austin3515

P.S. is it worth being subject to that insane bane of the small employer's existence - top-heavy?

I'm looking for a good write-up on what the paid prepare penalties rules means for the TPA, particularly when we encounter clients who are looking to bury things in the sand (for example, business owner strapped for cash takes a loan, but misses a payment). Once upon a time, it's been said that as TPA we are not the Pension Police. Is that basically what this new rules says? We are the pension police? In other words, not even a CYA letter will help?

Anyone have a good web-site that summarizes all of the state's withholding rules, particulalry those with mandatory wtihholding?

Sal Tripodi, author of the ERISA Outline Book, past president of ASPPA Fred Reish of Resih Luftman something or other Craig Hoffman and/or Derin Watson from Sungard Corbel Google any of their names and you'll get tons of hits...

Ah well I suppose if you make the amendment the day after the owner retires, you would have a problem, since amendments cannot discriminate in favor of HCE's. But that sort of thing is ALWAYS something to watch out for in every decision you make.

Just to be clear, do we all agree that the QDIA rules are impossible to comply with in the real world, particularly the small employer world? (and I know they're just safe harbors). -For example, 30 days before the contribution is funded, you may very well not even know if there is going to be a contribution. -OR let's say you play it safe and tell clients to distribute the notice in January, and then they don't fund until September 15th. An 8 month delay seems like a bit of a stretch for a notice. -And how many people are really sending out additional annual notices to plan participants who never changed the default? Real world answers only please As a follow-up, I had heard from someone who had heard that the money market might return as an acceptable default investment. Anyone else hear that?

I see something on page 5 that discusses the $100 threshhold, but only in the context of VFCP. But it does give more weight to the $100 threshhold that I've heard thrown about. If anyone happens to know of a place in published IRS guidance that says de minimis equals $100, but deposit the tax to the trust, I'd love to see it. The question comes up constantly on these boards!!

Anyone who dies, retires, becomes disabled BEFORE the amendment MUST receive the match in the document, since they have already accrued a right to the benefit. Everyone else is fair game, since they have not met the allcoation conditions due to the last day rule.

Check out the final 401k regs on terminating safe harbor plans. There is an exception to the 12 month plan year rule for changes in controlled groups. The safe harbor should be fine since the only reason for the short plan year was the acquisition.

Lost earnings are due since it's late, and the DOL says you pay the greater of the udnerpaymetn penalty rate or the actual return. Of course, under the VFCP filing (which requires a submission), you would exclusively use the underpayment rate. The DOL has this built into their on-lien calculator. http://askebsa.dol.gov/VFCPCalculator/WebCalculator.aspx With respect to the 5330, if it's only 5 days late, I would suggest it's not worth it since 10% of the lost earnings will be such a small dollar amount. We usually skip it unless the penalty due is greater than $100, which is based very loosely on informal guidance from the IRS

I feel a LOT better knowing the purpose of the 5498, which I had never known before. Obviously, whoever is getting the money will know more about it. For example, we (as I'm sure you all do) routinely review support for the source of incoming rollover to make sure it's eligible to come in. So the receiving organization will know it's pre-tax going to Roth and will issue the right 5498. All is well in the world again

But how in the world would they know it was from a pre-tax account??? Maybe they are required to know, in which case I would feel much better. There just seems to be a huge disconnect. For those of you saying check with the receiving IRA, do you process distributions? These operations are 100% incompatible with that type of a project. For example, we don't even have a phone number. And if you did have a phone number, why would the person answering the phone give us any information at all??

Of course, I thought of the need to update the form after posting the link. Another ambitious effort by the government to make plan administration as prone to error as is humanly possible. I fear the odds of them checking that box correctly are pretty low, then the 1099 goes out incorrectly, and no one will ever know. Ever. Then it creates a nice opportunity for tax cheats. If a tax cheat knew not checking that box could save an incredible amount of money in taxes, perhaps they'll opt not to check it and then plead "oh, I had no idea!!" OBviously, verifying that an IRA is Roth or Traditional will not be something that any providers or even the most diligent plan sponsors will be doing. The real world implications it seems were NOT planned for...

U'm being told that we need to code a portion of the 1099 as taxable. How would we know to do this, since we don't know if the account listed is a Roth IRA?

In this situation, is the plan paying the distribution responsible for coding the distribution as taxable? How in the world would the sponsor know whether or not the rollover account relates to a Roth IRA?

This Q&A was just published in the benfits link newsletter. If a plan uses the safe harbor standards for the hardships, this letter suggests that a participant would be required to take a loan before a hardship even if it would increase the hardship (i.e., disqualify the participant from obtaining a mortgage to buy a home). But they also said this at the very end: Does anyone know what commentary they are referring to? http://benefitslink.com/modperl/qa.cgi?db=qa_401k&id=93

Can I use the SHNECs (which are QNEC's) in the ADP test? I know I need to include it for the HCE's too, but in some cases, it might help...

And a follow-up! Account balance is less than $5,000 and the plan includes the automatic IRA rollover rules. Do those rules apply to this?

With a twist! She lives in Puerto Rico - I gather the rules would be applied the same as if she lived in Arizona, is that true?

Let's say the question is the same as before except: a) participant has just one year of service, and b) balance consists exclusively of 401k, c) participant leaves and comes back after 7 breaks. Same answer, right? Employee re-enters the plan on date of hire and still has one vesting year?

What about eligiblity?

Employee with 7 years of service incurs 5 consecutive breaks and then gets rehired. Document uses rule of parity. Is that person forever grandfathered in to vesting and eligiblity, or will it at some point be disregarded?

I guess I'm just not clear why, if you pass coverage after the exlcusion, you wouldn't be able to do it... You're talking about TESTING, and this seems to have more to do with ELIGIBILITY. Again, I assume you are correct because our documents say it, I just want to know you and Corbel are saying that

I tried to find this rule in the regs, but came up dry - can you point me in the right direction? The safe harbor regs reference only "eligibile employee" and the 401k reg defintion of "eligible employee" doesn't talk about those exlcusions. Is it perhaps a restriction that applies solely to prototypes? (I did see what you brough up referenced in our prototype document).

That's the second thing I've learned from you within a half an hour... Thanks!