Santo Gold

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

Can anyone help clarify what is meant in FAB 2009-02 that states: The contract or custodial account is legally enforceable against the insurer or custodian by the participant alone, without any employer involvement I'm hung up on the "legally enforceable" part. Does this mean that the conditions and terms of the account are between the participant and the insurer and that the particpants does not need or require employer involvement in regard to any ongoing or future transactions in the account? If the employer has to sign off as the Plan Administrator for loans and distributions, would that not meet this condition? Thanks

403(b) plan had allowed for both EE and ER contributions. In 2007, the plan was frozen. No new participants entered and now new contributions can be deposited. I have the asset information for 2009. As of 1/1/09 125 participants had balances. As of 12/31/09 117 had balances. Per Field Assistance Bulletin 2009‐02, individual contracts or custodial accounts that meet all of the following requirements do not have to be reported as plan assets (or in the participant count) on Form 5500: 1 The contract or custodial account was issued to a current or former employee prior to January 1, 2009; 2 The employer has no obligation to make any contributions (including salary deferrals) to the contract or custodial account after December 31, 2008; 3 The contract or custodial account is legally enforceable against the insurer or custodian by the participant alone, without any employer involvement; and 4 The employee is fully vested in the entire contract or custodial account. Items 1 and 2 are obviously met. #4 is true also. #3 I am almost certain of. So, if all 125 contracts met this exemption, then I have zero participants to report on the 5500. Would you agree? Also, if that is true, would I still file a 5500, showing zeroes or would I not have to file a 5500? Thanks

Can a sole proprietor obtain an extension on his tax return (normally due 4/15) that both extends when the form is due and when he has to fund a prior years employer contribution? If so, how late can that be extended? Thanks

Sole Prop.

A small doctor's office was recently sold to a large hosptial. The office has a 401(k) plan with new comp. The plan termination date was set as 3/31/2010 (calendar year plan). No one is receiving any compensation after that date. While the 3 employees all have W-2 comp. for 1/1 - 3/31, the doctor does not have a set salary. I believe he does take "draws" but normally it is later in the Spring when the claims/insurance goes through and he can be paid. The Plan is a non-elective safe harbor plan. He would like to try to do new comp. for the 2010 short plan year. But what would he use for comp? Do we just add up his draws? Can we use a good estimate based on either 2009 compensation or estimated on 2010? Can he not do this at all? Thanks for any help.

Is there an excise fee on missed employer contributions? I also just found out that now there were missing employee contributions too.

This is a SIMPLE IRA plan. I'm being told that the employer has either not made or deposited incorrect amounts into the SIMPLE plan for several years. The employee contributions seem to be fine, this is just for the employer contributions. Can the employer use an EPCRS program to correct or are those not available to SIMPLE IRAs? Is a 5330 needed, plus excise tax, plus lost earnings, needed as well? Thanks

This is a SIMPLE IRA plan. I'm being told that the employer has either not made or deposited incorrect amounts into the SIMPLE plan for several years. The employee contributions seem to be fine, this is just for the employer contributions. Can the employer use an EPCRS program to correct or are those not available to SIMPLE IRAs? Is a 5330 needed, plus excise tax, plus lost earnings, needed as well? Thanks

Since we have an IRS opinion letter saying that the form of the document is approved, does that mean "all is well"?

Unfortunately, what is shown is exactly what is in the document. I agree that I think it was intended to be used only for 1 individual, but that seems to have gotten lost over the years and now more than 1 person is being thrown into this group. I would advise that we use pro-rata in this group even if it doesn't say to do so. But I was just looking for opinions on whether anyone thought it is OK to give the folks in this group whatever you want since there is no allocation method shown. Just curious, does this violate the concept of "definitely determinable" benefits?

In defining the classification groups for our cross-tested plans, our document calls for group #1: "An allocation up to the maximum permissible amount under IRC §415". All other groups call for a pro-rata allocation among the individuals in each group. If there is more than 1 individual in group #1, would you interpret the allocation language to mean that you can basically give the individuals in group#1 any arbitrary amount? For example, we give the 415 max to one individual, $15,000 to a second individual, and $0 to the third individual. Granted, it all has to pass 410(b)/401(a)(4), but if it does, would this sound right to you? FWIW, Group #1 is always used just for HCEs. Thanks

Can allocation groups in a new comp plan be defined by name? For example: Group 1 = specific owner, Group 2 = specific owner, Group 4 = all other participants? Thanks

This sounds almost too simple, but I have to ask? If a Church plan accidently omits a few participants from sharing in the employer contribution, they have to go back and make those contributions, plus earnings, correct? Wasn't sure if there was a difference because this is a church plan (compared to a PS plan). Thanks

I'm not sure how to ask this question, as it was asked of me: With a sole prop entity, is FICA paid on the company's profit sharing contribution? Does FICA reduce the reportable gross income? Thanks - Mike

a non-profit employer has over 200 employees and has about 80 individuals participating. It is a non-ERISA plan with only employee money in the plan. Do they have to file a 5500 since they have over 200 eligible employees? Thanks

Husband and Wife each own separate businesses that are not related to each other. No employees are shared. Both are sole props. They are about as separate as they can be. Based on this alone, I would say that a controlled group does not exist. Would you agree? I am not certain if there are any children under age 21. If so, then technically a controlled group would exist. Is that correct? Here's the twist. Both businesses are in Texas, a community property state. Given that, does it change the answer? Thanks

If a 457(f) plan calls for immediate vesting, does that/can that mean that there is now not a substantial risk of forfeiture and therefore can be taxable to the participant? Thanks

Any help clarifying the following would be appreciated. A PS plan has an "employed on the last day of the year" allocation requirement. The company also likes to deposit PS money into the participant's individual accounts throughout the year. The employer deposits an equal percentage of pay for everyone, or at least a makes a reasonable estimate to keep things equal. Not the cleanest way to do things, but valid nonetheless. If a participant leaves before year end, then the PS money for that participant is moved eventually to all of the eligible participant accounts, based on the final contribution allocation calculated after year end. Question 1: This is valid, is it not? Question 2: The participant can direct this current year PS money, just like the rest of the account balance, correct? Question 3: By depositing PS money during the year, the employer is "committed" to at least this PS amount, right? That is, the employer cannot make $50,000 in PS deposits during the year, and then at year end decide that the company only wants to make a $20,000 contribution? I have an accountant argueing that because of the employment on the last day requirement, that no allocation is valid and that no PS money should be going into anyones accounts during the year, let alone having the participant's self-direct this money that is not really their's yet. I see his point and I agree that making deposits in mid year is not a great idea.....but I still don't think that any of this is necessarily wrong. Any thoughts, comments or cites that can make the case one way or the other? Thanks