CJS07

Plan has four owners who all receive K1s and W2s. There are no other employees. When running the K1 calculations (by individual) I am getting a negative number for two employees. I am not sure how to handle a negative K1. . .For example: K1 compensation totals $2,700 (before any deductions) W2 compensation totals $35,000 After running the K1 compensation thru the self-employment earnings calculation and deducting self employment and the profit sharing contribution for the year I am left with a negative number ($9,500). Can I then add the W2 compensation of $35,000 to the ($9,500) and use the $25,500 as the participant's total compensation for the year? Also, does anyone know of a good resource to read up on K1 and Schedule C compensation? I feel like I get caught up on this stuff every year. . . Thanks!

A participant wants a distribution of 1/3 of what his RMD would be for 2009 and not have any federal withholding. Under the new 'rules' for 2009 is this allowed? Or would it really be considered a normal in-service withdrawal because he did not take the entire RMD amount?

Client is a 12/31/08 plan year end. They failed ADP - refunds have not been processed. One of the pariticipants is planning to take his refund from his Roth account - does the employer still have to pay the 10% penalty on the refund from Roth? I couldn't find anything specific in the instructions regarding Roth. I would think/hope the 10% penalty would NOT apply to Roth. . . Thx!

Can a plan utilize a discretionary match formula that matches more than 100% of deferrals and caps the match at X percent? Example match 125% of the first 2% deferred?

We used the Carve Out Method to run the ADP test which eliminated the "otherwise excludable" employees from the test. The ADP % for the 15 NHCE's (the main NHCE group that was not carved out) was 4.14% (there were 4 ee's who were carved out)(Total NHCE's were 19) Question --------------------- When using the QNEC correction method, does the excludable employee group need to be taken into account in determining the new NHCE % after the QNEC is made? (ie does the test have to be re-run without using the carve out method and use that ADP% which will be even lower to base the QNEC correction on?) 2. If we can base the correction on the ADP test which only included the 15 ee's, does the QNEC correction need to take into account the "otherwise excludable" ee's?

Haven't had any experience with Self-Directed Brokerage until now. Is there supposed to be something in the Plan Document stating what % of a participants account they can invest in self-directed brokerage? Also, do many of the institutions (ING, John Hancock. . .) limit the % an individual can put into self-directed brokerage portion of the plan?

Have a new plan in 2008 which utilizes Top Paid Group. None of the employees are owners. Only one employee made over 100k while working for the Company last year. One person times 20% equals point 2 - can I round my top paid group down to zero?

I have a participant who currently has 2 outstanding loans and the plan does not allow for a third nor would he qualify if the plan did allow. He does qualify for a hardship and his "need" exceeds the balance in his account. He has also deferred more than is currently in his account so he would in theroy be able to take 100% of his account balance. I wasn't able to find anything in the plan document addressing this issue but it seems odd to me that he could wipe his account out yet still have 2 outstanding loans. Would we also have to consider the loans as defaulted or could he continue to repay them? And can he really take 100% of his account balance since then there would be nothing securing the 2 outstanding loans??? (The trustee doesn't want to get into using outside assets to secure the loan). Thx

Took over another administrators plan and discovered Safe Harbor Match had been deposited as regular Match since 2004. Two individuals were paid out in 2004 and vesting schedule was applied to their Match accounts resulting in $150.05 and $390.65 being forfeited. The two individuals obviously should have received these amounts. There is currently $3,000 in the forfeiture account. Question is how do I determine what these participants should receive 4 years later??? They should receive some sort of gain but how would that be calculated???

Is there any guidance on if a trustee is required to give participants notice prior to charging TPA fees to participant accounts? I have a trustee who will be terminating their plan and wants to pass outstanding TPA fees onto remaining participants (less than 10) on a pro-rata basis. For example, one participant would be charged $900. The trustee doesn't want to give notice to the participants - he just wants to process the fees. It seems to be an ethical question at the very least. Thanks

A paricipant in a 401(k) plan went over the 402g limit for 2007. We/he didn't discover the "excess" until now. Since it is past the 4/15 deadline to return/refund what is the fix? Can we still refund or does the money have to stay in the plan?

