betheeg

Sieve, I'm wondering if this could work if you change the NRA to 60 and then provide for an early retirement date at 55?

A potential client has a SIMPLE IRA. In July 2005, 2 newly eligible employees enrolled. Financial Advisor gave the employer the new account numbers to make deposits. The account #'s got switched (employer doesn't know if Financial Advisor gave them wrong or she mixed them up). The error was discovered in January 2008, but the deposits for these 2 employees have gone in switched since July 2005. Total contributions of $9,000.00 (less than 3% of plan assets). The employer has attempted to correct problem with the investment company since dicovering it in January 2008. The investment company has the capability to go back and "redo" the deposits in both accounts so that gain/loss would be correct. They told the employer the correction would be made. They asked for and were given signed letters from the participants involved and a breakdown of the contributions. They have been stalling for 6 months and have now sent the employer a letter from their compliance department stating that the employer needs to go through the VCP and that they will not process any corrections without a compliance letter from the IRS stating that the correction is allowed. 1. Can the investment company require that to make a correction? 2. Couldn't the employer use self correction since this is an administrative error that can be corrected to the penny? Thanks in advance for any help on this.

Thank you for confirming!

A participant that is older than 59 1/2 wants to take a non hardship in service distribution of his 401(k) deferrals. Is this allowed even though the plan does not allow for in service distributions? I always thought that the plan needed to specifically state if it allows in service at a stated age but i am getting conflicting info that you are entitled to 401(k) deferrals "automatically" at age 59 1/2. Thanks in advance.

I have seen posts with 2 different opinions and just wondering what's the correct way to handle this. 401(k) established in 2001. For the 2005 & 2006 Form 5500 the incorrect EIN was used (typo - one number off on the end). Do you file 2007 with correct EIN and reference the incorrect # that was used for the past 2 years in Question 4 of the 5500 OR go back and amend the 2005 & 2006 form 5500s including schedules? Thanks for any input.

Lori - yes the business obtained a new EIN. Bird - good idea and the doc does allow adoption by other employers. Thanks for your input.

We have a sole prop client that incorported mid plan year - same employees. His plan is a safe harbor 401k with profit sharing. I know amendments to the plan are needed - new plan sponsor, tax id. Would you also include an amendment for the prior service under the old plan sponsor? Anything else I am missing? Also, how would you handle calculating the contribution for the year for the owner? Thanks for any help with this.

We have a client that has a welfare plan. During the plan year the company was sold off. A small portion of the company was bought by new owners, new name, new tax id #, but same employees. They are using the same plan document. I believe they need a new plan document for the new company with new effective date, tax id, etc. The HR person has a different opinion. I also believe the Form 5500 for the welfare plan should be filed as final. If I need to include more info - please ask! Any thoughts on all of this would be appreciated. Thanks.

But based on some of the opinions above, even IF an amendment was made to allow changes more frequently, there would still be a problem with the definition of comp. If the definition includes overtime, is there even the option of having her sign an election form stating no reduction on the overtime check? Or would the definition of comp need to be amended also to exclude overtime (which I wouldn't recommend)? I think my recommendation is just going to be to deny the request. Thanks again for the help.

Thanks so much everyone for your responses. JanetM-this is a small plan with an HR dept communicating with the employees. It would not be a huge deal to not withhold from the overtime check. However, the plan only allows changes to an election Jan 1 and July 1. So, I do believe it is an operational failure to allow them to not defer on the overtime check, even with a signed election for every check. Do you agree?

Definition of comp includes overtime. Overtime is paid in a seperate check to employee. Employee would like 401(k) deferrals taken form regular paycheck only. Can this be done by having employee sign salary reduction agreement stating no 401(k) from overtime checks? Thanks in advance.

I know that there are diffrerent permitted disparity allocation formulas, but didn't think that they all got an automatic pass on 401(a)(4). I thought it was only the ones I had mentioned in the original post. Any other thoughts?

We are auditing a plan that is a 401(k) that provides a match and a profit sharing contribution using 4.3 and $40,000. I have asked for the 401(a)(4) and the TPA is telling me that it is not needed because any integrated allocation is a safe harbor allocation and therefore the test is not needed. I thought that the only safe harbor was a pro-rata and an integrated allocation using 5.7 and full TWB, or 5.7 and 20% of TWB. Am I missing something? Thanks for any thoughts.

Good to know Jim. I think that's the way I will handle it as well. Thank you!

It is a volume submitter (Relius).

In a 401(k) plan that is currently participant directed, can you switch to a pooled account that would be trustee directed? All of the participants leave their money in money market and have expressed interest in having the employer handle the investing for them. Would this take anything more than an amendment? Thanks for the help in advance.

mjb-I also agree that this client should not own RE under the plan, but as I'm sure you know, some clients do what they want regardless of what advice they are given. I'm basically just trying to help out for now, but am shooting off a letter today with (again) the suggestion of legal counsel if they are to keep RE in the plan. I agreed with PP's reponse, I just didn't like the pompous way he said it. There's a tactful way to say just about anything. Any question asked -no matter how simple - can lead to good discussion and be a learning experience.

Sorry for the confusion QDRO, and thank you for answering my question without making me feel like an idiot.

Thank you for the answer to my question, Pensions, however I find your last sentence a bit harsh. This is the first year he has owned land under the plan and my only client that owns real estate under a plan. I assumed the taxes were paid with plan assets but wanted to be sure. I thought these boards were here to get help and ask questions? We are a small firm and I use benefitslink when I cannot find answers in my resources. Also, many of my clients are small businesses that cannot readily afford legal cousel.

What do you mean by "charged to the account"? Charged to what account? I'm asking if he should pay with his plan assets like he's doing with the ins premiums for the land.

Profit Sharing plan has partcipant directed accounts. 1 participant owns land. He pays the insurance premiums for the land from his assets, should he also pay real estate taxes from his assets? Thanks.

If a participant has a 5 year loan to be paid back quarterly, can he prepay the year's payments in January? (i.e $250 payment per quarter of 2007 but pays $1000 in January 2007, then doesn't make another payment until January 2008).

Plan participant dies and plan sopnsor cannot locate beneficiary form. He was single with no children. The plan doc says beneficiary without a form is parents and then estate. Parents are still living. The plan sonsor received a letter from an attorney asking for the participant's balance to be made payable to his estate. She attached the Probate of Will from the court naming his sisters as executrix's of his estate. Does this document override the plan doc so that the distribution to the estate can be done? And is there a time frame that this must be done within (the participant just died this summer)? Thanks for any help.

We have a client that owns 3 different entities and he wants to set up a sect 125 plan to allow pre-tax premiums for the employees of all 3. Does he need a seperate plan for each entity? Or can this be under 1 plan? Thanks for any help.

Thanks for the response, Disco. But the tpa is saying that the contribution is a match, not a QNEC. She is saying that since it is 100% vested and defined as an "elective Contribution" that the match can be tested in with the ADP. Tom says that can only be done if the contribution is a QMAC, and I've never known him to be wrong. But then I get this explanation from the tpa and the definition of "elective contribution" is confusing to me. Any other help?