Santo Gold

Does the DOL employee contribution deposit deadlines (earlier of ASAP/15th bus day) ever apply to ER contributions? For example, if the plan document calls for a safe harbor match contribution to be calculated on a payroll basis, but the ER does not deposit the s/h money each payroll, is there a violation? Thanks

LVS and JPOD - Thanks for the confirmation. A follow-up rhetorical question (no reply needed) is - given the little information provided on the 5500, what real value is there to the government for requiring a filing every year? Knowing how many 403(b)s are out there? OK; thats the one and only reason I can think of.

This is about as basic a 403b question as it gets: It seems like there is very little in the way of information that is needed when preparing a 5500 for a 403(b). Am I reading the instructions correctly that only the Form 5500 needs filed and that there are no schedules that need to be attached (e.g., not schedule H/I financial information)? Furthermore, participant count information on the 5500 is also not needed (line 6&7)? Finally, if the above is true, then does the SAR omit the financial and participant count information as well? Thanks for your help.

I don't believe that owner-only plans are required to file a 5500-EZ. They could file the 5500 if they want, but since the EZ is simpler, that is usually the way to go. Therefore, couldn't the owner use the DOL compliance program and file Form 5500 from 2002 forward, pay the $1,500 and be done with it?

I have the Schedule K-1 for both partners whose firm sponsors a 401k. There are no employer contributions for the 2006 plan year, just deferrals. Is the compensation for the partners the figure shown on Line 14A of the K-1, or do I need to subtract the 179 deduction (line 12) from that figure? Or is there another amount that should be used? Thanks

mjb: I don't know for sure if the all money is coming directly from participant's accounts. I think they had some old terminees who had non-vested amounts that are in a pooled account currently (which is probably not correct, as these amounts should likely be fully vested now). NAIU: I wasn't clear. The company was owned by 1 individual, who was also the only named trustee. The company is now dissolved, but the individual (not the company) remains as ttee. I don't like how this smells. There is no independent fiduciary who appointed him to the clean up job.

The trustee = employer, and the company is no longer in business, hasn't been in at least 2 years. Another concern I have though, is that it sounds like many of the duties he has performed are along the lines of service provider fees, which leads to ERISA 406(b) that states if the service provider is a fiduciary of the plan, who appoints himself to perform services, payment would be a prohibited transaction as self-dealing. Does that out weigh the fact that he is not getting paid from the company? I looked at the DOL website on self-dealing and still am not sure: http://www.dol.gov/ebsa/regs/AOs/ao2001-10a.html

Apparantly, the company is out of business for several years so the trustee has not been paid anything from the company. Also, I understand that settlor functions cannot be paid from the plan, but I considered most duties involved in a plan termination to be non-settlor functions. Costs involved in the decision to terminate and to amend the plan for termination would be settlor funtions, but the trustee has been doing all of the work sending notices to former employees, looking for lost participants, updating account balances, etc. I believe all of these are not settlor functions and could be paid to him from the plan. Whether they are they worth $20,000 is something he would have to prove to the government.

A large 401k (over 5000 ees) plan is terminating. The trustee has put in a lot of time with both a DOL audit and in assisting with the accountants audit, as well as other admin. issues. Trustee wants to bill his time to the plan, which would result in around $20,000 invoice. He can't do this, right? This would be a Prohibited Transaction. But, given the time spent on all of this, could the employer pay him for his time? Thanks

Calendar year 401k plan. The client last filed a 5500 for the 2003 plan year. The IRS sent a letter last week looking for the 2004 5500. Although the forms were prepared by the recordkeeper, they were sent to the client, who didn't realize they needed filed, so they were put in a drawer: 1) I plan on drafting a letter to the IRS, telling them the trust and asking for mercy. Are there any better ideas? 2) Is it too late to file the 2005 form through the IRS 5500 program, just paying the $750? Is that not an option since the 2004 form is on the IRS radar? Thanks

The the employees other than the doctor are NHCE, so would there really be a discrimination problem by having everyone currently employed on 1/1/07 immediately eligible 1/1/07, while keeping the 4/07 employee out for less than 1 YOS? We are using a prototype document so having less than 1 year of elgibility service means no 1000 hours requirement, and opens the door for part-timers, which the doctor does not want. He'll be OK with 1/1/07 PS eligibility, with 7/1/07 401k effective date and that should solve the elig. problem. However, if he wants this to be a safe harbor 401(k), can he still do that in mid-year since the plan would be effective 1/1/07? Also, I believe if it is a safe harbor, he would have to make the 401 and s/h effective later than 7/1/07, since we are less than 30 days away from that date, correct? Thanks for all replies

