No Name

Also, if the owner thinks the investment vehicle isn't great, wouldn't it be a fiduciary breach not to offer everyone else an out?

Exact Adoption Agreement language: "For any Plan Year in which the Employer satisfies the notification requirements of section 401(k)(12)(D) of the Code, the Safe Harbor CODA provisions of Part II Article IX of the Plan shall apply (Safe Harbor Option)." Sounds like skip the notice, not safe harbor to me. This is a Datair document with an IRS Notification Letter.

Thanks again, Tom I would only take issue with the 30 day notice. Even a 204(h) notice shouldn't be required for a termination. Another bit of spice. The Adoption Agreement states that the 3% SHNEC will be made for each year the notice is timely provided. I prepared one, but don't know if it was actually distributed. If not, no Safe Harbor and no 3% required? What do you think? (Don't need to answer this)

Preston works on a lot of DBs for my former firm. I'm surprised you can't find him from the glow of his sliderule!

Hey, No one jumped in, so I'll give it a shot. I've only got one 401(k) where there are consistant uncertainties re: pass/fail. There is one participant who flip-flops between HCE and NHCE ( via 20% rule). He's quite content to max out, then get his refund post year-end. His deferrals sometimes affect the other HCEs (leveling), but no one understands this stuff but us (if WE do!). Why only one problem plan? Its amazing, actually. At small companies that I service, there have been a welcome few "ringers"; working spouses that want to save for retirement, while the other spouse is affluent enough that they defer 70-90% (thanks, EGTRRA). Really helps that ADP test. A few other plans have HCEs that couldn't be bothered. Lots of 0%s in the HCE group. (Cap Gains vs. Ordinary Income debate?)

If the match is 100% vested, how do you have forfeitures? It would seem you mean "what do you do with the match attributable to the protion of the refund". I think you give it to the participant and include it on a 1099-R.

Thanks, Tom Always very thoughtful. But I don't see my answer there. (No offense intended. You have all my respect.) Maybe because there is no guidance? I don't see how a Safe Harbor NEC must be treated with white gloves, when you could always terminate a Money Purchase, or amend the formula. The only special difference I can think of is that no hours or last day rule can be imposed. And of course, ADP testing will be required. Thus, I'm thinking, change the Plan Year to end 3/31, no notice ("maybe" or otherwise) for the new Plan Year = no Safe Harbor. Maybe even a new short Plan Year ending 12/31, again, not Safe Harbor, but back on track as a calendar plan. Trying to move back to the top of the topics for more opinions.

Calendar year client has a 3% Safe Habor non-elective contribution Plan. He's asking if the plan can be terminated or amended prospectively to get rid of the contribution requirement. There's 1 HCE and 1 NHCE. I assume they've accrued the 3% on compensation earned to-date. I've looked far and wide and see many opinions that the 3% is locked in on all compensation earned during the Plan Year. I'm thinking of creating a short plan year to lock down compensation earned to date. I know it will not be "Safe Harbor", but HCE will not defer in 2005. I'll end now and see if there are any opinions/options out there.

48. So we can stop searching the woods for him and go home.

I have a client who had a corporation, went to sole proprietor on the advice of a guy who claimed to be an accountant, then re-incorporated on the advice of a real accountant. Plan documents were done to reflect all of this. For 2004, I have participants with 2 W-2s, one with sole p EIN and one with corp EIN. Add them together? All but 1 are relatives. (Owner will have little-to-no sole p income but W2 from the corp.)

ftwilliam.com, a benefitslink sponsor. $250 for unlimited returns.

Took me a while... Dichotomy 1. Division into two usually contradictory parts or opinions: “the dichotomy of the one and the many” (Louis Auchincloss). 2. Astronomy. The phase of the moon, Mercury, or Venus when half of the disk is illuminated. 3. Botany. Branching characterized by successive forking into two approximately equal divisions. Fungible 1. Law. Returnable or negotiable in kind or by substitution, as a quantity of grain for an equal amount of the same kind of grain. 2. Interchangeable. Note that the Latin root "Fungi" means "Vice", I guess as in "Vice Versa". Thanks, WDIK, for getting me to ask "Huh?"

Lori, Money is fungible, as you know. Once the refund is reported as taxable, it doesn't matter what she does with it. I'd watch the Roth income limits for eligibility to contribute. Traditional IRA is an option. I'm asking myself why I would go that route. I'm thinking of the dichotomy of whether ordinary income tax or capital gains tax will be the same x years from now as they are now.

SoCal, I use the ftwilliam.com website (a Benefitslink sponsor) to produce Form 5500 and attachments. When ready to print, they're .PDF files. The only caveat I've seen from them is to be sure there's no scaling of the document (Fit to Page) prior to printing. Including that caveat to the client, I don't know why my printing or their printing would be an issue. I've used Datair in the past (and respect them). They've got a Q&A on their website that states that .PDFs are not acceptable, but it's dated in 2002. Maybe things have changed.

Sure.

I've had access to the Pension Answer Book (PAB) for maybe 10 years. At the beginning, I derided it as a "Comic Book". Over the years, it got thicker (more content, or perhaps more rules), a little better and more expensive. I'm starting a work-from-home business and am interested in one reference (as well as a monthly subscription to TAG). Is Sal's book as readable as PAB? What format (Q&A, straight citations, examples, etc.)? Will check the other thread as well.

Follow up question. It is common that, when a participant terminates, we generate a form for the terminee to complete asking how they want their money. We also include the IRS Notice. Sometimes, these don't come back for months (or years), so we carry these people on the books. Language in the plans read that the employer CAN cash out the participant, but is silent on whether they MUST, and no "drop-dead" date is mentioned. Under the new rules, is there a date specified as to when an employer MUST make the direct rollover?

Just be sure to alert the principals that "distributive share" is not included as compensation for allocation purposes.

All, I'll cop to the fact that accounts of lost participants can be forfeited. I've just never done so. I deal with small plans, but can imagine the nightmares the large plans run into.

If you're referring to deferrals, these are never forfeitable.

Right. We use Datair as a prototype drafter. They then offer their approved documents to client TPA firms who can apply to IRS for a "Notification Letter" with the TPA firm's name on the letter. You become a regional sponsor.

If you're looking for annuity purchase rates, go to www.peregrinepensions.com/APR.XLS

We don't know what the amount is yet. Might make a difference.

For what its worth, I had a DB/MP combo with a combined trust. The corporate resolutions stated that earnings first went to the DB up to the actuarial interest assumption. Excess was credited to the MP. All participants were in both plans. A random audit came out clean. They're kind of laid back here in CA. FWIW.

I hired an applicant that listed "Education" as "11th Grade, thus far".