Santo Gold

I got my first look at a 403(b) plan with around 90 participants. The plan has been in existence since 1998. It allows for 403(b) and non-elective/profit sharing contributions (match not allowed). The asset report from the mutual fund company shows that the EE and ER money has been commingled. There is no separate accounting of how much of any given participant's account balance is EE and how much is ER. The good news is that the PS contribution is 100% vested, so there should not be any distribution problems for terminees or retirees. Regardless of the 100% vesting, the requirement is that the plan has to account for EE and ER contributions separately, even in 403(b) Plans, correct? (1) Any suggestions on what the next steps should be? Do we need to go all the way back to 1998 and start the accounting process at that point? (2) Is this something to resolve through VCP? What kind of penalties or fines do you think would be involved? (3) If the records are not available back to 1998, do we just start with when the records are good and sort of grandfather the assets before that time as a EE/ER account, or something just to distinguish when the bad recordkeeping ended? Thanks for any advice!

We've been handed an owner-only MP and PS plan. Both were effective in 2003. Nobody can find the plan documents back to then. Actually, nobody can find any documents period, amendments or otherwise. Owner knows he has to go through VCP. Just wanted to see how to handle since we have no plan documents at all: (1) Should we go back and draft a GUST document which would have been in effect in 2003, call that the original document, and let VCP know that this document provides the link back to the when the plan was effective? or (2) Just draft the new EGTRRA document and call attention to all the amendments that were missed but are now included in this new document? I cannot determine if filing a GUST document is necessary. If it existed, of course we would include it. But if as part of VCP we are going back to the plan's inception and acknowledging that there was no document even back then, do we need to go through the motions of adoption a GUST document at the same time as adopting the EGTRRA document? Also, the fee is $750. But do you think this would be eligible for the non-amended discount of $375? Finally, would you file both plans together or separately? Thanks

An owner of a small business has as employees, himself, his wife and an assistant. He also has about a dozen CBA employees. The owner is also a union member. The owner pays into the unions multi-employer plans for the union members, which includes himself. This includes both a union DB and DC Plan. In the meantime, the owner establishes a 401(k) Plan for himself, wife and assistant, but excludes non-owner CBA employees. Question #1: Can he achieve $49,000 (under age 50) in the company's plan? Or does the $49,000 limit include the contributions from both the company plan and the union DC plan. Question #2: Does the union DB plan affect his $49,000 limit? Thanks

Yep, open to 403(b) plans, but must be done electronically.

Are 403(b) plans eligible for the DFVC program? Thanks

A participant has several pre-tax IRA's outside of the plan that he wants to roll over into the company's 401k plan. The 401k plan allows for Roth contributions. Assuming we amend it to allow for Roth conversions, can he do what he wants to do? That is, rollover over the IRA into the plan, converting them to Roth dollars at the same time? Thanks for any advice.

Small company started an "owner-only" 401k plan. Problem was that there was an eligible employee not covered, maybe more. There is the owner, owner's wife, a part-timer and a full-timer. So he could have kept out the p/t (if less than 100o hours) and the owner's wife. But then again, if the document never said that, that might not work anyways. But the F/T looks like she had to be in regardless. What is the fix here? The plan has only been around 3 years and the owner has only put in no more than $10,000 401(k) money into the plan. No other money in the plan. He could go back and bring the F/T in, with ER contributions, earnings, etc. But he would be on the hook for 3 years of missed 5500's, correct (he's never filed since it was 1-life & under $250K). That's a $1,500 DFVC filing. Then there is a VCP filing to bring the F/T. Plus the ER contrbutions for 3 years, plus earnings. And assuming the document (if there is one) doesn't exclude the owner's wife or have a 1000/1 Year wait to get into the plan, he might have to do the same for the other 2 people. Who know, maybe another VCP filing for a missing document? I haven't seen all of the workings on this yet, but some/most/all of the above will be true and if so, its going to cost him a lot of money to fix. But, he only has $10,000 in the plan. Is it better/cheaper to have the plan DQ'd, have what's in there now taxable to him, and re-file his tax returns for the past 3 years? Is there a way to guess/quantify what plan DQ might cost him? Thanks for any comments.

If a participant is laid off (with the understanding that they will return to work at some point in 2011) as opposed to having terminated employment, are they still on the hook for ongoing loan payments? I'm sure the answer is yes, but what I mean is this: Participant has about another year to go on loan repayments and her balance is around $800. She is being laid off on 12/31/10. Her last loan repayment via payroll is also on 12/31/10. Since she will be laid off, she was hoping she could lower her repayments to something more managagable while she is out. Is this allowed? Probably not, right? If the plan allowed for more than 1 loan at a time, could she take an additional loan out, spread the payments out over 5 years, and repay that loan with smaller payments?

