Lori H

The profit sharing plan I'm working on has forfeitures. The plan document states that forfeitures are to be used in the year following to reduce the employer contribution. If the sponsor is not making a contribution what should be done with the forfeitures. Should they be reallocated using the contribution formula? The plan is top-heavy and the contribution formula is non-integrated. Thanks for the help.

A nhce/non owner participant terminated Feb 2013 at age 74. In March she subsequently rolled over her account to an IRA. Later in the plan year she received a deposit into her former employer's 401k equaling the 2012 employer receivable. She still has a small balance in her 401(k). Is the plan responsible for issuing her a 2013 RMD or the IRA?

so it IS required.

They don't need to fill out a special form outside the standard Benefit Payment Election Form such as a W-9P do they?

a participant (under age 59.5) wants to have 30% withheld from their distribution. Do they just elect this on the Benefit Payment Election Form and/or does a Form W-9P need to be completed?

The gender of the OP is not quite right. And fyi the word 'reportable' is nowhere in the def of comp, if it states "wages, tips and other compensation on Form W-2" then that is Box 1 on the W-2.

Doesn't Box 1 already exclude all deferrals? Perhaps you mean "Box 1 less comp prior to entrydate"? you are correct. sorry for the confusion

Comp is based on plan year and with respect to any participant means: "Wages, tips and other compensation on Form W-2". I gather this means Box 1 on W-2, yes? However, the only adjustment to compensation is "excluding comp paid during the determination period while not a participant in any component of the plan for which the definition applies" Therefore, mid plan year entry would exclude compensation earned prior to that entry date. Since "including Salary deferrals" was not checked as an adjustment then comp for plan purposes would be W-2 Box 1 less deferrals, correct? i.e. $10K Box 1 W-2 less $2K deferral would be $8K for plan purposes? Therefore potentially lowering match funding for participants who did not exceed 401(a)17.

thanks for your response. some participants do not defer. we use ft. william and it is aware that the plan is TH. I just want to ensure that the p.s. allocation is being done correctly (uniform percentage) which in this case is 1.4% of pay as opposed to the comp. % in the document. And since the 1.4% is less than 3% top heavy minimum, despite a SH match, that the sponsor does not need to fund the full 3%.

small plan that is top heavy contributes a safe harbor match and a profit sharing contribution. Document states p.s. is allocated based on a comp percentage. however, system is allocating profit sharing giving each eligible participant a p.s. contribution of 1.13%. Is this acceptable? The plan has $36898.22 of it's $90,000 employer contribution after a $53101.78 safe harbor match.

2 member LLC. Schedule K-1 income subtotal was $409349. I believe you deduct Sec 179 which was $5946 and then deduct deferrals which was $22000 is there another calculation to be made before you arrive at earnings for plan purposes? I believe both partners have earned well in excess of 415 limit, but just want to confirm.

participant has an IRA and a profit sharing plan. He is 75 and his wife is the owner. Can he satisfy the profit sharing's RMD by taking it solely from the IRA?

Just some thoughts. 1) Get a SH match account set up now. 2) Is there any way the r/k can go back and separate regular match and SH match? 3) If not, you'll have to amend the plan to allow for SH from deferral and PS only. 4) Have any distributions been made for anyone who had regular and SH match and who was not 100% vested? If you, you forfeited too much. 5) Did anyone tell the ER they should open a new source? It should be part of your procedures, when doing the SH amendment, to let them know that it is a separate money source. 6) Is this the first year of the SH match? Why wasn't this seen during the annual reconciliation? 1) Done 2) Yes 3) Plan was amended for SH several years ago 4) No. Plan has 100% vesting 5) Not until this week. 6) No. Good question.

i see in EPCRS where they mention "abuse of hardship provision" but they don't really address how to prevent it. Of course you have to make a loan first unless that leads to greater hardship.

Going back to the 2006 plan year a participant has requested a hardship distribution each year and has requested another for the current year (prevent foreclosure). The sponsor is properly documenting the hardship. It seems as if the participant defers for 6 months, takes a hardship, sits out for 6 months and then starts the cycle again. What other steps should the sponsor take?

When the plan went Safe Harbor, the sponsor did not add a safe harbor match source to their deposit template. They just kept depositing funds into their pre-safe harbor Employer Match account. Therefore the financial institution would not have been alerted to the issue. The plan strictly only has safe harbor, employer match and deferral funds, but the financial institution only was aware of er match and deferrals.

Sponsor has been allowing hardship distribution of safe harbor match and earnings for a few years now. IRC 401(k)(12)(E) prohibits this. What is an appropriate course of action? Also, what is the govt. reasoning behind this? Is it because an employer match is discretionary while safe harbor is required?

Thank you. Quick follow up on proper Divisor Amount. Owner was born 9/8/42. age 70.5 3/8/13. Wife is beneficiary with DOB of 9/14/42. Would the divisor amount not be 27.4? Our system is calculating the RMD using 26.5

Does the still employed father of the sole owner get an RMD at age 70.5? The father was once the owner. Not sure if the family attribution rules would still apply to the father here.

hello, a plan wants to amend their plan to add automatic enrollment to newly eligible employees effective the beginning of the next plan year. Can the plan limit the amendment to just newly eligible employees or do current eligible employees have to be subject to the amendment as well?

I see 2 separate issues. One is determining the beneficiary and the other is whether that beneficiary can receive a QPSA. QPSA is in code section 417. My opinion is that the consensus is that when the QJSA and QPSA consent rules are involved, preexisting beneficiary designations naming alternate primary benes will become null and void at the moment of marriage. So now you have to go back to your plan and read for a certain nuance... a spouse beneficiary who does NOT get the QPSA. It might simply mean she's treated mostly like a nonspouse; she might have to wait until a later date to take distributions or she might not get certain forms of distribution; just have to read your plan to figure it out. The key is that the validity of the consent is not contingent on a year of marriage, rather it's the availability of the QPSA that requires the year. (But the fact it's a 403(b) makes me less than 100% certain on the whole thing. I did find that some 403s can be subject to QPSA, so then it seems those rules would follow thru in full.) Edit: is the plan definitely subject to ERISA? Then my answer stands http://benefitslink.com/boards/index.php?/topic/51441-spousal-consent/ yes it is subject to ERISA. thanks for link

The plan doc does have a QJSA provision as well and states even if the Participant was not married for a year an annuity can be purchased as a distribution option. Does the fact that the participant got married preclude the niece from receiving funds even if a new beneficiary designation naming the spouse was not made?

hmm, that's what I was thinking initially, but then we got to discussing it in our office and thought that the fact that the spouse did not sign off on it would leave her open as beneficiary.

the plan sponsor has confirmed the participant was not married to his spouse for one year at the time of death.

The plan sponsor has confirmed the participant was NOT married for one year at the time of his death