DP

We have a Safe Harbor 401k plan with a 3% NE contribution - no match. One of the participants called today to see why there was no 401k coming out of her check. The payroll service they used stopped her 401k deduction in early January 2009 with no reason. The participant is just now noticing on her paycheck that no 401k has been withheld since January. The payroll service said they have no idea why they stopped the 401k deduction. They are asking what they can do to rectify the situation. I'm not sure what the payroll service can do. Any ideas?

I have a medical practice with a PS/401k plan. Three of the participants have ongoing loans. The medical practice is being bought by the local hospital effective 5/1/09. The hospital says since they are a 403(b), they cannot assume these outstanding loans. The plan's loan policy says the outstanding loan balance is due and payable upon termination of employment. Are there any other options for these participants with loans other than to either pay off or take as a taxable distribution? Thanks.

I have a small medical practice client that has a calendar year SH 401k plan with age 21/One YOS, semiannual entry dates. I have not restated them for EGTRRA yet. They added a new doctor 9/2/08 and they want him to be able to participate in the plan 1/1/09. Then they want to change the eligibility back to One YOS. I was thinking that I could amend the plan effective 1/1/09 to allow entry after 3 months of service, and enter the 1st day of the following month. This would let one additional part-time person into the plan, plus possibly any new hires during 2009. Then I would restate the plan for EGTRRA and change the eligibility back to 21/One YOS effective 1/1/10. Does this sound reasonable?

I've always heard that she would have to repay all money sources. Is that something that might vary according to the document? The plan document states: If a Participant has less than a one hundred (100) percent vested and nonforfeitable interest in his Non-Elective Account (or Matching Account), receives a distribution from such Account, and later resumes employment covered under the Plan, his entire Non-Elective Account (or Matching Account) shall be restored to the amount on the date of distribution if the Participant repays to the Plan the full amount of the distribution from such Account. So according to the plan document, it sounds like only her NonElective balance has to be repaid. She did not have a Matching Account balance.

I've always heard that she would have to repay all money sources. Is that something that might vary according to the document? Good thought. I better pull out the plan document to see if it specifies in the plan document what must be paid back.

I hadn't thought about that aspect. So if she returns all the money that was rolled over to her, anything above the original Profit Sharing distribution amount could come back into her account as a Rollover?

I finally have a plan participant who wants to pay back her rollover distribution in order to restore the Profit Sharing balance she forfeited. Her rollover distribution consisted of 401k, Non-Elective Safe Harbor, and Profit Sharing balances. This participant rolled over her distribution from the plan into a conduit IRA. This money in the conduit IRA, which has now gone down in value, is coming back into the plan. Wouldn't the participant have to contribute enough money for the loss in earnings so the actual distributed amount would be restored to the plan? When the money comes back in, I assume it should be deposited back into the original sources of money, and not classified as a Rollover source. Is there anything else I should be aware of?

I have a new Profit Sharing 401k Plan with a 3% Non-elective SH contribution that is running on a calendar year. The employer's corporate year ends on June 30. For the 2008 plan year, what is the due date of the 3% SH contribution so it can be counted as a taxable deduction for the corporation? Would it need to be paid by 9/15/09 - the date the corporation's 2008 tax return is due? Thanks.

A participant in a PS/401k plan has requested a hardship distriution for medical expenses. Upon questioning her, participant stated she has financed her outstanding medical bills. Can she still receive a hardship distribution for the unpaid amount of the medical bills?

Sounds like a pretty good guess to me. I wonder if it will require a prior year, and current year amendment to remove the Safe Harbor provisions.

I have a calendar PS 401k plan where the 2007 3% nonelective SH contribution was not going to be funded until 9/15/08. There was no employer contribution for 2007. A 2008 SH notice was given to the employees stating a 3% nonelective SH contribution would be made. All 401k contributions have been deposited timely. This corporation has fallen into hard times and they terminated their plan on 5/16/08 with appropriate notice given to the employees. If the corporation goes bankrupt and cannot fund the 2007 and 2008 Safe Harbor contribution, what happens?

I have a calendar PS 401k plan where the 2007 3% nonelective SH contribution was not going to be funded until 9/15/08. There was no employer contribution for 2007. A 2008 SH notice was given to the employees stating a 3% nonelective SH contribution would be made. All 401k contributions have been deposited timely. This corporation has fallen into hard times and they terminated their plan on 5/16/08 with appropriate notice given to the employees. If the corporation goes bankrupt and cannot fund the 2007 and 2008 Safe Harbor contribution, what happens?

