Earl

For the mid-year entrant you are discussing, Person hired 06/15/05. Enters 401k 1/1/06 and PS 7/1/06. He gets 3% of full year for top heavy but enters PS on mid-year. Comp for allocations is "While a Participant". Is the cross testing done with the 3% allocation $ amount and the partial year comp (sort of doubling his allocation)? For 401k. How do you do the AB%T calc. with the diff periods of elig. and comp and defs. Can you include only the 7/1 - 12/31 comp and defs in the calcs? thank you.

I find that payments, to beat the extra 72(t) tax, must begin after separation from service. I have a partnership that will be disolving. So there is separation but the sponsor will go away so the plan needs to go away also. One partner wants to start a distribution stream. If he sets up a plan as a Sole Prop and rolls his account to that plan, I think he loses the "separation" qualifier. (He has non-standard assets so he doesn't want to go to an IRA.) Any ideas on how this can be accomplished? Thanks -

that's what I was afraid of. Thanks

do you need to include the DB accruals in the AB%Test part of the ABT when cross testing if you don't pass Ratio Percentage?

That's right. Distributions after 12.31.06. So is there any effect/problem with rolling over in 2007 and starting a payment stream? 2005 distribution doesn't disqualify? 2006 - do they need to take a distribution from the 401(b) account. I am looking and will report anything I find.

Person way past the required beginning date dies in 2005 leaving a 403(b) account to a daughter. She is told that she has to take the money within 5 years and takes out some money in 2005. Can she now roll to an IRA in her name fbo the deceased and annuitize it over her life expectancy or did that first distribution eliminate that option for her? If so and depending upon the amount, could she back into an amount from which that first payment would represent an annuitized payment and rollover that amount to an IRA and continue that stream? And then take the other portion within 5 years... Thanks

put this in wrong area and can't figure out how to delete. sorry.... posted in distributions

Thanks - It looks reasonable to recognize. I should have been able to find this. Thank you for pointing it out. Earl

A QDRO is executed in 2006 saying AP get 50% as of 8/12/05. In determining the 12/31/05 balance for the calc of the participant's 2006 MRD can I recognize the QDRO interest? (So early in the year I gave him a number but now I can change it?) My thought was the regs are set up so that you can determine the minimum on the first day of the year and that's it. Thanks

Fabulous. Thank you guys. Earl

Thanks for your help on this. 1563 is exactly the source of my hesitation. Identical ownership is: Bob: 75% Sue: 0% So the total is 75% which is > 50% But if that applies, then the Parent / Sub 80% test would seem to be irrelevant if one person with over 50% could cause controlled group status. But I don't see 1563 saying "5 or fewer but at least 2". Is that just implicit? 1563(a)(2) BROTHER-SISTER CONTROLLED GROUP. --Two or more corporations if 5 or fewer persons who are individuals, estates, or trusts own (within the meaning of subsection (d)(2)) stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such person only to the extent such stock ownership is identical with respect to each such corporation.

Thanks - No relation. Should have said Bob and Fred for clarity. Is it because the effective control test needs two people? Thank you for any insight.

LLC. A LLC. B Bob 100% 75% Sue 0% 25% Is this a controlled group? It seems that if Sue is in the tests then it is a controlled group, but if Sue is not in the tests because she owns 0% of A, it seems that it does not meet the effective control test. Thanks for any input.

so, just before you die, take out a maximum loan. not all die old or quickly.

Thank you again. Awesome citation.

Great. I can take that to the bank, right? thanks for taking the time.

Comp. A & Comp. B co-sponsor a 401k plan. Comp. A stock is sold to Mega-Comp. C on 4/1/06. Comp. A's Board, on 3/31/06, passed a resolution saying, "the Company will cease to be a participating "Employer" in the Plan effective as of the close of business on March 31, 2006". I don't think that created a "distributable event" for the employees of Comp. A because it was not "termination of the plan" before the sale. Am I correct? Or would this allow for distribution of 401k money for employees of Comp. A now working for Mega-Comp. C? ************** I think that to allow for distributions they would have had to spin off one of the companies (A or B) from the A+B Plan and then A could have terminated pre-sale, thus allowing for distribution of assets. Without the spin-off, if plan terminated and distributed $, Comp B. would not be allowed to have a plan for a year. Right? ************** Is there any issue with a Trustee-to-Trustee transfer of the money from the A+B plan to the Mega-Co Plan now that Comp A is not a participating employer in the A+B Plan? (Although I don't know where else the money can go.) Thanks

thanks again to you guys for taking the time to respond. it is appreciated.

Interesting So the AP does not become a Participant when the separate interest is created?

Thanks - The plan is a 401(k) Plan. The question pertains to the period of time between now (when a separate interest has been created) and the time benefits are paid (the Distribution Notice is out to the AP). You seem to be saying that the AP could put a Des Ben on file for if she dies in the meantime, pre-distribution. Which makes sense to me as she has a separate interest in the plan. But an attny is telling me what was noted above. I am not too concerned as I am sure the intervening time will be a couple of weeks, but it just seemed odd to me and I never heard it before/couldn't find anything specific allowing it.

I am hearing that an alternate payee under a QDRO may only name the alternate payee's children (and possibly the estate) as the beneficiaries of QDRO payments. Is there a restriction? Thanks!

Thanks for your replies. To try to clarify my question: The old MP/PS plans would only be required to file if the assets are aggregated with the new corporate plan. Is this aggregation required so that the old plans are required to file 5500s? Another thought: Are you saying that, since it is a controlled group, it can't file an EZ and there is no "asset test" to determine if you are exempt from filing the regular 5500? I think you are saying that and I think I get it (now), I hope. Thanks a lot.

I have always wondered does he own 7% or 3.5%? He owns 7% of 200%, doesn't he? Thanks

Just found out a client has MP & PS plans floating with Fidelity. No contributions for years, total of the two plans is under $100,000. He now has a business (100% owner) with employees and a PS/401k plan. Ignoring the GUST restatement issues, are the plans aggregated (say via controlled group rules) so that the two frozen plans are required to be filed? I see in the instructions that an EZ would be unavailable due to controlled group, but are the assets aggregated to determine the filing requirement status on the dormant plans? Thanks

would the 2nd RMD be based on the 10/31/04 balance less the 1st RMD amount if not taken by 10/31/04?