BG5150

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.

Do terminated people with balances have to get the QDIA notice, too? Or just the people currently employed?

Why don't they just charge the participant doing the distribution? And how would you net that with gains or losses? It's a fee of $100 and not based on asset value. Sort of like a $1,000 quarterly administration fee--it's a thousand bucks whether the assets go up or whether they go down.

Have a great Thanksgiving, folks! See ya next week...

I know a hardship should only be taken after all distributions and loans available to a person are taken. However, I've read that a loan doesn't have to be taken if it creates additional hardship. Where is that stated in the regs or guidance? And secondly, what if a loan wouldn't cause add'l hardship, but one is already taken, yet more is available. For example, a person took a $5,000 loan last year for 5 years. Now she wants a hardship. However, since the loan was taken, an additional $4,000 has been added to her account. Would she have to refinance the existing loan for an additional $2,000 before a hardship could be taken? Or does the existence of the first loan satisfy the provision that all distribs & loans must be taken before a hardship can be done?

And eToys. (I have a few of those...)

BFDS maybe? www.bfds.com

I think EPCRS says that you can either do a QNEC enough to pass the test --OR-- do refunds and a one-to-one QNEC on the gross refund amounts. However, you cannot separate the plan into two component parts--excludable and non-excludable. Everyone gets tested together to determine the refunds and QNEC's. (See EPCRS Appendix A Sec 03 and Appendix B Sec 01)

I'd like to know how it was a mistake in fact. It was a plain ol' mistake. No facts were messed up, just the processing.

You do your 5500's in APRIL? Geez, by then, I'm lucky to have census data back from half my plans in order to do testing...

What kind of "activities" are tracked on the 5500? Contributions & Distributions, mostly. Maybe some fees. And investment balances. My answer to question 2 is C. On a side note: if the 5500 is an IRS form, why is it sent to EBSA (DOL)?

I believe you file a 5330 for each year, including the interest.

I'm not sure what version of Relius you are using, but in the one we use, 13.x, there is an "Allocation Classes" feature. It is in Plan Specs-->Allocation Provision window-->5th tab. There you can set up all your allocation groups and choose one to be the default. On the participant's status/service screen, there is a place the group can be entered. (It can also be imported) This way you avoid the default division altogether. When doing the PS allocation, you choose Allocation Class instead of Division and you can put the all dollars/percentages for each group in right there. (I also try to put the people into corresponding divisions so when I run my contribution reports, I can break it down by group, but it's not necessary to get a PS allocation done.) And to answer your original question: I think it would be best to put the not-yet-eligible people into the group they probably will be in once they become eligible. Like people have said, they will fall to the excludable reports anyway, and you will have less work to do in changing them around into the proper groups once they become eligible.

Only as long as there are no other ER contributions such as match or reallocated forfeiture or profit sharing.

If you have shortened a word or group of words, it's an abbreviation (inc for incorporated, cpa for certified public accountant). If you pronounce an abbreviation as a word, it's an acronym (modem for modulate-demodulate). http://www.merriam-webster.com/dictionary/acronym PBGC is an abbreviation. ERISA is both an abbreviation and an acronym. radar (RAdio Detecting And Ranging) laser (Light Amplification by Stimulated Emission of Radiation) scuba (Self-Contained Underwater Breathing Apparatus) ...are all acronyms (radar being a palindrome, too)

Each letter should be said separately and in order, of course. If that's the case, it's not an acronym but an abbreviation.

If I am less than 100% vested and I quit (or get fired) I lose some or all of that money. Why not forfeit the amount that pushed it over the edge? Last-in-first-out? Thirdly, in an "up" market, I lose all the gains I made on my money and start from scratch with the company money. For example, say my 415 excess is $500. I had that money in my account earning money since I put it in. Now I have to take it out with the earnings. The Employer deposit is only making money from when it was (probably) invested much later than the deferrals.

I always thought it was silly for the refund to come from salary deferral. Why should my taxable income for this year go up just because my employer wanted to be generous with a Profit Sharing? I seem to remember reading plan docs that had the 415 excesses reallocated to everyone else. Does anyone really do that?

Just a quick side note on the 3% vs 5% thing: You may not have to give an additional contribution to some. Top Heavy contributions are based on full-year compensation, whereas Profit Sharing can be based on partial year compensation. Sometimes the 3% of full year comp comes out to more than 5% of participation comp. You would allocate the greater amount.

I say kwa-dro, since QDRO is an extension of DRO. It's a kwa-lified DRO, hence the kwa-dro pronunciation (by me). Funny, I thought we's at least have a couple of kew-dro's in da house...

The same goes for the Safari browser. (The space bar thing). I'm a Mac user at home, so I jumped at the chance to use Safari on the PC. Haven't looked back since. (However, some sites have a little trouble loading in Safari, so I keep IE on standby for those few times I need it)

It could also be a pun on the people who didn't see this coming and kept all their money in equities: A backward "K" in baseball is the scorers notation that a person struck out "looking"