401_4_ever

Thanks everyone for the help. It's Commissioner v. Keystone Consol. Indus, 508 U.S. 152 (1993). It addresses minimum funding requirements of DB plans.

It was my belief that somewhere out there there is a reg or case which states that required contributions (e.g. safe harbor) must be made in cash. Is this the case?

Can a safe harbor contribution be made with employer stock? If anyone has a cite one way or another that would be great, thanks.

These questions plague everyone, and generally depend on your current tax bracket, your tax bracket at retirement, how close you are to retirement, how well/poorly you invest the money, and most importantly the unanswered question of whether congress will raise or lower the tax brackets/rates between now and the time you take a distribution, and if you are far from retirement that of course is wholly unpredictable.

Only if you get the IRS agent to agree it's an insiginificant failure. He/She may call it significant.

It is common, and there is no customary maximum. Depending on the plan if he is what is known as an HCE (highly compensated employee) he may be forced to withdraw some of the money at the end of the year. An HCE is either a 5% owner or someone who makes over $100,000.

I couldn't agree more. I am an attorney and am ashamed of the actions of my otherwise (sometimes) noble class...

Independent of the code and regs, how do you get around the operational failure created here for years 2-6? Does the document state new elections are needed every year?

Does anyone happen to have a chart of what states require withholding for state income taxes for 401(k) deferrals, and what states don't? Thanks in advance.

I am having a bit of a brain cramp on this. Can anyone point me to the correction method for when the plan document does not match the sponsor's original intent, and the sponsor has been operating the plan all along in violation of the plan doc? I know it involves a retro-amend & vcp submission but I am having trouble finding it in either of the rev procs (2003-44 & 2006-27). Thanks in advance.

Was this IRS representative's comments made before Rev. Proc. 2006-27 came out? Appendix A section .01 (pg. 58) states that "The correction methods in this appendix are acceptable under SCP and VCP." The next page, the example under .05 (pg. 59) describes the 50% of ADP route, which we've all cited before. I don't see how it could be clearer that this method would be available for self-correction... I completely agree as to the other point, the valid election form had to be honored, no matter how long an employee goes without noticing no deferrals being made.

This is addressed in the rev proc 2006-27 which is the new guidance for EPCRS issues. I believe the new method for this situation is you take the employee's ADP rate for his group (presumably yours is a NHCE) and use that as his deferral rate. You then make a QNEC of 50% of the amount you come up with. You then do 100% match, and the earnings on both of them as well. A self-correct is likely appropriate.

I just have a couple quick Roth questions which for some reason I'm having a brain cramp on and can't find the right answers. We have a 401(k) plan which is safe harbor for ADP/ACP through an enhanced 4% match, and are thinking about adding a Roth component. If anyone could answer the below questions it would be much appreciated. (1) It's my understanding that if you match a Roth deferral, the employer match goes into the pre-tax account. Is this correct? (2) Are the ADP/ACP safe harbors the same for Roth as pre-tax deferrals? (3) Can a plan choose to match pre-tax deferrals and not roth contributions, or even match roth contributions at a different level? Would this be considered discriminatory? If it isn't considered discriminatory, I'm assuming it would jeopardize safe harbor status? Thanks a lot.

Does anyone have any experience in naming allocation groups for a new comparability plan something along the lines of "every participant" employed by the end of the plan year? The ultimate goal is for each employee of the company (less than ten total) to make up their own individual allocation group. I have done this once in the past, and named each employee into the plan document. Of course, the problem with this is that if one person leaves or joins the company, a brand new amendment must be passed. It is my inclination that we wouldn't receive a determination letter for simply listing that every one employed is their own allocation group. If anyone has any experience in this, or even better, a cite to a reg or announcement regarding this issue would be much appreciate. Thanks in advance to everyone!