I'm paraphrasing here so no jokes if this is to simple or stupid of a question: Financial advisor has an RIA agreement with the trustees and plan sponsor as the 401k plan advisor. He is now being told that due to this relationship, that he cannot use that foothold with the plan to approach the participants with an investment relationship outside the plan. Agree/Disagree? Thanks

It's not me unfortunately, but it is apparantly an accurate description of a possible new client of mine.

Compensation is not capped when using the match in a SIMPLE IRA. So, if the participant is age 50 and has compensation of $466,666.66, he could defer $11,500 plus $2,500 in catch up and be at 3% of pay for deferrals. Would the match be $11,500 or $14,000? Thanks

In a SIMPLE IRA plan that allows for catch-up contributions and the employer contribution is in the form of a matching contribution, are catch-up contributions matched: (1) all of the time (2) none of the time (3) at the discretion of the plan sponsor Thanks

Thanks David. That's a pretty good link and confirms that the early retirement cannot be eliminated. Do you think they could eliminate it for new participants and preserve it for the existing participants?

Both a PS and an MP Plan had an early retirement feature of age 55 and 5 YOP. The plans were merged a few years ago and I believe the merged plan showed an Early retirement age of 59-1/2. Is that permissible? Is the 55 and 5 a protected benefit or can we eliminate that? I don't think it should have been eliminated, at least not for the current participants in the plan as of the date of the merger.

If no action is taken the rest of this year, does the $500/$1,500 plan start-up employer credit go away as of 1/1/2011? Thanks

We prepared our final 5500 before noon today, but had 10 plans combination hadn't signed or registered to sign yet. We spent a lot of time with follow ups this afternoon and at 5:18, the final plan was signed and accepted. A little surprised as I expected at least one "you mean we had to sign the form as well as register" to slip by.

Thanks Tom. Try to keep those hours worked reasonable next week OK?

PS Plan with a 7/31/10 PYE. The plan has a 1000 hours requirement but no last day requirement. SS integration used for PS allocations. Q1: Can the 7/31/10 plan year be amended after 7/31/10 to allow for new comp? There would be 2 rate groups, one for owners (all HCE) and one group for everyone else. If permissible after PYE, what is the deadline to make the amendment (is it 2-1/2 months after PYE?) Q2: If it is too late to amend the 7/31/10 PYE. could we amend the 7/31/2011 PYE now (10/2010) before anyone has 1000 hours worked in the current plan year? Q3: Performing a 180, could we amend the 7/31/10 to pro-rata now (after 7/31/10)? doing so would only "hurt" the HCEs since it would take a greater overall PS contribution for them to achieve what they would have received if SS int was used? Thanks for any comments.

Company A acquires company B in October of 2010. Company A has a 401k plan, company B a SIMPLE IRA plan. Company A permits company B to continue with the SIMPLE plan until 12/31/10 at which time it will be terminated. All employees will be eligible for company A's plan in 2011. Questions 1) Can company A make the required SIMPLE matching contribution on the 2010 obligation in 2011 or do they have to make it in 2010? 2) Are the company B employees prohibited from rolling over their SIMPLE plan assets into the new 401k if they have not been in the SIMPLE plan for more than 2 years?

A large plan (100+ participants) needs an audit and gets the bill from the accountant. Can these costs be passed onto the participants and deducted directly from their accounts? Thanks

What if this wasn't the case that a deferral request was made but not implemented? That is, what if you had participants who were never given the opportunity to make 401k contributions, and yet the ADP is 0% because no one else in the plan contributed? Would the remedy be $0.00? Thanks

I have several plans with the same circumstances. I think you file with 0 participants and $0 assets. I would file since despite the FAB, the instructions do not list the above conditions as a reason not to file.

Are participants assets in a SEP or SIMPLE shielded from claims from creditors? A participant in one of these plans (he's not sure which one he is in) has some major credit card problems and was told by the collection agency that they could go after his SEP/SIMPLE. Thanks

Who would be more of an expert on the process involved in disclamining the plan benefit: an accountant or an attorney? Also, the plan document does not mention disclaiming. Does this have to be allowed in the document or is it something that can be done without being explicitly addressed in teh document? Thanks

This is probably something for an attorney to work out, but I would appreciate any thoughts or ideas. A 401(k) plan participant passed away. She named her 3 sisters as beneficiaries in the plan. However, she also had a will, which stated that all of her assets are to go to the children of her 3 sisters. Question #1: Does the will supercede the beneficiary form? Who gets the 401k account, the 3 sisters or their children? After the participant's death, the 3 sisters want to waive their benefit. Their intention is to have their children receive the 401(k) assets. Question #2: Can the sisters waive their benefits in the 401(k) Plan? Question #3: If they can waive, does 401(k) balance get distributed pursuant to the will (the children)? If not, where does it go to? Thanks