Lou S.

Correct me if I'm wrong here but isn't the discretionary match an "additional employer contribution that is not required on account of the ADP/ACP safe-harbor" and doesn't that blow the Top-heavy exemption? Is there an exception for the additional discretionary match? I know the formula you aredescribing satisfies the ACP test but I'm not sure it maintains the T-H exemption.

This info is old. The DOL clearly allows charging participants directly for distribution processing under the 2003 published guidence.

Unless A & B constitute an Affiliated Service Group (ASG) relationship, A would have no problem establishing its own plan. From the limited info my guess would be A & B are not an ASG but you probably have much more info to make that determination than I.

How do you retroactively terminate the plan now as of 5/17/08?

What does the amendment terminating the MP plan say with respect to compensation? Typically we word them to exclude compensation paid after the date of termination to avoid any grey areas on when compensation was "earned" vs when it was "paid".

The due date of their tax return was 9/15. Shouldn't it have been deposited by that date? Are you sure it is really late? If they have a post mark or some other record of mailing on 9/15 I think they are OK, even if the trust didn't post it until a few days later. It would be late for minimum fiunding which I believe says the money has to be in the trust but for tax deductibility, timely mailing is timely filing as I understand it.

Not stupid at all. I had this discussion recently with a person involved with this situation. I know we would still file a 5500 rather than a 5500-EZ for 2008. Nonetheless, it is unclear when the plan ceases to be subject to PBGC juristiction. I'm unsure at this point how to notify the PBGC they're no long involved without filing with the PBGC. These are questions that need to be addressed. Just write the PBGC for a coverage determination with the facts showing when the plan ceased to cover any non-substantial owners. It's pretty easy and they are pretty quick. Not sure if the PBGC will rule by end of year but we submitted one earlier this year on April 7 and had Ruling form the PBGC on May 2. That inculded an interim corrispondence to clear up a minor question they had.

You must do the RMD before the rollover.

Under §415(h), yes. Just make sure that owner A's partnership interest really is not more than 50% in company Y.

It depends. Does the plan have in-service distribution provisions? Does she qualify for them? If so restating might be easier. If you terminate Plan A you need to adopt all the amendment to bring it into compliance upon termination. In my experience finacial service companies don't generally do this. If you terminate 12/31 will you distribute in 09? If yes you'll have a 5500 for the old and new plan for 2009. If Plan A has a 401(k) feature {solo-K maybe} then you won't be able to put a 401(k) feature in to Plan B for 12 months. If this is one person non-K is there some reason you don't just terminate and put in SEP? Does she part timers kept out by qualified plan that whould come in under SEP? Is the existing plan a profit sahring or money purchase plan? Are there employees involved?

You have to give the employees an effective ability to make salary deferrals. However much lead time before the final payroll to distribute and collect enrollment forms the company needs to do this would be the limiting factor.

A plan wants to terminate mid year and is a safe harbor matching 401(k) plan. The plan has always made deferrals and safe harbor match only. The plan is top-heavy and relies on the exemption from T-H status due to SH match. Am I correct in the following 1. 30 day notice to employees is required to cancel the match. 2. The plan will be subject to ADP/ACP testing for the year of termination. 3. The sponsor will need to make top heavy minimum contributions for the year of termination (because the exemption no longer applies). Is there an exception for terminating plans that I am missing where one or more of the above would not apply? Thanks in advance for any thoughts.

Form a plan standpoint I don't think you will have a problem. You will still be limited to the 10% participation phase in on the dollar limit. If you are trying to justify the 100% comp limit (because it may be lower than the phased in dollar limit) you might get challeged by the IRS if you are claiming past service for years with no W-2 wages but pass through dividend S-corp income.

I would agree with everything Mike said. I have not heard about the "dirty little secret" he brings up. This is interesting (disturbing). I don't see anything in the Code or Regs that would support the IRS possition that he puts forth but that hasn't stopped them from taking odd positions in the past. I know on several non-cal plans we have used that technique to maximize contribuions w/o exceeding 415. In the past we have self corrected 415 errors due to deferral and large ER contrib but since finalization of 415 regs I agree an EPCRS submission is required to fix.

Under 401(a)(13)(A) generally no. There are some exceptions for QDROs - 401(a)(13)(B) And some for "Certian Judgmnets and Settelments" 401(a)(13)© - if the garnishments is for one of these specific execptions then yes; if it is not then no.

What does the plan's SPD say? If it references that participants may be charged fees you are probably OK. If not an updated SPD or SMM might be in order.

Good point. On the PBGC covered small plans which is what I'm running into here. I found some additional discusion on this in the 401(k) section of the forum http://benefitslink.com/boards/index.php?showtopic=40008 That indicates that even for small non-PBGC plans it looks like you can deduct the maximum to the DB and the 6% to the DC.

Assume an employer has a DB Plan and PS plan that covers the same employees in both plans. Covered Compensation is $1,000,000. The DB minimum under 430 is $300,000 The DB maximum under 404 (assiming no DC Plan) is $500,000 Can the sponsor contribute the $500,000 to the DB and also contribute 6% of pay $60,000? Are they limited to $300,000 to the DB and also contribute 6% of pay $60,000? Would they be able to contribute $500,000 to the DB but nothing to the DC?

A Form 5330 is not required. The participant however will have taxable income in two years, the year of the deferral and the year of the distribution. 1.401(g)-1(e)(8)(iii). Also I'm not sure if they changed the rules on this with the final 401(k) but I think late refunds of excess deferrals are problematic now and may require EPCRS action. Maybe someone else can weigh in this part.

In the past when this came up we have used the same method as allocating earnings on an excess contribution or excess deferral refund.

Restricting the ablity to make contributions based on attainment of age 70 1/2 would violate ADEA. I agree with billgrady 100% on the yes, yes answers.

You can exclude all HCEs from the safe-harbor match. I am not sure if you can have a safe harbor match that benefits some but not all HCEs.

I wouldn't change it. Use the effective date in the adoption agreement. Tell them if they have a different position they should prepare the amded 5500s for their client.

We have a client who holds property/mortgages in his profit sharing plan. His wife accidently paid a bill related to one of these properties with personal funds. The owner wants to reimburse his wife from the Plan assets. This is a one person plan. Is prohibited transaction? If so is it correctable under one of the IRS programs or can they just self-correct and document the error.

I'm a bit confused by your question. The plan fails the test but there is no compliance violation if the refunds are made timely. As Luara points out as long as the refunds are made within 12 months of the close of the plan year you don't need to worry about any of the correction programs. In most cases if the refunds are made after 2.5 months after the end of the plan year but before 12 months after the close of the plan year, the employer will need to pay an excise tax.