Would a 5330 need to be filed if a participant went over the 402g limit in 2007 and the refund was not processed until July of 2008?

Is there such a thing as a statute of limitation on ADP/ACP testing? I remember hearing something about a 3 year period but am unsure if I'm inventing this.

Do you include an outstanding loan balance in the calcualtion of the Required Minimum Distribution?

A retired participant (non-owner) turns 70 1/2 in October '08, therefore her first RMD is not due until 4/1/09. She is interested in rolling her vested balance out of the Plan now. For plan purposes, does she have to take her 2008 RMD first, then rollover the remainder? Or can she just rollover the entire amount without taking an RMD because she is not required to take an RMD during '08? Thanks!

Can an employee who is not yet a participant take a loan from their rollover account? The document allows non-participants to roll their money into the plan. I am thinking that the employee cannot take a loan until they become a participant but wanted to see if anyone else had any thoughts on this. thanks

Thanks for the comments/advice. How did you go about calcultating earnings?

Have a client who was to do Safe Harbor non-elective contribution for 12/31/2006. Form 5500 filed for 2006 included this contribution. Turns out client never made the contribution. What are the appropriate steps to fix this? I assume they should make the contribution immediately and will not be able to claim the deduction on their 2006 tax return. Do they need to make up for lost interest? Should we amend 5500?

401(k) Plan terminated on 6/30/07. A participant took his balance (payable to him) 12/10/07 - 1099 issued by asset company. This participant also had an outstanding loan - a 1099 has not been issued. Is it too late to issue a 1099 for 2007 (provided the participant hasn't completed his taxes yet)? If it is too late will there be a problem if the 2007 Form 5500 says it's a final return but a 1099 is issued in 2008? Thx

Hi, I have a plan that is making a discretionary PS contribution. The document states an eligible employee must complete 1000 hours and be employed on the last day of the plan year. I have a participant who completed 1000 hours but terminated on 12/31/07. Relius isn't giving her a contribution. Would she be considered an employee on the last day of the year??? She would have been an employee at the begining of the day but not at the end. . .

If a participants gap period is a loss do you include the loss in the refund calculation?

Hi, We have an HCE who put in 17,915 in deferral and 32,085 in profit sharing and he is over 50. Should we consider that he made the full catch-up of 5,000 and thus for ADP purpsoses let the software put his deferral at 12,915 OR is the catch-up 2,415 and have the software put his deferral at 15,500? In what order do we recharacterize the catch-up -ie 402g, 415, and then ADP OR 402g, ADP, 415? We're getting different results from the software based on when we do the test (before or after the PS contribution is posted). Thank you

I'm working at a TPA firm where they suggest clients with late deferrals go through the Voluntary Correction Program. I have not encountered this at prior employers - we always filed 5330s and deposited the lost earnings and called it good. I went through an audit a year and a half ago in which a client had late deferrals and had filed a 5330 & deposited the earnings - the auditor was satisfied with that alone. I currently have 2 clients who have late deferrals totaling less than $3,000 each. I'm wondering how many of you use the Correction Program in a case like this and if something has changed recently where the industry is using the Correction Program for late deferrals. Thanks!

Hi - I wanted to double check what limits are used with off calendar years. So for example if you had a 6/30/07 plan year end what years limits would you use for: Determination of HCE Annual Comp. Limit Annual Additions Thanks!

Plan eligibility is no age, no service requirement and immediate entry. There is an employee who worked 5 hours a week - (260 hours a year) - and will never work anymore hours than that. Can this person be "carved out" of the ADP Test forever - as long as the employee never reaches 1000 hours in a year? OR Can we only carve this person out of the test the first year and then in following years include them? THANK YOU!