ErisaGeek

Does anybody know if the 30 day waiver form will be required to be signed by a participant for obtaining a Coronavirus related distribution? I am thinking no since the Section 402(f) notice does not apply? Any thoughts?

However something to keep in mind is are you going to pull the basis contributions or even the gain or loss on that incorrect contribution? Given how the market has performed in the first quarter of 2016 odds are you may have a loss. So something to ponder whether you will be pulling the basis or the amount with the loss which means the plan sponsor may have to still come up with the loss. For example if HCE A got $250 incorrectly and today it is worth $200. So you would pull $200 out from HCE A and plan sponsor still has to fund the loss of $50 to come up with the $250 in total to reallocate or you still pull $250 from HCE A which would not be fair unless it is still the owners we are talking who are HCEs and not a HCE based on prior year compensation limit. Thanks.

I do not find it necessary to make a VCP submission in this case since all the communication was done accurately to plan participants. The participants were not affected by any means. It was simply an oversight of making the change in the plan document. I would simply retroactively fix it in this case even though usually retroactive amendments is not something personally I prefer doing but I don't see any harm in this particular scenario.

In my opinion I do not believe there should be any problem for having separate plans that are drafted identical even though from a cost perspective it would not make sense but have all companies participate in one plan. If the owner wants to sponsor separate plans then he can do so. I guess one advantage to having separate plans would be that it would take time to reach the 5500 audit threshold. Other than that not sure why one would want separate identical plans? Thanks.

I have seen IRS auditors go by the check cut date which would be 3/16/16 based on your scenario.

The participant and the IRA custodian needs to be informed the excess amount not eligible for rollover to IRA. The participant simply needs to withdraw that amount from the IRA and subject it as part of his income in the year the excess is withdrawn. The 10% penalty would not apply to the participant even when the excess is withdrawn from the IRA. Code Sec. 408(d)(5)(B) Now if the participant does not act on it there is nothing else the plan can do but keep this documentation on file. But I would also send something to the IRA custodian like stated above because the IRA custodian should at least put some pressure on the participant to have the excess withdrawn from the IRA.

I would agree with Lou S comments. The individual regardless on Jan 1st did own more than 5% even though that morning or afternoon he signed the stock agreement to sell his shares. The conservative answer would be to count him as a HCE unless the agreement is somehow drafted that somehow spells out that as of Jan 1st opening the HCE has no ownership which would be doubtful. You would almost want to draw up an agreement then on Dec. 31st surrending the shares.

The employer can certainly either terminate and cash out the MPP or simply merge the MPP into their new 401(k) plan. If you merge the plan it will simply be a trustee to trustee transfer and no participants would be able to take a distribution if still employed. Also you could keep the vesting schedule in tact or to simplify make everybody 100% vested. You don't have to make them 100% vested. Also to keep in mind is the fact that you will have to make sure the 401(k) plan allows for J&S rules otherwise you will have to add that option at least for the MP contributions and deal with spousal consent notices etc.... However if you were terminating the MPP then all accounts would be 100% vested and participants would be able to decide if this wish to rollover into the new 401(k) plan or simply take a lump sum distribution or rollover to an IRA.

Facts: Company A is a brand new company. The company was formed on January 1, 2005. The same year they start a calendar year 401(k) plan - 1/1/05 through 12/31/05. The top heavy determination date will be 12/31/05 being the first plan year. Q1) One of the key employee determination is an officer whose annual compensation exceeds $135,000 in 2005. However since this is the 1st year the determination date is 12/31/05. Does that mean that you use $135,000 compensation limit the first year as well as the second year while determining the key employee status? OR Q2) Basically it means that since there was no compensation in 2004 an officer cannot be a key employee in 2005. Am I correct? How do you apply the key employee definition in case of an officer especially since the compensation limit is bumped up from $130,000 to $135,000. Any IRC reference would be appreciated. Thank you.

Thank you Archimage. I will follow up with ASPPA.

What do you do if the distribution fee is more than the account balance of the participant? Can you still collect the distribution fee and not make any payment to the participant? I would think that would be discriminatory. If you did collect whatever distribution fee you could get out of the participant does that mean the participant does not get a 1099 since the person never got any money? Please share your thoughts.

Does the participant have the right to obtain a copy of the audit that was completed by DOL?

The profit sharing contribution was declared by a board resolution. I am not sure whether the participants were informed about it.

