BG5150

And if you can add them for the Profit Sharing, I see no reason why you couldn't add them just for the Profit Sharing and keep the other sources' eligibility the same.

Where is there mention of the 30-day wait period for distributions, and that people can waive it and get their distributions sooner?

Who is going to keep track of all those "little balances" at the end that will crop up? And how are you going to zero those out? It is money "owed" to the trust and the participant's account, so you just can't forgive it. The other this is to track it and have the company's payroll change the loan payment for 219.21 to 0.48 for one payroll and hope they remember to remove it the next time.

See Chapter 11, Section XIV, part I, #6 in the ERISA Outline Book.

I certainly would consider the person as "receiving a true-up." The driving factor is not the amount, but the fact that the person was employed on the last day of the year. The plan shouldn't be penalized for no change in the person's deferrals or compensation.

If NOBODY gets any match, then NOBODY benefits. If SOMEBODY gets a match, then you would have to do your coverage test.

That would not be a forfeiture to be reallocated. It is not unvested money. I believe (read: me and maybe one or two others here): The money should be removed from the accounts and put into a suspense account (which the forfeiture account often serves as). Then funds can then be used to offset the next ER's contribution. And here's where it get's controversial: I think they can be used to offset, yes, further deferrals. That is not to say they aren't deducted for EE's paychecks, but the ER can offset the deposit by the amount in the suspense account.

Just a side note on QNEC's: If you are doing a 1-to-1 QNEC for plans that are being corrected more than 12 mos after the testing year ends, you cannot break the population into component plans.

I see no sense in putting someone on there who has taken a full distribution in the time between termination and filing.

If a plan has less than 25 people at the beginning of the year, a plan can optionally file an abbreviated return which includes: Full 5500, abbreviated Sched. A, full SSA, full Sched I and maybe a Sched R. (note the absence altogether of Sched D) This is addressed on p. 8 or 9 in the 5500 instructions. On another note, if the funds are in a Pooled Separate Account (and if a Sched D is needed), then those funds need to be on the D with code "P". Having insurance products in the plan is irrelevant for the D.

I try to give the most recent balance, since there may have been additional contributions since the termination date.

We are filing on the accrual basis, and the Auditor is insisiting that since the financial statements are accrual basis , we should pick up the 2008 ADP Refunds as a payable as of December 31, 2008. I just want to do it the correct way. Is there any standard here? If the auditor wants it there, put it there. Just get it in writing.

The recent thread on hardships being grossed up for taxes got me thinking (I hate when that happens!) What if someone overestimates the amount of taxes? For example, say someone requests 10,000 in a base hardship. Then includes the 10% penalty tax (1,000). And for Federal tax they assume a 35% rate (3,500) for a total of 14,500. What happens if the person is in the 25% bracket at the end of the year? Obviously the h'ship was more than the need + taxes & penalty.

Quick question, first: were there less than 25 participants in the plan on day 1 of the year?

I thought if the "maybe" language was written into the plan, you only have to provide the notice and not have to amend the plan each and every year. I've used Corbel's volume submitter, and with the GUST version, you had to amend every year, because there was no "maybe" language available. But with the new EGTRRA VS, there is the option.

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)