I have a dental practice with a calendar year Safe Harbor PS Plan. The discretionary Profit Sharing contribution is made to employees who are employed on the last day of the plan year. A participant's employment was terminated on 12/21/07. This was also the last day the dental practice was open during 2007. All employees were off the remainder of the year. Shouldn't this terminated participant be entitled to the Profit Sharing contribution? She's already received her 3% Safe Harbor contribution. Thanks.

Thank you. That's what I was wanting to hear.

I have a doctor aged 72 with his own practice that needs to take an RMD from his Profit Sharing plan this year. His broker told him he could take this RMD and send it directly to charity. My question is does this IRA Charitable Rollover apply to Profit Sharing Plans, or only to IRA's? If it applies to Profit Sharing Plans, how is the 1099-R coded? Thanks.

All plan assets are in a pooled account. At the time of the rollover distribution, we were under the impression that the 2006 Employer contribution had just been made.

In Feb 2007 we issued a rollover distribution for a participant in a PS/401k plan after receiving her completed paperwork. The distribution included a 2006 Employer contribution which had not been funded yet. Around Sept. 1 of this year, the corporation decided they would not be able to fund their 2006 Employer contribution. We amended all the reports. I contacted this participant to let her know she had received $400 too much in her rollover. Also I contacted the company this money was rolled over to and let them know what the situation was. The participant called today and said she would not be returning the money from her IRA. My question is how would the 1099-R be handled? Should there be a 1099-R for the eligible rollover amount using Code G. Would a second 1099-R be issued for the $400 as a taxable distribution to the participant? I need to have my ducks in a row before I call the participant back. Thanks.

I have a client with a calendar year PS/SH 401k plan. We calculated a total contribution due of $63,000 for 2006 which would be due by 9/15/07 (due date of corporate tax return). The client is having a hard time coming up with the money. If the client doesn't deduct the $63,000 contribution on his 2006 corporate tax return, does this mean he can take until 10/15/07 to make the $63,000 contribution for 2006? Thanks.

I have never worked with DB plans and know very little about them. We have a prospective client who has an active DB plan which he is wanting to terminate. He then wants to adopt a SH 401k DC plan and rollover the DB balances into the new plan. His former TPA will handle terminating the DB plan. There are five employees who have reached retirement age and are receiving benefits from the DB plan. They are also still working 1000 hours a year. Can these five employees be excluded from the new SH 401k plan? One of the five is an HCE. What is handled differently in the administration of this new plan? Are the contribution limits the same? Thanks for any advice.

A and X are unrelated. Dr. A used to work for Practice X. She was not a shareholder. When she started Practice A several years ago, she took a few of the staff members from Practice X with her. Now several years later, another employee has left Practice X to work for Practice A.

Medical Practice A has a calendar year SH 401k plan. Age 21 and 1 YOS. Dual entry dates. The plan recognizes service with Medical Practice X for eligibility and vesting. On 1/10/07, Jane Doe, a 10 year full-time employee of Practice X, terminated her employment and was hired at Practice A. The doctors at Practice A want to let Jane start participating in the 401k immediately. My position is that she will have to wait until the next entry date of 7/1/07. Am I wrong in my thinking? Or can she start participating immediately upon being hired? Thanks.

Do we keep separate records for Dr. John Doe's plan assets or are they commingled with Dr. Jane Doe's plan assets? Would Dr. John Doe file his own Form 5500, or would his plan assets be included in Dr. Jane Doe's 5500? Thanks.

Dr. Jane Doe is 100% owner of her medical practice. She has a prototype Safe Harbor PS/401k for her six employees. Her husband, Dr. John Doe, is setting up his own medical practice in his wife's office and will share her staff. Dr. John Doe will be the only employee in his practice. Dan Dr. John Doe adopt his wife's PS/401k plan?

If a person aged 50 contributes the full $5,000 catchup to his 401k plan, can he also contribute the full $1,000 catchup to his Roth IRA for the same year? I say yes. Is that correct?

I have a calendar year Profit Sharing 401k plan, 3% non-elective Safe Harbor, and a last day rule. We have several participants that terminated 12/31/05. Each of these participants received a full contribution for 2005. Since they worked through 12/31/05, they each received a substantial paycheck in January 2006 which included vacation pay. Even though these participants didn't actually work any hours during 2006, wouldn't they be entitled to at least the 3% Safe Harbor contribution on their 2006 compensation? This usually causes us to have to do a second distribution if they have already been paid out their 12/31/05 balance. Now if they had a Cross-Tested contribution formula with no last day rule, wouldn't these terminated participants have to receive the Gateway Allocation for 2006 along with the Safe Harbor contribution? Thanks.