SMB

Facts: DC Plan participant, age 72, still actively employed, not an owner, balance ~$200,000. Participant would like to take a $50,000 loan (no prior or existing loans) and roll over her balance to an IRA as an in-service distribution. Question #1: Will she need to keep $50,000 in her Plan account as collateral for the loan? Or, by virtue of the fact that her account balance was sufficient to support the $50,000 loan at the time the loan was made allow her to subsequently roll over her entire account balance (except the loan) to an IRA? Question #2: Unlike her Plan account, the rollover IRA would be subject to required minimum distributions. However, since there was no balance in the rollover IRA as of 12/31/07, would 2009 be the first year she would be subject to RMD from her IRA? Thanks for any and all input!

Freestyla, Let me also add my sincere "encouragement" to your efforts. Nearly all of the major mutual fund companies (e.g., Fidelity, Vanguard, T. Rowe Price, etc.) and on-line brokerage firms (e.g. Charles Schwab, TD Waterhouse, etc.) have a "Beginner's Guide to Investing" (or similar) on their respective websites - a good - and inexpensive - place to start. I also would recommend the following books - all written for the "newbie" and "non-professional": Saving for Retirement (without living like a pauper or winning the lottery) - Gail MarksJarvis The Lazy Person's Guide to Investing - Paul B. Farrell, J.D, Ph.D. The Only Guide to a Winning Investment Strategy You'll Ever Need - Larry E. Swedroe Good luck! SmB

I'm a "qualified plan" guy - so, pardon my Roth IRA ignorance - but, then, that's what these forums are for, right? Individual ("recipient") is to receive half of her ex-spouse's Roth IRA incident to a divorce (part of the court-ordered property settlement). Is the start date for the "5-year clock" for the recipient the same as the original Roth IRA owner's? In addition, if the recipient is disabled, can the transferred Roth IRA be distributed as a tax-free "qualified distribution"? Or, is it far less or (more than likely) far more complicated than this? Thanks for any and all input.

Don't typically deal with SARSEPs - tend to find them anything but "simplified"! However, Employer has a "grandfathered" SARSEP adopted via IRS Form 5305A-SEP. It is my understanding that: 1. Such a "model" SARSEP is automatically "deemed" to be top-heavy (i.e., to avoid the Employer's having to make a T-H determination each year). 2. The required top-heavy minimum contribution for eligible Non-Key Employees is a % of comp equal to the lesser of 3% or the highest deferral percentage of any Key Employee. 3. If no "discretionary" employer contribution is made to the SARSAEP for all participants for a plan year, then the eligible Non-Key Employees still have to receive a top-heavy minimum - or if an employer discretionary contribution is made that is less than the required top-heavy minimum, Non-Keys would need to receive an additional contribution amount, so that their total employer contribution equalled the T-H minimum. Correct - or no? Thanks!

Employer wants to establish a SIMPLE IRA effective January 1, 2008. Since it is already mid-November, will the 60-day notice requirement be met for 2008 if employees can make (or change) salary deferral elections on a "daily" basis - versus only as of January 1st?

Bird, I suspected that "something" needed to be distributed from the late Fred's account for 2007, but wasn't sure what, when and to whom. Thanks for taking the time to analyze my situation and reply. Much appreciated. SMB

No takers? Is it because it's patently obvious or thoroughly confusing (my status)?

Husband (Fred) and wife (Wilma) are co-owners of a business and both are covered by the company's DC Plan. Both Fred and Wilma had a "required beginning date" of 04/01/07 for purposes of commencing their required minimum distributions from the Plan. Fred died in 2006, prior to his required beginning date. Wilma received her 2006 required minimum distribution based on her 12/31/05 Plan balance. In 2007, Wilma (as Fred's surviving spouse and beneficiary) rolled over Fred's Plan balance to her account under the Plan. No money was actually moved. Wilma simply ended up with a "rollover" recordkeeping account in her name and will be issued a 2007 IRS Form 1099-R reflecting the direct rollover of the death benefit. Since the rollover of Fred's balance to Wilma's account was not effected until 2007, am I correct in assuming that this rollover amount is NOT included in Wilma's 12/31/06 Plan balance for purposes of calculating her 2007 RMD - but will be included in her 12/31/07 Plan balance for purposes of calculating her 2008 RMD? Consequently, Fred's Plan balance was not (need not have been?) included in any RMD calculation for either 2006 or 2007? Just trying to make sure I've got my "head screwed on straight" on this one. Thanks for any and all comments, confirmations, clarifications, etc.

Austin3515, Isn't a safe-harbor enhanced match sufficient to avoid both ADP and ACP testing? Or, is ACP testing required in my example because the safe-harbor enhanced match is being made on salary deferrals in excess of 6% of comp? If that's the case, could the plan provide for a safe-harbor enhanced match of, say, 150% on salary deferrals up to 6% of comp and not have to do ACP testing? Thanks! SMB

Setting up a new safe-harbor 401(k) Plan effective for 2007 (2 docs and 1 eligible NHCE). Can the Plan provide for an enhanced safe-harbor match for ADP purposes on deferrals in excess of 6% of comp - i.e., 100% on employee salary deferrals up to 7% of comp ('cause $15,500 / $225,000 = 6.89%)? No additional matching contributions to be made. Thanks!