Client A has a calendar year profit sharing plan. Client A has not made the profit sharing for 2002. However the client has claimed the deduction for 2002. What are the consequences of not depositing the profit sharing amount into the plan? How can it be corrected? Do you have to pay an excise tax? What is the time frame by which the profit sharing needs to be deposited? Any help would be appreciated. Thanks.

Thanks for replying back. I am however looking out for a company who would sell such a software program to track the plan administration work as we do not have anybody in-house to program such a software. If anybody knows or uses one could you please let me know. Thank you.

Does anybody know or can recommend a plan administration software tool that one can use to track the work load of the pension administrators? Say Example a pension administrator has 50 plans assigned to him. Is there any software out there that can help with pulling out information such as: Q1) How many 5500 are due based on plan year end? Q2) Which plans are top-heavy etc.? This software would be a good tool for the administrator to see where he is on his workload as well as help the manager keep track of the cases. Thanks.

Co. A & Co. B are part of a controlled group. Each company however has set up their own plan. What is the rule in regards to coverage testing as well as ADP/ACP test? Do you have to aggregate both the plans and do a combined coverage test as well as ADP/ACP test? What if each plan passes on its own coverage test and ADP/ACP test? In that case is it safe to argue that you would not need to aggregate the plans for ADP/ACP test or coverage test? OR Maybe in controlled groups since the companies are considered part of a single employer no matter whether they are all participating in one plan or separate plans you always have to do a combined coverage test and ADP/ACP test? If the latter is true than what is the advantage of having separate plans in a controlled group situation since anyway one would have to do a combined coverage and ADP/ACP test? Thank you for all your help and guidance.

You are correct in stating that Notice 2000-3 does not provide steps to terminate a safe harbor 401(k) plan. There are two answers to this question depending on what approach your client wishes to take. Conservative Approach: You would do a 30 day notice to inform that the safe harbor match is going to be discontinued. After the notice requirements are met you would terminate the plan. However the cost concious client is going to get upset about this method. This approach would be the best precaution a client could take. Aggressive Approach: You simply terminate the plan and discontinue the safe harbor 401(k) match. One could argue that the safe harbor 401(k) is not a pension plan and hence not subject to the 204(h) requirements. In either approach the client would still have to run the ADP/ACP test for that plan year. You can also read about these two approaches in Sal Tripodi's ERISA Outline Book-Edition 2003.

Company wants to set up a safe harbor 401(k) plan for all non-union employees and a separate regular 401(k) plan for the union employees. Is it permissible to provide safe harbor contributions to non-union employees and subject the union employees to 401(k) testing since they would not receive any safe harbor contributions. Technically if there are no HCE's the union plan will anyway pass the 401(k) test. Also am I right that the 401(m) test is not needed on a union plan? I know when you have one plan only Notice 98-52 allows you to disaggregate union vs non-union employees and provide the safe harbor contribution only to non-union employees and be non safe harbor for the union plan. Is the same reasoning true if they had separate plans one for union and one for non-union employees. Thank you for your help.

Facts: Prototype document has the following provisions: Early Retirement Age is 62. Normal Retirement Age is 65. In-service distribution is allowed upon reaching normal retirement age. Person A reaches early retirement age and is still employed. Person A requests for his distribution because he has reached early retirement age. However he is still actively employed. Can he take a distribution and roll over all his money out of the 401(k) plan? My feeling says no because he has not terminated service. He has basically just reached the early retirement age and the plan document does not allow in-service distribution until age 65. Am I on the right track or am I making this too complicated? Thank you for your help.

I plan on taking the C-2 DC test this fall. It has been very interesting to read this link about the C-2 exam. I want to obtain past actual C-2 tests so that I can practice those questions. Where can I get old C-2 test questions? This test has got me worried now so I want to be prepared as much as possible by solving some old tests. Thanks.

I feel that even though the merger date was 12/31/01 you would not be able to wrap up the 5500 for the money purchase plan since the money purchase money was still not transferred until January 2002. The money was still in the trust beginning 2002. The last 5500 should be filed when there is no penny left behind in the trust. I would not worry regarding the funding requirements for 2002 as long as the 204(h) notice was done in a timely manner indicating that the money purchase contribution formula would be zero after 12/31/01.

Eligible compensation should be of only those participants eligible to share in the contribution allocation and not everyone eligible to participate in the plan.

There is no C-1 study group. They do offer classes in Chicago for a week or so. It is like an intensive class which crams everything in a weeks time.