MoShawn

Having trouble reasoning this one out. The due date for Form 5500 for a 3/31/10 plan year would be 10/31/10. Since that is a Sunday, the due date would move to the next business day, Monday, November 1. An extension of time to file for 2 1/2 months normally takes the due date to 1/15/11. Since that is a Saturday, the due date would move to the next business day, Monday, January 17. However, that is Martin Luther King, Jr. Day. So would the extended due date move to 1/18/11? Or would it be better to be safe and enter 1/14/11 and have a day short of the full 2 1/2 months?

We recently received a copy of a restated plan document that incorporated an amendment from 2005. Our (and the client's) intent was to make a specific employee (NHC) eligible for the plan as of 12/1/05. Normally, we would draft the amendment to indentify the individual specifically. Unfortunately, the draft of the amendment actually reduced eligibility from 1 year to 3 months (401(k) only), and entry dates from semi-annual to monthly (all sources). This did allow the individual to enter the plan as of 12/1/05, but would obviously have impacted all eligibility calculations from then to the present. Both the company and our firm have continued to operate the plan on the 1 year service and semi-annual entry terms. 1. Can we say this was a mistake in the drafting of the amendment, and this should only have applied to 2005? 2. ??? Suggestions?

Does the answer change if this is employer stock, and the $200 difference is unrealized appreciation?

Have a client who wishes to convert their current IRA to a Roth IRA. Current IRA is invested in stocks, with a cost basis of $100/share and market value of $300/share. When doing the conversion, is the amount includable in income based on the $100 cost basis, or the $300 market value?

The participant did submit medical bills. The issue is that the majority of them are from prior to 2010. I find it extremely difficult to believe that these are not either paid or wrapped up along with other services in one of the later bills. He maintains that they are all still outstanding and the most current that he has received.

How would you handle a case where a participant submits medical bills dating back over three years? (i.e., a hospital bill from 2007, that was clearly issued in 2007) There is no indication of whether any of them have been paid. Can I rely on the participant's assertion that they are still outstanding? He maintains that they were billed at the time but he never received another billing.

A client recently received a notice from a fund company regarding a 403(b) plan they maintained several years ago. A single individual still has an account, but is now missing. This is considered a "dormant" account, since it has had no contributions since at least 12/31/2008. We cannot find confirmation one way or the other whether we need to file Form 5500-SF, 5500-EZ, or no filing at all. Any opinions?

Have a potential client currently maintaining a PSP and a CB with assets in the same insurance contract. They are clearly separated within the contract under 2 different "sources" (Employer Profit Sharing & Employer Contribution). Does anyone see a problem with this? I know that 2 DC plans can share the same trust when the sources are clearly defined, I'm just not sure when they are un-like plans.

Oh, not correcting the plan, but the payroll. My comment was to the immediately preceding post. Sorry.

They are currently discussing with their accountant how to go about doing this.

The only thing I could see was to self-correct by forfeiting what was erroneously deposited. I couldn't find anything about sending that money back to the employer.

1. Well, PS (with loans) was merged into 401(k) (without loans). 2. I like this. Essentially grandfathering in existing loans, but providing for nothing further.

Client had both a PS plan and a separate 401(k) plan, and merged the 2 effective 1/1/10. Unfortunately, we now discover that the owner had a loan outstanding from the PS Plan at the time of the merger. The 401(k) Plan has not, does not, and has no desire to permit participant loans. Do we: a) need to amend the 401(k) to permit participant loans, b) need to default the loan since it is not permitted in the 401(k), c) not have a problem since the loan is from a prior plan arrangement. I'm hoping for c), but would be ok with a). Opinions?

Have a client that discovered 4 payrolls into the year that 401(k) deductions were being made for several employees who had elected to stop contributing effective 1/1/10. We suggested correcting the payroll system on its own, forfeiting incorrect amounts that were deposited, and using forfeitures to offset future contributions (yes, plan permits). Client now wants to know if they can have that money back, since it was a payroll error. I haven't been able to find anything that would allow this, so any insight would be appreciated.

