jquazza

Hey Mr. Baker, Can Benefitslink provide a room for AndyH, Gburns and Bird? We might throw them in there and you know, see what happens... That may be a good opportunity for a PPV special... All jokes aside, I think the only good advice the original poster received was to consult a qualified investment professional. I don't think you can ever give investment advice without taking into consideration all the individual's objectives and means. We have no idea if the uncle (or aunt for that matter) wants to give few hundred dollars a year or 1/2 million, will it be a one-time thing or will it be recurring every year. Personally, I am biased against insurance products, but I do recognize that they are valuable for certain individuals.

Mbozek, don't you think there is room for abuses if you don't alllocate the forfeitures until all participants but the owner are gone?

I think you have a problem and you should look at the plan provisions pre-merger. By the way, did you file for a determination on the merger? Since you had unallocated money, I believe it was required. My guess is you didn't file otherwise the IRS would have told you to use the forfeitures prior to merging the assets.

You have to allocate the earnings to the participants who missed them, hence, the allocation should be made prorata the contributions of each payroll.

Your plan failed the comp test, that's ok, all you do is used a different compensation that satisfies 414(s) (like any 415 def. of comp.) As Tom pointed out, now, you end up with different contribution rates and you have to perform the general test (and maybe Xtest.) The problem I see is your SHNEC is based on a compensation that is discriminatory and therefore, your plan is not Safe Harbor for that year.

I think the DOL only sends these letters to make the general plan sponsor population aware of the correction programs available. I would reply to them that the plan has already corrected the problem.

Agree with LC, remember, RMDs are not eligible for rollover.

Try employeelocator.com, it's $10 per part, response within 24hr.

As long as the only contributions to the plan are deferrals and safe harbor match, the plan is deemed to satisfy the top heavy minimum.

Here is the cite that should put an end to this nonsense: 1.414(q)-1T (Q&A-3© (2) Applicable dollar threshold. The applicable dollar amount for a particular determination year or look-back year is the dollar amount for the calendar year in which such determination year or look-back year begins. Thus, the dollar amount for purposes of determining the highly compensated active employees for a particular look-back year is based on the calendar year in which such look-back year begins, not the calendar year in which such look-back year ends or in which the determination year with respect to such look-back year begins. So, every one is right except KB, Brian was wrong for a short while but he did a marvelous flip-flop

I agree with Tom, adding a discretionary match will provide the sponsor the flexibility to increase the match. If you want to provide an enhanced SH match that will be different every year, you will have to amend the plan each year and that not the best solution. And since the SH notice has to explain the match formula to the participant and has to be provided before the year begins, the sponsor won't know how good the year was anyway. Also, to preserve the automatic pass on the ACP, make sure the sponsor does not match deferrals above 6% of comp.

I agree with Wannabe, you don't have a SH for that year and have to run the ADP/ACP. Now, if the year in question is post GUST restatement, you may have a qualification issue (that was actually discussed at a Corbel seminar one of my colleague atteneded last year.) As far as correction is concerned, you really have a problem as this is not discussed in EPCRS. The problem is not so much with ADP and ACP, but with the NHCEs who didn't defer and might have had they known about the SH contribution (especially if in the case of a match.) You may have to contribute a QNEC to all NHCES to bring them to the level where they would have maxed their match. At any rate, I would not do it without the Service approval.

TP, you're right on the money... 2005 Pension Limits

If you think it's discriminatory, then every time you have a match based on a capped deferrals (i.e. 100% of first 6%) you would be discriminating. A formula that would work to achieve your result would be 600% of the first 1% (assuming no one deferred less than 1%, or 6,000% of first .1%)

It was actually announced today, see IR 2004-127. 2005 Pension Limits

I suspect that you have a payroll company trying to impose its own system limitation on the administration of the plan in contravention of the plan terms. If I was the participant affected, I would be fighting for my benefits.

For contributions recharacterized as catch-up due to an ADP test failure, you will actually look at the catch-up limit for the calendar year in which the plan year ends (in your case 2004.)

Plan sponsor of a Safe Harbor 401(k) failed to remit the Safe Harbor contributions for PYE 12/31/02. They will ultimately deposit the contributions adjusted for earnings. The auditor insists that a schedule G should be included with the 5500 to report prohibited transactions on the use of plan assets. I arguing that unlike participant deferrals, which become plan assets as soon as the sponsor can segregate them, employer contributions do not become plan assets until actually contributed to the trust and therefore there is no PT for use of plan assets. Does anyone think we have PTs to report?

We took over that plan during the year and have been appointed as corporate trustee. We weren't trustee during the period in question.

How would you handle the schedule P for a self-trusteed plan when the trustee is deceased?

If the document is drafted to only include the first 205k, then the particiapnt should not be able to defer. It seems to me that the service provider is not consistent. How can he have compensation to defer but not to get matched?

Chaffee, Nobody wants to reply, that's because you don't give enough info (who owns company A? How many execs own what of B&C? Do they own Co. A? What kind of business are these? Do B & C provide services to A? etc...) You really want to look at whether the companies are part of a controlled group or affiliated service group. refer to IRC sections 414(b), 414© and 1563 for CG, 414(m) for ASG. There are lots of posts on the subject. If you are not familiar with the rules, it's best to let the client's counsel make the determination. Actually, even if you are familiar with the rules, it's best to let the client tell you as this determination can be construed as practice of law. If they are CG or ASG, you have to aggregate the plans for 410(b). If each plan passes 410(b) on its own, you can, disaggregate for ADP/ACP, otherwise, you have to test them together. If they are not a CG/ASG, you cannot combine the plans for 410(b) and ADP/ACP testing. And by the way, because A owns 70% of B & C, you have at least a CG for 415 purposes.

I disagree, I've always considered them interest bearing cash. For what it's worth, the 5500 Preparer's Manual agrees with me.

RB, keyword in your post being preliminary. I think we're all in agreement here. Bottom line is the sponsor should trust the TPA and provide them with the info they need, the TPA should trust the sponsor and accept the information on whatever format the sponsor wants to provide it.

What does the plan document say? If it doesn't say what you want, you can always amend it, no?