WDIK

I would also review this link.

Some answers can be found here and here.

Not to be a nitpicker, but the withholding amount on the $10,000 net distribution would be $2,500. (10000 / 0.80 = 12500)

If the contribution were being mailed under the above scenario, would the postmark need to show 5/14/05 or would 05/16/05 be sufficient because the postal service is closed for business on 05/15?

If the two of you would be kind enough to tutor me for a moment... What are the ramifications in the situation you describe if benefits to a participant are due and payable and yet the plan has no assets and a credit balance? Is such a scenario impossible, does the fact that a benefit is payable require a contribution to be made, or is the participant out of luck? Thanks for indulging my curiosity.

If the profit sharing plan is filing Schedule I, follow the audit rules for small plans (i.e. exempt if sufficient qualifying assets or appropriately bonded, etc.)

http://benefitslink.com/buzz/new.html (Second item from the top for 5/18/2005)

Since the brighter minds on the board have not responded I will share a thought, although it may be summarily rebutted and/or dismissed. I think that the ability to increase the deferral percentage allowed under a 401(k) plan was merely a by-product of some of the provisions of EGTRRA (i.e. the increase in annual additions limit and the exclusion of deferrals for deduction limitations), not a provision in and of itself. Therefore, it would seem that the "retroactive" nature of the good faith EGTRRA amendment is not applicable to this situation.

The following link may have been superseded since it is based on comments made in 1999, but I provide it for informational purposes. http://www.reish.com/practice_areas/Techni...ps/IRStip36.cfm

You seem quite upset by the situation, which perhaps has caused you to misstate or misunderstand several items. 1) In relation to plan documentation such as an SPD you stated "I have not received anything like that to my knowledge." Two hours later you are quoting from your "employee handbook" regarding investment direction. 2) As R. Butler points out there is a difference between choosing investments and taking a loan. 3) In one post you state that the plan administrator "has ignored phone calls and message requests" but subsequently indicate that the plan administrator spoke to you and misinformed you regarding your transfer. 4) It is also a little confusing whether we are talking about one plan with separate investment direction for vested money (hence your thought of a transfer from one plan to another) or two plans. As frustrating as the situation is, these boards can be of the most help if you can set aside the emotion of the circumstances and provide clear details. (Sorry pmacduff for echoing some of your thoughts. We must have been typing our posts at the same time.)

Your account is part of the entire plan and trust and is governed by the documents that established these entities. Some plans allow participant loans, while others do not. Some plans allow individually directed investements, while others do not. Some plans allow for inservice, hardship or early retirement distributions, while others do not. I would recommend that you review the Summary Plan Description that you should have been provided for an overview of the provisions your plan has adopted. If you are really ambitious, or have insomnia, you may want to request and read the entire plan and trust documents.

I probably didn't express myself adequately in the prior post. The point I was trying to articulate is that automatic enrollment requires no forms or elections, so a process that requires a form or an election seems to run contrary to the general premise of automatic enrollment.

The instructions for Schedule H indicate the following: "Delinquent participant contributions reported on line 4a should be treated as part of the separate schedules referenced in ERISA section 103(a)(3)(A) and 29 CFR 2520.103-1(b) and 2520.103-2(b) for purposes of preparing the accountant’s opinion described on line 3." No such comment exists in the Schedule I instructions. Also note that 29 CFR 2520.103-1(a)(2) refers to plans "which cover 100 or more participants"

If the participant will be given the option to designate deferrals under a plan with automatic enrollment as Roth contributions there are two possible scenarios. 1) The participant makes an election prior to the commencement of deferrals, in which case the automatic enrollment seems redundant. 2) The participant makes an election after the commencement of deferrals, in which case the tax withholding and reporting will probably be incorrect. I'm sure there are other factors that I haven't fully thought about but it seems to me that a "Roth designation" and automatic enrollment are somewhat incompatible.

At least one article lists a lack of diversity in plan assets as an item that may trigger an examination by the IRS. While I doubt that information on Form 5500 showing an asset near the 20% threshhold would raise many eyebrows, that information, combined with other factors certainly may increase scrutiny of the return. I do concur with Bird that it doesn't seem like you have much to worry about based on the information provided in your post.

I yield to superior logic and citations.

I cannot speak as to Accudraft's reason for citing a community consensus, but it appears to me that the updated language provided by Accudraft merely clarifies that the automatic rollover rules apply upon plan termination to amounts over $1,000 in the absence of a participant's consent. This seems to be a logical conclusion. Consider: 1) A plan is amended to limit involuntary cashouts to amounts under $1,000. 2) A terminated participant with an account balance of $4,000 does not provide consent, so the plan cannot make a distribution. 3) Subsequently the plan terminates. 4) The participant noted in item two still does not provide consent. 5) The automatic rollover rules apply because the amount to be paid is over $1,000. Are there other alternatives for such a scenario? (I guess if the plan is a defined beneift plan subject to PBGC that the missing participant program would apply.)

They may not be rollovers at all. Was the transfer based on a merger of the two plans?

It is my interpretation that the under 100 participant rule exempting certain welfare is separate and unrelated from from the 80/120 particiant rule. The 2003 filing should have been completed based on the participant count at 1/1/03. (I assume that you have double and triple checked the participant count.)

This site has useful information about correcting excess annual additions. However, from the wording of your post, I wonder if perhaps you are talking about excess deferrals or excess contributions rather than excess annual additions.

It is my recollection that the limitation on deferrals under 402(g) is an individual limit and ties to the participant's taxable year (usually a calendar year) rather than to the plan's taxable period.

There is no need to attach a note. Complete item 4 of the Form 5500 if the name and/or EIN of the plan sponsor has changed.

"...and thank you so much for bringing up such a painful subject. While you're at it, why don't you give me a nice paper cut and pour lemon juice on it?" - Miracle Max

I would first follow the document, then your gut, and lastly other comments (unless of course such comments are based on the document.) (Edited for nonsensical word duplication.)

I think I am either misunderstanding part of your post or the questions being posed. If I am reading correctly, you seem to be saying that the Corbel document has three provisions pertinent to your question. 1) "[C]ompensation is counted as of date person becomes ineligible." 2) "Hours of service definition counts all service." 3) "[A participant that moves from an eligible to an ineligible class] would be considered employed on the last day regardless of whether a member of the eligible class." In that case it appears the document stipulates that the participant is entitled to a contribution based on salary up to the date of status change. If that is not the case, please point out how I have misread the post.