BG5150

I am guessing (read: guessing) that as long as the methodology is consistent (cash vs accraual) and the funding is consistent (match gets deposited after plan year every year) that it would be okay. The money is going to be counted eventually.

In the Top Heavy Plan definition, Tripodi says to use only the actual contributions for plans not subject to minimum funding (401(k), PS plans). He does mention that in the ASPPA Q&A the IRS opened the possibility that the accrual method may be acceptable: Though all his examples go on to use the cash-basis for non-pension plans.

This is from The ERISA Outline Book: However, elsewhere in the book it makes this argument: Which of course leads to the usual caveat (emphasis mine):

From what I remember, 2 1/2 months means 2 1/2 months. It never mentions business days. We always tried to get things out by the last business day w/in the 2 1/2 months. Which, in this case, means the 13th.

It allows you to not file Schedule D, do an abbreviated Schedule R (only if Part II needs to be filled out) and also just do an abbreviated Schedule A. That simplifies my reporting for some plans by an hour or so. Some plans have dozens of funds that are pooled separate accounts and need to be reported on Schedule D, and that can take some time to create.

TH calcs are done on a "cash basis," so, no, you would not use the QNECs in this case. And, for part 2 of your question, I think the 2 1/2 month date really only applies to refunds and whether there is an excise tax.

My thoughts: Would the $1,000 be higher than a plan-imposed limit? If not, leave it there and just do not withhold in one paycheck. It wouldn't be a "pre-funding" rule, because the participant would have received that much in the original paycheck anyway. If the $1,000 was higher than a plan-imposed limit, the money can be removed from the participant's account (adjusted for earnings) and put in a suspense account, the person would be "made whole' (for the entire $500, no earnings). The money can be then used towards the ER's next deposit.

Does a SH notice say the contribution is for the year or the plan year? Could you amend to have the plan year shifted to say 3/1 to 2/28, and eliminte the SH for the new plan year, and just have to make the SH for the short plan year (1/1 to 2/28)? Then, maybe, in December, amend back to calendar year?

I believe the TH pass would still apply, as long as the forfeitures are considered annual additions for 2008, that is, they are allocated within 30 days of the due date of the corp tax return (or is it 30 days after the due date of the 5500?).

Because the current plan is obviously a 401(k) plan, you cannot have a successor plan with a 401(k) feature for a minimum of one year after the termination of the original one, I believe.

I think it was merely a mistake. If everyone is getting a pro-rata allocation, you don't need to cross test. Whomever entered the information into the software, probably did so right after doing a new-comp plan and just didn't uncheckl the box, or, for some reason, it's a default opion that should have been de-selected.

What I want to know: Where is this Wal Mart at which you overhear conversations about filing old C/R's and DFVCP? I don't even overhear talk like that here at my job!!

According to TAG, this is a 415 violation, since there are no allowable deferrals for the owner, it must be classified as a non-elective contribution. Since he had zero compensation for a non-elective contribution, there is an annual addition failure. From TAG's reply to me: "Under the general corrective principles of RP 2008-50, the excess annual addition would not leave the plan. The amount would be removed from the account of the self employed participant and treated as a forfeiture, pursuant to the terms of the plan document."

Your plan should have provisions dealing with EE's who are participants and then become part of an excluded class, and those who are in an excluded class then move to an eligible class. Notwithstanding the above, a person who has satisfied the initial eligibility for the plan ("year of service" may or may not mean satisfying 1000 hrs), does not lose his or her eligibility due to a reduction in hours. However, if the person works less than 500 hrs, I think they can be removed from some coverage testing. And as said before, the person may not be elgiible to receive a match, QNEC or Profit Sharing becasue of those hours. Generally: once a participant, always a participant. The document should also have a way to deal with rehires, and when the service requirements may have to be re-satisfied.

All I have are links to the code sections, but I never see the preables anywhere. Does someone have a link that would point me to them (the preabmles)? Many thanks in advacne.

...AND and document violation

After tax contributions are not deferrals, so, no, they don't count. And don't forget, they get tested in the ACP test, not ADP. (401k vs 401m)

If this person is in fact a non-owner (and has always been), and if these "RMDs" started after the early 2000's ( I forget the year), then they really weren't RMDs at all, just regular in-service withdrawals. (Hopefully, you were withholding the full 20%!) So unless she set the withdrawals on an installment plan and the document prevents cessation of the installments, I believe she can stop any time.

How hard is it to add another sub-account? Does the place where the money is held charge for the extra account? If so, I'd thinking about changing where the money is held.

Since both sources are 100% vested, I would think that a reasonable segregation could be done. Maybe just take 3% of the account and move it to a new source. I just hope that they kept good records of the basis of the deferrals so proper hardship amounts could be calculated (if allowed). The exact earnings in each accoutn may be wrong initially, but, again, since they are both 100% vested, I think if its reasonable, then it could be okay.

And just remember: After Tax contributions get tested under ACP. In one of my former jobs, the person handling a case tested the after-tax under ADP and the plan passed for 4 years. Then after she left the company, someone noticed the error. When he retested it for the 4 years, the test failed! Every year! Lots of QNEC and lots of angry calls & letters and lots of checks written to their lawyers (and some to cover the QNECs, everything got straightened out. And, to my knowledge, the case is still with that provider.

My understanding is the only money that should ever get sent back to the employer that was invested in the trust is money due to a mistake of fact. (Not a mistake, but a mistake of fact.) [There may be something about money left over after a plan termination, but I am not sure] So, if there are no more ER contributions to be made, and all of the fees are paid, then the money should be reallocated to the participants. Hopefully the document shows the procedure for that.

Was a tax form issued by the company for the check?

Does the document have some sort of heirarchy for the forfs? Such as to use for ER contribs first, then maybe to offset fees? And what would happen if there were forfeitures, but NO employer contribution for the year? Or if the employer contributon is less than the forfeitures?

Are distributions the only way to satisfy the tet? What about a QNEC?