Leopurrd

I'm currently working on plan compliance for a document that has not been updated since 1984 (gasp!).....Being somewhat new to the qualified plan arena (around GUST), I'm not sure what amendments are needed to bring this plan into full compliance. Does anyone know a website/reference that lists the required amendments in chronological order? I've seen the VCP checklist but not all legislation has the dates on them! Many thanks!

mbozek, Thanks for your help!

yes. Basically, the employer sends a check to "x" every month, who then invests the $ by person into their selected funds. "x" received the check timely but the deposits were made very late. the employer did not realize this until their accountant was performing their bank reconcilation and noticed the outstanding checks. I'm worried that as TPA we know the $ were not deposited timely, but the employer thought it was. I am trying to determine if they will be required to file a Form 5330 and pay late interest to the affected participants even though it was the investment company's fault?

Quick Question: Has anyone ever ran into the situation where deferral checks were timely submitted to the investment company, and for some reason they sat on the checks for a while and did not post the dollars to the account until the checks were "found"? (about a 3 to 4 month lag - small plan, only about 4 ee's deferring) I'm specifically wondering the client liability for 5330 excise taxes and late interest due to the participants for the error. Thank you!

Tbob, I agree with you -there are 3 limits to take into account for catch-up purposes.

Couldnt you actually go to 46000 with the full catch up? I thought the annual limit was determined on the last day of the determination year, not the first? Also -you can use the entire catch up available to max out; the 402g limit would be the first determination of catch up, the 415 limit would determine the additional catch up. We use Relius and it determines the catch up automatically, so forgive me for not explaining in more detail; but i do know it can be done with the recharacterization rules in my second paragraph! I'm assuming, of course, that all deferrals were made in the 2005 calendar year. Otherwise you'd be in a sticky situation determining catch ups for each year!!! If he does max out, just a reminder that next years admin you could not use any of 2005's catch up in your contribution calcs. Hope this helps! Vicki

It would depend on your plan document (discretionary?). You would also need to pass the ACP test.

Not sure about them pressuring the participant, but it would be legal for them to put a lien on her account balance. If they know she has the money in the account, it may only be a matter of time before they issue the lien? Vicki

Thanks, Stephen - I guess I wasn't looking closely enough in my conference guide! Hope to see you all there! Vicki

Hi Tom, ASPPA newbie here! What class are you teaching, and what booth can I find you at?? See you soon, Vicki

Thanks!!!

PiP- Can you be more specific? I think I'm missing something because when I send a batch print to a .pdf version, each Schedule is saved as a different file? Is there a way to combine together and send as one document instead of separate documents? Thanks! Vicki

I'm not a lawyer, but....does your plan have a fail safe provision? I was told at a Corbel conference that if your plan includes the language you could execute an amendment for each year as necessary to essentially name the person stopping you from passing testing and put them in a different allocation group? I've heard mixed things about this, I'm assuming Archimage would be in the category "against" this. Personally, since Corbel is our document provider, we have taken their advice and used this on a comp plan in limited circumstances. Vicki

The plan would have to be effective 10/1 to start a NEW 401k plan. The notice requirement is different for the first year of a SH plan - you don't have the 30 day notice. If you search the boards you may be able to find more about the notice requirements in the first year. Unfortunately, you'd have to ask yourself if you could implement the plan in a day....Personally I would not want to start a SH plan and then not allow the NHCE's to participate from day one - could be looked at as discriminatory because only the HCE's would know about the plan on the effective date? If you don't start it 10/1 you would have to wait until 1/1 - you are correct in your 3 month thinking. Sorry I can't be of more help! Vicki

I would think so - it would be an amendment to allow for deferrals from 5 to 100% of pay??? I'm basing my answer on the fact that we use the Corbel prototype and it allows you to choose the following option for salary deferrals: from ____% to ____% There may be requirements on notifying those who are not contributing the minimum 5%? Vicki

Becky, Thanks for your reply! I'll give Scott a call and let everyone know the outcome. Vicki

