rcline46

Asolutely.

I normally just amend to let that person in.

see what NewKirk can do for you.

The first issue that comes to mind - if the assets of one plan can be used to pay benefits in another plan then the IRS may construe that there is only one plan. This construct way predates 401(k) individual account plans, but it is still listed under the definition of 'plan'. I remember that there are other items and it may have been TRA 86 or even later that the definition of 'plan' was re-emphasized in the law.

Review the definition of 'plan' very carefully. One trust might cause the 2 plans to be treated as one plan.

no, transition relief only allows you to operate each plan as if nothing has changed. THere is a strict prohibition on terminating a 401(k) plan and starting a new 401(k) plan for the same people within 12 months of the date of the LAST distribution. The way the OP wrote the question, they are violating that rule, big time. However, if the Resolution to terminate was adopted one minute before the closing of the deal, then you are ok. (I prefer the day before). This should be covered in the sale/purchase agreement. I have no problem with the acquiring company completing the termination. But if the actually acquired the plan, and then terminated it, that is a big problem.

The resolution to terminate the 'acquired plan' MUST be executed BEFORE the purchase agreement is signed. If not you are probably violating 401(k)(6). That violation disqualifies BOTH plans. I am writing this stuck at home due to my new love Sandy.

A controlled group is treated as a single employer for testing. A multiple employer is not a single employer, therefore each employer is tested separately. That is why it is a multiple employer plan.

Not kowing what kind of plans you are discussing - if they are 401(k), the way your message is worded you are violating 401(k)(6). If you have legal assistance and you question is not worded correctly then that is a different issue. Following the IRS termination work under Form 5310 is a good start, plus likely short plan year issues under the regulations.

Me thinks there is a disconnect. Confusion over 'lost earnings' penalty for late deposit, and the interest calculation for purposes of the 5330. 5330 interest is calculated on the PT (missed deposit) from date of failure to date deposit is put it. You need to read the rules on LOANS as PT, since the IRS considers this an impermissable loan from the plan to the sponsor. I do not recall the specific RP or RR on this, but in the 5330 instructions, you are using the LOAN rules. The 'lost earnings' to be given to the participants for the failure is calculated under one of the many variations in RP 2008-50, and they are not necessarily related to the 5330 interest. Now to answer your question, the PT was cured when the deposit was made, and the interest only goes to that date. Hope it did not cross a plan year!

The 10% rule applies to the adp/acp givebacks UNLESS the participant has elected otherwise. The 2 1/2 month rule only has to do with excise taxes paid by the employer and has nothing to do with the employee.

actually the question does not make any sense. DC plans have their 415 limit which is contribution based and DB plans have their limit which is benefit based. I don't understand the question.

The rate is called 'actuarial equivalence' and is defined in the plan document, can only be changed by amendment, and in some cases is grandfathered or may take a year to 'phase in'. So it is not 'pick you own this time' if that is what you are trying to determine.

Hmm, what about plans that match on a per pay basis, or the non-elective SH? Since this money does not go through the normal payroll channels who will figure that out?

A fast education: 1. the plan document must define when an employee becomes a participant in the plan. This is fixed, immutable and not subject the whims of the employer or the employee. 2. If there is an employee deferral aspect to the plan, there are rules as to when the employee must be provided information sufficient for her/him to make a decision. THis provision date is tied to the date the employee will become a participant. 3. the employee is in control as to when they make a decision. If before they become a participant, then their decision becomes effection on the participation date. If after their participation date, the documents again will define when the employee's decsion is effective. Not one of these items is dependent on the TPA or recordkeeper. THe TPA and recordkeeper must first follow the terms of the document, and then the decison of the employee. Nothing in respect of these items has changed since 1978 when 401(k) was added to the code, or the 1930's when 403(b)s came into existence. Does this help?

Our practice is to reamortize the loan so that it remains withing the 5 year period.

We consider the failure to be Excess Contributions which is covered in RP 08-50, because they are excess deferrals.

Refer to the 'bible' - Revenue Procedure 2008-50.

On the second item, rental income is clearly passive income and not eligible compensation for plan purposes, so all of the second item goes away. On the first item, we NEVER let the principal take his/her money first. All expenses and all employees must be paid first. And if he/she does not like it, we encourage them to call the DOL and discuss the issue.

Their example is after correction, where the ADP is perfectly passing. This is expressed in both questions. At least that is how I read the answers.

First, let me say I was shocked, SHOCKED at the IRS response, but pleasantly surprised. However, because of the rule that you must pass the ADP test both before and after shifting, I do not think you can shift anything before first having a passing ADP. In your question, you do not have a passing grade before the shift. I also hope there is only one HCE in your example. Due to the giveback rules, if you have more than one HCE, and the one causing the ADP failure is not the one getting the giveback (catch-up), you may not actually have a passing ADP test to start the shifting - that is the mechanical issue the mention in the question.

Will company A remain in existence and its business continue? If so Company B has only become a common paymaster and, in my opinion, the employees of A are still employees of A and are not eligible for the 403(b) plan. This transaction is subject to facts not yet in evidence, and although the prior answers work, they work ONLY IF Co. A ceases to exist.

Rollover to IRA = new commission. 'Broker' wants hospital to help commit fraud for personal gain? Don't allow hospital to lie.

Collusion, price fixing, restraint of trade. Fees are not a good thing to discuss on a bulletin board.

Strange but true - I have an overfunded plan, all participants at 100% benefit and are terminating. I recall that some people brokered the sale of the company sponsoring such a plan to a company with underfunded plan(s). Does anyone still do this? If so, how can I contact them?