blue

After thinking about this the ER was not holding the EE's money so it would not be a prohibitive transaction. Hence no 5330. Would you consider it more of a friduciary breach because they neglected to follow the instructions on the enrollment form and make up earnings to the participant.

I was thinking it would be late deferral deposits???

Empolyer forgot to submit deferral contributions into participant's 403(b) account who had properly completed an deduction percent form. Calander year plan and EE noticed the error in October. The ER worked with the EE and they decided together the entire years deferral contributions could come out of her remaining paychecks. I calculated the lost earnings and the ER submitted the amount to the participant's 403(b) account. Now I know this may seem like a silly question but, since this is a 403(b) plan, do I still complete a 5330?? Any advice would be greatly appreciated.

Belgarath, Thanks for your replies. The information was helpful. One more question regarding quarterly statements...when I read section 508 of PPA I concluded the explanation of permitted disparity would only be required for DB plans. However, when I read the footnote on page 121 of the JCT it appears the explanation would be required on quarterly statements for DC plans. Are my assumptions correct??

What does JTC stand for?

Moving forward participant directed account quarterly statements require a reference to the Internet webite of the DOL for sources of information on individual investing and diversification. I looked at the consumer information section under dol.gov/ebsa and did not see a topic for individual investing and diversification. Should I be looking somewhere else?

Thanks for all the help!

Thanks!!! Now my next question. Where can I find this notice. I tried the IRS website and was unable to locate the notice.

Does anyone have an employer stock divestiture notice they would like to share??

Where do I find the newest list of required modifications for cross tested plan.

If a participant is on a maternity leave of absence at the end of the plan year, are they entitled to the top heavy contribution.

I was at a Sungard safe harbor seminar last week and the following question was presented: Amending a matching formula - Company plan includes a basic safe harbor match and a fixed matching formula of 50% of deferrals not exceeding 6% of deferrals. However, toward the close of the plan year, the company amended the matching formula to increase the matching percentage 100 %. Will the matching formula be subject to the ACP test? The answer was yes if you are lucky. You may not add a match or increase rate of existing fixed match during the plan year. He further implied that you probably have a disqualifying event since the final 401(k) regulations say you cannot have ADP/ACP testing as a back up with safe harbor

Does anyone know where to find an annual notice for plan opting automatic enrollment?

The 2006 instructions for form 1099-R states Code B (designated Roth account distribution) can be combined with codes 1, 2, 4, 8, G and L as appropriate. Does that mean if you had a distribution of an account with non-Roth 401(k) money and Roth 401(k) money being rolled to a traditional IRA and Roth IRA you would only need to completed one 1099R?

The PPA extended the participant disclosure period for distribution notices and consents to a 30 to 180 day period. Can this same time period be applied to the safe harbor notice?

Plan design – 12/31 PYE, DF & MT (no hours or EOY requirements), 21 & l YOS, enter semiannually. Our client forgot to tell us about a new company they formed in July of 2004. The ownership percents in each company indicate they would be considered a controlled group. My understanding of the transition rule in the ERISA outline book is that the rules cannot be applied since the company in question is a newly formed company not the acquisition of an already existing business. I have not received any information regarding the number of participants in the new company. Since the transition rules do not apply, I will have to try testing out the eligible participants of the excluded controlled group for calendar year 2005 (non of the excluded company’s employees would have been eligible in 2004). Now in 2006 they want to start allowing the employees in the company that was excluded to enter the plan as of October 1st. How do I test coverage? As of December 31, 2006, all eligible participants of the controlled group will be benefiting in the plan. But for three quarters of the year one company was not allow to participate in the plan. Do I perform a coverage testi as of September 31, 2006 and then again at December 31, 2006. Any help would be greatly appreciated.

Maybe I missed this - but was the Roth 401(k) feature extended?

We have a plan which did not correct excess contributions within 12 months after the close of the plan year. An acceptable correction method under EPCRS is to return deferrals to the affected HCEs and contribute a QNEC for the same amount to the NHCE group, this is known as the one-to-one correction method. Cite is EPCRS, Rev. Proc. 2003-44 Appendix B, Section 2.01(b) (page 53-54). EPCRS further states: The QNEC contribution is allocated to the account balances of those individuals who were either (I) the eligible employees for the year of the failure who were not highly compensated employees for that year or (II) the eligible employees for the year of the failure who were not highly compensated employees for that year and who also are not highly compensated employees for the year of correction. Alternatively, the contribution is allocated to account balances of eligible employees described in (I) or (II) of the preceding sentence, except that the allocation is made only to the account balances of those employees who are employees on a date during the year of the correction that is no later than the date of correction. Regardless of which option the employer selects, the contribution is allocated to each such employee either as the same percentage of the employee's compensation for the year of the failure or as the same dollar amount for each employee. Does this mean the QNEC is given only to NHCE with account balances or to any NHCE who is eligible?

Janice Wegesin’s 5500 Preparer’s Manual states, enter the complete legal name of the corporate trustee, the names of all trustees, or the complete legal name of the custodian of the plan on line 1a of Schedule P. Usually one trustee is authorized to sign. Someone in our office went to a seminar (cannot remember who sponsored it) and remembers hearing, if you have more than one trustee for the plan, separate Schedule Ps should be prepared for each trustee because it is not a good idea to have only one trustee sign. Can anyone give me a reason why having only one trustee sign Schedule P would not be a good idea?

Do you know when the changes will be finalized. Also, is there written guidance stating reliance on the proposed changes is okay.

Expected changes to EPCRS Revenue Procedure 2003-44 included correcting the problem of excluding eligible employees from making deferrals. The expected change required a make up contribution of only 50% of the ADP for the employee’s category. Does anyone know if you can rely on the proposed change before it is finalized?

I do not have a cross tested plan. I cannot just give them the gateway contribution. They are not eligible for the profit sharing contribution.

Not exactly sure what you mean. Here is my situation 3 HCE receiving the full profit sharing contribution 6 NHCE receiving the full profit sharing contribution 5 NHCE receiving only the necessary profit sharing contribution to bring them up to the 3% (one months salary – the time they were excluded from the safe harbor contribution) Are you saying the software is incorrectly including the 5 NHCE who received only the necessary additional 3% as not benefiting? Why would they be considered benefiting? Is it because they received the safe harbor contribution? I would not pass the gateway test because I could not meet the 5% gateway. Any thoughts would be appreciated.

I have a top heavy plan which has deferrals, 3% non-elective safe harbor and integrated profit sharing – entry dates for the safe harbor and deferrals are monthly after one month of service and the profit sharing monthly after twelve months of service. The employer hired several new employees who were eligible to defer and receive the safe harbor non-elective, but not the profit sharing. Since the plan is top heavy the new employees required an additional contribution for the one month they were held out of the safe harbor contribution. When I add the tiny additional top heavy minimum employer contribution Datair spits out a special top heavy report stating I am failing the 410(b) minimum coverage test – 401(a)(4) Top Heavy Safe Harbor. The verbiage on the report is as follows - Top heavy plans using a 401(a)(4) safe harbor formula (e.g. proportional to salary or integrated) with participants who are not eligible for the employer contribution effectively have two formulas and must pass a special ratio percentage test where those who benefit only form the top heavy minimum are treated as not benefiting. Is anyone familiar with this report????

If you amend the 5000, are you required to distribute another SAR?