WDIK

I don't mean to come across as being difficult, but to me the employer's objectives seem inconsistent. I don't know if the desired structuring would pass IRS muster or not, but I suspect that it goes against the intent of the cited regulations. I would think it would be more cost-effective to try and change the employer's perception of the situation.

Sorry to be dense on a Monday morning, but if the total account value is below the basis, does the allocation make any difference?

Other than the 20% mandatory withholding issue, are there other practical differences between in-service and hardship distributions?

http://www.dol.gov/ebsa/regs/fab2008-4.html I would refer you to questions 23, 24 and 35 for starters. You probably also need to know about non-qualifying assets.

Don't think of them as losses, think of them as negative gains. But more seriously, are you saying that the account value is now less than the total deferred because of investment losses?

There is no filing exception for Form 5500 based on dollar amount.

For code purposes, see 402(e)(4)(D)(i) (D) Lump-sum distribution For purposes of this paragraph— (i) In general The term “lump-sum distribution” means the distribution or payment within one taxable year of the recipient of the balance to the credit of an employee which becomes payable to the recipient— However, you should refer to any pertinent language in the plan document that my address a "lump-sum" in the scenario you describe.

The Form 5500 has a line item that is completed when there is a change in plan sponsor or EIN that is supposed to alleviate the potential problem you posit.

That is my understanding as well.

Perhaps it would be possible to make the correction on a prospective basis.

I don't think that the adjustments pertinent to the Schedule B have any impact on the reporting done on Schedule I.

Two "thoughts" in this link. http://benefitslink.com/boards/index.php?showtopic=42112

I'm not convinced that the statement in the instructions quoted by quinnfield means that you mark line 25 "No". That only indicates that the change in funding method does not need IRS approval. It is still a change in funding method. http://benefitslink.com/boards/index.php?showtopic=41455

Way to let the cat out of the bag!

1.401(k)-1(b)(2)(i)(B). [second paragraph]

Could it be Lurleen Lumpkin?

Unrealized gains and losses are not reported anywhere on Form 5500-EZ. The assets do not have to "add up" on the form.

http://www.irs.gov/pub/irs-drop/n-09-09.pdf

The plan document should certainly indicate those that have the authority to direct the investment of plan assets and to what level.

Personally, I would correct it on a prospective basis...

Does the client have another active plan? If so, could there be confusion with the filings based on the respective plan numbers?

Changing the actuarial valuation date does not change the method of reporting beginning and and of year assets on the Schedule I.

My guess is that the company itself may have the electronic deposit requirement, but this should not apply to the plan. (Assuming it has a separate tax identification number.)

It is most likely that the system will catch the inconsistency and generate a letter asking for clarification.

Isn't there a general plan account into which the contribution could be deposited and from which it could be distributed?