masteff

I agree w/ Janet. Go back up to Bird's post that has the quote from his plan's text. The section he's quoting is the definition of the deferral percentage. It explicitly states that the deferral election can "slice and dice" the components of comp for the purposes of the election. So def of comp stays the same, only the def of deferral election would need to be reviewed/changed.

http://www.cnn.com/2008/POLITICS/01/24/eco...ulus/index.html This article at CNN just says "per couple who paid income tax and who filed jointly". But people on the borderline shouldn't jump for joy too fast, as no telling if they'll use 2006 AGI or what to calculate who gets a check. So your coworker might double check what other income he had in 2006 as it might have pushed him over the limit. And of course all bets are off until the ink dries. EDIT: here's another good article which speaks to how quickly we might (not) expect to see these rebate checks coming. http://www.kansas.com/news/story/290530.html

"Any amount rolled over is subject to the same rules for converting a traditional IRA into a Roth IRA." (IRS Pub 590, page 64, 2nd column, "Rollovers from other retirement plans". http://www.irs.gov/pub/irs-pdf/p590.pdf ) Since you can rollover aftertax money to a traditional IRA and since I don't see anything restricting that aftertax money from being converted to a Roth, I don't see why you would need to do anything special. I'd be happy for someone to correct me if I'm reading this wrong.

Unless your plan language that defines deferral elections has nice wording like Bird's does above that permits you to split out overtime from regular pay.... your statement quoted here gives us the answer. And if your plan did allow for a multi-part election (like Bird's does above), then I think you'd have to alter your election form and make the choice available to every single employee, every Jan 1 and July 1 (and it would therefore apply to every regular and overtime check during each 1/2 year). Since we're past Jan 1, obviously the earliest this could be done is July 1. Given that you have 5 months until the earliest this could be done, you do have time to put in an amendment to make it work.

I've seen this done before. Most common in my experience is that the acquired plan is frozen and the acquired employees are placed in the buyer's plan. Sometimes the frozen plan is then merged into the buyer's plan. Some good due diligence is in order to avoid hidden problems, as J Simmons notes can be a concern. Be sure to get copies of current SPDs and plan texts (if the acquisition goes thru, be sure to get prior versions). And make sure you understand their source accounting (what a source is (get more than just an ambigious name), where type of contributions went into it, what distribution options apply to it (especially in-service), are there any special restrictions on it). Take a good look at the investment options in the plan and decide prior to the acquisition what course of action might be taken as far as keeping or replacing those options.

My understanding is that it's more of DOL issue. http://www.dol.gov/ebsa/publications/fiduc...onsibility.html Note the words "as soon as it is reasonably possible to segregate them from the company’s assets". In recent years this has been taken to mean that if the employer is able to make deposits for other deductions on or w/in days of the checkdate, the 401(k) deposits should be made just as timely. As the quoted section says: If employers can reasonably make the deposits sooner, they need to do so.

A place to start: look at your definitions of active participation, employment, eligibility and termination. It helps if the severance is paid on a later date than the last paycheck. We used our definition of termination to cut someone off after their final paycheck, so any subsequent bonuses, severance, etc were excluded.

I have a small problem w/ the retroactive change to the deferral elections.

Glad you were able to clear that up. Back to your original question. On SIMPLE's the employer has a choice to pick an institution for all employees to use or to allow the employees to pick. Obviously, your employer decided to make the choice. This is allowable. One big issue for your employer is trying to coordinate making contributions to every employees' account. If they allow you to pick, then they might have to send money and data to multiple places. By just using one, it allows your employer to simplify their administrative burden. You can always rollover or transfer later.

So the limit on Roth IRA for 2008 is $5000. To get the full match, you'd put in $4000 and they would match with $1000 (assuming your salary is more than $8333.34 for the year). Is using your preferred brokerage firm worth $1000 to you? Is there some particular reason to not like the brokerage the company uses (eg, the only investments available are CD's or annuities or a severely restricted list of mutual funds)?

Personally, I'd stick to the argument that it's allocated to 2007 despite it being contributed in 2008. The allocation is an adminstrative/recordkeeping issue. As the wages are paid in 2008 and the contribution actually in 2008 (i.e. "no later than the end of the 12-month period"), then I'd say they go on the 2008 W-2.

The example to Q&A-10 of reg 1.79(p)-1 indicates it would a deemed distribution on 12/31 (the last day of the quarter). So for your case it would be a 2007 1099.

