emmetttrudy

Is there a participant notice requirement for removing loan provision from a 401k Plan?

Thought if that, but she is only 56 so the 10% penalty would hurt if she were to take the cash distribution to repay the loan.

A one person DB Plan has about $100k in contributions from 2009 that was not made. Form 5330 was filed, excise tax paid and now the amount is growing because the contributions still has yet to be made. Client is considering plan termination to stop the bleeding. If she were to terminate the plan would the 2009 contribution still be required or would she just be paid out to the extent the plan is funded? There is a small MRC allocable to 2010 as well, even though the plan was frozen in 2010. My inclination is that these liabilities have been incurred and need to be funded, even though it would seem somewhat impractical given it is a one person plan, no employees.

A plan sponsor has a DB Plan and 401k Plan. A bond is required up to a maximum of $500k. Is this per Plan? Or would one $550k bond cover both Plans? The 401k Plan has over $5 million in assets so would require a $500k bond on its own. So, would the DB Plan need it's own bond? Possibly another $500k bond if it too has over $5 million in assets? Or I guess both Plans could be listed on the same bond but it's the amount I'm concerned with. Thanks,

A participant terminated back in 2004 and was recently rehired in 2011. During her initial time of employment (from 1990-2004) she had met the age and service requirements for the 401k Plan and was a 100% vested participant. In 2005 the plan sponsor put in a DB plan. Does she become a participant in the DB plan upon her rehire in 2011 because she had previously met the age and service requirements for this Plan? Or would she need to satisfy the eligibility for this plan from her date of rehire forward? Based on the information I have found she would enter immediately.

A group of physicians started a 401(k) PSP. They lease employees from a hospital and the leased employees participate in the hospital’s 403(b) plan. I know that we must include the leased employees deferral and match contributions from the 403(b) plan in the 401k Plan's tests (ie ADP/ACP test). I also know that contributions to the 403b plan can be included in the 401k Plan top heavy testing. What I don’t know is whether or not we can include the leased employees total 403b account balances in the 401k Plan top heavy test. In other words, can we include the leased employee 403b account balances for the entire period they were leased by this group or can we only include new monies to the employee 403b accounts since the inception of the physician 401k plan? The physicians have leased these employees prior to the inception of the 401k Plan.

thank you

A plan sponsor has a DB and 401k Plan (both one person plans, it is a self-employed individual). Do the loan regulations allow a $50k loan in the 401k Plan AND the DB Plan? Or is the loan limit aggregated amongst all plans and if he has a $50k loan in the 401k Plan he would not be eligible for an additional loan in the DB?

Thank you. I agree. Do you have any specific examples you have seen either in the regulations or commented on by the IRS? This seems to be one of those issues where some people interpret it differently and there is no clear guidance.

A participant takes a loan in December 2010 for $5,000. They pay back the loan the same month. In February of 2011 they take another loan for $15,000, and pay it back 2 days later. It is now March 2011 and they would like to take the maximum loan available. The regulations say that you subtract the highest outstanding loan balance in the last 12 months. This would be $15k, meaning a loan should be available for $50k minus $15k, or $35k. The plan's vendor is saying all outstanding loans are subtracted in the prior 12 months, meaning you subtract the $5k and $15k from the $50k max and her maximum available is $30k. What is your understanding of the regulations? And are there any examples in the regulations that would support the loan being $35k.

When does severance from employment occur in a union sponsored 401(k) plan? If an employee is laid off by one of the member employers does that mean that he has incurred a severance from employment, which would make him eligible for a distribution? Since the union is sponsoring the plan and the individual is still a union member I’m not sure that a severance from employment has occurred.

So if their compensation will support the maximum employee and employer contributions then they are ok funding throughout the year. But if they are uncerain how things will pan out throughout the year compensation-wise they just need to be conservative in how much they contribute and make sure they do not go over what would be allowable.

An LLC taxed as a partnership wants to fund some employer contributions during the year for the partners. However, it is not known what their earned income will be until the end of the year, so it's difficult to estimate what the final safe harbor match and/or profit sharing #s will be. Historically their comp has been well over the $245k limit to support the max contributions. BUt what if at the end of the year it's not? Are there any guidleines of what is ok to contribute during the year?

When a self employed individual has a DB and 401k PSP, the deductible amount of the contributions going into the 401kPSP and DB plans is limited to Schedule C net income less 1/2 SE Tax, correct? So while the profit sharing plan contribution cannot exceed 6% in general, it is also limited by the Schedule C income, because a net loss cannot be created by the deduction of a plan contributions?

DB Plan terminated in 2009. They decided to wait for the DL to be issues to process distributions. The DL was received in January 2011. There is approximately $100k of shortfall. Their options, as I understand it, are a) fund the shortfall and pay everyone out, or b) have majority owner(s) forgo benefits. It is a PBGC plan. My question is, if they decide to fund the shortfall, is this contribution deductible in 2011?

If the plan excludes a certain group of employees from receiving the employer match, but they are eligible to make employee elective deferrals, can this group be excluded from the ACP test? For these purposes, assume they are full-time employees and would have met all other statutory requirements.

What are the combined contribution limits for a SEP IRA and DB Plan? Self employed individual (Schedule C) currently is maxing out a SEP IRA and would like to add a DB plan on top of this to increase his contributions. If he contributes the maximum to the DB, what would his SEP contribution be limited to?

sorry, i meant to say they DO seem to fit under the definition of Elective Deferrals because it is a Pre Tax Deferral.

The actual wording is W-2 Wages PLus Elective Deferrals. and Elective Deferrals is defined as "Elective Deferrals includes Pre Tax Deferrals, Roth Deferrals and Employee Contributions, Matching includes all Matching Contributions and Nonelective includes all Nonelective Contributions." So HSA contributions do not seem to fit under the defintion of Elective Deferrals. Would you agree?

If the Plan Document's definition ofcompensation is W-2 + 401k deferrals, and a participant is haveing pre-tax contributions deducted from his paycheck to go towards an HSA, are those deductions added back into compensation as well for employer contribution calculations?

Plan sponsor has a DB and DC plan. The DC plan is not safe harbor and they routinely fail the ADP test, and correct by making a QNEC. Can the QNEC be used to satisfy part of the Gateway required for the DB/DC testing? For example, if the Gateway is 7.5% and the QNEC is 3%, does the QNEC of 3% plus another 4% profit sharing contribution satisfy the Gateway?

If the lump sum in a Cash Balance Plan is set to be the vested hypothetical account balance, then why does the Funding Target, which I understand to be the present value of accrued benefits, for each participant not equal their vested hypothetical account balanace as of the valuation date?

Thanks. The notice issue is really what I'm curious about since the limitations (for example, no lump sums) don't really affect anyone other than the one owner and he's obviously not planning on taking a distirbution anyway.

I am curious to know what others are doing for these types of situations...If a one person DB plan does not get the AFTAP certified until after the 10/1/ deadline, are you preparing a notice of benefit restriction and then another notice when the AFTAP is certified (say 10/15) letting it be known that the restrictions are lifted? Are there specific rules about wheher these notice requirements apply to one person plans?

So what's the advantage or point to defining AMC as the high 5 of last 10, when really it would have to be high 5 over the career?