Lori Foresz

Hi, Can someone please confirm if a profit sharing plan can allow in-service withdrawals at a stated age of 40 and not place any other restrictions? For example, NOT require the 2-year baked rule or 5 YOPS rule- only that the participant be age 40? Help is greatly appreciated.

I think I know the answer but want to be sure. If an IDA participant in a small plan has an LLC investment, does this mean that 100% of the assets are not in qualifying assets and long form must be filed. The LLC is held in custody by the IDA custodian (an RFI) but the LLC does not have a readily determinable market value. I was hoping maybe there was an exception for participant directed IDA investments that would allow us to continue to be eligible to file an SF. Thanks

We took over a 457b for not for profit. The normal retirement age is specified as age 59.5 the same NRA as in the 403b plan. The plan also allows the special 3-year catchup. I am reading the regulations and have found that NRA cannot be earlier than age 65 or the NRA under the DBPP or MPPP. Is there something that allows the NRA to mirror the 403b plan and still be OK for the 3-year catchup? Any help is greatly appreciated. lori

Hi, Client has a cross-tested 401k and a SEP. Do the SEP contributions need to be included in the ABT? Thanks

Thanks John. Your reply was very helpful and I just wanted to thank you for taking the time to help.

Hi,. We have a plan that has 6-year graded vesting on employer contributions/deferrals to the 47(b) NP plan. Participants also make deferrals from pay. It is our understanding (PLEASE correct me if I am wrong) that only the current year VESTED employer contribution (plus vesting increase from prior years' ER contributions) count towards the annual ceiling. So, someone who receives a 17,500 ER contributiion but is ZERO percent vested could contribute 17,500 deferrals from 2013 pay. We understand that due to the complexity of the annual ceiling calculation, some TPAS might be considering the entire contribution VESTED and apply it all towards the ceiling in the current year only. So, tracking of the annual ceiling is simplified. Any thoughts are appreciated. GG

I recall sometime ago that IRS changed opinion and we no longer need to file Form 5330 for late deposits of 401k. I also thought we no longer needed to check a prohibited transaction occured on Form 5500 Schedule H/I. Does anyone recall. Thanks

Thanks. That confirmed what I read in ERISA outline book. Employee does not even need to be comployed on 1-yr anniversary to get credit for YOS if works 1,000 hours during the consecutive 12 months following ECD. When he returns, he has already pased his 7/1/08 entry date so enters plan on rehire. Lori

Plan has 1 YOS (12 months/1,000 hours) requirement with entry on 1/1 or 7/1 (dual entry) EE was hired 6/5/07, left 4/15/08 (after working 1k hours from 6/5/07-4/15/08) and then is rehired 11/21/08. Document says any employee who terminates prior to entry date but after satisfying eligibility requirements, enters the plan upon later of reemployment date or next entry date. Since the EE quit before 12 months, does he have to now wait until 1/1/10 to enter plan? This circumstance has always confused me. Thanks

DBPP. Participant turns age 70.5 on 9/1/09. If he elects to defer RMD start date until 4/1/10, is the RMD for 2010 12 times the monthly accrued benfit (2010) plus 3 times the monthly benefit for 2009 (10/1/09-12/31/09) Thanks!

Item 2A of the Schedule E asks if the ESOP has outanding securities acquisition loan under Code Section 133. Is this for old loans were the lender could deduct 50% of the interest paid? Our ESOP does have a note out to the prior owner who did 1042 exhange but I want to confirm we still answer this question no on Schedul E. the loan is new and I understand the 133 exemption no longer applies but is grandfathered for old loans. Thanks!!

Two partners in a rate group plan. Each have Net Schedule C (after employee cost and 1/2 se tax) of 100,000. The employees are receiving only 5% of pay profit sharing from the partnership. Can the partners contribute and deduct more than 20% (can they borrow from EE amount under 25%) or are they stuck with 20%? In other words, total EE pay is 100,000 but partnership is only contributing 5,000 for the employees. Can the partners plit the other $20,000 (up to the 25% of pay limit for the EES) or are they stuck with 20% and rest of deduction is lost? Thanks!!

