rcline46

Its in the instructions for the 2009 Form 1099-R - check the IRS website.

Believe it or not - this is actually a document choice, so guess you have to see what the doc says. The answer is - it may be used.

In my opinion, yes, the SH is effective 1/1/09.

Now you know why it is bad to use full year pay for all. Also, since a SH plan, don't even think of full year pay for 401(k) purposes. SH should have been effective with the deferral date of 10/1/09, so that person was not eligible. Plan design when you have multiple sources must be carefully approached.

There is a bill in congress to suspend RMDs for 2010, so don't rush!

Since client is agreeable, 100% vest all participants in the affected divisions. This is not discriminatory and avoids may complications.

This is not related to hardships. It is an in-service distribution, and the timing of a distribution is protected under 411. I think current amounts remain/keep the in-service option, only new amounts get restricted.

I don't think it works. A rollover implies there was a lump sum option. Otherwise it becomes a transfer, and the DB taint stays. This is not permitted if the next plan is a profit sharing type plan. The benefits are still subject to PBGC and other problems - I dont think this is even permitted.

If ADP passes - shift.

No problem. We have many plans that routinely fail ADP testing and there is no problem with the HCEs getting returns each year, as long as they know it up front.

If you read the rules for the loan, the participant's security for a loan is up to 1/2 etc...... Note nothing here says to liquidate, only security. I will bet the loan form says participant pledges his security.

Assets in the participant's account are pledged as security for the loan. This is perfectly legal for a plan loan. This is just another way of issuing the loan instead of liquidating assets. In a down market not so good, in an up market, the participant gets the asset performance rather than just the interest on the loan.

The loans are an asset of the insurance company, and they keep the interest paid on the loans. For those looking into the 403(b) market this is a VERY BIG issue which needs to be resolved before a takeover begins.

You test ALL deferrals and ALL match contributions for the year against ALL compensation for the year. It is as if the Safe Harbor did not exist.

Very common with insurance cos. THey issue a loan against the assets of the ins co. and do not liquidate plan assets, they put a lien on the assets. Some cos. will liquidate assets to pay off the loan on a transfer, others will keep assets and release them as the loan is paid off. In the latter case, the new provider will collect the payments and send them to the ins. co., and the ins co will periodically release assets to the new provider. A real PITA.

In the proposed regs for removing the non-elective SH, the pro-rating was to the cessation date and the calculation of the 3% non-elective.

If all of this happend in 2010, when the distribution is made, if not rolled over, withhold the correct 20% of the entire distribution, one 1099. If the balance is to be rolled over, figure out what the gross up would be for the 'hardship', withhold those taxes and distribute as rollover the net. Make your life easy.

Each of those plans should have had a TRUST EIN assigned. As to the number on the 1099, who made the payment? Does the entity who made the payment file the taxes and prepare the 1099? If so then their EIN will appear on the 1099. The corporate EIN should NEVER appear on the 1099.

My opinion - Plan owes monthly benefits of $5,000. Whether paid for 1 year or 15 years, if converted to a lump sum, it is the lump sum value of $5,000 per month at the person's current age. No adjustments.

What a weird place to find it! Actually 402(h)(1)(B) is the real killer - the way I read this section, elective deferrals are NOT treated as ee contributions to a SEP! Since they are not ee contributions, they must be ER contributions, and then 402(h)(2) limits the total to 25% Double bummer - time to get a qualified plan!

I have no problem with the deduction limit. Remember we are speaking of a SARSEP, so we have the $16,500 deferral (which for some strange reason is ALSO capped at 25% of pay!). So if pay is in the right range, one could have $15,600 plus 25% of pay er contribution. For example, someone making $80,000 defers $16,500 or 21% of pay. Company wants to deposit 25% of pay or another $20,000. The document limits the whole shooting match to $20,000! I can't find justification for this in the regs, but we also can't violate the documents. THe IRS 5305 series even says to combine with other SEP plans for the 25% limit.

I looked at the 5305-a-Sep and the rules, and a SARSEP document from American Funds. They all seem to say that the allocation to an individual is limited to the LESSER of 25% of pay or $49,000. I thought this was changed in 2002 with EGTRRA, and in fact 1.408-1(d) says the limits are from 415. This of course is now 100% or $49,000. Is there another reg that limits SARSEP, or is everyone not updating (including the IRS!) because they cannot be established since 1997? Note this limit is NOT mentioned in the 5305-SIMPLE forms.

oooohhhh, good question! So if the new PSP were signed on 12/31/09, with contributions based on a full limitation year....... If worded correctly so the effective date were 12/31/09 and signed 12/31/09, with contributions based on calendar year pay (not plan year pay), and a limitation year of 1/1-12/31, and have a short year, but set so no proration of pay - that just might work. I wouldn't do it, but it might get past inspection if ever audited.

Successor plan rules for vesting, but disqualification of BOTH plans under the 401(k) (6)? rules - needs to be at least 12 months after distribution before a new plan is set up.

The only way I know an owner can get a K-1 and a W-2 is in a Sub S corp or LLC taxed as Sub S, and in those situations the K-1 is pass through income and does not count for benefit purposes.