Santo Gold

Company A and Company B are part of a controlled group, owned by 3 individuals. All 3 individuals have compensation from Company A and B. Both companies are part of Company A's 401k plan. There is also a management group (Company C) that has no employees, but consists only of the 3 owners. They have compensation from this entity as well. #1 Is it correct that all 3 company's are part of the controlled group? #2 Because Company C contains only HCEs, we would not necessarily have to include it for plan purposes (i.e, no chance of discrimination since they are all HCEs)? #3 If Company C is part of the CG, but is not part of the plan, would we omit compensation from Company C for plan purposes? #4 Is Company C compensation omitted for 415 compensation purposes? I believe the answers to the above are: Yes, Yes, Yes, I'm not sure. Thanks for any replys

An employee left one company to start her own business and had a loan in the first company's 401k plan. She immediately started a 401(k) plan with for the new company, and wants to roll the loan over. However, the first company had a repayment schedule based on monthly repayments, while the new company has twice a month payroll. We can recalculate the repayment schedule based on the different payroll frequency, but would that require a new promissory note as well?

On 1/1/07, 100% Owner of Company A buys 85% of Company B. Company A and B have roughly the same number of employees. Company A has a 401(k) plan, company B does not. For coverage testing, I believe the transition rules allow for the exclusion of Company B through the 2008 plan year. They have to be counted for testing in Company A's plan starting 1/1/09. Company A would like to allow Company B employees to make 401k contributions now in 2007, but would want to keep them out of the match and profit sharing until allocations until 1/1/2009. Can they pick and choose which plan components to have the transition period apply too, or is it all or nothing? Thanks

I don't know much about them but I will look into. You can transfer non-vested assets to another plan in a spin-off, even if they are unrelated employers?

Employer A has a 401(k) Plan that includes a 2/20 graded vesting schedule for PS contributions. Some of the owners of Employer A are planning on leaving the company, and starting Employer B. Employer B plans on having its own 401k plan, but wants to count service from Employer A for those employees who leave Employer A to join Employer B. This appears to be an amicable separation, so far so good. Employer B's document can be drafted to count this service with Employer A. But it is expected that some of the employees who switch from A to B will not be fully vested in their account balance in Employer A's 401(k) Plan. What both employers would like is for none of the employees who are transferring to have a forfeiture. Rather, they can move their entire account balance over to Employer B's plan, and continue to vest in it. So if an employee has a $10,000 account balance in Employer A's plan, but is only 60% vested, the entire $10,000 can be moved to Employer B's plan, and the employee would still be 60% vested. Can this be done? I suspect the answer is No, because if for example that same employee terminated employment with Employer B, still at 60% vesting, it doesn't seem right that the non-vested portion would now go to Employer B's participant, when it should go to Employer A people. Would you agree? Finally, if the above ownership was slightly different and the owners of Employer A also had common ownership control of Employer B. Would the above transfer of the non-vested amounts now be acceptable? Thanks

On the SAR, there is mention of the cost for additional copies of the report, both per page and per report. Is there a maximum dollar amount that cannot be exceeded for both of these costs (e.g., $0.25/page, $5.00/report)? Thanks

Are trustees or other fiduciaries of 403(b) plans required to have fidelity bond coverage? Thanks

Doctor is 100% owner of a small office, of which only he and his wife are employees and his compensation is around 120,000. They maintain a 401k plan. The doctor is also a minority owner (25%) in another office of doctors. This office also has a 401k plan. The doctors compensation is around $175,000 from this practice. For 415 purposes, can the doctor achieve $45,000 in allocations from each business or does the $45,000 apply to him in total, combined from both plans? Thanks

A small 401k plan had 1 payout (rollover) in 2006. By accident, our office and the accountant separetely prepared identical 1099-R's, which the owner/Plan administrator promptly filed both copies with the IRS and sent both versions to the former participants. Can anyone advise on how to fix this? If we file an amended 1099-R showing $0.00, I'm concerned that might wipe out both 1099s. To do nothing would make it seem that there were 2 distributions. Since this was a rollover with no taxable event, is it best to just do nothing? Thanks

In trying to figure out a way for some owners to maximize their annual additions, I came up with the idea of using employee contributions to get there. I would appreciate any comments if what I have is way off base. Company has 9 employees, with 2 owners (brothers), plus 5 more lineal family members, for a total of 7 HCEs, with 2 non-related NHCEs. Plan is a Roth 401(k) 3% safe harbor. No other contributions so far. New Comp. won't work in this plan if we try to favor the 2 owners. Everyone has elected to make Roth contributions rather than pre-tax 401(k). What if the plan allowed for both Roth and after-tax employee contributions? The 2 owners (with comp of $225,000) make $15,500 in Roth contributions, get $6750 in s/harbor contribution, and a contribution of $22,750 in after-tax employee contributions, getting them to $45,000 in 2007. If none of the other 5 HCEs make after-tax employee contributions, the 401(m) HCE ACR would only be 2.89%. If the 2 NHCEs were to put in on average 1.45% after-tax (but not Roth) or if the company put in a 1.45% QNEC for NHCEs only, then 401(m) passes (1.45 *2= 2.90%). Granted this is a pretty narrow set of circumstances, but does this work as well as it seems to work? The owners, who already favor after-tax plan money (compared to pre-tax) can hit $45,000 by either making a small QNEC or possibly no additional ER contribution if the NHCEs put in a small EE contribution. Is there any difference tax-wise between after-tax employee contributions and Roth contributions? Am I correct in that both contributions go in after-tax, earnings grow tax-free, and both are not subject to income tax upon distribution? I know there are some differences regarding when and how withdrawals are made.

