Bird

I don't think there's a perfectly clear answer, but I have an opinion. One argument, which I find persuasive, is that there's something in the 401(a)(4) regs that says an amendment or pattern of amendments can't discriminate in favor of HCEs, and I think it goes on to say that a plan adoption is the same as an amendment or something to that effect. It's hard to argue that this does not discriminate in favor of HCEs. The other argument is that because you can do what you want in a standardized prototype (many have this as an option - "eligibility is ____ [e.g. 1 year of service] except anyone employed on ________ is in immediately") that it has to be OK. I haven't been convinced of this yet.

QDROphile makes a good point, it's probably an offset and not a deemed distribution. So it happened in 2005 and wasn't reported. So you file a final 5500 for 2005 and decide separately how or whether to take care of the distribution reporting problem.

So a 1099-R wasn't issued? Seems to me the proper way to handle it is: Issue a 2005 1099-R now, be prepared to pay late fees for the filing (I think it's $50 per return after Aug 1 so this is not a biggie), make the participant miserable because s/he'll have to file an amended 1040, and file a final 5500 showing all assets distributed. I don't know if there's a more formal self-correction for failing to deem a loan distributed but this seems to correct it. Other things you could consider, but which wouldn't be "right" for various reasons: Deem the loan distributed in 2006 (i.e. file a 1099) and file a final 5500 in 2006. Deem the loan distributed in 2006 and file a final 5500 for 2005, ignoring the obvious discrepancy. (I might be tempted to do this.) Don't issue a 1009 at all and just file a final 5500 for 2005.

I am shocked...SHOCKED that a broker would give such incorrect information. The other info posted here is correct. You should also be aware that a final 5500-EZ is required even if one was never required.

Zoran, it's not perfectly clear what you're asking about, but I'm going to guess that the extra $4,000 is for a Roth IRA. If that's the case, then you can indeed maximize your 401(k) contributions at $15,000, and then make an additional $4,000 Roth IRA contribution...if you are eligible to make a Roth contribution. That eligibility is phased out at $95,000-$110,000 AGI for unmarried filers; $150,000-$160,000 for married filers, and $0-$10,000 for married taxpayers filing separately.

I think it is reasonable to assume that merged MP assets in a PS plan can be distributed under the new law. I think the same reasoning that didn't allow distributions of these monies is what now (well, in 2007) allows such distributions - that said money is still part of a "pension" plan, even though it's within a PS plan.

Sorry I didn't spell out what I thought was obvious - not that receiving an undelivered mail message is ok, but that if you use a system that gives such a message you could assume delivery was completed if you didn't get the message. There are different ways to satisfy the requirements and Fidelity took the easy was out by telling their client that they had to get delivery receipt. I say that's lazy. In any event it's wrong.

Austin's right; you can't take away the right to an immediate distribution for those employees already in the plan. Anyone who finds out he "needs" his job after he quits should have thought of that beforehand.

If you mean file it under the correct ("new"?) number and reference the incorrect ("old"?) number in Q 4, yes, that's all I'd do.

I don't think the fact that the first distribution was made in 2005 (and a second will be needed in 2006) affects the ability to roll out in 2007. I didn't really understand what you were proposing in the second part but I think that it becomes moot.

That's correct. Of course, the employer has to make that decision before the beginning of the year and communicate it to the employees 60 days before the beginning of the year, so that decision should have been made long ago for 2006.

I agree with Tom. I'd add that: the plan with the language quoted could, I believe, be amended to turn this language on and off - but with this particular language, I think the amendment would have to be done before the beginning of the year in which you're turning it off, and before the beginning of the year in which you're turning it on. The notice has to be given 30+ days before the beginning of the year in which the SH is used. This language is not appropriate for the "maybe" notice.

If the matches are calc'd on an annual basis and you do true-ups at the end of the year, then it doesn't matter too much when the money goes in so over the next few payrolls is fine. If the plan says matches are done a payroll basis, i.e. no annual calcs and true-ups, then there are deposit requirements that I don't know off the top of my head but I think you didn't comply. But for the amount of money involved, I think I'd just put it in over the next few payrolls and not worry too much about it.

I agree with Jim Chad on the first one. The phrasing of the second question confuses me; I think Jim read it as the employee deferrals weren't taken out of their pay, and if that's the case, then I agree that I would make it up over the last few pay periods, with their approval. But I'm wondering if we aren't talking about some kind of an employER contribution... An employER doesn't defer; the second part makes me think these are employer matching or profit sharing contributions. If that's the case, it's simple - just make them up (by the time of filing the tax return if you want to deduct them in this year). Oh, I suppose if they are matching contributions and you are matching on a payroll basis then you have issues with the need to get them in by a certain date; shortly after end of the quarter or something...I don't know those rules off the top of my head but let's clarify the question first.

The regs say that's an option, but note that if you get undelivered mail notices that's ok too, or doing a survey; see below. Don't let Fidelity get away with being lazy and/or cautious; press them on exactly what your options are. © Disclosure through electronic media. (1) Except as otherwise provided by applicable law, rule or regulation, the administrator of an employee benefit plan furnishing documents through electronic media is deemed to satisfy the requirements of paragraph (b)(1) of this section with respect to an individual described in paragraph ©(2) if: (i) The administrator takes appropriate and necessary measures reasonably calculated to ensure that the system for furnishing documents— (A) Results in actual receipt of transmitted information (e.g., using return-receipt or notice of undelivered electronic mail features, conducting periodic reviews or surveys to confirm receipt of the transmitted information)

No.

What "book" is he going by? At best, someone is wasting a lot of time and money; at worst, he (or you?) is imposing a condition on receiving benefits that doesn't exist (not to mention stirring the pot with the ex-s, and I hope that this misguided advice did not result in anyone having to buy out the ex's signature).

Why is he trying to find her if he is divorced?

Request For Proposal. No guidance, and that's as it should be.

The regular 5500 instructions are pretty clear that you can file on a cash, accrued or modified accrued basis and while the EZ doesn't say anything about it - to my recollection - I've always figured excluding the accrued contribution was ok. We'll generally file an EZ in this situation anyway, just because we do everything else including the accrual and it's easier to be consistent, but it's there for an "out" when needed, and I think it's legit.

Yeah - dog years.

The bill says "...shall apply to distributions made after final regulations...are prescribed." So the good news appears to be that the plan term. date doesn't matter, the bad news...is obvious.

That's a good way to look at it. If the stock was in the account, then it sounds like that's the result. Simply start making RMDs based on the account value.

You note that the plan offers both options...by not taking a distribution by 12/31/05, they have effectively elected the 5 year payout and can no longer go to systematic distributions. I think that guidance is needed as to whether someone in this situation can (in 2007): -roll to a non-spousal IRA, and then have to take it all out by 12/31/09, thereby leaving them in the same RMD position (possible, but requires continued tracking of the 5 year period by the successor custodian and that seems unlikely), or -roll to a non-spousal/inherited IRA, and then be allowed to take systematic distributions, thereby giving them an advantage they didn't have before (seems unlikely), or -not be allowed to roll at all because the intent of the law was to allow systematic distributions from a non-spousal IRA, not mess around with the 5 year rule because that would be difficult or impossible to track (most likely...I think).

If the wages were simply overpaid, and they're simply going to reduce future wages, then won't the 401(k) issues fix themselves? I mean, if someone elected 5% as a deferral, and the company overpaid the wages and put in 5% of the overpaid wages, unless they're asking for the money back, and they're not, I don't see a problem.