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Client has Safe Harbor 401(k) plan with SH Match requirement. The total employer contribution for the 2008 tax year was $20,000 for Safe Harbor Match and $60,000 for the Employer Discretionary Profit Sharing Contribution. The client made a timely deposit of only $60,000. Assuming we can use a portion of this deposit for the required safe harbor match, the client still has an issue with what they put on their 2008 corporate tax return. What are the client options if they still want the total $60,000 allocated as a profit sharing contribution? If they deposit it now is it deductable for 2010 and/or does the 10% excise tax penalty apply for a nondeductable contribution for 2008. What would be the issues if the only deposit due had been the Safe Harbor Match and it was not deposited by the corporate due date? Penalties?

This is enough to get started. Thanks...

Neither, the consultants are paid W2 compensation.

Are you saying that if we bring in a terminated participant (consultant) to pass the 410(b) coverage for the 401(k) portion, that we have to give this participant a QNEC? If so, how much of a QNEC would be required?

What happens if the plan doesn't pass coverage by excluding a class of employees?

Can you let me know where this is referenced in the IRS code?

A 401(k) plan excludes consultants from participating in the Plan. The plan has no coverage issues but regarding ADP testing, can you exclude this class from the ADP test?

Are the plans merging? Yes, the plans are merging. So if no company money has ever been funded under the 3 year cliff vesting schedule, must that 3 year cliff schedule be offered to participants as they merge into the new plan?

A 401(k) plan that provides a 3% safe harbor nonelective contribution is also a cross tested plan. In order to receive the profit sharing contribution, you have to be employed on the last day of the plan year. A terminated participant receives the 3% safe harbor nonelective contribution. Would he also have to receive a 2% profit sharing contribution to pass the gateway test even though he terminated employment?

Are the plans merging? Yes, the plans are merging.

Company A has a 3 year cliff vesting schedule but no employer contributions have been made (401k only so far). Company B has a 5 year graded schedule. Company A is merging into Company B. Even though there are no ER contributions in Co A’s plan do we have to allow the participants the right to choose the 3 year cliff if they have at least 3 years of service? I know the answer is yes if there were actual $$s.

An employer (sole prop) sponsors a Safe Harbor 401(k) Plan with a basic match. For 2005, the owner's net schedule C (after the common law participants' contributions & SETD) is less than $210,000 and his deferrals are $18,000. The plan's definition of compensation includes salary deferrals. In determining the owner's employer contribution allocation (4% of comp in this case), should his SEI be reduced by his $18,000 deferrals after reducing it by SETD?

DB Plan wants to buy a building for approx 1M (which will be almost 90% of the plan assets)in which a portion will actually house the plan sponsor of the DB plan. We are sure this would be a PT – however client would like actual sites. Comments?

A plan which has 401k and a fixed match deposited too much money in 2003. The plan allows for discretionary match and/or profit sharing. However, the 2003 extra contribution is still sitting in the account (under the forfeiture section) and not allocated as of today. It appears that it should have been allocated to participants eligible to receive a contribution in 2003. Comments??

Are top heavy minimum contributions satisfied also?

So, this can be done. Will there be any testing issues?

Has anyone heard of a triple safe harbor match where you have an enhanced safe harbor match, a discretionary match and a fixed match?

A client has a PSP/401k plan. 30 employees: 5 are partners, 5 are non equity partners, 20 staff. Currently the plan excludes the 5 non equity partners (who are NOT HCEs) from the 401k and PSP contributions. They want to change the plan to allow the 5 non equity partners to do the Salary Deferral but still exclude them from the PSP. The Plan is Top Heavy. Assuming all other testing is ok, will the 5 non equity (NHCEs) have to receive a top heavy minimum contribution?

Company B terminates defined contribution plan. Company B is owned by Company A and part of a controlled group. John Doe worked for Company B now works for Company A who maintains a defined contribution plan also. Under a regular plan termination, John Doe would be eligible to receive a distribution, however, since he works for Company A, he would not be eligible to receive a distribution due to the successor plan rules. Is there any way John Doe could receive a total distribution from Company B's plan?

A company has three shareholders - a majority partner, a minority partner and the ESOP. Can the minority partner purchase shares from the ESOP? I assume the answer is no because of the prohibited transaction rules. Would the minority partner have any other options of acquiring shares from the ESOP?

Thanks for the replies. I have reviewed the referenced PLR, which does appear to be on point, and I reviewed it with the provider that was offering to make the "gross-up" / restorative payments to the 401(k) plan. In response, I was pointed to IRS Letter Ruling 200404050 which appears to be more on point - particularly in that it was the new provider/insurance company, rather than the plan sponsor, that was proposing to make whole the participants for losses caused as a result of the contract transfer. This PLR gives me reason to believe that these arrangements pass IRS muster.

Co A was bought by Co B. Co A’s 401k plan is being terminated and all participants are allowed to receive a distribution. The plan has GIC contracts with high surrender charges. Co A has been advised by Co B’s financial advisor that the GICs can be liquidated and the charges paid back to the participant’s accounts by the employer so they are whole when the distribution is made. The participants of Co A will then have the right to rollover their account balances to Co B’s retirement plan. We thought a company could not put the GIC charges back into the plan. Please comment.

Yes, RMD's started during his lifetime. Can his RMD be recalculated using her life expectancy since she is younger?

A widow has been receiving MRD's from her late husband's retirement accounts the last couple of years. For 2005, she did not receive the required MRD. Will she be required the pay the penalty for not taking the MRD even if she is under age 70? What needs to be done?

Do you treat the employer match any differently for an owner employee than you do for a regular employee?