Bruddah Kimo

Thanks Lou! Just wanted to be sure

I have a 401k plan that is removing a poorly performing fund from their investment line-up. They wish to transfer all existing balances in this fund and move the investment directions to a fund which currently exists in the plan's investment line-up. 1) Other than fiduciary responsibilty, is there a required notification to be made and if so, what is the timing for the notice prior to the fund change? Thank you!

Thanks Blinky - I was told otherwise by one of our Senior folks here. I've been reading through Sal today trying to find my 'error' but came up empty. I feel a lot more confident now that the famous Blinky agrees with my interpretation. Mahalo!!!!

OK - I've read through the many Top Heavy/Control Group posts and my head is spinning I'm hoping if I lay out a scenario I'm facing, someone can provide an answer. Company A has 4 owners (each 25%) that sponsors a calendar year 401k plan. In 2007 Company B was formed in which Company A has 85% ownership. Company B consists of 2 former EE's of Company A. One is a 15% owner, the other is a worker bee. 15% Owner of Company B does not have ownership in Company A. Company B became an adopting employer of the Company A 401k plan in 2007. Both Company B employee's are eligible and participate in the 401k Plan. Only 401k deferrals were made to the Plan in 2007. My question regards Top Heavy determination for 2008. Do I test each company separately for Top Heavy (whereby Company A is not Top Heavy), or do I need to aggregate the testing where the 15% Company B owner is considered a Key EE which causes the Plan to be Top Heavy?

Can a Safe-Harbor Non-Elective 401k plan (3% of comp) use a definition of comp that excludes bonuses? Or must the plan use a safe harbor definition of compensation even if it passes the Compensation Ratio Test? Just want to be sure, I've seen conflicting info on this.....thank you!

Hi - In a calendar plan year 401k plan, if a participant ceases to make loan repayments in July 2007 and the loan is deemed at the end of the cure period, what is the correct date for the distribution of the 1099-R? The end of the calendar quarter would be 12/31/2007 - is the loan deemed as of 12/31/2007 necessitating a 2007 1099 or is it the first day following the end of the quarter, 1/1/2008, necessitating a 2008 1099? Mahalo!

Geez Tom - I really missed the boat on this....I was so concerned about the tax coding and earnings I didn't think about the distributable event! So no distribution is necessary - so no problem! Thank you for your insight!

Aloha! Situation - I have a new 401k client having their recordkeeping done on a fund groups platform. I was informed by the client that an audit revealed one of their participants exceeded 402(g) in 2006. I prepared a distribution request with instructions to use Code 8 on the 1099-R and sent it to the recordkeeper who prepares the distributions. The recordkeeper (big national firm) gets the form and tells me they will not process the distribution until I confirm the plan is using EPCRS and the 1099-R code will be 'E'. This makes absolutely no sense to me......I maintain it should be code 8 for the full amount and there is no need to use EPCRS. Am I missing something obvious? Anyone have a similar situation - thought I would see if anyone has a comment! Mahalo nui!

A Sole-P, over age 50, maintained a SEP-IRA to which he made a $6800 contribution in 2007. Later in 2007 he joined a 401k sponsored by an LLP (he is a partner) and made a employee 401k contribution of $20,500. Is this allowable or is he considered in excess of the limit? Mahalo!

A Sole-P, over age 50, maintained a SEP-IRA to which he made a $6800 contribution in 2007. Later in 2007 he joined a 401k sponsored by an LLP (he is a partner) and made a employee 401k contribution of $20,500. Is this allowable or is he considered in excess of the limit? Mahalo!

I have a calendar 401k plan where an ADP refund for 2005 plan year was processed before March 15, 2006 where 10% was withheld for Fed Taxes. Particpant has a 2006 1099-R coded 'P'. Question - regarding the fed tax withheld - would the participant report this in his 2005 personal return or his 2006 return? The refund is includible in his 2005 income, but I'm not sure about the tax w/h and I can't find a definitive answer. Mahalo!

Thanks Bird - the Sole-P did file for an extension on her personal return (I forgot to add that fact). That means she has until 9-15 (plan has a calendar year plan year) to file the 5500 - right? So if I can pull together and file b4 9-15 all is good, right? 2006 is the only year that is late (so far as I know...)

Aloha! I have a new client who thought her prior TPA was filing her 2006 Form 5500. She found out yesterday that nothing has been done. She's asking if we can prepare the 2006 5500 and wants to know her options. Facts: 1) Client is a Sole-Proprietor with a 401k PS Plan - 8 participants 2) Plan has over 300K in assets 3) No Form 5558 was filed 4) Plan was eff 1-1-2000 (so it's not new...) Any insights on how to approach this situation? Do we just file with the TSL (tear stained letter)? Mahalo nui!

I have a participant in a 401k Profit Sharing Plan who went out on disabililty in March 2007. She had an outstanding loan at the time and has submitted paperwork to have her loan balance offset due to disability. She is age 47. Two questions: 1) What is the proper tax code to use for the 2007 1099-R to be generated for the loan offset. 2) Is she subject to the 10% early withdrawal tax penalty for the loan offset. I think she should receive a 1099-R coded as '3' and she would not be subject to the 10% penalty, but I would like to see if anyone agrees. Mahalo!

I have a new calendar year 401k Plan that started deferring contributions 11/1/2006. Employee deferrals are the only contributions made to the Plan. The plan fails 416 for the initial 2006 plan year. Compensation is defined as calendar year earnings. Plan has 7 active participants as of 12/31/2006 of which 4 are Key EE's. Does Plan need to make TH contribution to non-Key for 2006 as well as 2007 since it is the first plan year? Aloha nui!