K2retire

The most recent ASPPA Journal supplement comparing qualified plan provisions indicates that Roth IRAs can only be rolled over to other Roth IRAs -- not to a Roth 401(k). It also indicates that Roth 401(k)s can be rolled to either a Roth IRA or another Roth 401(k). If the funds inthe Roth IRA were from a Roth 401(k) initially, (sort of like the old conduit IRA concept) does that change the answer at all?

You are not off -- the recordkeeper is.

Yes, and the 3% SH contribution will cover most of the TH contribution.

That pretty much sums up our entire industry!

I don't think this analysis is worth "paying for"; as it is not that complicated. Instead, I would recommend the analysis as necessary for the Advisors to win the business. When there is discomfort to the owner resulting from receiving conflicting information (with no details on why certain answers are provided), then the incorrect approach has already been applied. Heck, I'd do it for free given a detailed census; it just isn't that complicated. Obviously, the quick 50% calculation would change as the number of HCEs change, but the math being applied is simple division. Good Luck! Many reputable professionals can and would do that. The issue from the client's perspective is how to figure out the integrity and competence of the person doing the analysis. And given the conflicting information already received, how to make sure it is both accurate and appropriate to the situation.

There is no question that A and B are a controlled group. That doesn't necessarily mean they both have to be in the same plan, so long as testing is satisfied. Your best option is to consult an ERISA attorney. You have a very complicated situation and guessing wrong would be more costly than a consultation up front.

Not exactly, although in this case the outcome is the same. One company can have a plan that does not cover the other, but they have to be able to pass coverage testing with all employees from both and in this case they would not be able to do that without covering NHCEs who work for B.

If the plan is invested in publicly traded securities such as mutual funds, it is easy to obtain a prospectus by contacting the issuer. Since virtually no one reads them anyway, I doubt that is what the real problem is. Do you really mean some sort of description of the plan?

You clearly have 1 participant, not zero. But there are several other relevant questions. Is it a Money Purchase Pension or a Defined Benefit plan? It can't be both as you said. Was the letter you wrote in the form of a plan amendment? Was the document restated for GUST and EGTRRA and all of the required amendments adopted timely along the way? Has a plan termination resolution been prepared and signed?

Working on one right now. We have forfeited the match and deferrals and are working with the payroll provider to reimburse the employee through payroll.

Logic? Isn't that against all sorts of regulations?

Because what makes sense to a business owner and what makes sense to the regulatory folks have a major disconnect!

For this particular plan, it would feel like making a mountain out of a molehill. Business owners often struggle with the idea that their plans are not merely extensions of themselves and must follow rules. A business owner with no employees would find that concept even more foreign. However it is still the fiduciary's duty to accurately value the plan assets. The value of the assets would determine the need to file a 5500 EZ. Even in this plan, if you ever have multiple beneficiaries or a QDRO, the assets will need to given an accurate market value.

I have a note that someone named Sherry Whitaker at the IRS told me (in 2004) that their programming was being corrected to prevent this going forward. She also said they can be reactivated by writing to EP Entity, IRS, 1973 Rulon White Blvd., Ogden, UT 84404.

Was it deposited as a contribution (following the plan's allocation formula) or as earnings (based on investments)?

You have the issue of coverage to deal with. 0% NHCE coverage won't cut it.

From the perspective of the participant -- keep more of your own money to get more employer money.

If you were unemployed for half the year, there is a good chance that your income will be low enough that you can do both an IRA and the 401(k). Start with the research and you may save yourself some time.

That's exactly what I needed. Thank you!

ADP is telling one of our clients that deferrals must stop when a participant's comp reaches the 401 a 17 limit, even if the 402 g limit has not yet been reached. Although I have seen a few plan documents that had that limitation, this one does not. Any suggestions how to get ADP to correct this?

Inadequately trained call center employees saying what they think the rules should be?

Offering phantom stock to employees as an investment option is different than the employer making the contribution in phantom stock.

Perhaps it's an oversimplification, but a leased employee should get a W-2. An independent contractor would get a 1099.

Please don't take this as the final answer, but if you can clearly identify that you bought XXX shares of ABC company with the contribution, wouldn't selling those exact shares and withdrawing the proceeds solve your problem?

Kevin, it's been a number of years since I used Relius, but I thought that if the plan specs were properly set up it would look at a terminated participant's age when caclulating the contribution and figure out that they were past normal retirement age.