Lou S.

Very doubtful. The mistake of fact rules are fairly narrow if I remeber correctly and do not appear to apply in this case. I think you are going to be stuck with allocating a descretionary contribution under the terms of the plan. You might try this thread for some additional suggestions. http://benefitslink.com/boards/lofiversion...php/t14199.html

Bummer. I agree with Andy, have the trustee supply the value and recomend they have an appraisal done if they ask your advice but my best guess is the assets are $0 or something close to that. Hope they are looking for a big deduction because that is going to be one hell of required minimum contribution you are going to calculate for them.

GBurns, good post. It sounds like the person is eligible to me from the facts described. The issue would appear to be how do you pay her out if/when she is fired and how to report the distribution on a 1099-R since is sounds like she does not have a valid SSN.

He probably rolled over the other plan (less RMD) so I don't see how you can say the refund came from the other plan. If on the odd chance he took a taxable distribution from the other plan over and above RMD you could probably classify a portion of that as 402(g) refund but you may have trouble getting the other TPA to issue the 1099-R that way.

To use an example - Employee A works very part time and works only 400 hours in the first 6 months and does not enter the plan. But then that employee increases their hours such that they work 700 hoours in the second 6 months giving them a 1 year of service in the first 12 months. Or even more extreame Employee B works 600 hours a year (300 every 6 months) for 5 years then is hired full time at 2000 hours per year, employee B would come in under the 1-year of service rule. Unless you are checking eligibiliy every 6 month period and I'm missing the point. Usually what employers are trying to do with these conditions is to keep out part timers from the plan while bringing in the full time ees in less than one year. It is fine to do that but if one of your part timers who doesn't make the 500 hour rule 6-month rule later satifies the 1-year of service rule they have to come in. Typically with a 6 months service requirement you don't also have an hours requirement and everyone comes in after 6 months even the part timers is all I'm saying.

I agree 100%. We rarely see it happen but it sometimes it does and now you have to track the after tax basis in a plan that might not normally have after tax money. In cases like this we setup an after tax source for the participant just for the buy back so we know to track the basis.

Yes, as long as your retain the fall back year of service option for those who don't make the 500 hour 6 month rule. Otherwise it is a 410 violation, 410(a) I think.

Will the partners have earned income for self-employement tax purposes. If not, you have no pensionable income.

It has been a while since I looked at this issue but last time it came up I thought you had 12 months to make the T-H minimum contribution though if made more than 30 days after the due date of the contribution for deductibility for 2007 (4/15/08 in your example) then it is 2008 415 annual addition.

How about - has anyone had the IRS reject a 5310, ever? No we have never had one rejected. We've had several plans under 5 years. I think 3 was shortest but that was a dot com bust with valid reason. I think the rescession may be a valid business reason, many employers are cutting expenses. I'd make the client aware that the IRS might challenge on permancy issues to cover yourself but I'd be mildly surprised if the IRS didn't issue a favorable ruling.

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.