Richard Anderson

Plan Sponsor signed a resolution to terminate a 401(k) back in 2003. Every year since 2003 the Form 5500 has had the yes box checked for "Has a resolution to terminate the plan been adopted during the plan year or any prior year?". No distributions from the plan have ever been made. I assume that the 2003 resolution to terminate is no longer valid. Any reason the yes box should not be checked going forward?

It is too late (after 9/15) for the corp to adopt a SEP for 2011. It is not too late for a self employed entity to adopt for for 2011. The SEP would use only earned income from the Sole-proprietorship for the 2011 contribution.

Background: For first half of 2011 entity was sole-proprietorship. Incorporated for last half of 2011. Question: Is there any reason why the sole-proprietorship can't adopt a SEP for the 2011 year, based on the earned income of the Sole- proprietor for the first half of 2011? Adoption to take place between now and 10/15/12. Once the company incorporated in last half of 2011, no further income was generated or services rendered to the sole-proprietorship. Did the sole-proprietorship cease to exist when the company was incorporated in 2011, therefore is unable to adopt in 2012? If it makes any difference, once incorporated, no further services were performed for the sole-proprietorship, neither in 2011, nor in 2012. When does a sole-proprietorship cease to exist?

If Avaneesh Bhagat thinks that an employer corrective contribution is not necessary; what is the correction? Submit, do nothing as a correction and move on?

We have a situation very similar to this one, so I will continue with this thread rather than starting a new one. We have a 401(k) plan that allows for in-service distributions, but they allowed an under 59 1/2 participant to take an in-service distribution of his 401(k) source money. Participant has spent the $35,000 distribution and can not repay. We want to correct this through EPCRS. Is there any chance the IRS would call this failure anything other than "Overpayment"? I don't see what else it could be. The plan has not had any employer contributions for several years and the employer does not want to put the $35,000 back into the plan, as no employer contributions are being done. On EPCRS submission, If we propose that the participant repay the Overpayment using a repayment schedule; does anyone think that might fly?

It seems from the wording 6.06(3) that when the Overpayment is returned to the plan, whether returned by the participant or returned by the employer, the returned Overpayment goes into an unallocated account, used to reduce future contributions. In this case, of an improper distribution of a participant directed account, the return by the participant of the funds to an unallocated account seems to defy logic. So, my question is, if the participant returns any or all of the impermissable distribution of his own account (the exact amount distributed = 100% of his account), should that amount returned by the participant be put back into the participant's own account or into an unallocated account? "The Overpayment, adjusted for earnings at the plan's earnings rate to the date of the repayment, is to be placed in an unallocated account, as described in section 6.06(2), to be used to reduce employer contributions (other than elective deferrals) in the current year and succeeding year(s) (or if the amount would have been allocated to other eligible employees who were in the plan for the year of the failure if the failure had not occurred, then that amount is reallocated to the other eligible employees in accordance with the plan's allocation formula)."

When testing using compensation less deferrals, are 401(k) ROTH deferrals excluded from compensation? I would think they would be included in compensation since they are post-tax deferrals.

I forgot to add some information. Employee 8 has more than 5% ownership and has 3-month more service than employee 9. Employee 9 has 4.5% ownership. If I can somehow get employee 9 as the 8th one in the top paid group, then employee 8 will be HCE because of ownership. Also, all employees are counted for the top paid group count. Employer has not hired any new employees in the last two years. I wish I could get 20% to equal 8.1 employees, but no luck there. I'm at exactly 8.

Plan elects top paid group HCE definition. 20% equals exactly 8 HCEs. So, rounding up or down is not an option. Employees 8 and 9 have the exact same compensation ($125,000). So how do I choose between employee 8 or 9 as to which is HCE and which is NHCE? Would it be possible to have both employee 8 and 9 in the HCE group, even though the top paid group is only 8 employees?

Everyone was paid out by the end of 2010.

Can an employer start a new 401(k) plan now, and give safe harbor notice at the same time that the plan is effective? The employer previously had a 401(k) plan that was terminated in 2009 or 2010. Employer has not had a pension plan in effect between the termination of the prior 401(k) plan and now. They want to start a new 401(k) before the end of this year and to have safe harbor matching for the short plan year (from now until 12/31/2012). Is the old 401(k) plan that terminated in 2009 or 2010 considered at all in determining when the "new" safe harbor 401(k) plan can be established and when employees must be given notice?

This is the first 5310 submission that I have done and have a few questions. Included with the 5310 submission will be the restated Volume Submitter EGTRRA defined benefit document that the client will be adopting in the next few days. If we want a determination letter for the EGTRRA document, do we need to separately submit a Form 5307, or will the 5310 submission include a DL on the document. So my question basically is, do I submit both 5307 and 5310, or is the 5310 all that is needed? Also, the 5310 asks for the plan termination date. Can that be a date after the Form 5310 is submitted, such as 6 months from now?

The gateway is not itself a nondiscrimination test, but a prerequisite in order to be able to show nondiscrimination through cross-testing. If a plan uses general testing on a contributions basis (not cross testing), is the gateway a requirement?

Participant is age 73 on termination of employment on July 09. Elects not to take minimum distribution for 2009. Participant is rehired as part-time on May 2010. Does the rehire stop required minimum distributions? If no, is the 2010 minimum due 12/31/10 or 4/2011?

There will be no issue of amending or changing match mid year. No prior matching contributions in the plan. We just want to make sure that adding a matching contribution with accrual requirements (last day for sure, maybe hours) will not cause the plan to lose ADP safe harbor status.