John A

I have several questions regarding completing the 5310 for a profit sharing 401(k) plan termination. The plan terminated and the sponsoring employer was sold during 1998. Account balances have not been paid out yet. 1. Should the "current year" on lines 13b and 16 be 1999(now) or 1998 (the year plan was terminated and company was sold)? 2. On line 9d, should the "last contribution to the plan" take into account 401(k) deferrals and/or match, or just profit sharing contributions? 3. On line 16a, should "Employer contributions" take into account 401(k) deferrals and/or match, or just profit sharing contributions? 4. On line 13b, since business was sold during 1998, should line 13b(5) be 0 for Number at end of plan year? 5. Participants terminated during 1995 with less than 100% vesting, but their balances have not yet been paid out. They were made 100% vested when the plan terminated. Should these participants be counted on line 13b(6) and an attachment done, or can line 13(B)(6) be 0 for 1995 since they were made 100% vested on plan termination? Help with any or all of the above would be much appreciated. Thanks.

One section of the document provides: An Employee must have completed 6 months of Service with the Employer prior to an Entry Date. Another section provides: An Employee will enter the Plan on the first Entry Date on or after the date the Employee satisfies the eligibility requirements set forth above. These provisions only conflict for an employee who satisfies the eligibility requirements on an Entry Date (the first provision would make the employee wait until the following Entry Date while the second provision would not). Can this be fixed by amending the plan so that the sections no longer conflict? Does it matter which section is amended? Should an IRS correction program be used, and if so, which one? Thank you.

Plan year 7/15/99-6/14/00. All employees meet hours requirement in first 12 months of employment. All employees are over 21. Employee A hired 7/14/98. Employee B hired 7/15/98. Employee C hired 7/16/98. Employee D hired 7/17/98. What are the latest entry dates possible under 410(a)(4) (assume plan document is written to provide for latest possible entry dates)?

If a distribution is less than $200, but the plan administrator chooses to allow it to be an "eligible rollover distribution," then 1) does mandatory withholding apply and 2) is a 402(f) Special Tax Notice required? It appears to me that 31.3405©-1 says that mandatory withholding would not apply, but that the notice (with any inapplicable language removed) would still be required. Am I correct?

Dook, I wish I had an answer for you. We're looking for the same thing. Short of finding stand-alone cross-testing software, does anyone know of a relatively inexpensive larger package that includes cross-testing capabilities. So far, DATAIR seems to come the closest to us. Other ideas? Thanks.

If the situation does occur so that no HCE match is allowed for 2000, what is the best solution to be sure HCE match is again allowed for 2001?

Richard, I'm sure you're correct, but what are you basing your opinion on (written guidance - a cite, informal guidance from a meeting, common sense, etc.)?

In other words, prior to GATT, any mortality was acceptable as long as the same q's were used for both males and females (no matter what table was used, it was applied on a unisex basis), correct?

Ignoring what might need to be used to calculate any top-heavy minimum benefit, it just depends on what the plan says.

Prior to the existence of GATT, what mortality was required by 417(e) in determining the actuarial equivalent lump sum?

I have heard of various terms for "new comparability" plans - third-generation, qualified bonus, super-integrated, etc. I had not heard the term "super comparability" before. Can someone explain what a "super comparability" plan is and where this term came from? Thanks.

If a plan has not yet adopted GATT and is computing a lump sum, is the mortality table used required to be 1) mortality defined in the plan document, 2) old PBGC adjusted UP84 mortality, or 3) can it be either 1) or 2)?

According to IRS Alert Guideline No. 5C: disparity may not be imputed for an employee under more than one plan of the employer. Reference(s): Reg § 1.401(a)(4)-7(a); and Reg § 1.401(a)(4)-7(d);

The look-back year is never less than a twelve month period, per 1.414(q)-1T (a)(3). However, I'm not sure that answers the question.

