PensionPro

Rounding and tie-breaking rules. In making the look-back year and determination year calculations for a determination year, it may be necessary for an employer to adopt a rule for rounding calculations (e.g., in determining the number of employees in the top-paid group). In addition, it may be necessary to adopt a rule breaking ties among two or more employees (e.g., in identifying those particular employees who are in the top-paid group or who are among the 100 most highly compensated employees). In such cases, the employer may adopt any rounding or tie-breaking rules it desires, so long as such rules are reasonable, nondiscriminatory, and uniformly and consistently applied. 1.414(q)-1T, A-3(b)

Q1) Is there an operational failure here, i.e. failure to follow plan provisions? Q2) If yes, is it significant or insignificant?

If a minimum distribution is required for a calendar year, the amounts distributed during that calendar year are treated as required minimum distributions under section 401(a)(9), to the extent that the total required minimum distribution under section 401(a)(9) for the calendar year has not been satisfied. 1.402©-(2) Q&A 7.

Employer adopted a 401(k) plan but did not give employees the opportunity to contribute, so you have an operational error. The employer can not retroactively decide not to proceed after adopting the 401(k) plan. The plan has bigger issues than whether or not to file Form 5500. From what I am remembering, the employer will have to correct so the employees would receive the maximum SH they would have been entitled to. "Announcing the plan to the employees" is a requirement, not an option. The plan needs an attorney, not an Arthur Anderson OutBox aka Shredder.

I thought social security tax is only paid on employment income.

Maybe the agent auditing the individual taxpayer has limited familiarity with qualified plan rules.

Obviously there is no 402(g) violation. There is no 415 violation since the employers are unrelated. The agent's position is unclear at best.

http://benefitslink.com/boards/index.php?showtopic=35465

See Q&A 48: http://www.abanet.org/jceb/2004/qa04irs.pdf Note: The Q&A happened before the new 415 regs.

The relief under the DFVCP is available only to the extent that a Form 5500 is required to be filed under Title I of ERISA. For example, Form 5500-EZ filers and Form 5500 filers for plans without employees (as described in 29 CFR § 2510.3-3(b) and ©) are not eligible to participate in the DFVCP because such plans are not subject to Title I of ERISA. Plan administrators may call 202.693.8360 if they have questions about whether the program applies to their filings.

It appears from your questions that the PW contributions are being treated as non-elective rather than matching contributions. To answer your questions, the non-elective component of the plan (PW and PS contributions) must satisfy the requirements of 401(a)(4). Since you are cross-testing, eligible employees will need to receive the gateway minimum. For example, if an eligible employee is receiving 3% PW and the GW minimum is 5%, they will need to receive 2% in the PS.

http://www.irs.gov/retirement/article/0,,id=218383,00.html http://www.irs.gov/pub/irs-tege/ppa_chart_topic.pdf

I once refused to backdate documents and got fired by my TPA/actuarial firm employer, because my employer felt "everybody is doing it" and you can't stay competitive if you are not "flexible" when dealing with brokers, attorneys, etc. who are a source of new business. Anyway, I was able to keep a clean conscience, and get a new job (this was before the economic slowdown).

See "How to Report" on page 28 of Publication 575. Reporting the 60-day rollover is the individual's responsibility, not the plan's as the other posters noted.

414(b) Employees of Controlled Group of Corporations. —For purposes of sections 401, 408(k), 408(p), 410, 411, 415, and 416, all employees of all corporations which are members of a controlled group of corporations (within the meaning of section 1563(a), determined without regard to section 1563(a)(4) and (e)(3)©) shall be treated as employed by a single employer. With respect to a plan adopted by more than one such corporation, the applicable limitations provided by section 404(a) shall be determined as if all such employers were a single employer, and allocated to each employer in accordance with regulations prescribed by the Secretary. 414© Employees of Partnerships, Proprietorships, Etc., Which Are Under Common Control. For purposes of sections 401, 408(k), 408(p), 410, 411, 415, and 416, under regulations prescribed by the Secretary, all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer. The regulations prescribed under this subsection shall be based on principles similar to the principles which apply in the case of subsection (b).

Since household employees are not part of a trade or business, they are not part of a controlled group. For the same reason contributions made to their accounts are not deductible. However, Section 637 of EGTRRA waives the excise tax.

Here is one pertinent discussion: http://benefitslink.com/boards/index.php?showtopic=40976

The plan may limit the sources from which loans can made. Remember as per Code Section 4975(d)(1), loans should be available to all participants or beneficiaries on a reasonably equivalent basis.

This form has some useful information: http://www.statefarm.com/about/retirees/pdfs/statetax.pdf

There was a recent discussion on the subject: http://benefitslink.com/boards/index.php?showtopic=41016

That is correct. From §1.401(k)-6: Qualified matching contributions (QMACs). Qualified matching contributions or QMACs means matching contributions that, except as provided otherwise in §1.401(k)–1© and (d), satisfy the requirements of §1.401(k)–1© and (d) as though the contributions were elective contributions, without regard to whether the contributions are actually taken into account under the ADP test under §1.401(k)–2(a)(6) or the ACP test under §1.401(m)–2(a)(6). Thus, the matching contributions must satisfy the vesting requirements of §1.401(k)–1© and be subject to the distribution requirements of §1.401(k)–1(d) when they are contributed to the plan.

2. The plan's representative contribution rate is the lowest rate of the group that includes at least 50% of the all eligible NHCEs.

IRC §401(a) requires a qualified plan to be sponsored by an employer (or employee organization). If the sponsoring employer is no longer in existence, the plan ceases to be a qualified plan. The plan becomes an orphan plan. However, the mere fact that substantial and recurring contributions are not being made to a profit sharing plan does not disqualify it. It experiences a partial termination.

http://www.grantthornton.com/staticfiles/G...rveyResults.pdf

Provided it meets the other requirements of EPCRS, the plan can be retroactively amended under VCP.