitely. Please weigh in.

Unfortunately the Plan provides no guidance on the heirarchy of the distributions and the fact that there is post-tax and pre-tax money in the Plan. Thanks for all of your input. We have taken the stance that we will allow the MRD to all come out of the after-tax source but we are still, for that source, going to distribute part basis and part earnings on a prorata basis.

A retired participant who holds after-tax contributions in his account has been receiving RMDs for a few years. We have always calculated the after-tax to pre-tax dollars to be distributed on a prorata basis. Now this participant would like to roll his entire balance out of the Plan to an IRA and is insisting that the entire RMD for 2007 be made as a return of his after-tax basis but we don't agree. He thinks Q&A 9 in section 1.401(a)9-5 gives him that right. Any enlightenment from anyone on this issue would be appreciated.

We have a situation with a deceased participant where the beneficiary is her estate. Does federal and state withholding still apply? Thanks

I agree. Coverage issues shouldn't enter in. You can go back to the 2004 ADP test and exclude the otherwise excludible and use that number for prior year. Pretty simple option.

Thanks. That's very helpful.

A former Japanese owner of a business has now moved back to Japan and wants his balance in the DC plan wired out. Is there an exception to the withholding rules in this case? Someone referenced a US/Japan treaty that gave us the ability to ignore withholding. Any ideas?

Maybe I'm wrong here but don't people only give the multiple use test a try if they fail either the ADP or ACP? If each passes independently, why continue on to test multiple use?

I'm not sure the child clouds the issue. Does the child work for one of the companies or the other or receive compensation from both? Maybe that would make a difference and maybe not.