AKconsult

My client has an employee who took a loan in April then terminated and moved away. He never made any payments on the loan. He took a distribution and his distribution was offset by the loan. He has now moved back and been reemployed. What are his options on repaying the loan now? If he repays his distribution, could he have the loan restored and resume payments? Would he have to repay the distribution in order to resume the loan? I can't find any information about this in the plan's document.

I am looking at an individually designed plan which states that employee contributions to a SEP excludable from gross income under Code Section 408(k)(6) are not treated as annual additions. Is this correct? If so, could an employee receive the full 415 contribution in the employer's profit sharing plan AND defer $15,500 to the employer's SEP?

I am working with an individual who was a partner in a firm but left there as of 1/1/07. In mid 07 he received a payment for 2006 trailing receivables. The partnership operates on a cash basis of accounting. The payment he received is "unrealized receivable" according to IRS Pub 541. His accountant has told him he could contribute a retirement plan contribution to his former practice’s plan for this income. Does this sound right?

I have a client with a brand new plan. The plan is effective retroactive to 1/1/08, with 401(k) provision effective 2/15/08. Plan is using safe harbor nonelective. Can the nonelective contribution be calculated on pay from 1/1/08 - 12/31/08 or can I only use pay from 2/15/08? I am getting various answers from attorneys with whom I have posed this question...

We have several takeover clients for whom our firm has recently received various settlement checks as the result of class action suits against the investment firms. We do not have participant details sufficient enough to know how to allocate this money in the plans. Any recommendations on the best course of action for reallocation?

That is funny! I misplaced my apostrophe. Should be owners' wives.

How are employers/sponsors dealing with the PPA requirement to provide participants with a notice that describes the investment options available and fees if a distribution from the plan is deferred? Are they changing their 402(f) notices, adding something to the distribution form, etc? I haven't seen any firms really complying with this yet...

I have an employer with a SH plan, 3% NEC. They also provide a match of 100% of 6% and an integrated profit sharing contribution. So, very generous to employees. Very nice employer - pays employees well, etc. Small company with less than 10 employees. The owner's wives signed forms saying that they wanted to withhold 6% of pay (since that is amount necessary for full match) but they actually contributed up to dollar limit, which for them was about 75% of pay. They are being audited and auditor wants wives to return all deferrals over 6% since that is what the form says. This seems ridiculous to me since plan is safe harbor, no one was harmed etc. Any suggestions on convincing auditor to let deferrals stay in plan?

I have a client with a calendar year profit sharing plan but they are adding 401(k) and safe harbor NEC effective for 10/1. For the NEC calculation, can I just use pay from 10/1 and only give the contribution to participants in plan 10/1 or later or do I need to go back to 1/1? If it is permissible to just use pay from 10/1, how do I note that in document? The plan has semiannual entry dates and uses pay from period of participation. I am wondering if the period of participation pay provision in and of itself will let me just use pay from 10/1 but not sure...