Santo Gold

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

Lots of problems here. Any comments are appreciated: There is a 401(k) plan with a 6/30/09 plan year end. Safe harbor match contribution. In April, 2009, the employer decides he wants to stop the match. He never tells us (TPA). He claims he provided a 30 day notice stopping the match, but so far, he has not been able to give us a copy. I'm not sure where he would have gotten one from since we did not do one. Maybe the payroll company did one. (1) If he did provide proper notice, can he stop like that mid-May? Does the documetn need to be amended as well? If he did a notice but not an amendment (and one was needed) is the cessation valid or is the employer on the hook for the rest of the plan year? (2) Can he stop a safe harbor match in mid-year? Thanks

Found a previous discussion on this. Not sure I agree though http://benefitslink.com/boards/index.php?showtopic=31387

A participant does not have an account balance (never deferred and the only ER contributions are match contributions) and terminates employment. Participant would have been 0% vested in the ER contribution. Would you include this participant on line 7(h)? Thanks

If the employer froze the first plan (no more contributions allowed into Plan #1), started the second plan, and then 12 months go by, could the participants in plan #1, after 12 months, then take their money out as a distribution?

An employer has a 401k plan in place right not. They want to change investments and will do so. However, some of the employees do not want their existing money to go to the new investment platform. The employer would like to give them the option of taking their money out of the plan or moving it to the new investments. Because there is not a distributable event, this will not work. So another option that was presented was to start a second 401k plan. Terminate the first plan, start the second plan with identical provisions to the first plan. Now there is a distributable event so the participants can roll their money into the second plan or take it in cash or roll to an IRA. Thats what they want, but I know this won't work, just not sure why. Anything I can point to prove this won't work? Another option that I'm not sure about. What if they freeze instead of terminate the first plan, and start the second plan. but the second plan is written to not allow for transfers into it. Does that open up options on what to do with the money in the first plan? Thanks for any comments

Any comments are appreciated: A C-Corp has no employees, only the owner. She maintained a SIMPLE (assumed to be SIMPLE IRA) through 2008. She now wants to do a SEP in 2009. The company will cease to be in existence after 6/30/09. (1) I don't see a problem starting a SEP since she is not funding the SIMPLE in 2009 or later (2) Is there a permanence problem with her starting a new plan in 2009 and having it only be around for 6 months? (3) Her comp for 2009 will be around $150,000. Can she put in 25% of $150,000, or is the comp. limit pro-rated to $122,500, meaning she can only put in up to 25% of $122,500. Thanks

A safe harbor 401k plan had a 6 month 401(k) eligibility provision, but incorrectly applied a 2 year eligibility period on participants from getting the safe harbor contribution. They want to go back now and deposit safe harbor contributions for everyone they missed during these affected plan years. They would include lost earnings on these contributions correct?

I think I already know the answer is "no", but I'll ask anyways: Trustees want to switch to a new investment platform, but face significant surrender fees for doing so. Can they use the forfeiture account to pay these surrender fees? The plan document does allow for forfeitures to be used to pay fees. Thanks

Do you think this will fly? A non-profit currently sponsors a 401k PSP. They are having trouble with the 401(k) test. Should they consider amending the 401(k) provision out of the plan (making it a PS only plan), then start a non-ERISA 403(b) that accepts only 403(b) contributions? This would solve the 401(k) test, correct? Thanks

Is it required that catch-up contributions be matched in a safe harbor 401k plan? Thanks

If 2 platforms are offered, but only 1 used (small plan, only 5 people, and everyone went with "Platform A"), do you think that would satisfy this requirement?