Lori H

i would like to bring this issue up again. a plan fails the adp for the 2005 calendar plan year. the plan allows 100% of comp to be deferred. two of five hce's are over 50. those two hce's defer 13,000 in 2005, however if $4000 is recharacterized as a catch up, the plan passes the adp. so in theory $9000 is used when running ADP. is that ok? or is the proper method: determine how much excess would have to be refunded to the hce's by calculating the excess to each hce by leveling, if the excess does not exceed the catch up limit, then no refund is due. for example these particular hce's deferred the highest dollar amount and therefore would get the first reduction in the leveling method and if the amount of excess was $1000 each to pass adp then that amount would be classified as the catch up. what's the catch?

A participant in a profit sharing plan is deceased and so is the spouse. The company does not have a beneficiary designation on file. What options are available to the administrator for distributing the account balance?

WDIK we have pretty much always used the previous years figure in line 7f on the 5500 and carried that over to line 6 on the current year 5500. this reports total number of eligible participants, not those with account balances. so if i am interpreting this correctly, a plan with lets say 130 eligible participants at the beginning of the plan year would be required to have a plan audit, a participant is defined in the instructions as anyone who is eligible, even if there were only lets say 20 of those eligible actually participating.

if a plan has over 120 ELIGIBLE participants but lets say only 50 are actually participating, does this require an accountants opinion?

a participant in a 401(k) rolled his balance into an ira when he left the employer. now, after surrender fees have passed, he wants to roll this ira into another ira that he has set up. is this ok??????

I am a little confused. I've read that 403(b) plans are subject to the automatic rollover of mandatory distribution rules. If the participant already owns the contract what would there be to rollover? Thanks for the help.

generally can a plan rollover annual payments to a term participant over 5 years?

wdik even if she is NOT in the TPG due to comp, she would have to be in TPG due to being wife of 5% owner? thanks.

current adp for the hce group is 27.43% hce's consist of 95% owner, owners father and owners wife. other 5% owner is owners brother who is not an employee. was wanting to look at top paid group and see if i could help them get a lower refund back. question is owners wife, who's adp is 61.4%, made only $17k in pye 9/30/05. she would not be in the top paid group, but would she still be considered an hce due to attribution? also, the plan doc. does not clearly state top paid group as an option for adp, just current year data. could a retroactive amendment be done to allow for top paid group?

i believe that to be the case as elective contrbutions but not including elective contributions that are catch up are considered annual additions under irc 415

can you rely on a form only determination letter issued on a non-standardized prototype without subbmitting for an opinion on the effect of other federal or local statutes? all non-standardized plans i've come across have been submitted for determination

upon our review of a 2 participant psp with an effective date of 1/1/95, they never updated for gust/egtrra, which we agreed needed to be submitted under VCP. upon digging deeper, the original non-standardized prototype doc was never submitted for determination. should this be disclosed under the VCP? we are updating to a gust approved Standardized prototype doc.

2 particpant/2employee psp has been in effect for 10 years plus. father son plan. the assets are separate brokerage accounts and a life ins policy for each. the son is on disability. plan has not been funded in quite some time. the fathers brokerage account has been distributed to him. he's over 60. initially they wanted to terminate the plan, but now their agent is pushing to freeze the plan in order to avoid the heavy tax penalty on the csv($71,000). we did a corporate resolution to terminate and it was executed. i feel the plan should be terminated, but would there be any way around the fact that the plan was in existence to avoid taxation? ive never been a fan of life policies in qualified plans.

actually, the current trustee/owner is not participating in the plan. his father the former trustee and owner has a large balance, but the policy would cover all the participants i guess in the event of the demise of the owner. would the corp. be the named beneficiary of such policy?

has anyone ever seen a plan that had a policy to pay the plan's participants in the event of the demise of the trustee/owner? could a key man policy be purchased to effectively do the same thing. plan has appx. $750,000 and 211 shares. i have personally never heard of any such policy.

new client wants to utilized VCP to correct failure of updating plan for GUST/EGTRRA/401(A)9 etc. 2 participant psp. since i have never had to file a VCP and am not an enrolled agent, i am not eligible to include Power of Attorney. it would be a waste of my time, money, etc to become an enrolled agent unless i was doing VCP filings frequently. what options do i have other than to prepare the application and have the plan sponsor sign off on it? any unenrolled agents have experience with this?

basically the letter states that the plan doc has not been updated, that it qualifies for VCP, attributable fees (both VCP and our 5500 admin), and advising them of potential liability if the plan got looked at. ultimately, this plan was neglected and did not have proper guidance by it's accountant. plan sponsor(guitar shop) was pretty much in the dark. all that's left in the plan is sponsor's money, the only other participant was paid out. hence, i doubt that participant would cause a stir i.e. lawsuit unless the plan was in fact audited and faced disqualification. since plan sponsor does not really want to pay the couple of thousand it would cost to bring the plan into compliance through VCP and getting a new doc., there would really be no benefit in starting to submit schedule P's, since if it got audited, he would tagged irregardless. true? the statute of limitations really wouldn't apply or would be a mute point.

yeah, i have sent them a letter outlining the VCP process, fees involved and ramifications of non compliance. i think they are going to just keep there fingers crossed. it's more of a money issue with him i think. it will be more than that if the govt comes a knockin'

1) non standard protoype doc was never updated for gust/egtrra/401(a)9 and 2) new client did not want to apply for VCP under EPCRS, but wanted to terminate plan would you... A) prepare final 5500 with schedule P. showing assets liquidated or B) run from this "dog". Note: plan is profit sharing est jan 1995. two participants. less than 200k in assets. any "benefit" to filing schedule p, since if it does get audited, they would be in world of hurt regardless?

i have been through this. company's 401(k) got dol audit. dol discovered they did not have a bond and all they required them to do was get one and send them copy of bond. no penalties.

a husband divorced and received a order. the wife elected to receive the payments in monthly installments effect. jan06. amount is appx $950 per month. husbands plan is governmental and ex wife is 401(k). she wants to rollover payments into her plan, but what if she died a year from now? would they continue to her beneficiary or would she have been better served taking a lump sum rollover into her plan? thanks.

employer will be receiving state grants to propose outdoor projects at various schools. plan to increase number of employees drastically after a few years(maximum of 500). no physicians. 457(b) coupled with 403(b) sounds like a good low cost plan.

never mind, i found my answer in a QDRO thread.

a participant in a profit sharing plan has received a lien. the lien wants to attach his account balance to pay for back child support of appx. $4500. has anyone seen any rulings on such?

so would it be better to just, rescind the SIMPLE 401(k) provisions during the plan year and go traditional 401(k) with an effective date being the first day of the next plan year?