ERISAnut

Let me caveat that by saying, once you get them on the line, they will not let you go until your problem is solved. That is the tradeoff. The long wait time is likely due to others with situations that are just as pressing, but they are being taken care of now that they have gotten through. I was so impressed with my situation, I actually forgot about the wait time. But, it is an issue; until they solve your problem. Please let us know how it works out.

This needs to be broken down into two distinct issues: 1) Rules of parity for zero vested participants. You lose everything. All service (both vesting years and eligibility) if the document applies such rules. 2) Everything else. Say you were 20 vested when you terminated. Then, you lose your forfeiture after 5 consecutive one year breaks, but you never lose the vesting percentage since you were not zero vested. Even though you do not get a redeposit after 10 years, you are still 20% vested. Notice, this is different from "1" above.

Much better. I ran into the same situation earlier this year. It worked out great. The person on the line mailed me all years going back to 2000. Had it within a week, since he pulled the info while I was still on the phone.

A very simple solution. Just call the IRS service line and request all tax info they have on record. They can typically go back 7 years. You will see who is reporting every year to the IRS. They will typically report an account balance for the year, if nothing else.

Yes. You can run a 401(k) with a 6% employer contribution in conjunction with a DB plan. Also, if the DB plan is covered by the PBGC, you do not have to limit the employer contributions to 6%. Typically, these two plans will pass non-discrimination testing on their own. However, in some instances, you may want to have a cross-tested Cash Balance Plan while using the 6% funding into the Safe Harbor 401(k) plan to make an effective DB/DC combination. This is flexible. You always need to watch-out for gateway (when no exceptions to it apply) In this instance here, the gateway is typically 7.5%.

Very important observation. It would be a good idea to draft the plan to state that once the plan becomes top heavy, it will remain on the top-heavy schedule and not automatically revert back. If it automatically reverts back, many employers (i.e. prototype adopters) will likely miss the rule where employees with 3 years of vesting service may elect to remain on the top-heavy schedule. Fortunately, this will not be a huge problem for DC plans going forward. I would hate to imagine the non-compliance on this single issue over the past years.

No. But the actual payout of the participant within the 12 month period will create a loan offset (where this participant may still come out of pocket within 60 days from the distribution and roll it over). Plan termination will typically cease contributions (but loan repayments are not contributions).

You are correct in many instances. Sometimes when the law changes to impose a more liberal vesting schedule, it typically applies to 1) only those employees who perform service on or after a certain date and 2) only those employer contributions made on or after that date. Everything else, (i.e. applying vesting schedule to all employer contribution balances and all employees) is up to the discretion of the employer whether to amend their plan to provide it. Sometimes, however, vesting changes affect everything that is currently there, in addition to contributions going forward. However, they do typically apply to only those employees performing an hour of service after a certain date. So, you are right. It will always depend on the specific circumstances as to what is required, and what flexibilities are allowed to the employer.

Of course it does; as it does not preclude this from happening. The key issue here is that the Plan Administrator (in order to remain as conservative) may refuse to accept this (and there is nothing the state law can do about it). Basically, the Plan Administrator is ultimately responsible for ensuring the participants rights under the plan. Within this responsibility, the Plan Administrator can accept instructions via Power of Attorney (or Attorney in Fact) when the Plan Administrator (after performing the necessary due diligence) believes it to be within the participant's best interests to honor the Power of Attorney. This is a very subjective standard. But, as a standard, the Plan Administrator may say "never".

LOL, We all beat the hell out of that one. All responded at the same time.

1.401(k)-2(a)(3)(i) : The last sentence states "If no elective contributions, qualified nonelective contributions, or qualified matching contributions are taken into account under this section with respect to an eligible employee for the year, the ADR of the employee is zero." The argument is, and has always been, what is an 'eligible employee' for ADP purposes. I typically maintain that this is made without regard to 'eligible compensation', but this is the basis of the disagreements.

Yes, You have to keep apples to apples and oranges to oranges. When qualified plans are at stake, you cannot use a service class exclusion to define your eligible group. This means that you cannot use criteria that is actually defined on a customary work schedule to define your class of employees. This means that you cannot use 'temporary', 'part-time', or 'seasonal' to the extent that these terms are being defined in the plan using a customary work schedule. 403(b) doesn't take it that far. So, you have to limit the application to only those rules that can be applied to 403(b), because in certain instances you are comparing an apple to an orange. Hope this helps.

You appear to be confusing the issue. The plan is only requiring "ONE YEAR OF SERVICE". This term is typically defined as "a 12 month period where the employee completes at least 1000 hours of service". You can define the year in this manner, or any other (perhaps more liberal) manner. But, you do not want to double count, which is what you appear to be doing. Once you get this under control, then you can begin to look at certain types of plans (or types of employer contributions) that may provide for more restrictive eligibility (up to 2 years). But, this has nothing to do with 'how you define a year of service'. Sorry, J Simmons jumped in ahead of me.

