BG5150

Boy, if I had a nickel for every time I said that about a retirement plan issue, I could probably retire...

Do you even have the records to do all the old 5500's?

I couldn't find it in EPCRS now, wither. But it is in the "Fixing Common Plan Mistakes on the IRS website: http://www.irs.gov/Retirement-Plans/Fixing...tribution-Plans

One of the corrections is to distribute the inadmissible deferrals to the participant (plus earnings). Taxable, not eligible for rollover treatment. I do not think the 59 1/2 penalty applies.

Do you have a link to this? I cannot find it.

Have her verify that it wouldn't be a new loan from the proceeds from the rollover, but actually rolling over a prior obligation. Side notes: how do you get around the fact that the loan defaulted on March 31? What will the correction to get it caught up be? And is John Hancock going to calculate the interest through the date of distribution if it is going to be rolled over?

Will the new plan accept a rollover of a loan? I don't know of many plans that will let you do that.

Has anyone mentioned fiduciary responsibility to them? The DoL takes a dim view on brokerage-only setups. From FAB 2012-02R, Q: 39

To what lengths should a sponsor go to obtain an address of a "lost" participant in order to supply the 401(a)5 notice?

Unless you are in the OEE group. Those in the Otherwise Excludable Employee group are not required to get the gateway unless the benefits in the OEE group also need to be cross-tested (which is highly unlikely). Think of it as a separate plan. I replied in the spirit of

The Gateway is not a profit sharing contribution. It is an Employer contribution. So, if you get ANY Employer contribution (Safe Harbor or PS), you must get at least the gateway if the plan is to be cross-tested.

And if the participants are not going to be making up payments themselves over the summer, would the loan even be valid if the Trustee knows that payments will be missed?

Be careful of the loan agreements if you want the people to send in their own checks. Many agreements say $x.yz will be deducted each paycheck, and make no mention of what happens if there is no check. Would doubling up on payments be allowed? That would seem to run afoul of the level amortization rules. If the participants are not sending in their own checks (timely), I think you have three choices: 1) get the loan caught up when they return, 2) reamortize to the end of the original loan or 3) reamortize to the end of 5 years after the loan was taken.

The IRS Commissioner's office isn't in the Pentagon, is it? Besides, the Pentagon in in Arlington, and not DC. (If that what was meant by the "Cherry Tree" reference)

Unless the sponsor makes a declaration that the ER will not assess fees to participant accounts, there still is the possibility of it. So it must be disclosed. Even if the the ER and/or forfeiture account paid for the past 20 years. The disclosure indicates any and all fees that COULD be applied.

I think it can be added at any time. (prospectively, of course.)

So, after this go 'round, when are the next "annual" notices due? What does "annually" mean in this case? Plan year? Calendar year? Would the next one be due by Aug 30, 2013? What if the ER gives them out again in January 2013; would the one after that be due a year from that?

If they didn't do it right the first time, the test isn't failing, it's an invalid test to begin with. Figure out who should have received it using the provisions in the plan document. Anyone missed gets it. Everyone missed gets it. Then run the ratio test.

The loan policy may state that loans may only be granted for reasons that fall under the safe harbor hardship situations. But does it say there is the same burden of proof needed?

What was the allocation formula in place before 1/1/11? The 2010 contribution must be broken up and allocated on the pre- 1/1/11 basis. Starting 1/1/11, they made the allocation formula per capita, with no last day rule or other requirements (such as hours worked). They are stuck with that for 2011, because all the participants on 1/1/11 satisfied the requirements. If the PS ELIGIBILITY requirements (that is, just to be eligible for the PS component of the plan to begin with) are none (no service or hours req'ment and immediate entry), then anyone hired in 2011 would have to get the per capita amount, too. The amendment adding back in the last day requirement would be affective for the 2012 plan year. As for your question about being hired 7/1/11: I would say the person would share in the per capita PS.

The government won't know. Unless the person gets audited. However, isn't it incumbent upon the Plan Administrator to make the RMD (or is it MRD these days? I never remember!) happen? Is in not an operational failure to not distribute the RMD?

ETK: Notice the formula in the OP: 100% up to 4%. 401: You should be fine, I believe.

The contribution amount is determined by the employer, at its discretion (usually). $80,000. 5% of total compensation. $800 per person. Then you take that total dollar amount, and allocate it per the terms of the document. Pro rata, new comp formula, per capita. Sometimes, the allocation must pass the General Nondiscrimination test. The two, contribution amount and allocation can be different numbers. To wit: ER wants to make a 10% of compensation to the PLAN, and the total comp is $1,000,000. It would be a $100,000 contribution and deduction for the ER. But, that doesn't mean everyone must get 10% of his or her compensation for the year. The allocation method could include permitted disparity, wherein the higher paid people would get slightly higher than 10% and others slightly lower than 10%. The total will still be $100,000 though. The allocation method will also tell you the conditions under which someone will get a contribution. Things such as dates of employment (mid-year dates are very odd) like the last day rule, or working a requisite # of hours, etc. The ER will NOT have discretion in the allocation method for a year, once someone has accrued the right to a contribution. He can change it prospectively, for the next year.

Plan had a bunch of people who became eligible in 2007-2009 but were not informed of their ability to make 401(k) contributions. They all terminated in 2009 or '10. In preparation of the 2010 analysis, in 2011, this was realized. Company made the requisite contributions and attendant matches and paid the people out (all were less than $100). So, when are these people considered having account balances, and thus, participants again? When the deposit is made to the accounts (mid 2011)? Do they get "retroactive" account balances back to 2007-2010? This is extremely salient to my open participant count for 2011 form 5500.

And by any chance were these 3 people HCEs or are going to be HCEs?