BG5150

Is an automatic enrollment feature availble to the plan?

Does the plan have any other employer contributions other than the SH? Like an additional profit sharing or match or reallocated forfeitures? If not, you should be okay with just the SH contribution--since you get the "free pass" in that situation. If not, I think all you have to do is give participants employed on the last day of the year, but who entered the plan mid-year, an additional contribution to get them "trued-up" to their full year compensation. Yuu don't have to mess with the integrated profit sharing allocation at all.

Is it too late to do SH for 2009 if the deferral feature has been implemented, I think. When will the bookkeeper be eligible? In 2009? Does the plan allow for a QNEC? If so, the ER could make a QNEC enough to satisfy the ADP test. And as for the 2% "limit" mentioned: it is the LESSER of NHCE average PLUS 2% or TIMES 2%. Therefore, it would be zero (0.00 X 2% is always less than x% + 2%) ASIDE: Someone once put up a rhyme of when you use the 2+, 2x and 1.25x. It turns out you use the 2x when the NHCE % is under 2, you use 2+ when it's between 2 and 8 and 1.25x when it's over 8. )Can anyone find a link to the rhyme? I can find it using search)

I was always under the assumption (me=ass, perhaps!), that gap earnings can be done with acutal gains/losses, and the other way was also acceptable, kind of like a safe harbor (for lack of a better term). I would thinkt he latter helps with balance forward plans, since earnings are only done a few times a year.

How long ago was the first distribution? My former company would require a new distribution request if the first one is over 90 days old or it crosses tax years. I think neither you nor the Employer can say for certain where the participant wants his or her money. The person may be in a different financial situation than when the distribution was first done. Maybe the IRA was moved to another vendor. Maybe a car payment or tuition bill is due and this money would be very timely. There are many circumstances where the (former) participant would like the money to go to a place other than the original IRA. In any case, it's probably up to the firm where the assets are. It probably has its own procedures for handling these cases. Maybe ask for processing fees to be waived in this case.

Was it all paid on W2? Anything on 1099?

Does the document have any language in it describing how to correct a coverage failure?

Could you amend the plan to give him his own group? Not sure if it's too late to do that. Is he over 59 1/2? Could he take a distribution of the "extra" 5% he would get?

Does the document (or AA) allow for the forfs to be used to cover fees/expenses? Also, I think the forfs can be used to offset the money sent for deferrals, too, since they are considered employer contributions. (The only employee contributions are After-tax and rollvoers)

And, if it specifically allows for that correction method int he plan document.

How long do you wait after you ask the SSA (or IRS) to forward your letters before you start moving accounts from a terminated plan? (assuming other avenues come up empty, as well) A month? 3 months? 6 months?

And a waste of time.

So, it's 415 first, then 402(g)?

Keep in mind, it is not 120 participants at any one moment. It is the number of active participants on the first day of the plan year, including terminated people who retain balances (but not beneficiary or QDRO accounts). Don't fall into the trap that the # on the last day = the # on the first day next year.

I edited my post.

On a side note, I believe the plan administrator has 18 months in which to qualify a DRO. Seems kinda long, but I think that's the timeframe.

It's not only 401(k) contributions. You must also take into consideration matching, profit sharing and/or forfeiture allcoations. So if a key EE had a 2% deferral rate and there was a 50% match, that would get the key EE to a 3% allocation...

I would consider it SHMAC, since it's 100% vested as are deferrals.

Number 10, to me, is the worst.

Don't forget about the deductibility limit which caps the total PS at 25% of covered comp. So, in total, the covered compensation for 2008 can't be more than $1,240,000.

The refund is taxed at the person's ordinary income rate. However, many record-keepers withhold 10% in federal taxes (and sometimes state, too), unless the participant elects another percentage, including zero.

However, so may argue that the date does, in fact, relate to the determination of taxes. Because after that date, the 10% excise tax gets assessed. There is a little writeup on it in the ERISA Outline Book:

When does the document say they come into the plan? Does it say something like "coincident with or the next..."? If so, I would think that this person enters 7/1/08 and is not excludable. Actually, With a hire date of 7/1, the person would satisfy one year on 6/30, so the next entry date is 7/1. If you are using Relius, depending on the setting, I believe, the program will exclude those who have worked less than 18 months for some reason.

That made my day! To the OP: can you go back to the organization which wrote the plan? Maybe it can tell you where to look in the plan/AA for the guidance you need.

Since gap earnings are not applicable for 2oo8, how would you figure out earnings on an ADP refund in this case: HCE puts in full $15,500 deferral from last paycheck of the year. Pay date is 12/28 and the deferrals are on the 2008 W2. However, the deposit to the plan is not made until January 5. HCE is due a gross refund of $3,000. How do you figure out the earnings on that? None whatsoever, since everything was deposited in '09, after the plan year ended? [Hypothetically.]