K2retire

Agreed, but the employer rarely wants to make a terminated participant happy when it costs him money!

Lots of details here that I'm unsure about, but I am comfortable saying that if the account balance would not be available as collateral for the loan, alternate collateral would be required.

I guess that woujld make it either an "ex-standard table" or a "table formerly known as standard". The latter is clearly more poetic!

All good questions Peter. But if the expert (attorney or accountant) doesn't at least ask questions about these ramifications, how can the client be reasonably expected to know that there might be other issues to consider? When I taught pension law to paralegal students, none of whom expected to work in the field, I pointed out to them that there were 3 instances where the information I was teaching would be useful to them: 1. they could reasonably expect to be a plan participant at some point; 2. if they ever worked in domestic relations they needed to be aware of QDROs; and 3. if they worked in corporate law (particularly mergers and acquisitions) retirement plans needed to be part of their due diligence for the client.

Perhaps if you point out to the owners that giving themselves the SH match would probably be less expensive than giving all of their staff a top heavy minimum contribution plus they get to keep the contribution, they will reconsider whether or not they can afford to make the required contribution. Although, I'm not certain that is the correct answer, raising the question might persuade the client to do what they need to do.

Does the employee have any more 2008 paychecks from which to make them up? It seems unlikely at this date.

The situation that you describe sounds like the exact reason that the controlled group rules were established in the first place. The attorney who helped set up the other company should have warned about such things.

I've always been told that is the determining factor.

I suspect that Lou's reference to a hardship in post # 8 means that taking a loan would create a financial difficulty for the participant, not that it would somehow magically meet the safe harbor definition of a hardship.

It is conceivable that a decision has been made to give 100% of this asset (and the related income tax liability) to one heir and fewer of the remaining assets as an offset. It is also possible that the will contains a specific bequest of this asset. The estate is required to file an inventory of assets with the court. If it includes the plan account (which it should since the beneficiary is the estate) the PR will be required to account to the court for how it was distributed. Transferring the balance directly to an heir rather than to the estate is suspicious, especially based on what you've been told. If you want to go that far, you might require the PR to produce a court order showing that this asset of the estate is to be distributed to him personally before sending a check payable to anyone other than the estate. Such a request might even be a fiduciary duty to ensure that the plan assets are for the exclusive benefit of the participants and their beneficiaries.

If it was paid on December 30, why would it not be 2008 pay that should appear on the 2008 W-2?

I asked about this at the DOL Speaks conference last spring. The DOL person with whom I spoke was "shocked" when I asked why nothing was being done to follow up on 5500s that are filed showing no fidelity bond. I believe that the recent ASAP holds the answer -- if the only enforcement is a lawsuit the probably don't have the resources to pursue the issue.

Distribution from Inherited IRA, dead husband's IRA, beneficiary account in qualified plan?

I believe that there is IRS guidance clearly stating that the correction for failing to meet the safe harbor is NOT to simply require an ADP test.

I believe that the SH match only has to be funded quarterly if the document calls for matching per pay period without true up. If the document calls for matching on a plan year basis you have until the due date of the tax return. But the deposit date is not the big issue.

Sadly, I've heard of a number of other sites that have the same problem with Firefox.

Larry, unfortunately all of you are given a bad rap by the loud mouth few who think they are not only infallible, but also otherwise perfect people.

Where I used to work both top heavy and 5500 were prepared on an accrual basis. Where I work now both top heavy and 5500 are prepared on a cash basis. I doubt that this was considered in either decision, but in hindsight, I would think that consistency would help support either case.

I'm not all that familiar with UBTI rules, but why would direct rental income be treated differently than rental income from a limited partnership?

If I were advising the trustee of this plan, I would want to find a way to make this NOT happen. First, the rental income will likely be UBTI to the plan. Accounting for that will increase the plan's expenses. Second, with the current state of the real estate market there is some question in my mind about whether a "prudent man" would agree to such an arrangement. (By the way, many estimates that I've seen indicate that the better time to buy real estate will be along about the time when this participant will be eligible for a distribution anyway.) Third, does the plan trustee really want to be responsible for answering late night calls from the tenant who has a plumbing leak or some such emergency? Does the participant's account have sufficient liquidity to cover such expenses? Is the plan prepared to handle such accounts payable?

We've been hearing rumors of 1-2 year turn around for these letters. Where I work now our clients rarely apply. Where I used to work they always did. The difference in philosophy is related to the complexity of the plans offered: a cross tested plan with assorted exclusions by job classification is more risky than a pro-rata profit sharing contribution with no exclusions or allocation conditions.

"IRS" and "reasonable" in the same sentence? My you are an optimist!

Since the employer apparently is consistently not enforcing the 15% limit, could an argument be made that the other 300 could have exceeded it too? FWIW, sounds like it's time to remove the limit!

Wouldn't it be a whole lot easier to just amend the existing plan to cease the safe harbor provision after the required 30 day notice?

I work for a company that acts as both TPA and recordkeeper. We charge an annual fee to the plan sponsor for the TPA services. We are paid for the recordkeeping services as part of the management fees collected by the mutual funds. To invest in these particular funds, one must use a brokerage firm. The broker is paid a commission from the fund sales charges. As mentioned above, every situation can be different. Keep asking until you get the answers you need.