betheeg

Back to the adding matching contributions to the deferrals and just running an ADP test. I am auditing a plan that is doing this and the TPA is saying that it can be done. She faxed me the definition of "elective contribution" which says "In additon, the Employer matching contribution which is used to satisfy the ADP tests and any EMployer QNEC which is used to satisfy the ADP test shall be considered an Elective Contribution for purposes of the plan. Any contributions deemed to be Elective Contributions (whether or not used to satisfy the ADP or ACP tests) shall further be required to satisfy the nondicrim requirements of regs 401(k) and 401(m)." The tpa noted that this is not a reclassification of match in order to pass ADP. SHe is saying that since the match is defined as an Elective contribution, than it can be tested in ADP. I trust what you say but how to explain this to the tpa? Thanks so much for the help.

as long as you pass testing, can you exclude per diem employees? and I assume it would have to state that in the doc, right? any problems with this? Thanks for any help.

so if in fact it was an an employer match contribution that was made, it needs an ACP test. 1 more question about ADP testing. Can you run the ADP test excluding employees that have worked less than 1 YOS when in fact those employees are eligible immediately upon hire? Thanks, Tom.

Can a 401(k) plan simply add the matching contributions (100% immediate vesting provided) to the employee deferrals and just run an ADP test? Thanks for any advice....

Can a terminated participant receive a distribution from a 401(k) plan that is to be rolled over into an IRA, "hold" the money for 59 days, then make the deposit to the IRA? (The person wants use of the money in the meantime). I don't like the situation, but is there any rule against doing this? I should also mention it is one of the trustees of the plan. Thanks for any help.

Apparently this TPA "shops" for the cheapest rates, then the premiums are paid from the employer to the TPA, and they in turn pay the insurance company. They also process any claims. They did put a code in the NAIC, policy year is correct, nothing completed for fees and commisions, 7 is completed for stop loss, 8 is balnk, and 9a is completed. So what to do from here...contact insurance company directly? Thanks for the thoughts...

This is an unfunded welfare plan that does not require a schedule C reporting. The TPA actually completed the info right on a schedule A...I just had never seen that before. Has anyone else seen this? Thanks for the response, Vicki!

I posted this in the Form 5500 board and didn't get any responses. Maybe I can get some help here! When filing a schedule A for a welfare plan, I have always reported the insurance carrier. I just received schedule A information where the TPA is listed instead of the ins. carrier. I have never seen this before. Has anyone else? I called the TPA and all the person could tell me was that it is their name on the schedule a because the premiums are paid to them and they process the claims. Anyone else have an opinion on this? Thanks in advance for any help.

When filing a schedule a for a welfare plan, I have always reported the insurance carrier. I just received schedule a information where the TPA is listed instead of the ins. carrier. I have never seen this before. Has anyone else? I called the TPA and all the person could tell me was that it is their name on the schedule a because the premiums are paid to them and they process the claims. Anyone else have an opinion on this? Thanks in advance for any help.

We have an accounting client that has recently asked me to look at their options for retirement plans. They told me they had a Simple Ira in place. After reviewing, this is the list of problems they have: 1. There plan document is a SEP plan document. 2. They have been remitting employee deferrals "when they get around to it" - maybe once a quarter...randomly at best. 3. They have excluded a part time employee that should have been included for 3 or 4 years. 4. They have been withholding employee deferrals AFTER TAX - yes - I said after tax!!!!! 5. The match for 1 employee has been done consistently incorrectly. I know this "plan" is screaming for the VCP - I just have never had to do that before. Can someone give me ideas on how to file - or if I can with a Simple Ira - and what they would be looking at for maximum penalties??? what is the basic process for going throught the VCP? thanks for any help- Beth

so janetm, the plan is just 401(k) deferrals right now, but they are thinking of going to safe harbor. So I'm assuming we could not exclude the union employees from that. And what if they wanted to make a PS contribution? My understanding is that you if you want to exclude a group they are either in or out...you can't just exclude them from certain contributions. Thoughts???

We have a client that established a 401(k) years ago. A few years later, a union was formed. The union employees are covered for retirement throught he union, so the client wants to know if there is a way to now exclude these union employees from the company 401(k). Can you do this with a simple amendment? And could the now excluded union employees keep their balance in the plan? Any thoughts are appreciated....thanks in advance.

Very helpful Andy, much appreciated. One other thing. Why are your arguments against 412(i)? Again, not my area, but I have read and heard that you are able to put more money away with a 412(i) vs. a DB.

AndyH- The 412(i) was the client's idea. From my understanding (which is extremely limited with DB plans)412(i) is funded with insurance contracts and annuitys. The client also wanted a way to be able to have some money invested in the market, hence the 401(k). To be honest, this is not my area at all. I was just trying to get the original question answered for one of the partner's at my firm. If you think there is a better way to do this instead of the 412(i) that can accomplish the client's goal, please let me know. I am open to suggestions! Thanks so much for the help!

So there can be no employer contributions put into the 401(k), not even for his wife? Thanks for the input so far.....

We have a client that wants to put as much $ away as possible in the next 5-10 years. He is a sole prop. His only employee is his wife. They are both in their 50's. If he establishes a 412(i), can he also set up a 401(k)? (I believe he can, but want to be sure.) More importantly, if he sets up the 412(i) and maximizes his and his wife's contribution, what will they be able to contribute to the 401(k) (deferrals, employer contribution)? What do you guys think about this? Opinions? Other options? If more info is necessary to answer my questions, let me know. Thanks in advance for the help.

We have a client that has a health insurance plan with a $1000 deductible. The company has agreed to pay any bills until the deductible is satisfied, then the insurance kicks in. Is this an HSA? If not, what kind of arrangement is it? If so, they need a plan document, correct? And should it be administered by a third party (right now they are doing it in house)? Any help is appreciated...my knowledge on these is so limited. Thanks

We have a client that has a health insurance plan with a $1000 deductible. The company has agreed to pay any bills until the deductible is satisfied. Is this an HSA? If so, they need a plan documnet, correct? And should it be administered by a third party (right now they are doing it in house)? Any help is appreciated...my knowledge on these is so limited. Thanks

Thank you all for your thoughts, very helpful! ~Beth

Thank you both for your thoughts. ~Beth

I have a client who dissloved a business (corp) midway thru 2005. He then established a new business (sole prop) in another state. He had a profit sharing plan for the old business. He established a new plan for the new business. He is the sole owner of both. Can he maximize to the 415 under both? My initial thinking is no, but wanted to be sure. Thanks for any help.

As of the last audit (2004), 222 participants.

Good point. I am also looking for ideas on how this will be done administratively. Would they have to term the existing plan? And will it avoid the audit?????

My firm does the audit of a large 401(k) plan that is sponsored by a company that has several entities. We find several mistakes in the third party admin every year. The TPA has suggested to the plan sponsor that they should establish a plan for each entity seperately in order to avoid the large plan audit. Can this be done? Our initial thoughts are that 1)he wants to avoid anyone overseeing his work 2) he has found a way to switch the income paid to us for the audit to go into his pocket (how expensive it would be to set up plan docs, and annual admin for 5+ plans!) Please give me any thoughts and suggestions. Thanks.

Right. I have him at 7.9% of comp because I had to keep his EBR lower than 3.70%. Everyone else is 3% of comp. EBR's for HCE"S are .85%, .79%, and 3.67% EBR's for NHCE's are 2.47%, 1.93%, and 3.70%. So I think I am OK.