I'd suggest you read through the "Who's the Employer" Q&A column on BenefitsLink -- http://www.benefitslink.com/qa_columns/who_is_employer/index.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click)://http://www.benefitslink.com/qa_colu...x.shtml (click). You can also post a question there, which might be answered online by the author of the Q&A column. [This message has been edited by Dave Baker (edited 10-12-1999).]

Rev. Proc 87-27 states: 6. All actions necessary to implement the change of plan year, including plan amendment and a resolution of the Board of Directors (if applicable), have been taken on or before the last day of the short period. Does anyone know if anything has superceded Rev. Proc. 87-27, or is the deadline for changing the plan year still the last day of the short plan year?

I believe there are 3 items that would get pro-rated: 1) the 415 limit, 2) the 401(a)(17) maximum compensation limit, and 3) if the plan uses permitted disparity, the social security taxable wage base. However, the regs I'd cite would be more applicable to a change in limitation years rather than a limitation year starting prior to the effective date of the plan and an initial short plan year. The regs I mean are 1.415-2(b)(4) and 1.401(l)-2(d)(5). I'd be curious as to whether others would agree or disagree with what I stated in my first sentence above.

A very old loan still in existence was made to a participant and the loan is a general asset of the plan. Both the plan and the participant would like to change the loan so that it falls under the current participant loan rules, so that repayments go into a participant loan account rather than into the general assets of the plan. The plan is a 401(k) profit sharing plan. The plan allows only one participant loan at a time. The current outstanding balance is about $10,000. What is the best way, if any, for the plan and participant to make this change?

Thanks, MWeddell. The situation you mention at least gives some meaning to the rule for me.

Thx, pax!

pax, just to clarify: assuming the $5,000 limit, are you saying that 1) no spousal consent is required for the money purchase plan distribution since the amount is less than the $5,000 cash-out limit, and 2) spousal consent is required in the 401(k) profit sharing plan since the $8,000 total distribution is above the cash-out limit (that is, the total plan distribution amount is considered; it does not matter that some of the money is from employee contributions and some from employer contributions)? Thanks!

Chris, yes, it seems to me to be an accurate interpretation. This is an interesting question. It appears to me that the immediate vesting requirement only applies to the contributions used to satisfy the ADP test safe harbor. In the situation you describe, obviously the matching contributions are not being used to satisfy the ADP safe harbor. It appears that the only restrictions on the matching contributions to satisfy the ACP test safe harbor are the formula limitations described in Section VI.B. I do not see anything in VI. that would prevent the use of a vesting schedule or last day rule for matching contributions that are not being used to satisfy ADP. One thing I'm curious about: do you have any idea when the following requirement of Section VI.A. would NOT be met: "(i) each NHCE eligible to receive an allocation of matching contributions under the plan is also an eligible employee under a CODA that satisfies the ADP test safe harbor of section V" ?

How do the spousal consent rules apply in the following situation: married participant has $4,000 vested balance in a money purchase plan, $4,000 profit sharing balance plus $4,000 deferral balance in a 401(k)/profit sharing plan that is subject to J&S rules?

My take on Notice 98-52 is that you meet both the ADP and the ACP tests if the ONLY provisions are 1) Basic match OR 2) Enhanced match OR 3) Basic 3%. You STILL PASS both ADP and ACP if you provide BOTH 3) and EITHER 1) or 2). IN ADDITION to all of the above, you still pass ACP using safe harbor if you provide additional matching contributions (which could be discretionary) that meet the "Other Matching Contributions" criteria in Section VI. of Notice 98-52 and the "Matching Contributions Generally Must be Required Under the Terms of the Plan" section, including the limit to 4% starting for plan years beginning on or after 1/1/2000. Example 4 in Section VI. seems to be the best example to me. I agree with MWeddell that if the plan accepts after-tax contributions, then those contributions always are subject to 401(m) testing and will not pass via safe harbor.

Additional details about this question: The last payment was processed 2/17/97, so 90 days would make the defalcation 5/17/97. The original loan was about 2000 and the remaining principal balance is about $1000. The participant filed for bankruptcy in 1996 or 1997.