Are there any written rules regarding the allocation of fees among participants? We normally process these pro-rata based on account balance (a 0.5% fee is taken from each participant's account, for a total fee of 0.5% of plan assets). Now have a client asking if the fee can be taken per-capita: $2,000,000 in assets x 0.5% fee = $10,000 total fee / 20 participants = $500 paid from each participant's account

Does anyone know where to find unrounded plan limits for 2009?

A company is 5 days late in depositing elective deferrals. Participants' accounts were down during the period, thus the actual deposit made was worth more than what the "earnings" would have been. Is there a 5330 to file in this case? The "amount involved" when considering elective deferrals is the lost earnings due. Since there were no lost earnings, there would be no amount involved and thus no excise tax?

Have a client who wants to designate his spouse as the primary beneficiary of his 401(k) account. No problem. Next, he wants to name his daughter as contingent beneficiary if she is age 18 or over at the time of his death. Otherwise, benefit would go to a trust established for the daughter's benefit. Anyone have issues with this?

ESOP loan was fully repaid in July 2007, with the company repurchasing all unreleased shares. Eligibility section was amended to freeze future participation at that time. Three participants were terminated in 2007 prior to the participation freeze. They were re-hired in 2008. Should they: a. follow the re-hire rules in the plan doc (no breaks in service, so re-enter plan with all service intact), or b. be considered non-participants since participation is now frozen.

I use Relius. I have never had it treat a rehired employee in a manner I thought was correct, regardless of how I set up the plan specs.

Thank you all for your input. I think I've seen on these boards before a confirmation that, barring plan language to the contrary, a year of service is credited at the end of the computation period? Thus the result my software is giving me (enter 7/1/09, since ee worked 1,000 hours in the computation period by that date) is incorrect?

Note my post above on "Reemployment before five (5) consecutive 1-Year Breaks in Service". It does reference "Employee". There is another paragraph in the same section with nearly identical wording that references "Participant".

From definitions section: 1-Year Break in Service - "means the applicable computation period during which and employee has not completed more than 500 hours of service with the employer." (language about recognizing leaves of absence) Years of Service and 1-Year Breaks in Service shall be measured on the same computation period. Year of Service - For purposes of eligibility for participation, the initial computation period shall begin with the date on which the Employee first performs an Hour of Service. The participation computation period shall shift to the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service. If there is a shift to the Plan Year, then an Employee who is credited with the required Hours of Service in both the initial computation period (or the computation period beginning after a 1-Year Break in Service) and the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service, shall be credited with two (2) Years of Service for purposes of eligibility to participate. From Eligibility section: Reemployed before five (5) consecutive 1-Year Breaks in Service. If any Employee becomes a Former Employee due to severance from employment with the Employer and is reemployed by the Employer before five (5) consecutive 1-Year Breaks in Service occur, then the Former Employee's prior service shall count in the same manner as if severance from employment with the Employer had not occurred.

I have checked everywhere I can think of, and cannot find a definitive answer. Entry requirements are age 18 and 1 year of service. Year of service is the 12 month computation period from hire date to anniversary (switching to plan year afterward) in which and employee has 1,000 hours of service. Entry dates are monthly. Date of birth = 5/7/86 Date of hire = 6/13/05 Date of term = 12/10/07 (actual last pay was 4/15/07) Date of rehire = 7/16/08 2005 hours = 466 2006 hours = 675 2007 hours = 207 2008 hours = 960 2009 hours = 1,032 EE did not have 1,000 hours between 6/13/05 and 6/12/06. When does this person become eligible for the plan? a) software says 7/1/09 (1,000 between 1/1/09 & 6/30/09), b) client says 8/1/09 (based on 7/16/08 rehire date) c) gut says 1/1/10 (ee never had a year of service in a prior computation period)

Is there a minimum excise tax amount for filing a 5330? I have a case where the client did not remit data until after the 2 1/2 month deadline. Of course, there turned out to be an ADP failure with a refund due of $62. The 10% excise tax would be $6. Is this really necessary? I thought I saw a few years ago that anything under $10 need not be filed, but could be getting that mixed up with something entirely different.