BG5150

I always thought the SMM timing rules were a bit strange, given that you must give out the SAR a mere 2 months after the 5500 is due.

In my old job, we used 90 days, unless the time between the two crossed tax years. I believe that this is a decent course to follow for a couple of reasons: If the original distribution was rolled over, the original IRA or QP may not be in existence any more, causing delays. The participant may have moved to another state, thus there may be a state tax withholding issue, if the first distribution was paid directly. The participant may be in a different tax and/or financial situation the next year, and it may impact where the person would like the money sent.

I always put people who are receiving installment payments in b, and all others in c.

Playing devil's advocate: Maybe during the time the check is in transit, they come up with the money somewhere else, and they use the hardship money to repay that source. And, I think the rules only call for proof of the need, not the satisfaction of the debt.

Was the 5500 done on an accrual basis?

Why not? Deferrals are employer contributions.

From Corbel's VS: "The amount by which Compensation is reduced shall be that Participant's Deferred Compensation and be treated as an Employer Elective Contribution and allocated to that Participant's Elective Account" (emphasis mine) As for the timing: I'm not saying to wait until the end of the year to allocate this money. It should be used right away, of course. Just because the ER withholds $50 form an EEs paycheck, doesn't mean the ER must send to the trust $50. If there is money in the suspense account, it can be used for that. This is assuming no aspect of the plan dictating that match forfs must be used to offset other match contributions.

Why not just send it in using the 2008 forms now and wait to see if they come back to you with a letter? You will at least have a record of sending timely.

In some of the documents I've worked with, deferrals are considered Employer elective contributions. (To me, the only true employee contributions are after-tax and rollover contributions) So, I've always considered deferrals as an acceptable source for forfeiture money to cover, unless the document specifically says that match forfeitures must go to cover the ERs matching contribution for the year. (Some docs say that match forfs pay for match and PS forfs pay for PS, but some just say that forfs go towards the ER's contribution.) But these aren't normal forfeitures of non-vested contributions. They were mistaken contributions. Becuase they have already been invested int he trust, I think they should be removed fromt he accounts and placed in a suspense account (which the forfeiture account often doubles as), and used to pay for the next employers contribution. It's really a zero-sum game that keeps any plan assets from being reverted to the Employer. Say for example, the amount to be "forfeited" is $500. And the next total deferral cotnribution totals $4500. Instead of the company writing a check for $4500 and getting a rebate from the plan of $500 (net -4000 from company, +4000 to plan), the company merely sends in $4000 and the record keeper uses the $500 from suspense to true-up the amount (net -4000 from company, +4000 to plan).

I would forfeit the money, and use it to offset the next few contributions. (And I am considering sdalary deferrals as Employer contributions for this purpose)

I meant "Imchipbrown" (oops)

So, it's allowed, the OP just has to check the plan's document to see if it applies.

Does the document allow that the match counts towards TH? (Didn't EGTRRA or PPA allow that the match can count, but doesn't have to?)

I would say not in test because there was no compensation whatsoever. In my example the person had compensation, it just wasn't eligible for deferrals. BTW: At the ASPPA conference last year, the question was addressed and the answer was to include my guy with zero salary. (I know it's not an official answer, but more than we had int he past.) To the OP: is this a sole-prop, partnership or corp? If not a corp, I don't see how W2 could be paid. ANd are we talking about '08 or '09?

The Form 5500 instructions have a portion that lists what forms a small pension plan may be required to file. Schedule D is on this list. Here is a link to the instructions. See pg 9. http://www.irs.gov/pub/irs-pdf/i5500.pdf Laura On a side note (I know the OP said the plan has more than 25 participants): If a plan has less than 25 participants at the beginning of the year, it optionally file only certain forms, and schedule D is one of the forms which DOESN'T have to be filed. There are more conditions as to whether a plan can use the "Voluntary Reporting Option." You can read about it on p. 9 of the 2008 instructions so thoughtfully linked above. But in this case, I think you are out of luck: a schedule D is needed.

Bottom line: If the person is still working for the company, but is now in an excluded class, loan payments still have to continue. If the person has been terminated, see the plan document or loan program and/or loan documentation to see how it should be taken care of. On another note: be careful when you are deciding who is eligible or not to make deferrals (or to get a match or PS). The plan may be set up so "temp" (or part-time, if that is the meaning here) people never become eligible, but if someone satisfies the eligibility requirements, that person remains a participant even though he or she may now be scheduled to work less than hours needed for initial eligibility. That is, unless that person's job classification is specifically excluded from participating. For example, eligibility reqs are 1000 hrs in 12 mos. Suzie works 1200 hours in 2006, '07 and '08. In '09, she is now only working 850 a year. Jsut beacuse her hours got cut, doesn't mean she isn't in the plan any more (though it may mean she doesn't accrue vesting service). Unless Suzie's job classification is expressly excluded from the plan, she stays in.

Where can I find the ERISA code online? All I seem to find are bits and pieces of it. Is it all in one place anywhere?

He is still a participant in the plan; he just does not qualify for the contribution. As you said, there has been no distributable event, so I would say "no" to the distribution question.

Because a lot of times, the bosses will use their accounts as a sort of line of credit, but they don't want to have the hassle of doing it for the rank and file. So they keep the loan provision and try to keep it hush-hush. As to prime+3: Here is what the ERISA Outline Book has to say about interest rates and the PT exemption:

But you need a compelling reason to use the service. You just can't use it to track down a dead-beat ex-wife or a long-lost pal from first grade. (Of course, locating someone for benefits purposes is a compelling reason)

I've had some success with Accurint. Not sure how much they charge, because I was with a large company at the time, so I'm sure we got a volume discount.

Have you asked the document provider/author what it thinks about the issue? Many times when I am not sure if something can be accomplished in a plan, I go back to the provider/author. Perhaps teh same question was posed to them and they already have an answer.

With a New Comparability formula (if it is allowed under your document) you could accomplish this. And even better, the sponsor can determine which of the HCEs can get an allocation (For example, the owner and his wife, but none of the other HCE's).

Yay! I may have to go to jail, but at least I'll probably avoid heavy fines.

K2: If and when the employer makes the plan "whole," how does it do that? Does the money go back into the participant's account? Sitting there accruing tax-free gains (or lossed), and then he or she will be entitled to that money again in the future?