Hi All, I was wondering if anyone has run into this situation and/or can advise the best way to handle regarding the Form 5500 filing: I have a client with 2 H&W plans (one medical/dental and one for life). They do not have a document that wraps these two plans together, so they are required to file 2 Form 5500's. For 2003 (initial year), the preparer combined both plans on one 5500 with a wrong pn (503). both 2003 and 2004 should have/be filed with pn 501 for medical/dental and 502 for life. I'm thinking an amended 2003 return would alert the IRS and the client would have a late filing for one of the returns. If we correct going forward, we have a plan that just "appears" - the effective date would not correspond to the first plan year filing, essentially. How would you correct in this situation - or, what is the favored correction method of the IRS? Thanks for your help! Vicki

Everyone, thank you for your replies - I'm glad it was the right decision.

Hi everyone, I wanted your opinion on the following situation, as in light of the circumstances below, I advised to client to obtain ERISA counsel. I was questioned by our in-house contact to the client on this (I think they figured that as TPA we would know how to proceed). If you could let me know that it was the right thing to do, I'd appreciate it. Or, maybe, this was a situation that occurs often but we don't see? The situation: 2 Owners, husband and wife. Both over 70 1/2 in a PSP. Husband dies and wife is the bene. Wife dies 3 months later without taking any of the bene money. Neither had ever taken any MRD's and should have been for probably the past 10 years. Estate has bene's - the 3 children. Per the trust, husband's $ goes to his trust (passed to bene but she died prior to taking) and wife's goes to her children since no living bene, so techincally both proceeds go to same people 2 out of 3 children are questioning their options. client thinks the 3rd will not as he is "mentally incapacitated". i advised them that they had until 9/30 to make a choice, and that technically since we were past the beginning date of the mrd's that the $ must come out at least as quickly as the MRD's would. After that, I was clueless. what would you do in this situation? thanks for the replies!

Hi everyone, I posted this on another topic board but didn't get an answer - can anyone here help? Thanks.... I've read everywhere (including right down to the code) that the plan can have "qualifying employer real property" in the plan. The IRS website even mentions that this can be mortgaged by the plan (I realize that you have to watch for a PT). However, what I cannot find are specifics about mortgages in a qualified plan- how much can be mortgaged, specifics of payments, etc. Can anyone point me in the right direction? I'm looking for specific citations, etc. Also, if anyone knows of any examples it would really help!

I've read everywhere (including right down to the code) that the plan can have "qualifying employer real property" in the plan. The IRS website even mentions that this can be mortgaged by the plan (I realize that you have to watch for a PT). However, what I cannot find are specifics about mortgages in a qualified plan- how much can be mortgaged, specifics of payments, etc. Can anyone point me in the right direction? I'm looking for specific citations, etc. Also, if anyone knows of any examples it would really help! Vicki

Don't forget that if the HCE is 50 or older in 2005 he can recharacterize some of his ADP failure as catch up. You could also see if the current year method would help him pass - you can always switch from prior to current, but you must use the current year method for 5 years before switching back to prior. It's a tradeoff in admin but may make the client happy???

per the IRS website: "In order to fix the mistake under SCP, generally the mistake must be fixed within two years after the end of the statutory correction period (i.e., the 12-month period following the close of the plan year). Unless the failure can be classified as insignificant, VCP must be used after this time" Too bad it wasn't discovered until now - you had until 12/31/04 to use SCP under EPCRS. you can find out about VCP here: http://www.irs.gov/retirement/article/0,,id=112981,00.html

I may be stating the obvious, but in regards to your post (quoted), why not establish a Safe Harbor 401k with a match? This way, those who defer will receive a match, those who do not participate will not receive anything, and your owners can max out? Also, you would go around the pesky TH issue if you didnt contribute anything else..???? However, the downside is that the match is required- may be too hefty for the employer? But, if he thinks most of the contract people won't participate, this may not be a problem....

Thanks for the post; I was thinking the same way. Vicki