BG5150

Why would that be? The amendment (in this example) was done before the notice went out, so, in theory, the plan cannot be safe harbor for 2009. So how could an employer send out a notice saying it will make a contribution that is not allowed in the plan and be held to it? What if I said to my employees I was going to make a matching contribution for 2009, but my plan does not allow for it. Would I still be on the hook for it?

A person's 2007 RMS is based on her 12/31/2006 account balance. For argument's sake, let's say the RMD is $1,000. She never takes it. When I calculate the 2008 RMD using the 12/31/2007 balance, I don't reduce the balance by$1,000 because of the previous year's RMD do I? (Did it used to be done like that?)

So if the loan is not a PT, then what happens to the money wouldn't be either, I would think.

Sometimes, trying to wade through these: http://www.access.gpo.gov/nara/cfr/waisidx...26cfr1e_05.html And I am not at liberty to say whence I post. [My 'employer' disavows any knowledge of this post]

Get the employee on video denouncing his ties to the plan. Just make sure the guys in masks and with the machine guns are not in frame. It may look bad. And coach him to "say" his statement, not "read" it. It's more believable that way.

As for what happens to the money: I think (read: I'm not really sure at all), if the document allows it, the funds can be escheated to the sate in limited circumsatances. I think (see caveat in previous sentence) it's the absolute last resort, though, after all other altenatives have been exhausted.

If putting the house in the daughter's name raise the issue of an "indirect" PT, wouldn't putting the house in their name raise the issue of a "direct" PT?

Fixed

Hey, I think I was a contractor for Microsoft a bunch of years ago. Can I still get my stock options? :-)

What does the plan document say? Usually it says to take reasonable steps to locate the participant; it may even mention using the SSA to find them.

Why would the house have to be in their name? As long as the loan is being repaid w/in 5 years, it doesn't matter what they use the money for. If it's for more than 5 years, then, of course, it would have to be for their PRINCIPAL residence. That would be a tough one to get around.

Why is it wrong? Where to start? 1. If she wasn't the only participant in the plan with a balance, she took not only her money, but the money belonging to the other participant(s). Isn't that stealing? Or at best, it is not living up to her fiduciary responsibility. 2. If she is not over 59 1/2, she shouldn't be taking anything other than a hardship or a loan, which, as you know, have their own set of rules, many, if not all, of which probably were broken. 3. Does the plan offer any in-service withdrawls, and under what circumstances? She might not have been able to make a distribution at all. Would something like this even be correctible under SCP? Is VCP the option here?

I don't know if this plays into this at all, but here goes: TH contributions are based on full year compensation, whereas you can limit the "normal" PS to only compensation earned while a participant. But, if the 3% TH comes out to more than the gateway, you use the greater dollar amount.

So, I'm guessing the employer does not have copies of the plan's 5500's for past years?

Letter of the says you can use the de minimis rule if the costs of doing the "distribution" would be greater than what is being "distributed." Plus, after Sept. 1, 2008 you can use the updated EPCRS (2008-50) which ups the minimum to $75.

The plan has been amended to allow for rollovers to an inherited IRA by a non-spouse per PPA. Do I now have to withhold the 20% federal tax if the beneficiary is not rolling the money over?

what is the excess amount? If the participant received his entire account balance before the MRD date how is that an excess contribution since the MRD is not due until either 12/31 or 4/1 of the year following the year in which age 70 1/2 is attained? See Reg 1.401(a)(9)-5 Q/A1©. He didn't receive his balance; his IRA did. The amount due to the RMD is an ineligible rollover amount, so it needs to be pulled out. If it is not pulled out before the individuals tax filing date, I think there is a 6% excise tax on that amount (not sure about the earnings). I do believe there is no 50% excise tax since a correct 1099 will be issued from the plan, and the money did get removed (1.401(a)(9)-7 Q-1)

Can someone point me to the code section that says you are subject to a 6% excise tax for an ineligible rollover? (Participant rolled entire 401k account before RMD was taken, and I need to show someone that there is an excise tax if the amount is not removed) Thanks!

That's what I figured. I just wasn't 100% that I didn't overlook something.

Usually this is stated in the section of the plan that deals witht he restorations.

I was just wondering what might happen in this scenario: Person is 75 and is retired. Not finding retirement life satisfactory, she decides to get a part-time job. As fate would have it, her new employer is very generous in its eligibility for the retirement plan: immediate eligibility, monthly entry. So our restless retiree starts working on Feb 15 and enters the plan on March 1. Being fiscally responsible, she decides to take advantage of the plan's salary deferral feature. She contributes $200 a month to the 401(k) plan. In October, her husband wins the lottery, and they move to the Bahamas so he can fulfill his lifelong dream of being a scuba instructor. She quits her job and sets up a shop selling overpriced beer to tourists next to her husband's scuba shop. My question is: does she have a RMD for that year? I would think not, but you never know.

Did she roll the money over, or did she have it paid to her? If she had it paid to her, I don't see a problem, as long as it was enough to cover the RMD (and if it was 2/3 of the vested account it should have been). 1099 shouldn't be an issue--it will be code 7, regardless. If she rolled it over, I believe the plan is okay, since the money was distributed. She has a problem in her IRA. She should remove the ineligible contribution, and the plan should issue 2 1099's: one for the RMD and one for r/o (codes 7 and G, respectively). And I don't think the plan year has anything to do with it, since RMDs are based on the calendar year, and the present year's distribution is based on the previous year's closing balance.

Does #3 get defaulted or deemed a distribution? I would think the latter. A defaulted loan is still an asset of the plan until offset, whereas the deemed distribution wipes the loan completely off the books. Should this participant not terminate in the near future, loan # 3 would not be offset. So if he wanted to take another loan in the future, he would still have to pay back the defaulted loan before a new one could be taken. If it is deemed as a distribution, there is no longer that problem.

Do the regs define what "immediate" need is? We have always used the "must have bill or threatening letter in hand" approach, but does the law further address what an immediate financial need is?

I see in EPCRS that there is a de minimis of $75 for corrective DISTRIBUTIONS (EPCRS section 6.02(5)(b)). But is there a de minimis for corrective CONTRIBUTIONS? More specifically, I have a plan that needs to do some true-up amounts for a profit sharing. Client believes the $75 de minimis applies for people who have terminated and took their money. (The true-up is for 2006). Does EPCRS allow for de minimis exclusions of corrective contributions? If so, where. Thanks in advance.