If a participant wants to take a loan in February, is there a specified amount of time when the loan repayments must begin? The participant wants to start repayments in June and the loan procedures are silent on this. Thanks

That sounds reasonable, but after reading the 945 instructions, it states that form 945 should not be filed for years in which there is no tax withholding.

Form 945 has been filed for a plan in the past due to taxes withheld from distributions. However, no distributions took place in 2006. Should a 945 showing $0 still be filed? Thanks

The father-in-law of the owner is currently employed and is over 70-1/2. Is it necessary that he receive a minimum distribution as long as he stays employed? Thanks

For a plan to test otherwise excludable employees separately in a 401(k) test, is it necessry for that to be stated in the plan document? Thanks

A 401(k) Plan (no safe harbor) has a 1000 hours/last day rule for match contributions. There are 2 HCEs and that out of 10 NHCE participants, 2 terminate with more than 500 hours during the year. However, the employer makes no match contribution for the year. Is the 410(b) test for the 401(m) contributions automatically satisfied since since no one received a contribution? Or, does the test still need to be performed, with an 80% result, because of the 2 terminees? Thanks

Employer of an existing 401(k) plan wants amend to the plan to provide for a 3% safe harbor for 2007 even though it is now late December, 2006. The answer is usually (always?) "No", but does the answer change to "Yes" if the plan currently uses a current year ADP testing method, in which case they would have until 12/31 to amend the plan? Thanks

I believe it is subject to QJSA. Would that mean the sponsor has to purchase a QJSA instead of rolling into an IRA, with payments to begin immediately?

The employer is terminating the company's 401(k) plan. One participant has over $5,000 but refuses to sign any paperwork regarding distribution of his account balance. I don't know why. Since we cannot cash him out (over $1,000), would we treat him as we would a lost participant, showing that we went through the steps to locate and pay him but to no avail. Then, having done that, just set up an IRA for him, roll his money over to that institution, and be done with him? Thanks

Owner A owns 100% of Corporation XXX and 85% of Corporation YYY. Owner B owns 0% of Corporation XXX and 15% of Corporation YYY. Does a controlled group exist? I would say yes given Owner A's ownership percentages in both companies. But with Owner B owning 0% of Corporation XXX, I am not sure that the 50% identical ownership test is satisfied. Also, assume a CG exists between XXX and YYY. XXX has only 2 employees (Owner A and Owner A's wife) and both are in the XXX Profit Sharing Plan. YYY has 22 employees (Owner A, Owner B, and 20 NHCEs), all of whom are in the YYY 401(k) Plan. Am I correct that both plans have to be tested as 1 employer for plan testing purposes? If so, would it be true that XXX could not provide a high allocation to the owner and spouse, while providing for only a 3% safe harbor contribution in the YYY Plan? Thanks

When filling out the SS-4, it is the trust that we are obtaining a number for, not the plan, correct?

I am looking at a plan that allows for hardship w/d, loans, and age 59-1/2 inservice w/d (this is a 401k plan). The owner would like to eliminate at least 2 of these 3 provisions. Is that allowable, or are all 3 considered protected benefits, that may only be allowed to be removed for new participants? Thank You.

This post concerns document amendments in general, not necessarily GUST or EGTRRA, but I thought I'd post here anyway. Is there a correct answer as to who should sign a plan amendment - trustees or plan sponsor or both? I've seen generic amendment packages from various document providers (Mckay/Hochman, Accudraft, FT William) and there doesn't appear to uniform agreement on this. Is there a different answer if its a document restatement rather than a small amendment? Thank You

One of the fund choices in a 401k plan is bankrupt. For awhile, the fund continued to report the fund value at a certain value, but then later paid out 75% of this reported value (meaning 75% of this last reported value was liquidated and forwarded to the trustees, not paid paid out of the plan). This iinvolves a smaller plan. Is there anything that needs reported, via schedule I or otherwise in regard to this transaction? Would the affected participants simply show a 25% loss on this fund to their account balance? Thanks

Is there much of a difference for a non-electing church plan to go with a 401k vs 403b? Does using a 401(k) make it subject to ERISA? Also, as a TPA, I'm having a tough time seeing what role we would have in adminstering a church plan. If the document has to be individually designed and maintained (which we do not do) and there are no 5500s, discrimination testing, etc. for us to provide service on, then what, if anything, is there for TPAs to do?