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I agree with Mojo, and I don't see any other way of doing this other than a plan spin-off. I don't think there would be a choice for the employer the way Mr. Powers describes this situation.

I'm just not clear on succeessor employer issues, so I agree to do as you suggest. It can't hurt.

100% business owner sponsors a 401 (k) Plan. He then forms a new company with another owner (50-50) and the employees are scheduled to work for the new company starting on 1/1/13. The new company would like to sponsor the existing 401 (k) Plan and I don't think there should be any issue with that under normal circumstances. There's no problems with the existing plan that I'm aware of. Is there anything else that should be considered? For example, do I need to credit service prior to 1/1/13 for the employees that are covered under the existing plan because their employment will transition as of 1/1/13 to the new company? Or is the new company considered a successor employer? Thanks.

BG, you're question is right on target. When I first looked at the account balance it was under $5k, then when I starting preparing the distribution paperwork to autoroll, it bounced up over $5k. When I looked at recent account history, I saw that it fluctuated above or below the threshold required for consent. It seems that now it is over $5,000, this amount stays in the plan because the participant did not make a distribution election.

There's a terminated employee in one of my plans that has a vested account balance that flucuates above/below $5,000. If I'm reading the regs properly, and please correct me if I'm wrong, I cannot autoroll the participant account unless it's below $5,000, even if the vested value was below $5,000 at the time the participant terminated employment.

I had forgotten that loan offsets could be rolled over, if not previously deemed distributed. Thanks for clarifying.

What happened to the loan in Plan A if the participant did roll it over to Plan B? Is she still repaying it to Plan A according to its terms? That's what it sounds like, so I'm not sure why anything for the loan in Plan A would change. I'm also not understanding the part of taking a new loan to make a contribution to an IRA. What does that accomplish? Sorry if I'm not quite getting all this, but I'm want to make suggestions, if possible.

You are correct, Mr. Powers. Assuming there are no other loan restrictions within the plan, the highest outstanding loan balance(s) in *any* 12-month period cannot be more than $50,000. That's how we do it here in the Kalto Provence.

Where I work we have an FSA Plan. I used to receive my reimbursement checks within a week or two. Lately, I have to practically beg to get reimbursed after two or more months. What is the maximum period of time between submission and and reimbursed allowed in the regulations? Thanks.

I don't the answer either, but can offer this from an earlier posting: From the 2000 ASPA conference: Q5: A 401(k) plan has 150 participants. The plan must file a full 5500 and have an audit by an accounting firm. Due to the cost of the audit ($10,000 or $15,000), my suggestion to the client is to split the plan into two plans, each with 75 participants. For 2000 there will be an audit. The plans could be split into two plans on December 31, 2000. Therefore, on January 1, 2001, both plans have less than 100 participants and no audit required. For tax qualification testing, they can be permissively aggregated. In fact, my plan is to administer as if it was one plan and just separate for 5500 purposes. Is my conclusion correct? A: This question raises issues of avoidance and evasion. It is not certain that you really have two plans for purposes of Title I of ERISA in this instance--even if there may be two plans for Internal Revenue Code purposes. In Advisory Opinion 84-35A, the Department stated it would consider, among others, the following factors in determining whether there is a single plan or several plans in existence: who established and maintains the plans, the process and purposes of plan formation, the rights and privileges of plan participants and the presence of any risk pooling, i.e., whether the assets of one plan are available to pay benefits to participants of the other plan. This Advisory Opinion also notes that the Internal Revenue Service has cited the existence or absence of risk pooling between funds as relevant to the determination of single plan status. See §1.414(1)-1(b) 26 C.F.R. §1.414(1)-1(b). In DOL Advisory Opinion 96-16A, the Department stated its position that whether there is a single plan or multiple plans is an inherently factual question on which the Department ordinarily will not opine in the Advisory Opinion process.

The link you proivded for the IRS phone formum was very informative. I had to slightly modify the way I was preparing forms based on the commentary from the Service. For purposes of preparing the form, I will assume they are correct because I could not really find what I was looking for in the instructions. Sometimes it seems like splitting hairs, but I rather get it right the first time.

It costs more to do the calc and prepeare the forms than the lost earnings and penalty are worth. It's a lesson for the client, but I do wish the 7 business day safe harbor rule did apply for large plans.

It was the decision of the auditors for the plan, not mine. Most of the deposits were made on the same day as payroll. Since this is a large plan, there is no safe harbor deposit rule and the auditors felt compelled to report the late deposits. Total penalty is very small, but nonetheless I had to correct for earnings and report the PT.

Thank you very much ESOP Guy. I'll take a look at it.

Thanks. I was only trying to clarify the correction date.

I couldn't find an exact answer in the instructions either. If I take the position that the PT ends on the date that the lost earnings are reimbursed to the trust, then it seems that the PT occurred in 2011 and 2012. If that is true, then would I calculate the penalty for 2012 on the lost earnings?

This question is not about determining when contributions are late. I'm trying to determine what date goes on Schedule C of Form 5330 for "Date of Correction." If this is the date the PT is considered corrected, then is the correction date when the deferral was deposited, or when the lost earnings get deposited? Here's an example: Payroll Date - July 16, 2011 Remittance Date - July 18, 2011 (safe harbor does not apply!) Lost Earnings Remittance Date - October 23, 2012 I appreciate any insights into this matter.

Plan had late contributions for several payrolls (1 or 2 days late - large plan). The lost earnings are to be deposited this week. No VFCP. Is the date of correction on Schedule C the date the deposit was made for that particular payroll, or is it the date that the lost earnings were deposited? Thanks.

There's been commentary on this issue over the past few years. Take a look at ASPPA ASAP 07-14.

You also need to mindful of a possible partial termination issue, if there were employer contributions allocated to the group that is now exempt from participation.

If the participant otherwise had a distributable event, then would it be looked at as disqualifying? Could the participant merely say that I want to distribute my loan if otherwise permitted for that specific source of the account?

Reality check - every SHNEC is a QNEC, but not every QNEC is a SHNEC. What I should have said was: Lastly, QNECs and Safe Harbor Nonelective contributions can be separate and distinct sources of contribution. So, I took your question to mean exclusion from the Safe Harbor contribution and not QNEC (other than SHNEC).

Assuming he gets a W-2 wage statement, wouldn't any 403(b) elective deferral amounts show up on that form?

I agree, BG. We have too many Safe Harbors in this industry. And, what's so safe about them anyway...

401(K), 401K, 401-K and other incorrect variations can sometimes drive me bonkers on a bad day...like today...