austin3515

Thre Questions: Q1: If a participant wants more than 20% withheld from a eligible rollover distrbution, or more than 10% from an ineligible rollover distribution, are people getting a signed WP-4? Our forms have always provided for the regular defaults, but we often get participants who want to do the right thing (i.e., withhold appropriately), and most of them end up not following through with the WP-4 and just go with the defaults. Q2: Can any provide me any sort of logic for why the government wants to make it so hard for participants to have their taxes adequately paid via withholding??? Q3: I've seen many providers forms allow participants to request more than the minimum withholding without requiring the WP-4. Have others seen this too? The more I think about it, I can't help but wonder if this is just not enforced. What IRS agent would care that a participant had MORE than the minimum withholding withheld? I mean, the government gets their money quicker and the risk that they'll never get it dimishes? What is the story? Any thoughts or, even better, knowledge on the subject?

Sorry, but I'm going w/ Sal on this one...

Q1a: With respect to the catch-ups not requiring top-heavy contributions, he sites whereever it says that a plan shall not fail to satisfy top-heavy by reason of making a catch-up contribution 1.414(v)-1(d)(3)(i), which states: Contributions not taken into account for other nondiscrimination purposes -- (i) Application for top- heavy. Catch-up contributions with respect to the current plan year are not taken into account for purposes of section 416. However, catch-up contributions for prior years are taken into account for purposes of section 416. Thus, catch-up contributions for prior years are included in the account balances that are used in determining whether the plan is top-heavy under section 416(g). Q1b: With respect to the ability to limit HCE's to a given percentage, he sites 1.414(v)-1(e)(1)(i), which states: An applicable employer plan does not fail to satisfy the universal availability requirement of this paragraph (e) solely because an employer-provided limit does not apply to all employees or different limits apply to different groups of employees under paragraph (b)(2)(i) of this section. However, a plan may not provide lower employer-provided limits for catch-up eligible participants. As I had mentioned before, my intepretation of this last sentence is that a limit cannot apply solely to catch-up eligible participants. IF that is not the interpretation then the immediately preceding sentence has no meaning whatsoever. Q2: The real question is who is a better judge of what the regulations mean - you or Sal? I mean, Sal very literally wrote the book on this stuff. Q3: Corbel's prototype has a field to apply a separate 401k contribution limit on the HCE's and I don't recall anything in any amendment that indicated such a restriction violated the universal availability requirements. I see no reaosn not to use a very effective and very legal plan design...

The EOB clearly indicates in Chapter 11, Section XII, Part E2 (2006 version) that having plan imposed limits apply to different groups of participants does NOT affect the universal availability requirement. It then goes on to say that HCE's could be limited to a lower percentage of pay. In Chapter 3, Section IV, Part C.1.b.3, he also indicates that catch-up contributions are excluded from the determination of a key employee's contriubtion rate. So the only conclusion (if you trust Sal is that you can limit a key employee to 0, let them make their catch-up contributions only, and no THM is required.

We're discussing providing limits on owners, and not catch-up eligible participants. The fact that they are also catch-up eligible is a coincidence. Based on your interpretation of the reg, the employer wouldn't be able to restrict catch-up contributions of HCE's in order to avoid failing the ADP test. I think we would all agree that is not the case. It appears to me that the intent of this provision is that the sponsor should not be able to negate the catch-up contribution provisions simply by imposing additional limitations. AS an example, assume the sponsor said "catch-up eligible particpants may only contribute $10,500 for 2007." Therefore, after catch-ups, they still contribute the regular $15,500. Why might they do this? Perhaps to reduce matching contributions? Nevertheless, that's how I interpret the provision.

I think the question more specifally relates to participants NOT contributing, and no there is no law that says you need to get an election form back from them indicating they elect to make 0% in contributions. But as you mentioned, it is recommended.

non-spouse beneficiaries can either take a full distribuion of the inheritance w/in 5 years of date of death, or take distributions over their life expectancy. In that regard, the MRD rules are the same (as I understand it) regardless of whether the money stays in the plan or is rolled to an IRA, except for one thing. Most plan's provide that after death MRD's are full distribution after 5 years. However, if this is the case they can roll their money to an Decedent FBO Beneficiary IRA and take the lifetime distributions from the IRA. Either way, the moeny should be able to be withdrawn sooner - the IRS would be happy to tax it for you! I'm not quite sure if this answers you questions?

