WDIK

Based on the way you describe the plan language, neither the age nor service limit would appear to apply to those employed on the effective date of the plan. Additional insight into the plan document may yield a different interpretation.

I have no citations to back up my understanding, but I believe that for Form 5500 purposes, the transaction is only reported once, in the year that it occurred. As you point out, it will continue to be subject to excise taxes until it has been corrected.

I would also like to express my sympathies.

I can see how the phrase "by the way" could be used in an arrogant and insulting way. I can also see how that phrase could be used in an entirely benign way. It seems to me, however, that there is only one way to use the phrase "take your elitist, holier than thou attitude and shove it!"

Creative, but it will not be a newly established plan if it is a successor plan.

For an existing 401(k) plan, the amendment to a safe harbor plan must take place before the beginning of the plan year. (In other words, you will have to wait until 1/1/2008.) Notice must be given at least 30 days, but no more than 90 days, before the beginning of the plan year. I do not belive that current versus prior year testing has any impact in changing to a safe harbor 401(k) plan.

The latter.

They should be able to establish a 401(k) plan.

Participant loans from qualified retirement plans must meet certain statutory requirements such as the level amortization requirement, repayment term requirement, enforceable agreement requirement and dollar limitation requirement. Refer to Section 72(p) of the Internal Revenue Code. Participant loans from qualified retirement plans must also meet the provisions spelled out in a plan document and loan procedure policy, which should include language regarding interest rates, number of loans, etc.

From the Form 5500 instructions: "A 'controlled group' is generally considered one employer for Form 5500 reporting purposes. A 'controlled group' is a controlled group of corporations under Code section 414(b), group of trades or businesses under common control under section 414©, or an affiliated service group under section 414(m)." In addition, be cautioned that the Form 5500 instructions also indicate the following: "A separate Form 5500, with box A(2) checked, must be filed by each employer participating in a plan or program of benefits in which the funds attributable to each employer are available to pay benefits only for that employer's employees, even if the plan is maintained by a controlled group." Is that sufficiently confusing? (As a cautionary note, just because each entity funds separately does not necessarily mean that those funds are only available for that employer's employees.)

Unless I'm misunderstanding the original post, I think there should be one Form 5500 with code 3H for controlled group on line 8a.

The 1996 instructions for the Schedule B added the following phrase: "The Schedule B does not have to be filed if Form 5500-EZ is not required to be filed (in accordance with the instructions for Form 5500-EZ);" Since such phrasing did not exist in the 1995 instructions, I would propose that there was some reason the IRS felt it important to clarify this matter.

In the situations I am familiar with, the filings were not made because of any particular benefit that might have been reaped. Several years ago, some felt there was ambiguity (which has more recently been clarified) about the necessity to file a Schedule B, even if plan assets were below the threshhold. The parties involved took the conservative approach of filing because of that uncertainty.

I have never had such a filing returned.

This statement was surprising to me. Are you sure? Are such filings just not processed, shredded, or what?

A final filing for the 2007 period will be required.

mjb: Are you asking a question to which you already know the answer?

Does the plan allow for hardship distributions? If so, does it allow for retroactive hardship distributions? Timing will be an issue with respect to the occurence of a deemed distributions. When did or will the failure to make payments in accordance with the terms of the loan(s) happen? The entire discussion may be pointless anyway if none of the loans are going to be repaid.

Although the following from the 2002 Annual Conference IRS Questions and Answers does not directly address the 5500 reporting issue, it may be of interest to note that a receivable discretionary profit sharing contribution certainly is an asset as of the end of the prior year for some purposes. p 49. Receivable Contribution and Top Heavy Determination? Is a discretionary profit sharing contribution for the prior plan year that is deposited after the end of the prior plan year included in the top heavy determination for the current plan year? Let’s say we have a calendar year plan, effective several years ago. We are determining the plan's top heavy percentage for the 2002 plan year. The determination date is therefore 12/31/01. The employer makes a contribution in February, 2002, which is allocated and deducted as of 12/31/01. There is a question as to whether this contribution is included in the top heavy determination for the 2002 plan year. The question relates to Q&A T-24 of the 416 regulations, which says that if a plan is not subject to 412, then the account balances are not “adjusted” to reflect a contribution made after the determination date. A. The key phrase here is “account balance”. The participants’ account balances, as of (say) 12/31/01, include the profit sharing contribution that is allocated and deducted for the 12/31/01 plan year end. So the guidance regarding “adjustments” does not apply to the receivable profit sharing contribution; it is already part of the participants’ account balances. The following is my analysis: The question as to what contributions are considered due on the determination date is determined under §1.416-1, Q&A T-24, which says that it “is generally the amount of any contributions actually made after the valuation date but on or before the determination date”. It then goes on to say that any amounts due under §412 are considered due, even if not made by the determination date. One could take the position that this is a exclusive statement; in other words, if a contribution is NOT due under 412 and is made after the determination date, it is not considered 'due'. However, the answer to the question (T-24), “How is the present value of an accrued benefit determined in a defined contribution plan” is answered, “the sum of (a) the account balance as of the most recent valuation date occurring within a 12-month period ending on the determination date, and (b) an adjustment for contributions...” The term, "the account balance" includes contributions credited to the account of a participant, it does NOT mean only the contributions actually made that have been credited. For example, if a 100% vested participant terminated after the determination date but before the contribution was actually made, the distribution would include that contribution, even though it had not yet been made to the plan. This is because the account balance, as of the last day of the plan year, includes the contribution. So, when the regulation addresses adjusting the account balance for contributions made after the determination date, we must start with the account balance, and then apply the adjustments. Since the account balance includes the receivable profit sharing contribution, the adjustment does not refer to the receivable. The reference to §412 in §1.416-1 is with regard to a waived funding deficiency that is not considered part a the participants' “account balance”, as the term is defined. Q&A T-24 refers to a DC plan with a waived funding deficiency that is being amortized. Such a plan must maintain an “adjusted account balance” (reflecting the amount of the contribution that has not been deposited) which must be maintained until the actual account balance increases to the point where it equals the “adjusted account balance”. It is to this (unadjusted) account balance that the (waived) contribution must be added, since the amortized contribution only becomes a part of the actual account balance as it is paid to the plan. The requirement therefore has the effect of determining top heavy status as though the contribution required under 412 had actually been made. In other words, the “account balance” would not include the waived minimum funding contribution, so an adjustment is required. We accept this analysis.

pax did provide an answer in one of the threads.

And triplicate. http://benefitslink.com/boards/index.php?showtopic=36181

101 Pension Miscues and How to Avoid Them by Summer N. Ept (Edit to avoid possible offense: The author refers to sponsors and not the members of this forum.)

Does this request from the client have anything to do with cost?

Since there are so many factors to consider before making this decision, most members of this forum would suggest that you get personalized help from someone that can review your entire financial situation. A few of the things that should impact your decision include: 1) Your age. A 10% excise tax applies for distributions prior to age 59-1/2. 2) Your tax situation. How much of the distribution will be used to pay the appropriate income taxes. 3) Your current financial need. Are you in a stressful finanacial situation without any other sources of income?

Many non-standardized prototype documents have received approval letters from the IRS.