K2retire

It is also my understanding that each trust is required to have a distinct EIN. I have seen many plans that use either the plan sponsor's or a service provider's EIN, but I don't believe that is what should happen. A few years ago (around 2004 or so) the IRS decided to inactivate a bunch of EINs that hadn't been used in several years. Unfortunately, filing a 5500, Schedule P was not sufficient to prevent that from happening. Supposedly they have stopped doing that now, and you can have the old ones reactivated as needed.

I think this is debatable. What allows the plan administrator to re-classify a participant's elective deferrals as some other type of contribution? I've always understood that if there was no comp from which to defer then the funds that were intended as deferrals must be employer money of some type. That is the rationale for not being able to refund them, since it was employer money, not something the participant paid.

If the employer is required to use electronic deposit of withholdings with the company EIN (as most of them are these days) they may have a problem using the company number for this withholding because it sounds like it was not deposited electronically.

Perhaps I'm not understanding the question, but you said the documents provide 5% top heavy in the DC plan. Why would you need an additional amount in the DB?

I am not an expert on this type of claim: I work with retirement plans. But it is conceivable to me that the company learned recently that they had been interpreting something wrong and has been directed to stop doing that going forward. If you had already had the procedure when that switch occurred, you might have had a claim based on having relied on their pre-certification. Since you are on notice that they will not cover it before undergoing the procedure, you are probably stuck with the choice of not doing it, or paying for it yourself. For what it's worth, I agree that those choices are not fair, but what's legally correct and what's fair are not necessarily the same.

My crystal ball is out of order, but I'm still hopeful that the stock market doesn't USUALLY behave like the Titanic over the long haul.

Then I would lean toward showing them as terminated in the plan they are leaving.

My thoughts exactly!

I am in now way qualified to give investment advice and I know nothing about this particular fund. But it seems to me that the market is having a sale -- anything you invest at these prices will buy many more shares than at any time in recent memory.

Are both employers part of the plan?

Leevena, your warning is a valid. Care should be taken to determine if this client is simply uninformed, or beyond hope. But in really small businesses, it is not uncommon for one spouse to be totally out of the loop on some aspects of the business. This is often the same person who wouldn't know where any of the personal financial records were after her husband died. Sadly, my own husband would probably be in the same boat if something happened to me. Sheila, the employer should receive investment statements. They are likely to come at the end of each quarter. At a minimum she should get something at the end of the year. There will be clues on those statements. They should be titled in the name of the plan, not the name of the business. If it is an individually directed plan (which most of Paychex plans are) there will be a separate statement for each participant.

It's also a 402(g) violation.

Paychex SHOULD have everything you need, but my experience with them is hit or miss. The plan should have a representative assigned to it. Have the client start there. They will want the client and branch number. If the decedent was the only contact person in their files, you'll have to find out how to get that changed before they will give you any information. Many of the conversion plans that we see from Paychex have received a 5500, but never filed it. If that was the case for this plan they won't be on FreeERISA.com. We also see many Paychex documents that don't include information that should have carried over from the prior document (like the original effective date or proper plan number). Try to get copies of the earlier documents, if possible, rather than relying on Paychex' document. Good luck!

Our interpretation on that is that you make the safe harbor matching contribution for the partial year, but the entire year is subject to ADP/ACP testing.

I've found that groveling is also helpful in similar cases.

They can amend to remove the safe harbor match effective 30 days AFTER they notify the participants that they are doing so. It is too late for it to be effective 1-1-09 at this point. They will owe the match for January (or 30 days after whenever they decide) and will have to be tested on a current year basis for all of 2009.

MJB, there is another posting where she indicated that she has been told she is not the beneficiary. That implies that the prior spouse did have a QDRO indicating that she was to be considered the surviving spouse for plan purposes, probably completed before the remarriage.

Typically the spouse is required to consent to naming anyone else as the beneficiary. Some plans, however, require that you be married more than a year to qualify as the spouse for that purpose. When you say "plan administrator" is that someone at the company, or an outside firm? I would start by talking to someone in HR at the company.

That is correct. Any contribution beyond deferrals and the safe harbor triggers the top heavy minimum requirement.

I experienced a similar situation pre PPA in which the employer insisted on putting all of the contributions into a money market account earning 1-2% per year for his 6 person plan. The actuary would not permit us to use earnings assumptions that low and the client couldn't understand how his plan could be underfunded when he always deposited what we told him he needed to deposit. In 2004 that seemed outrageous. In 2008 it's looking pretty smart!

I believe anyone who works on 12-31 meets the last day employment requirement, even if it is his or her last day on the job. As for the distribution timing, the requirement you describe is often used with balance forward plans that may not know each person's account balance until several months into the next year.

Larry, there would be some sense in your suggestion for us if we did consulting or VCP filing. Since we don't, we find it easier to motivate the client to look for documents BEFORE we let them in the door.

It may be very difficult. Start by fixing the "complications", then you may have more luck.

We will not take a conversion plan until they produce the prior document and all required amendments. I agree with you that it is rare for a small employer to know where to find them, but usually the prior provider can come up with them. If you haven't seen the existing document, how can you be sure that you aren't deleting a provision that is a protected benefit?

Don, don't you suppose that he would pass on eating sharks out of professional courtesy?