BG5150

...could be "inactive", employed but not drawing a salary.

I was looking at it from a different perspective. I was looking at if from the perspective of "whose stock do I own besides my own?" Rather than, "who also owns my stock?" Sully you are right. Please excuse my (previously) poorly worded posts. What I meant was: Say I don't own any stock myself. I am considered as owning, however, the stock of my parents, children and grand children. (1 up, two down) Sorry for the confusion.

Think of the "up" and "down" as ages. Thus, 1 up (your parents) and 2 down (your children and grandchildren).

I don't think notice is necessary, but I think it would be prudent. It may upset people if they see less than the stated amount of match in their accounts without. And all it takes is one squeaky wheel to bring down a rain of hurt on a company. We had one client who didn't notify the participants that profit sharing wasn't going to be made. There was one lady who freaked out and started complaining to the IRS and DOL about all sorts of shenanigans with the plan (none were true). So some agent decides to be a knight in shining armor and long story short, it was hell for the employer to clear itself of any wrong doing.

Ownership attribution goes one up and two down: HCE's parents (1 up) and his/her children and grand children (2 down). It also goes once laterally, that is HCE's spouse. No other spouses or relatives of the others. (Try to picture a family tree, with generations going down).

What would the participants have to say about not having the sources broken out? How could they reconcile what they had taken out of their paychecks with what went into the account?

For some of my smaller plans, I just take a quick peek at the r/k system to see if they were paid out so far this year. If they were, I just omit them from the form. Think that is okay?

Basically, the bottom number of the 80-120 rule goes like this: Assuming the plan did an H last time, as long as the count stays above 80, the plan can continue to file the H. If it is under 100, it may file an H or I. If the plan goes below 80, it mst file an I. In this case, I'd do an I. I think the accountant just wants to do the audit to generate fees. Or even just to keep it simple and continue to do an H, this way he (or she) doesn't have to revisit whether or not an audit will be done on the plan year-to-year.

The instructions for Schedule SSA indicate that for the participant's balance in 4(h) should be the value at 'time of separation'. Does anyone really put that value in there? Or do you put the balance at the end of the reporting period? Or even just a current vested balance? Does it matter? Your thoughts are appreciated...

Was the old plan officially terminated? Were the assets liquidated? Does that matter?

Just make sure none of the HCE's are getting more reimbursement than they paid out. I'm sure the DOL would have something to say about that.

Check the docs first to see if you can do this, first. You may have to amend them if a QNEC is not allowed (or, rather, not chosen as an option by the employer).

I think FreeErisa only has filings thru 2004 plan years. I'm not sure of the other site.

BINGO!

Is the 5-year "widow" mandatory? I seem to remember that there is a provision to apply to the IRS to switch before the 5-yr period is up. And, if it's a prototype, doesn't the plan doc specify what method is used? (Bear with me, I've been out of the business for a year and a half, and I'm just getting back into it, so a lot of stuff has slipped my mind...)

This may be semantics, but you don't have to worry about him when doing the testing IN 2006 for the 2005 plan year. However, testing FOR 2006 (done in 2007, most likely) he will count if, in fact, he is eligible for the plan. He will NOT be an HCE because he has no compensation in the lookback year. Ne c'est pas? (Am I not correct?)

I would say check the compensation definition in the plan docs.