Santo Gold

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?

I'm having trouble understanding a portion of the final 401k regs concerning the use of the ACP safe harbor: If a plan uses an additional match (in addition to the basic safe harbor match), and that additional match has a 1000 hour/last day requirement, is it just the additional match that is subject to the ACP test, or is it that the additional match PLUS the basic safe harbor match is now subject to the ACP test. Thanks

Company A leases most of its employees from a hospital. Company A wants to start its own 401k plan. The owner would like to exclude the leased employees from company A's plan, but would likely fail coverage. When the owner pays the hospital for the leased employees services, included in that is a portion that is for the leased employees retirement benefits in the hospitals plan. Lets say it works out to be a 5% of pay contribution for each employee. Question: Can the owner take credit for that 5% in this plan? In other words, if the owner were to make a 3% safe harbor contribution plus an additional 2% PS contribution to Company A's plan, does that mean that since he is already giving 5% to the hospital for the leased employees retirement benefits, he can put 0% in for the leased employees into Company A's plan? Thanks

Soon to be extinct company wants to terminate and pay out its 401(k) plan before the end of 2006. The plan has about $5,000 in forfeitures however that need re-allocated before doing so. Document calls for forfs to first pay down expenses (of which there will be about $1,000) and then re-allocate anything leftover (about $4,000). The big problem though, is that no one has worked for the company since 2003. The owner has been there, but he's not taken any pay since 2003. On what basis would we re-allocate the forfeitures? I have not seen the documet and will assume for now, that the plan calls for forfeitures to be re-allocated after 5 breaks in service. So perhaps the plan was correct in not re-allocating sooner. But would that mean that now, we have to go back and fully vest the folks whose non-vested balances created these forfeitures?

Employer wants to fully vest all existing participants in the company retirement plan as of the date of sale to a new owner. Then revert back to the existing schedule for all new participants after that. As long as the change applies to everyone equally this should be OK, correct? Thanks

A tax-exempt local government money purchase plan has a GUST document, which uses a vesting schedule that starts at 0% for years 1 and 2, and does not fully vest until year 8. Normally this would not be permitted, but is there an exception for government plans?

Plan sponsor wants to start safe harbor auto enroll, effective 1/1/08. Match will therefore be 100% on first 1% deferred, and 50% on the next 5% deferred. Current company match is 50% on first 6% deferred. Since the auto enroll match would be better than the existing match, it's a no-brainer then, that the company match must be amended to be in line with the auto enroll match. Correct? On the other hand, if the current match was better than the auto enroll match, would anyone try to keep the 2 match formulas? One for auto enroll, one for everyone else?

Tom: Thanks for replying, but could you clarify what the distinction is between your first and second paragraphs. In pp1, you say it's clear that if the plan is safe harbor, the 3% must be provided, no wiggle room. But in the pp2, you mention about offering the 3% on a year to year basis.