cpc0506

I agree with rcline46. As an aside, what if a plan offers Profit Sharing with 1000 hours AND last day requirement. The Plan currently uses a pro-rata allocation formula. Client wants to change to New Comparability for 2013. Can this be done or have employees already accrued a benefit under the pro-rata formula?

Do the Loan Policy need to be updated and signed with each restatement of the Plan. Client came to us with a new GUST document and provided a signed Loan Policy effective 1/1/2007. Document was restated timely for EGTRRA but client did not receive a new loan policy. Is this okay?

Plan year end is June 30. Profit Sharing Plan only. Client writes to us, the TPA, to begin termination paperwork for the plan. Client wanted termination date to be June 30, 2013. We received the letter July 17, 2013. Can we terminate effective 6/30/13 and have an adoption date later or does the effective date of the termination need to occur after the adoption date? Please advise

The amendment is effective 1/1/14 so mid-year amendment change is not an issue.

After much discussion, we decided to generate an SMM for the client. Thanks all.

That language is not showing up on our SPD....

Here is the language from the SPD: What is the Employer matching contribution? A matching contribution is a contribution the Employer makes based on your elective deferrals. If you do not make any elective deferrals, you will not receive any matching contributions. The Employer may make a discretionary matching contribution equal to a uniform percentage or dollar amount of your elective deferrals. If the Employer decides in any year to contribute a discretionary match, it will decide how much to contribute and the matching rate which will apply to your elective deferrals. If you make elective deferrals, you will always share in the Employer's matching contribution for that Plan year, regardless of the amount of service you complete during the Plan year. No where does it mention how the match is calculated. We use Relius for our documents.

Client changes the match calucation by removing the true-up option for calculating match. Nowhere in the SPD is true-up mentioned. Is an SMM required?

New Client wants to to know if he can have a second Trustee for his plan, which of course he can. However, the client tells us that the person he wants to name has no relationship to the company and is not American. Your thoughts?

You can use the statutory exclusions for the Safe Harbor contribution and allow immediate entry for the 401k but remember that the top heavy exemption no longer applies. So you will need to check if the plan is top heavy and if so, the partcipant deferring but not eligible for the safe harbor contribution is required to receive a top heavy 3% contribution.

PensionPro has provided proof "As per ASPPA letter sent to IRS in June 2012 amending a SH plan's allocation formula for non elective contributions is questionable and risky with respect to the plan's safe harbor status." I would wait until next year.

I don't agree with John's response. I believe an amendment mid-year takes the safe harbor maybe off the table and the plan cannot be safe harbor in the year of amendment.

Is a rollover of SEP funds to a new Profit Sharing Plan of the same employer considered a related or unrelated rollover? What about Simple IRA funds?

First, you need to review the provisions of the Document. Are earnings allocated on a balance forward accounting. If so, there would be no extra earnings due to deposits during the year. If there is no language for allocating earnings, you can allocate earnings based on how often salary deferral is deposited to the plan. Most software companies provide a spreadsheet of allocation percentages. I recall that if the payroll is weekly, the allocation weighting is something close to 45.33%. Check with your software provider.

Plan doucment was restated with match calculated on a Plan Year Basis. In the past, the client made the match on a pay period basis. We informed client that additional funds were due to plan for 2012. Client wants to amend plan back to pay period basis effective 1/1/2013. Can this be done now? The plan has no allocation requirements for receiving a match.

Also removes the need to provide 404a5 notices.

Participant Directed accounts are not a benefit right or feature that is protected. A plan sponsor can chose to go the Trustee Directed.

Plan was established in 2008 as a safe harbor match plan. Client decided to drop the safe harbor provison effective 1/1/13 and added a discretionary match and chose Prior Year Testing for 2013. Prior TPA did not run an ADP/ACP test in 2012 since plan was safe harbor. What do we do now?

So, based on what Tom has indicated, is my logic correct? Partcipant A comes a former key the year following her death. The beneficiary takes the distribution in the year following her death, but keeps the funds in the plan as he is also a participant of the plan. Since the funds were from a 'former key', the funds are excluded from top heavy numerator and denominator.

I tend to agree with QDROphile. My question still remains, is the resulting rollover to the plan (even though it never really left) a related rollover or an unrelated rollover?

Am I overthinking this? Participant B took the distribution but opted to keep it in the plan. (like a rollover). Not sure what you mean by in-plan transfer. A 1099 will be generated for the deceased employee. Right?

They were both participants of the same plan.

Participant A was 'a key employee' for 2011 and passed away during 2011. Participant B (also a key employee) is the beneficiary for Participant A. They are husband and wife. Both participants were participants in the same plan. Partcipant B rolls the distribution in 2011 from Participant A's account to his account in the current plan. Is this distriubiton considered a 'related rollover' or unrelated rollover? I am raising this question as how the rolloer will influence on top heavy testing. Thanks.

We have a prospective client. The client is a Controlled Group consisting of Company A and Company B. Company A has over 80 employees. Company B has 20 employees. Client would like to offer a 401k plan to company A and company B but wants to provide a safe harbor match to Company A only. The plan will pass coverage on the match with the employee count that currently exists. Is this ok? In other words can a safe harbor plan exclude employees, other than statutory excludables? Thanks

Client now tells me that the distributions were made but from the wrong plan. This was confirmed. This was an Advisor error, as the advisor calculated the amount for both the SEP and the Profit Sharing Plan and took entire amount from the SEP. Advisor claims he was not aware of the rule regarding where the funds needed to be distributed from. The distributions were ‘timely’ in one sense, but not ‘timely’ in the legal sense. How would you handle this?