stephen

Corrections for this are allowed effective May 19, 2006 per the changes the DOL made to the Voluntary Fiduciary Correction Program. Voluntary Fiduciary Correction Program If the link does not work paste the following in your web browser: http://www.dol.gov/ebsa/compliance_assistance.html#section8

Why not ask your actuary? That said it seems since your actuary said it was qualified that you would "write a letter saying it is qualified but we cannot accept said language" and go on to day the reason it cannot be accepted is "the order permits the alternate payee to designate a beneficiary before commencement of benefits which we cannot do."

Yes- 3 year cliff (0,0,100) or 6 year graded (0,20,40,60,80,100) are allowed under top heavy plans.

Perhaps the retiree wants to diversify their retiremwnt assets and is comfortable with the offerings and fees in the 401(k) plan and therefore is looking at that as an option. By rolling over into the 401(k) plan there is not a taxable event and theerfore no taxes to pay currently. The NUA may make sense but this was not asked by the original poster.

If the employee is rolling over cash from the ESOP I am not sure why there would be an issue with the 401(k) plan accepting the cash. After all it seems this is simply a cash rollover to the plan. However, if the employee is trying to roll the ESOP stock into the 401(K) plan I can see where the in-kind becomes an issue. As the 401(k) plan is not required to accept stock form the ESOP plan as a rollover contribution. Does the ESOP allow for the retiree to take a cash distribution? If yes, can he/she then roll this distribtuion over to the 401(k) plan?

As long as both plans allow for this it is not an issue.

Yes-

Excellent advice from Mike. I also want to mention that a safe harbor 401(k) plan might be a good fit for you and your company. With a 3% 100% vested contribution to all of your eligble employees you can maximize your 401(k) contribution ($15,000 in 2006) and get the 3% contribution as well. Should your employes choose to defer they will have their deferrals along with their 3%. Combining this with an integrated profit sharing plan contribution for the good years may get you the contributions you want at a minimal expense. Another option not yet mentioned is a non-qualified plan. I wish you the best of luck in your search for a plan that fit's your and your compnies needs.

Vicki, I just wanted to make sure you realize that LauraB's link directs you to the 2005 reading list which should not be used when preparing for the 2006 exam. Stephen

I have seen plans who allowed for the former employee continue making loan repayments. However, generally loan provisions require for the loan payments to be paid via payroll deduction thus soon after termination the loan is defaulted unless the participant has the means to pay it all off.

Vicki, I believe ASPPA has changed DC1, DC2 and DC3. Starting this spring they are all textbooks written by Ilene Ferenczy thus no more required reading from the EOB and no requirement to purchse the EOB to study for the exams. The textbooks are all you need to prepare for the exam. GOOD LUCK! Stephen

Perhaps you know an ASPPA member that would be willing to help you by generating a list of ASPPA members in Charleston SC. Look on BenefitsLink Job Search by State to see of any job openings in the area. IMHO, your absence from the field is readily explained by your need to help out with the family business.

Or worse if the plan allows for more frequent election changes to elections the participant could change as often as each payroll period Roth, then non-roth etc.

mjb - On the split deferral idea based on what little I know on this topic I agree with your opinion that it seems the intent is to allow it to be a split option. It seems odd to me that an employer would want to limit contributions to Roth or Non Roth as they are being deposited since the plan that allows for Roth Salary Deferrals has to allow for regular Salary Deefrrals. Since the recordkeeping system and payroll system would have to accomodate both why not allow for a split contribution all of the time.

mjb - I see you are still trying to find someone else to join you in your line of thinking for determining HCEs: HCE Thread Good luck with that- Perhaps an ASPPA member will submit the Split Roth question to be asked as a Q&A but I don't know if you'll find anyone to submit the other one as it seems we all agree with the many sources that say for 2006 HCE determination you look back to 2005 and see who made more than $95,000 in 2005.

There is no inservice distribution rollover allowed that I know of from a 401(k) plan. You need a distributable event such as termination of employment before you can take a distribution of salary deferrals.

Have the bonus checks been cashed or deposited? If yes, I am not sure how you can undo what has already been done.

mjb- Since PiP and Bird have left the discussion I suggest you follow your own advice above and use the yourself as the responders to this post (except for non-tax pro) have sided with the NUMEROUS publications that all say what I said in my orginal post on this topic.Once you get a reponse from the IRS please post it here for all of us to see. As for me I am sticking with my original post (and the PAB, EOB, Brown Letter, TAG, etc.) by continuing to administer plans in accordance with the law (not what I believe to be a missprint in Pub. 560). Thank You, Stephen

When I worked on Balance forward plans and the loans were participant directed invetsments we did it this way.

mjb, Perhaps you missed the above comment from non-tax pro when they said,

Pension Answer Book Q 3:8 attached HCE_Determination.pdf

The Pension Answer Book Question 3:3 refers you to Q 3:7 and Q 3:8 (amongst others) The section below is from Q 3:8. "Thus, for plan years that began in 2005, the look-back year began in the 2004 calendar year, and the compensation limitation for determining HCE status was therefore $90,000. The compensation limitation for determining HCE status is $95,000 for plan years beginning in 2006, based on the look-back year beginning in 2005."

The odd thing is the Publication 560 (copy attached) on the cover states "For use in preparing 2005 Returns" Then on page 5 - 6: "Highly Compensated Employee. A highly compensated employee is an individual who: Owned more than 5% of the interest in your business at any time during the year or the preceeding year, or For the preceding year, recipient received compensation from you of more than $95,000 and if you so choose was in the top 20% of employees when ranked by compensation. This $95,000 amount increases to $100,000 in 2006." I still say I am correct- p560.pdf

I stick by my previous post. Perhaps the IRS made a mistake in Publication 560 (page 4-5) and this should be $90,000 (instead of $95,000) from a previous year or in reference to 2006 returns.

Does the TPA have the full allocation report complete within the first 90 days? If not, what basis do they think the participant should be using to make his election?