Santo Gold

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

401(k) Plan A is merging into 401(k) Plan B. Plan B does not allow for loans, but Plan A does and has 1 outstanding loan currently. Can Plan B be amended to allow for rollover loans only even if it does not allow for new loans? Does it matter if the outstanding loan being brought over is for an HCE or NHCE?

I assume the "should" part is NO since people are going to be taking money out of this plan left and right, and it operating not really like a retirement plan? Any other drawbacks you can think of?

Can a profit sharing plan have an in-service distribution age requirement of age 21? I know it sounds absurd, but from what I read, the age for in-service w/d can be any age prior to NRA. Does this sound OK?

Found my answer: Since they are participants, but all would have less than 3 YOS, they would get the vested percentage from the old schedule, based on their current YOS. Then, they would follow the new vesting schedule until they are 100% vested.

A 401(k) plan has a vesting schedule of 50% after 1 YOS, 75% after 2 YOS and 100% after 3 YOS. The employer wants to amend to a 2/20 schedule, but only for employees hired after a certain date. Employees can make 401k contributions immediately upon hire (no eligibilty requirements, but have to wait 1 year to participate in the 401(k). Since these new hires are actually participants in the plan, I think that they would be 50% vested after year 1, but would then follow the 2/20 schedule thereafter. That is, 50% after year 1, 2, and 3. Then, 60% after year 4, 80% year 5, and 100% year 6. Does anyone agree with this?

The person who begs to differ is a financial advisor who, for selfish reasons, would prefer the plan not offer after-tax Roth contributions. I think he is thinking Roth IRAs and assumes the same rules apply to Roth 401ks. Thanks

Roth 401(k) contributions held in a trust as part of a qualifed plan has the same protection from creditors as traditional 401(k) contributions, correct? This is spelled out in ERISA.....is it Title I? Someone outside the office begs to differ Thanks