austin3515

Little Plan merges into Big Plan as of 9/30/2011. Question is, do we need to send the SAR to the participants of little Plan, who, as of 9/30/2011, have no money left in Little Plan (it was all transferred to Big Plan). If Little Plan was TERMINATED, I typically would not send anyone an SAR, for the same reason that I would not send SAR to a participant who closed their account during the plan year. But in this situaiton, Little Plan sort of exists within Big Plan because Little Plan was MERGED INTO Big Plan. So for that reason I struggle not sending the SAR to the Little Plan Participants. Please let me know what you think!

Was there a break in service for the people being kicked out? If not, then terminating the plan precludes a new 401k plan for at least 12 months. In fact, can you even create a distributable event by terminating only a portion of the plan? I actually dont think so. Also, clearly any of these changes could only be done prospectively. There is not basis for invalidating deferrals retroactively. Also, as an adopting employer (who also might be a trustee) the other owner might have his/her own rights to do a spin-off. If they're getting into a fihgt, I think you need an ERISA attorney to figure out who can do what. I'm not sure who calls the shots in your scenario, but I think that is an important question to have the answer to.

Personally, I think my comment applies to pooled accounts equally.

OK, so now we're talking about forfeiting 401k money, which is not much easier to defend What provision of the plan, or EPCRS for that matter, supports this course of action? Also, one would presume that somehow the owners are goign to get back their money, so I'm not sure moving money from your left pocket to your right pocket before paying the money necessarily helps you out here. You're leaving out I'm sure that the owners will get a bonus to make them whole. The point is, I think you are playing with fire. I would not recommend putting this idea in writing on your letterhead and giving it to your client. If it doesn't meet that test, then that means it is not advice that should be given. I'll tell ya what, I wouldn't even submit the question to the IRS at a Q&A for fear of being added to a watch-list!

"If it is still 2011, and you make the discovery that it is top-heavy before the year closes out, could the employer leave the funds contributed by the key ee's in the plan - but recharacterize them as employer non-elective or match to be used for all participants - and adjsut the payroll records for the keys to refelct that they did not defer to the plan?" I have a hard time understanding how this would be legal. What is the basis for this distribution? How could it be considered a mistake of fact? I get that the feds have bigger fish to fry but this is the number one issue facing small retirement plans. Why they have chosen to stick it to small business on this one for so many years without resolution is beyond me. I get that it's directly correlated to the size of their campaing contributions. Imagine if such a rule applied to the fortune 500 companies, how quickly it would be removed!! Oh wait, it does apply, in the form of minimum funding on their pensions. How many laws have been passed for funding relief??

I was wondering if such a provsion in a CBA was even legal. I wonder if anyone here would know that??

I've also been struggling with that. I actually began writing the question and then I decided I didn't care what the answer was The quesiton was, could a union exclude exclude people working less than 30 hours per week as a class, and does that create a 410(a) issue?

I looked it up in the EOB now that I am in the office, and it's one of the shortest write-ups! Collectively bargained plans are deemed to pass coverage. End of discussion. In my case they all get the same percent of pay so nondiscrimination is not an issue. But I did read in the next paragraph exactly what you mentioned regarding each distinct CBA.

Have a plan that covers ONLY Union Employees. It just so happens that all the full-time employees of this organization happen to be hihgly paid skilled professionals, and they get quite a generous contribution and make a decent salary; some earn more than the $115,000. Is there some sort of a piercing of the coverage exemption? There is no plan covering the part-time staff. To make this really controversial, let's assume they work 1,100 hours a year and make up 40% of the workforce, and average benefits would never pass... Of course, the union covers the "trades people" - coverage in the union is not based on how many hours you work.

Which is why I was finally convinced to check the extension box.

Filing accepted, no errors.

If you were the IRS, wouldn't you clarify that point in the instructions? OK, I'm moving forward with the box checked for extension!!

Doing an amended 2010 5500 today. Should I check the extension box? Getting a validation error from FT Williams because there is an extension created, but the box isn't check. It seems silly to check the extension box for an amended return. Thoughts?

Plan has 3 NHCE's: 1 Is Otherwise excludable and gets only Safe Harbor 3% 1 is a terminated non-highly getting only the gwm 1 is a full-time active NHCE getting enough PS to pass testing. How do I apply the limitaiton on the number of allocation groups? If 3 NHCE's the limit is 2; if 2 NHCE's, the limit is 1 rate. But should providing the GWM be counted as an allocation rate? Should the Otherwise Excludable participant (whom my document permits disaggregating for testing) be considered an allocation rate?

I think it's debatable whether or not merely writing a check actually segregates it. I think the actual funds would have to move. To me, this is not the kind of thng that warrants "pushing the envelope" or taking an "aggressive" position. You're doing lost earnings, correct? It's irreconcilable to me to do lost earnings and not report them as late. We've done LOTS of these over our client based due to cpa audits, missed deposits, etc. I cannot think of a one situation where something actually came of it. (now if the participant's call and complain, that's a different story altogether).

Why not just report it, nothing every comes of these disclosures anyway (Ok, maybe a form letter inviting you into VFCP). But it's not like if you put it on there the feds are going to show up in haul you away

So what you are saying is that in my example, we cannot shift deferrals to the ACP test for only the NHCE's to make the [edit: ADP]test fail by more, resulting in additional deferrals being reclassified as catch-ups, correct? Put another way, even though there are unused catch-ups, there is no way to recapture the catch-ups by shifting NHCE deferrals? Thanks Tom!!

The quesiton references that the shifting is being done AFTER recharacterizing excess deferrals as catch-ups. Do you want to read through one more time? I just think it veyr clearly states that this is the case. Also, the question that follows clearly suggests that a passing grade is not a requirement to use shifting.

You don;'t think the IRS Q&A gives the green light for shifting even a failed ADP test, provided you shift for both HCE's and NHCE's? I thought that was pretty plainly what they said. And yes there is only one HCE. Funny you should mention that because here in the office we had that same conversation about how this clearly backfires with more than on HCE.

ADP test fails and just $2,000 is reclassed as catch-ups (leaving $3,500 "available"). The IRS came out once before and said that if the test is failing you can still use shifting, but now you must shift for both HCE's and NHCE's, because the "plan is passing right at the passing percentage." See questions 15 and 16 of the attached. The question is, can we shift elective deferrals over to the ACP Test in order to increase the amount reclassified as catch-ups, thus avoiding the need to shift any HCE deferrals? Shifting___ADP_Test_Failed_IRS_Q_A.pdf

Let's say you pair a 403(b) Plan with a 401k covering just the HCE's. Let's say there are two HCE's, one of whom is an office making more than the officer threshhold, and is therefore a key-employee. Assume further that more than 60% of the assets in the 401k plan are allocated to the key employee. Is there any opportunity to aggregate the 401k and the 403b?

I mostly post in the 401k voard. Not sure if this is the right board but I'm trying to findout if there is a text book regarding the long term disability insurance claims process, such as information on important case law and regulations. In 401k world we have Erica outline book, which codifies almost everything you would want to know... Anything like that for lt disability?

Small overpayment in a 401k plan. I know I send a letter asking them to repay the overpayment, and tell them that the amount was not eligible for rollover. Do I need to issue a 1099 showing taxable income for the amount not eligible for rollover if I know they rolled it over?

Not to be fresh, but just going out on a limb here, I'm guessing he has no money.

Let's say hypothetically we amended the plan to allow for it. Would that be a permissible amendment?