We have a new 401(k) plan that is to become effective 7/1/2007. The employer wants to have a 21 & 1 requirements with semi-annual entry. In addition to the doctor, they have 2 ee's hired 9/06 and 1 hired 4/07. They want to have the 2 2006 hired ee's in the plan as of 7/1/07, but impose the 21&1 on the 2007 hire ee. Would writing the document to say that "any employee working for the company on 1/1/07 is eligible for the plan on 7/1/07" be acceptable? Using a date (1/1) prior to the effective date (7/1) in order to bring people in? Thanks

I have an employer who wants to have a PS contribution allocation requirement of (i) at least 9 months of service with at least 1000 hours worked in that period, plus (ii) employed on last day of the year The first condition is obviously unique and what I have questions on. After reviewing, this would only apply to new participants, as participants in the plan on the first day of the plan year (1/1) who work 1000 hours would not receive a contribution only if they were not there on 12/31. Can you have a 1000 hours requirement with less than 12 months of service? Any other pitfalls you see to this? Thank you

An employer had a few late deposits of 401(k) contributions. The lost earnings amounted to around $60. The 5330 excise tax adds only about $10 to that. 15% of $70 is $10.50. I did not see it in the 5330 instructions, but is there a $100 de minimus excise tax when using 5330 for late deposits? Thanks

So, the employer must (in writing) designate which plan year the contribution is for. They could say its for the 12/31/06 plan year and allocate immediately, and count it as an employer contribution for the 6/30/07 fiscal year for taxes. The only part I did not understand is why it has to be made before 6/30/07? Thanks

If a 401k plan has a 12/31 PYE, while the fiscal year for the company ends 6/30, how would we go about making a PS contribution? For example, the ER wants to contribute $10,000 for the fiscal year end 6/30/07. Would that have to be allocated based on 12/31/07 eligibility and wages? And if that is true, then we would have to wait until after 12/31/07 to deposit (ind account plan). But then that means the employer would have to extend the company's tax return beyond 9/15. Is all of this correct? Is there a better way to handle this?

That's interesting. Elective deferrals are combined for 401k and 403b, but not for 457. So, assuming his compensation is high enough, he could put in $31,000 total employee dollars!! Thanks again

A doctor is switching jobs and will be working with more than at least 3 different organizations. He will have the ability to defer salary into a 401(k), 403(b), and 457 plan, all separate plans of different employers. Can he contribute $15,500 into each plan, or does the 402(g) limit apply cumulatively over all plans? Thanks

The link below mostly addressed a question, but I was hoping for further clarity: Company A sponsors Plan A and has a match safe harbor 401(k) plan. Company B is unrelated and sponsors Plan B which is a 401k but not a safe harbor. Company A buys Company B and wants to merge B's non safe harbor plan into A's safe harbor plan in mid year (7/1). From what I've read and linked to, this cannot be done without Plan A losing its 2007 safe harbor status. Is that correct? If so, does the employer still have to make the safe harbor contribution even though it is not a safe harbor (I would assume so since it is in the document)? One suggested alternative was to freeze Plan B as of 6/30, allow B's employees to participate in Plan A as of 7/1, and merge Plan B into Plan A on 1/1/08. Plan A would remain a safe harbor at all times. Do you agree with all of this? Thanks very much. http://benefitslink.com/boards/index.php?s...c=32952&hl=

I think I found my answer...... A MP plan cannot have a 401(k) arrangement. So, having a MP/401k combo plan is not permitted, which is really what I was asking. I believe you could merge a MP into a 401(k), as long as it did not act like a MP/401k combo.

Can a Money Purchase Plan be merged into a 401(k) Plan?

Can a safe harbor 401k plan switch from a basic to an enhanced match in mid-year?

The employer wants to move ahead with this. From what I've researched, in-service withdrawals can have an age restriction only (on PS money). There does not have to be a service requirement (i.e., 2 years of seasoned money before a participant can take it out. Is this correct?

Thank you for the input. That surprises me.

It's a bad idea. Thanks for the comments