emmetttrudy

They are the most pleasant and responsive government organization we deal with, by far!

If a DB Plan pays a PBGC premium out of plan assets to the PBGC, does the PBGC need ot be listed on the Schedule C?

@ Belgarath. Agreed, amazing. I guess they know better than we do!

Assume the approach is © from your post above. Say, for example, a participant has a hypothetical account balance at the BOY (he had accrued benefits in previous year). However, for the current year he did not meet the 1,000 hour accrual requirement and so accrued no pay credit for 2012, only received interest credit. My understanding is this participant would not be eligible for the offset in 2012. Would you agree?

thank you ak2ary.

I was making up numbers to make the math simple for the example. The CB credit is not .5%.

Hypothetically you have a CB Plan and a cross-tested 401k PSP. The compbnied Gateway is 7.5%. The average DB Allocation rate for NHCEs is .5%. So an NHCE would need to receive 7% in the PSP to meet the GW requirements (7.5% - .5%). What about a participant who does not benefit in the DB Plan in that year? For example, an employee is a participant in both plans, receives a 3% safe harbor contribution in the 401k PSP, but does not meet the allocation conditions for a cash balance credit (1,000 hours). Would this participant need the full 7.5% in the PSP, or still only the 7%?

Thanks. We have already spelled everything out in a letter to the client. The aim of my original question (is this a PT?) is because I am trying to figure out if we need to mark "Yes" on the Form 5500 that the plan experienced a PT during the year.

I wouldnt even consider it. Anything contributed to a 401k Plan that is set up in 2013 would be going into a plan that is not permitted in the first place, which would mean they would not be subject to favorable tax treatment. Some people obviously think the rules don't apply to them, but I wouldnt advise anyone to go down that route.

A Plan allows two participants into the Plan early. Both participants (HCEs) contribute employee deferrals. The employer refuses to correct the error. Is this a prohibited transaction? Would they need to check Yes on the Form 5500 that the plan had a PT during the year?

If they have contributed to a SIMPLE for 2013, they cannot start a 401k Plan until 1/1/2014. They must provide a notice to all employees by November 1 stating the SIMPLE will be terminated. Then 1/1/2014 they can start a 401k, not before.

quite possibly. i guess it depends on what the definition of authorize is? By simply contributing the profit sharing is that authorization? Signing a form just seemed like an extra step to me.

A TPA provides what they call a "Form 18" with each of their reports to the client. The Form 18 details the profit sharing contribution by participant, and contains a signature line at the bottom for the Trustee. I have never seen this before. Is anyone familiar with this form? Is it required? Could it jsut be something the TPA developed for the client to "memorialize" their profit sharing decision? Any insight would be appreciated.

Doctor A is currently a sole prop with a 401k Plan and DB Plan. he is considering creating an LLC, the members of which would all be doctors (and HCEs), for the purpose of contracting with medical payors—hospitals, insurance companies, etc. in an effort for collective contracting and bargaining. The Plan is to have the LLC enter into a participation agreement with Doctor A's current Plans so the compensation he receives for services rendered through the LLC would be eligible for retirement plan purposes. His two Plans would also exclude all of the other members of the LLC (since they are all HCEs, this shouldnt present a problem). However, my question is does this create an issue for 401(a)(26)? Doctor A and several other doctors from the LLC will have met the eligibility criteria and be eligible for the DB Plan. But all except Doctor A would be excluded.

the BPD does say the change in vesting only applies to someone who has at least one hour of service after the effective date of the amendment. thanks John.

Effective 1/1/2012 the eligibility for both the DBP and the PSP was changed to 2 years (and 100% vesting). This brought up two issues this year: (1) The 2 year requirement in the PSP cannot apply to deferrals or safe harbor. An employee hired in 2010 entered the PSP on 1/1/2012, and gets the 3% safe harbor. For testing purposes in 2012, the combined GW turns out to be 7.5%. By virtue of receiving the 3% SH, doesn't this trigger the TH and GW contributions, and thus this participant must receive 4.5% PS contribution to get to a total of 7.5%? (Because of the two year requirement he is not in the DBP for 2012 so received no accrual). (2) The amendment does not specify the 100% vesting applies only to PS contributions made after the effective date of the amendment. So, what about a participant who terminated in 2011 that was 40% vested, and has not taken a distribution yet? Is he now 100% vested in his PS contributions, or still 40%?

I dont see anything in 72p about when the first payment is due. Other than payments must be made quarterly. So I would assume the first payment is due within the first quarter after the loan date. How do other people administer this? For example, what if someone wanted to take a loan today and not make the first repayment until 3 months from now, and then make repaments monthly subsequent to that?

Yes, the participant is still alive. Correct, for a spouse (sole beneificary) who is 10 years younger or less than 10 years younger, the Uniform Life Table would be used. I just couldnt find anywhere in the regs that deals with the situation of not having the spouse's information. We dont normally collect it.

the RMD calc rules require a separate table of factors if the participant receiving the payout is married, their spouse is more than 10 years younger, and the spouse is the designated beneficiary. Does anyone know of any specific exception to this rule - for example, if you are unable to acquire the beneficiary information, is it ok to just use the Uniform Life Table I?

OK, so it sounds like the 6% PS contribution does depend on the DB contribution. So if the comp is below $255k, you use the comp minus db contribution for the calc of the 6%?

What do you mean if it is all done at once?

A business owner has a 401k Plan and a DB Plan. He receives a K-1. Would like to contribute the maximum allowable -> DB contribution + deferrals + 6% profit sharing. Is the 6% profit sharing contribution calculated based on his net earned income prior to deducting the DB contribution?

The thinking would be different...except for in this case this is a 2011 plan year contribution. So any additional contribution made is already late.

I am trying to figure out the correction for a plan sponsor if they contributed funds to their Plan in-kind as opposed to in case. Has anyone encountered this before? From what I understand: (1) The transaction must be backed out (positions sold) and the funds re-contribued in cash. Should it be the original amount involved in the transfer of stock or should it be the original amount + any earnings, if any? (2) It is a prohibited transaction so must be notated as such on the Form 5500. (3) The amount contributed does not count towards the Minimum Required Contribution. So as a result, they should file a Form 5330 and pay the excise tax on the failure to meet the MRC. What I am not completely celar on is how much excist tax is to be paid. Is there one excise tax to be paid because there was a prohibited transaction, and then another excise tax paid for failure to meet the MRC?

For the Not Top Heavy Portion the last one should actually be the participant must receive the GW, since they worked 1,000 hours and accrued a benefit in the DB Plan they must get the GW in the 401k PSP.