Santo Gold

Hoping someone can confirm: Is a non-profit 403b plan, that allows only for employee contributions and the ER has minimal involvement, considered a non-ERISA plan? If so, then a 5500 has not been required, is continues to not be required under the new 403b regs. Is that correct? Thanks

I researched a few other posts and understand that gap period earnings are no longer required. But could anyone clarify the following: 1) Is it required that Gap earnings be eliminated, or is it optional? 2) Does WRERA (enacted 12/23/08) eliminate Gap earnings on excess deferrals for plan years beginning in 2008 or 2009? 3) Does PPA eliminate Gap earnings on excess contributions/aggregate contributions for plan years beginning in 2008 4) We currently have in our final 401k/m amendment, and then as part of our 415 amendment, that gap earnings must be calc'd. Based on WRERA and PPA, does that mean we could not use Gap, and documetn that with an amendment at a later date? Thanks for any assistance

Thank you.

I think I already know the answer, but here goes: If a company sponsors a 401k plan and a separate profit sharing plan. Now it wants to terminate the 401k. Is the profit sharing plan, already in existence, considered a successor plan? Therefore, they cannot distribute the 401k accounts? Thanks

I believe I answered my own question. The transition rule applies to acquisitions. No mention is made of newly created subsidiaries. It would seem that subsidiaries would not be included in the transition rule because the potential would be there for abuse (i.e., having a bunch of NHCEs moved to the new company, not covering them for up to 2 years).

Mr. X owns 100% of two companies. Both companies participate in one 401(k) plan that has equal benefits for employees of both companies. There are a total of 15 employees between the two companies. Mr. X now is starting a 3rd business, in 2009, again he is the 100% owner. He would like to not have to provide retirement benefits for this group for a few years. There are to be 7 employees in this company, at least 1 will be an HCE. I know that when a business is acquired, there is a transition rule that allows for the acquired company's employees to be excluded from testing in the controlled group for up to 2 years. Does that same exemption apply to a newly created company? If so, does that mean that these employees of the new company would not count in the 410(b) test until 2011? Twist: It is expected that the seven employees of the new company will come from the employee pool of the other 2 companies. A tough sell for sure to any employees making that switch. But, does that change the above applicability of the transition rule? Would they still have until 2011 before counting them? Thanks

Any thoughts on how to terminate an ERISA 403(b) plan for an employer that is no longer in business? We have contact with the employer so it is not an orphan plan situation. The plan would still need to go through the process of adopting a plan document, terminating the plan, distribution instructions, etc., correct? Anything else? Thanks

They are a controlled group

Company A sponsors a 401(k) Plan. Company B is an adopting employer of this plan. Now, Company B wants to stop participating in the plan permanently. If they do drop out, are the Company B participants entitled to take distribution of their account balances? The plan is not being terminated, so probably not. But the Company B will no longer be an adopting employer: does that mean their participant account balances have to stay there? For a twist, what if its Company A that wants to get out? Do we have to re-do the document, showing Company B now as the plan sponsor, plan administrator, etc? Thanks

I was hoping someone could provide a brief 457 "101 - Basics" and then point me in the right direction for additional information. This is regarding an employer that I'm not really involved with: A (very) small business maintains both a 457(b) and 457(f) plans. Attorney drafted both documents and everything seems to be OK with that. What administrative services are needed for these plan on an ongoing basis? There are no 5500s needed. Any other filings that they should be making? These are non-qualified plans, so the usual 415 and 402(g) limits wouldn't apply correct? The plan covers only the owner, so there are no testing issues. Do they need a TPA at all for something like this? Thanks for any help.

But if the NRA is 55, why would we not have a qualified CODA? Same old 401(k) plan, just with an earlier NRA.

I have a participant/owner, who is approaching age 55. He plans to continue working for some time, but would like to get his money out of the plan sooner rather than later. The NRA is currently age 65. No hardship exists. He is fully vested. He is able to take most of his employer PS and match dollars out (24 month requirement), but he is still 4-1/2 years away from getting to his 401(k) and safe harbor contribution accounts. My understanding is that as long as he continues to work, he cannot take an in-service withdrawal of the 401k and safe habror until he hits 59-1/2. Is that correct? If so, could the plan be amended to reduce the NRA to age 55? And since he will be 55 soon, the plan does allow withdrawal of his entire account balance even if he continues to work after 55. Does this sound OK? Thanks

Profit Sharing plan has insurance policies in it. The policy's are "owned" by the plan and are held for certain individuals. The Plan is now terminating and the policies have surrendered for the cash surrender value. The insurance company then issued a 1099-R to the plan, for the surrender value of the policy (minus acculated PS-58 costs). Does this sound correct? What exactly should the plan do with this 1099-R, attach it to the 5500? The plan does not file a tax return or anything of that nature that an individual normally would. I'm not sure how the 1099-Rs for past PS-58 costs were handled (I suspect they were never issued, but thats another story). Any comments?