The "plan year" is generally a defined term in your plan document (which is a legal document). It typically is January 1st to December 31st. The fact that your operations were closed on and after Dec 21st has no bearing on the plan's definition of the year. The solution would be to alter the employee's termination date to 12/31. This should have zero impact on other benefits like health insurance, etc.

See this thread for additional cites: http://benefitslink.com/boards/index.php?showtopic=36487

I was mulling this over since it was first posted and came up w/ a few thoughts... Fidelity's plan services will initiate requests via phone but the participant still has to sign the form and submit it either to the plan sponsor or Fidelity (depending on level of service). The issue I see is that the plan sponsor still has to document the hardship reason. The participant has to send in some type of substantiation. (Guess that depends on what type of substantiation your plan requires; whether it's more than just a statement of need. Though I seem to recall that a stmt of need alone is insufficient.) So I can see taking the initial request via phone to streamline the process, but I can't see by-passing some type of paperwork. Best case I could see would be using the phone recording in lieu of a signature on the form, but participant would still have to submit supporting documentation to the extent it's required (eliminating papers from benefits dept-to-participant, but not from participant-to-benefits dept). NOTE: If any portion of a withdrawal is rollover eligible (such as an in-service w/drwl combined w/ a hardship), then the requirements of 402(f) apply and you then have the added step of providing the special tax notice on rollover eligible distributions.

I won't confuse the issue by going back to edit my previous post but I do take the point that on the IRA side of things, it's a "transfer" and not a "direct rollover". But my overal point is still the same: to answer CarKeys question #1, it's not counted as a new contribution for 2008. IRS publication 590 starting at page 21 has discussion http://www.irs.gov/pub/irs-pdf/p590.pdf

To add to John's answer... What you're discussing is called a rollover. A rollover does not count as a particular year (e.g. 2006 or 2008). It's just a rollover distribution in the old account and a rollover contribution in the new account. On your tax return, you won't report it as new contributions. Instead, you'll report the gross amount on line 15 with the word "rollover" written in (see the instructions for form 1040 learn more http://www.irs.gov/pub/irs-pdf/i1040gi.pdf ).

I looked at Pub 15-A and they haven't released the 2008 version yet. It's one place I'd expect to give some hint. http://www.irs.gov/pub/irs-pdf/p15a.pdf

D'oh. (Where's the Homer Simpson icon?) Okay, so if it's health... CCH Master Benefits Guide (2002 version) says in part 580 that "the exclusion [from employees income for employer contributions to premiums] applies regardless of whether a group policy or individual policies are involved." However in true CCH form, that specific item does not have a citation but I presume it has to do w/ sections 105 and 106.

So if you decide it's still okay to get individual contracts after reading Don's link... The issue I see is whether it would constitute group-term life. So we can look to the regs... 1.79-0 says "The term 'policy' includes two or more obligations of an insurer (or its affiliates) that are sold in conjunction." and "Thus, a group of individual contracts under which life insurance is provided to a group of employees may be a policy." The next place I'd point you to is 1.79-1 in whole. First noting the list of requirements in 1.79-1(a). Then noting the rules under 1.79-1© on groups smaller than 10 (you said yours is only 6). To ensure compliance, you'll have to take extra note of ©(2)(ii) which provides rules on how rates can be set in such a group.

Two points following WDIK's post... 1) The snag point in that last paragraph (B)(2) is the words "...but only if the plan provides for..." While the law was broadened.... was the plan? 2) The cited section applies to ADP testing but doesn't necessarily extend to W-2 reporting (going back to the original post). My thought is that the comp is deferred until 2008, so not reported on a W-2 until 2008 (in 2009). While the plan contributions might be allocated to 2007, I'd say it happens in 2008 for W-2 purposes.

Those two additional factors would explain the vagueness and contradiction of several web articles on the subject (I basically found "yes", "no" and "maybe").

Correct. IRS Pub 936 says as much ( http://www.irs.gov/pub/irs-pdf/p936.pdf ). It also requires that the debt instrument "is recorded or is otherwise perfected under any state or local law that applies." Of course my sticking point is "You must be legal liable for the loan. ... there must be a true debtor-creditor relationship between you and the lender". I'm unclear on whether this is met in the case of a 401(k) loan.

My bad.... forgot about the bankruptcy reform act that was passed a couple years ago.... see this thread.... http://benefitslink.com/boards/index.php?s...ankruptcy++loan (Actually, I think the plan could allow the deductions to be stopped but that's a different discussion.) Back to your original question... I've never heard of a plan sponsor responding to one of those notices. We certainly were never told to by outside counsel.

No security interest in the home is required. It's just like a normal plan loan except you use proof of home purchase to substantiate allowing the longer loan term.