Plans must be aggregated for top heavy testing if at least one key EE participates in both plans. But what does participate really mean? Does a KEY EE have to BENEFIT under the plan during the year or just have a balance in the plan. Sal Tripodi's book seems to say a KEY EE only need have a balance in the plan for the plan to be aggregated with another plan covering a KEY EE. So, a frozen plan in which a key EE has a balance would still be aggregated with an active plan that covers other KEY EEs and non-KEY. I guess this makes sense- I just want to be sure. thanks!

Thanks Becky. I will read the PLRs to see if they shed any new light. What did you mean by "are you really combining the plan limits when only one plan is limited". Is this referring to the fact that the 401(k) plan has no ER contribution so shouldn't be combined for determining the overall limit for both plans? I'm just not sure I understood that. Many thanks Lori

ESOP currently excludes 1042 seller (and family member) because of stock sale. Company also has 401(k) and exluded EES are eligible to make 401(k) contributions but there are no other ER contributions to 401(k) plan. Are we allowed to consider the "ESOP excluded EES" compensation in the 25% contribution limit (all will be contributed to the ESOP) since they are eligible for the 401(k) plan (combined plan limit) or must we disregard since they are only benefitting under the 401(k)? Would this be solved by making $10 employer match to 401(k) plan? many thanks for any help!!

Thanks RLL. But what is the actual law? I see that family members can't be allocated stock (or anything in lieu of stock) after the 1042 exchange- but does the law preclude them from even getting a cash contribution under the plan? That is what I am struggling with. Many thanks for your help.

The ESOP document says all family members will be excluded from the plan starting with the year of the 1042 sale and for the next 9 years. I think I know the answer (or fear the answer) but does this have to apply or is the rule that the family members just can't be allocated any of the 1042 stock? If the ESOP is buying the stock outright (with the existing cash in non family member accounts) and then makes a cash contribution, does the law precude the family members from getting a cash contribution under the ESOP? Many thanks for all the help.

Help! Who is a family member for purposes of the nonallocation of 1042 stock? I can't find my reg book. Many many thanks Lori

If a plan fails coverage and has to give a contribution to a terminated EE who is zero percent vested- is that okay? Seems like there would be some requirement that it be at least partially vested- but maybe not. Please and thanks

Thanks Tom. I do see that the plan must make the 3% through DOT and pass ADP (the worst case scenario) in the preamble, but strangely, can't seem to find that in the actual section of the regs. Don't know why I'm surprised. Is the fact that the plan must also pass the ADP hidden in the regs? Why can't they write the regs a bit clearer. I still can't determine if a 30 day notice is required for 3% plans or just plans tht provide the safe harbor match. I guess best to provide the 30 day notice just in case. Thanks again

Not surprisingly, I am confused by the final regs and the exception for the 12-month rule for safe harbor plans in the year a plan terminates. The plan makes the 3% not the match. The regs say the plan will not fail to satisfy the requirements for safe harbor if it satisfies the requirements through the date of termination and EITHER 1) treats any suspension of safe harbor matching as a reduction or cessation subject to a 30 day notice requirement or 2) the termination is because of business hardship or transation described in 410(b)(6)©- probably a merger or acquisition. Can anyone determine what this means for plans that make the 3%. Neither of these would apply if there is no match made. So, either it means 3% plans automatically satisfy 1 or satisfy neither and therefore must provide the 3% for the entire year or lose safe harbor status if it termintes mid-year. Help! Thanks

I guess this has always bugged me and I'm hoping to get some clarity. It was my understanding that 10% federal withholding applied to corrective refunds of excess contributions unless the participants elect out. Now I am being told by one of the recordkeeping firms, that the 10% withholding only applies if the distribution is made after March 15. Can anyone shed some light, share some insight. Many thanks

The Corbel VS plan we have is silent on whether an ADP test can be corrected via a combination of a QNEC and refunds. It would seem to me that since the document does not say that one method precludes use of the other, I am thinking a small QNEC could be made that would reduce the refunds almost 75%. Does anyone else use this method? Thanks Lori

Excellent point on the first year rule. Does anyone know if the final 401(k) regs address when changes to testing methods can be made or is this still subject to many differences of opinion. Help!! Thanks

Hi, I rarely have plans that use the prior year testing method so I want to confirm that is there was NO match made in the prior year, all match amounts for the current year must be returned to HCES? Seems like a faulty document design. Can anyone confirm? Thanks so much