Your first paragraph has the dates a little skewed, so I'm not sure what you're saying there. But in your second paragraph, the answe yes, if someone exceeded the maximum allowable contribution of $15,500 during calendar 2007, yes they went over the 402(g) limit for calendar 2007. In the third paragraph the answer is yes for the exact same reason.

Comp is plan year beginning (i.e. 2006 limit applies) SS wage base (For integrated plans) is plan year beginning (i.e. 2006 limit applies) 415 is plan year ENDING (i.e., 2007 limit applies) (it's the only limit that's plan year-ending). With respect to 401k contriubtions, that is always the calendar year, and never the plan year. And that is what makes ADP testing (in light of catch-up contriubtions) so much...fun?

That is false. I'm not even sure what this is being confused with?

Yikes, I'll edit my post

I recommend posting responses to the following thread, where it was originally posed: http://benefitslink.com/boards/index.php?s...36027&st=15 Otherwise, we'll have answers in two places...

Deleted comments on fees (see next post) Just so people appreciate Amy's advice: -Within the Davis Bacon definition of the ERISA Outline Book, Amy is credited as the primary source of the content (examples, etc.) via an article she wrote for the ASPPA Journal (May/June 2003) which I myself read based on that recommendation (I highly recommend it if you administer any such plans). -She's one of the experts at TagData -She authored of the Coverage and Nondiscrimation Answer Book (with, of course, Tom Poje). -She works at McKay Hochman, frequent poster, of very informative Q&A's on the benefitslink newsletter. I can't remember a post that had this many heavy hitters! Maybe Paul Schultze will weigh in?

As long as you meet certain notice requirements to participants you can get rid of the j&s requirements in your plan. Based on what you've told us, you're getting incorrect advice.

I'm not sure you can report them for wanting to do something. If you fire them as a client, you will never really know whether or not they did this terrible thing. Reporting them, in my opinion, would be unethical, because they may indeed come to their senses based on their firing and not go through with this sham termination. But I could not agree more that this is not worht whatever the fees.

So you're opinion is that the preamble to the regs vetoes the GUST opinion letters? Does anyone have the 2007 EOB? I'm curious to see if he has changed that paragraph, because Sal doesn't mention the preamble to the regs in the 2006 version.

Okay, so I went right to the source: The ERISA Outline Book. According to Uncle Sal, Blinky is on the money. The IRS has publicly stated at many Q&A sessions that this approach is a no go. However, the book also indicates that many GUST approved documents include this provision, and a favorable letter should insulate any claims by the IRS that this is not allowed. However, he did suggest that this will be eliminated in the EGTTRA restatements. See page 11.471 of the 2006 edition.

Participant dies, and their niece is the beneficiary. She is 12. Obviously their parents should be the ones filling out forms etc. How can I prove that the parents are indeed the parents? I'm guessing birth certificate, but has anyone gone any further than that?

Gotcha - I was focused on the I-9 portion of your request. I hadn't even noticed that you indicated they asked for the employee's file which is NOT a reasonable request. In fact, depending on what's in their, you might be violating HIPPAA by doing so.

The point is to get evidence of the employees birth date. Referencing the Plan's records regarding dates of birth isn't auditing at all. Now getting an I-9, that's auditing!! The employee signed it and everything! They probably even kept a copy of the driver's license! Most employers have I-9's for all employees, particularly companies started after 1986. I audited 100s of plans (if you added up the 4 years I did this) and this was NEVER an issue with any of my clients. Okay, so if you ask for 20 I-9's and they only track down 18 and you need to do alternate procedures for a couple of participants. I think you are making way too big a deal over a simple request. My question regarding payroll was intended to remind you that the auditor is going to have access to information that is much more confidential then I-9's. I pose the question again, why are the I-9's more confidential then the payroll records?

Back in my auditing days, we would ask for I-9's on all clients. IT's the easiest way to verify DOB and often date of hire (i..e, when did they sign the I-9). One thing auditors hate to hear is "you can't have access to that." That's a BIG red flag Sounds like you have a good relationship with the auditor, and nothing seemed out of line, otherwise they would have made a bigger issue about it. Out of curiosity, why are I-9's more sensistive then payroll information?

Is there a web-site that anyone knows of that describes the withholding requirements for those states with mandatory withholding?

Sure failing to disclose SS integration is definitely on par with, say, dealing crack

If you're going to be on the losing side of an argument, it's not bad to be standing alone with Craig Hoffman (and Bird too, I think)! I forgot to mention that at the ASPPA Northeast Benefits Conference he publicly requested that the DOL clarify that the disclosures applied only to DB plans.

4th quarter!! Fabulous news!!