WDIK

I don't feel comfortable using the term retroactive with respect to salary deferrals whether they are based on either positive or negative elections.

1) Prepare the Form 1099-R, immediately mail recipient's copy to home address (although this should have been done by January 31st, it is probably unlikely that there will be any ramifications), file IRS copy with 1096 by February 28th. 2) File form 945 along with appropriate payment and be prepared to pay applicable penalties.

I believe that Form 945 and Form 941 filings are treated similarly.

According to Publication 590, "You can file your return claiming a traditional IRA contribution before the contribution is actually made. However, the contribution must be made by the due date of your return, not including extensions."

I believe that potential reversion issue is applicable in a partial termination scenario, not in a standard termination. See Regulation 1.411(d)-2.

You might start by reviewing the instructions to the Form 5500. These can be obtained at this IRS website.

I believe that stock attribution between grandchildren and grandparents only flows in one direction. In other words a grandparent is attributed stock owned by a grandchild, but a grandchild is not attributed stock owned by the grandparent.

The regulation previously cited goes on to say: (b) The account balance is increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. For this purpose, contributions that are allocated to the account balance as of dates in the valuation calendar year after the valuation date, but that are not actually made during the valuation calendar year, are permitted to be excluded. (c ) The account balance is decreased by distributions made in the valuation calendar year after the valuation date.

It is if the plan is not top-heavy. EGTRRA only modified minimum vesting schedules as they apply to employer matching contributions.

A plan document may be drafted to apply different vesting schedules to different types of contributions.

That information does soften my opinion. If that information were in writing, it would further soften my opinion. If that information were in the plan document, it would soften my opinion like butter on a hot tin roof.

That looks correct to me. (Except it might be more correct to say "by" instead of "on")

So the possible dates to consider an employee a participant in the 401(k) portion of the plan are: 1) May 15, 2004 2) July 1, 2004 3) August 1, 2004 Number one certainly seems reasonable. Number two doesn't necessarily make sense since employees with a year of service prior to the execution date could have been eligible to defer prior to 7/1. Number three is based on the argument that employees cannot be considered participants in the 401(k) portion until deferrals can actually be processed. This appears somewhat arbitary as many factors could either accelerate or delay the process. Was there anything that actually communicated to the employees that their deferrals would/could not start prior to August 1st? It seems that at least some employees could have made elections well prior to August 1st, and based on the plan document alone, deferrals should already have been withheld.

From Treasury Reg. 1.401(a)(9)-5: Q-3. What is the amount of the account of an employee used for determining the employee's required minimum distribution in the case of an individual account? A-3. (a) In the case of an individual account, the benefit used in determining the required minimum distribution for a distribution calendar year is the account balance as of the last valuation date in the calendar year immediately preceding that distribution calendar year (valuation calendar year) adjusted in accordance with paragraphs (b) and © of this A-3.

It would be difficult for me to argue that a participant was eligible to defer before the plan was in place. What language does the document have regarding entry dates?

I have seen language in plan documents regarding deemed distributions that refer to participants that are nonvested in their account balance, but I don't ever remember seeing such sections refer to participants with no account balance.

Where I kept getting stuck in my thought process is that and that When does an employee become a participant in the 401(k) portion of the plan? It seems to me that it would be at the time such employee becomes a participant in the plan in general since the document does not address that issue. I did not really think about whether or not compensation from 8/1 was valid under 414(s) since it seemed such an option was not available based on the language described in the plan.

I would not be inclined to use the August date absence such applicable language in the plan document. I would not consider being eligibile to defer for plan purposes the same as being able (or unable) to defer for administrative reasons.

anagpal: I think that we agree that you report on line 7h participants that: 1) terminated employment during the year; 2) with accrued benefits; 3) that were less than 100% vested. I assume that you agree conditions one and three are met in scenario 1. If my assumption is correct, then we must disagree whether or not the participant had an accrued benefit. It seems to me that the second condition is met since the participant had an account balance. Could you please elaborate your position?

For scenario 1, I agree that the participant should be counted on line 7h. For scenario 2, I would lean toward the argument that participant would not need to be counted because such participant has no accrued benefit. The line description indicates to count "participants that terminated employment during the year with accrued benefits..." I would not be overly concerned if such a participant were counted, however.

Perhaps....rustle.

Might it be possible that this plan is not covered by the PBGC program?

It seems to me that it is precisely the incorrect syntax used in my post that promotes the attempt (as lame as it may be) at humor.

In this context wouldn't it be more appropriate to ask "Why keep putting your foot in your mouths?"

That is my understanding. These two entries are not necessarily the same. For example, if an employee's entry date into the plan is the first day of the plan year, such employee was not reported in line 7 of the prior 5500, but would be reported on line 6 for the current year 5500.