Sorry, prior post the result of being a computer dinosaur (and, perhaps, a tad too much post-Form 5558 celebratory "libation"). Just wanted to suggest to my fellow "vetrans" - for the benefit of all the EB "newbies" - that we discontinue using the now achronistic terms "Keogh" and "HR-10". After all, they are so "20th Century"!

If truly NHCE-oriented - what about a payroll-based IRA program? In my experience, there are not many NHCEs who defer more than the IRA contribution limit. Just a thought...

Non-top-heavy salary deferral only 401(k) Plan with prior year testing. Only 1 HCE, who is catch-up eligible for 2007. 2006 ADP for NHCEs was 5.0%. Am I correct that for 2007, Plan will pass ADP if the HCE limits his deferrals to 7% of his comp PLUS his $5,000 catch-up? Thanks!

"Rhetorically speaking" - I've often wondered of what earthly value is a fidelity bond equal to 10% of the value of a plan's assets, "funds handled", or whatever criterion you want to use? If my employer "retired" to some unknown island with my (and every other participant's plan $s), recouping 10 cents on the dollar would simply be adding insult to injury. Just "venting".

"A&B Dental Group" owned 50% each by Drs. A and B. For whatever reason, each Dr is now going to own 100% of his own practice, with each practice owning 50% of the former A&B Dental Group, which will now be comprised of just the staff (most "shared"), office equipment, etc. - i.e., going from 1 entity to 3. "A&B Dental Group" currently sponsors a "New Comparability" PS Plan. Not sure where to begin with the new "arrangement" from a qualified plan standpoint. Am I dealing with an affiliated service group? Can each entity sponsor its own Plan? Should they consider a multiple employer plan? ??? Mostly just looking for "considerations" and "possibilities" from the more learned and experienced pension folk. Thanks for any and all input!

For those of you fellow TPAs who can take just a minute away from annual data requests, 1099-R prep and 401(k) testing... I am a "micro" TPA shop (DC only) and am looking into purchasing some sort of reference resource. In the past I have usually purchased various versions of the "Answer Books" (Aspen Publishers), but it seems such a waste to buy hard-bound books anymore, especially when they are typically already somewhat "dated" before the ink dries! Consequently, I am interested in a CD-based or WEB-based service that's updated periodically. The "ERISA Outline Book" seems to be the reference of choice for most of the BenefisLink subscribers (plus, the price seems much more "budget-friendly" than many services). That being said, I'd be interested in hearing any and all comments (pro and/or con) that anyone would care to offer regarding other resource providers - e.g., Sungard Corbel's "Pension Library", Aspen's "Pension and Benefits eLibrary", CCH's WEB-based "Pension Plan Guide", etc. Thanks for the input!

Can anyone direct me to a resource for a sample RFP for a 401(k) Plan? Really don't have the time or inclination to "reinvent the wheel" when I'm sure somebody's already got a good one. Thanks!

Any chance your Plan allows the participant to be charged for distribution-related costs? That might change his tune...

Just a thought - increase his salary deferrals (assuming this was a 401(k) Plan) to "offset" the taxable income (but not until after the hardship "suspension" period).

First and foremost, the Plan must provide for "in-service distributions". Second, some contribution sources - e.g., employee salary deferrals, may not be distributed, even "in-service" before a participant's attaining age 59 1/2. So, if it's been said once here, it's been said at least 1,000 times - check the Plan document. And also IRS regulations.

My understanding is that such an SP (assumes no employees) would need 2 TINs - one as an "Employer/Plan Sponsor" and a second "trust TIN" - as the Plan's associated trust is a legal entity that is separate and distinct from the business. The "trust TIN" is used as the taxpayer i.d. for trust investment accounts, for 1099-R distribution reporting (i.e., the trust - not the business - is the "payer") and on Schedules P & R of the IRS Form 5500.

Individual sold the assets of his single member LLC (assume it was an "asset" sale, since there was no "stock", per se, to sell). Same individual subsequently established a new single member LLC and wants to set up a PS Plan for the new LLC. Some of the employees of the "old" LLC are now employees of the "new" LLC. Must/may the PS Plan of the "new" single member LLC take into consideration service performed for the "old" LLC for initial eligibility and/or vesting under the new PS Plan? Thanks!

First, let me caveat my response with the fact that I deal exclusively with "micro" plans (i.e., read maximum hand-holding). I typically charge from $75-$100 per distribution, which includes: Sending the terminated participant a "distribution packet" containing information rearding his/her Plan's specific distribution options, the required IRS notice, and election/rollover/spousal consent (where req'd) forms. On receipt of the completed forms from the participant, preparing a "letter of instructions and authorization" to the investment custodian, mail same to the client to be signed and and forwarded to the investment custodian by the Trustee. Processing the mandatory withholding deposits on cash distributions. Preparing and mailing the Form 1099-R. Preparing the Form 945. My fees are also typically billed to the Employer - most of whom are more than "happy" to have all of this handled relatively "independently".

Dear QDROphile and Archimage, Thanks for confirming what I already strongly suspected! Any input from anyone who may have encountered a life insurance "incidental benefit" issue on audit? Thanks!