Thanks to all with the replies. My last question: If she takes the $1,000 out of the plan in cash and rolls the other $99,000, what 1099-R code would be used for the $1,000 non-taxable distribution? She is over 59-1/2. Would you just use code "7" and, show $1,000 as the gross distribution but $0.00 as taxable? Thanks

I believe © fair market value was paid to the plan for the insurance CV. So now, out of the entire account balance, $1,000 is "after-tax", and therefore not eligible for the rollover?

If a plan has been reporting its ps-58 costs via 1099-R each year, and lets say those accumlated reported ps-58 have totaled $1,000. Now the participant has terminated employment and is doing an IRA rollover of her $100,000 account balance. 2 questions: 1) Should the rollover 1099-R simply show a gross distribution of $100,000 with a taxable amount of $0.00? 2) How does the already declared $1,000 in ps-58's get tracked/credited once the $100,000 leaves the plan? I assume that if nothing is done, the $100,000 goes to the IRA, and is then taxed as it is withdrawn from that IRA. Where/when does the already taxed $1,000 used to reduce the taxable portion of the participant's subsequent cash distribution(s)? Thanks

If a plan currently has their involuntary distribution threshold set at $1,000 cash out (no automatic IRA for amounts from $1,000 - $5,000), can the plan be amended to have involuntary IRA rollovers if the amounts are between $1,000 - $5,000? Are there any protected benefit rules that are applicable? Thanks

I'm still getting more details on this, but a SEP plan was overfunded for 2008. Is the correction of this problem the same as with a qualified plan? Take out the excess, pay a 10% tax, file a 5330? Thanks

What if this is a volume submitter document and the plan states that amounts between $1,000 and $5,000 must be paid out via IRA rollover as desingate by the Plan Administrator (if the participant makes no other affirmative election). The VS has no alternative provisions for involuntary distributions. Since VS documents are permitted to have several minor modifications to them outside of the choices presented, would something like this qualify as a minor modification? I.E., do away with the $1,000 - $5,000 rollover, and just allow for cash outs under $1,000? I realize that there is probably no certain answer to this, but what do you think? Thanks

I already know the answer: Read the document, but I have to ask anyways: Is a plan required to execute automatic distributions? That is, if the plan contains language saying amounts under $1,000 can be distributed without consent via cash distribution, does that mean the plan sponsor has to force people out? Our, for this example, the sponsor does not want to deal with automatic rollovers for amounts between $1,000 - $5,000, but the document contains that language. Is the sponsor required to make auto rollovers? Thanks

If a non-key is still employed but receiving a RMD, can she change her mind and elect to stop the RMD's, again, while she is still employed? Thanks

For an ERISA 403b plan, participants and the employer are currently contributing money into annuities via 2 separate large annuity & insurnance companies. The plan sponsor/plan administrator would like to change that and only have the new money go into 1 annuity provider's product for, among other reasons, making it easier to track. Can they make this change prospectively for new contributions? Can they force participant's to move their existing account balances out of the one insurance company's product and into another insurnance company's product? Thanks

And that section is...? I'm not aware of a requirement that says you have to continue filing a 5500 if you ever filed one. And I'm positive that we had a client who went from 5500 to 5500-EZ filing and I don't remember a problem with it, although it was before the EFAST system. Just a thought - you might want to consider amending the 2004 return and marking it "final" to indicate that future returns aren't required. Of course that will cause some static since the assets aren't zeroed out, and then they filed again in 2006, but I'm just trying to think outside the box. Another thought - if I were the client, and now realized that not only did I pay someone to do something that wasn't required, but that doing so has me embroiled in this mess, I would be very upset. What a horrific waste. The section was just page 2 of the EZ instructions. I don't see the IRS' line of reasoning in these instructions though.

New information on the plan. Forget the SEP and ASG/CG components as they do not exist. This is simply a 2 life (both owners) PS plan that has never had assets in excess of $100,000. History: The plan has filed 5500's since inception, except for 2005. 5500's filed again in 2006 and 2007. But 5500 was filed not 5500EZ. So, the missing 2005 was caught and thats what the IRS is looking into. The IRS agent is saying that since the plan actually filed a 5500 instead of an EZ, that the fact that a filing really was not due (less than $100,000) in that year does not apply. Once you file a 5500, you cannot go back and then avoid filing a form because you want to be considered an EZ filer. I asked where it says this in the instructions and I was pointed to a section in the EZ instructions that to me are not clear on this specific point. Any comments on: 1. Once you file a 5500, you cannot claim to be exempt in future filing years even if you meet the other exemption criteria? 2. Once you file a 5500, you cannot file future 5500EZs in the future. Thanks

But does the company have to meet a certain criteria in order to even be able to terminate a 403(b)? I heard something about there having to be less than 2% of active employees eligible to participate before a termination can occur. Is this or something similar to this, correct? Thanks