You should issue a correct 1099-R to reflect the corrective distribution amount. Once this is done, he will receive two 1099-R Forms, one with the 'eligible rollover amount' and the other with the 'corrective distribution amount'. The participant should be instructed that the corrective distribution portion is taxable and not rollover eligible. From there, he may choose to attempt to recover those amounts from his IRA, since they are not rollover eligible, or may leave them inside the IRA as a non-deductible contribution (where he would file his form 8606). I would only worry about correcting the 1099-R forms and properly communicating the situation. The choice of how he amends his return and handles the IRA should be a conversation between he and his financial advisor.

Yes, since the universal availability rules do not apply to churches. There are many things that churches can do that other entities cannot. Churches are not even required to have written plans.

We're basically saying the same thing. Typically, that language in the BPD would imply that the adoption agreement provides the option. However, the BPD may actually state that those decisions will be address on a separate salary reduction agreement. This has been my experience on certain documents. The point being made is that BPDs are generally written to allow any and all options (for which the decisions will be made on the adoption agreement). This is usually the case. I agree when you say "IF the adoption agreement". I was merely assuming that either the adoption agreement would say it, or the BPD would include language stating the client will document the decision on a separate salary reduction agreement. But, we actually agree.

NO, there is no penalty since it is not a required funding under Section 412 of the Code. As long as they fund the contribution by the extended tax filing deadline, all your issues are fine.

jpod, You are correct. Even the IRS is understanding enough to know that you cannot take what is not there. So, in the event the funds (or assets) are not available, then the account is effectively exhausted. You are likely looking for the most effective way, operationally, to close down the plan.

Yes, 2006 is the first lookback year. Your relief runs through 2007. (remember to apply the $5,000 rule to this count) So, you are fine in the SIMPLE IRA plan for years 2007 & 2008. If your employee count doesn't get back under 100 by 2008, you are not fine for 2009. I orginally misread the question. So, this is an edit. I actually edited twice to ensure I am communicating this correctly. Hope this helps.

Find a buyer for the his share of the ownership in the mortgage pool and use those funds to meet the RMD. Regardless of the freeze, this PS plan has the responsiblity to value all assets at least annually. Once the employer figures out how to appraise this asset for fair market value, then you have the amount to base your RMD on. Also, he should attempt to sell that ownership (now that a valuation was done). It would normally be funny, except for the fact that there is a huge mortage crisis, when someone invests qualified plan funds in illiquid assets that end up hard to value.

Nothing taken as a rant. You cannot possibly have anything to apologize for. Your comments show that you actually 'think'; and that is a reflection of strength.

I have a thought. Regardless of the rule, you should want to for the sake of your employees. Who wants to track summary of material modifications. It would be nice to reference one document with complete and updated information. When amended (i.e. changing only one or two provisions without re-writing the entire document) then that necessitates a SMM to be sent to all participants. Imagine having to track 4 of these. I'd rather receive one updated SPD. So, regardless of the amendment, a full restatement would generally produce a new SPD on most document software systems. Just a thought without engaging in the legal aspects.

Yes, You are hearing correctly. Here's the major difference. The IRC provides that when you "shift", then the 'dollars shifted' must be removed from the ADP test and tested under ACP. When this is done, then anyone who is ELIGIBLE to defer into the plan must now be included in a ACP test, regardless of the fact they they may not have been eligible for a matching contribution (i.e. last day & 1000 hour rule). Borrowing, as outlined in the Regs (which is the way the IRS interprets the Code), does not require this. Regardless of the last day & 1000 hour rule being applied to the matching contribution, you are allowed to 'borrow percentages' from the ADP test without requiring those employees to be tested under ACP. You are not shifting dollars, but instead borrowing percentages. Once borrowed, no dollar amounts are earmarked to any individuals. This is a cleaner, easier, more liberal way of doing the calculation. Also, it is perfectly acceptable to the IRS as they made it that way.

No, Your second example is not correct. 2010 remains the date. The initial date for the Roth IRA never changes. The new 5 year period measurment ONLY pertains to a situation where there would have been a 10% early withdrawal penalty, but it was exempted because of a rollover to a Roth IRA. If the participant is actually 59 1/2, as outlined in your example, then there isn't a new 5 year period.

Sieve, I see what you are saying, but you missed one point. I didn't make an actual determination of whether the individual is a common law employee of the receipient or a common law employee of the leasing organization. I merely communicated that in order to address the question, you must first make an accurate determination using those rules I outlined. You are actually making the determination. I do not disagree with your determination, but remained careful not to make it. I would normally push the actual determination of employee status off to the employer because it is their ass on the line if they get it wrong. My second response was that the PEO thoughts came to mind, but I didn't speak to those. I actually avoided it because the framework lies with making a real determination of whether the individual is a common law employee of either organization.