rcline46

I just learned of a bundled, no fee Fidelity Profit Sharing Keogh Plan, and they will not permit loans in the document. This person will now become a client of ours.

Uhhh, Austin - what did you do in 2005? Did you reduce All forceouts to $1,000 or less? That is the only way to not have Auto IRA requirements in your plans. Assuming the above, you (your clients) are now attempting force outs of amounts under $1,000. You are now stuck with the old rules which amount to leave in plan, or 100% withholding and the IRS really does not like this. You can forfeit the amounts, but you have to keep track of them forever in case the participants show up. Hie thee to a locator service (billable to the participant's accounts) and find them!

Returned this to active posts. Still do not have the document. Any other ideas as to whether this is really compensation in the 415 sense, or is it taxable income but not 'compensation'?

Big OOPSSSSSSS - The amendment for the final 401(k) regulations had to be executed prior to the end of 2006. Find the amendment and see how it modified the QNEC rules for this particular plan.

Prior to the Final 415 regs, 415 comp did NOT include deferrals, and so by using the 'addback', deferrals get added back to 415 compensation. (Note - this is no longer true under 415 - deferrals ARE included in 415©(3) comp) So, 401(k) and 125 deferrals were added back to 415 comp in the document. My problem, as you noticed, is that these 'deferrals' were/are leftover corporate 125 contributions and are NOT employee elective deferrals. When these funds were put into the 401(k) plan, they were classified as deferrals and became taxable income on the individual's W-2. I am trying to sort through the situation (and I need the document to verify how the plan worked) and determine if I really have 'deferrals' or if not, what the heck the contribution is since the employee was taxed on it (ok, taxable income reduced by the 'deferral')

Company sponsors a 401(k) plan and has a cafeteria plan. Company funds the cafeteria plan at $300 per month for all eligible employees. Employees can choose from a menu of benefits on which to spend their $300. The plan provides that any unspent money will be contributed to the 401(k) plan as an employee deferral. There does NOT appear to be a cash option. I am waiting to get a copy of the document. My questions are: Is this really a deferral if there is no cash option, or is the deferral treated as a cash option? If not a deferral, then what is it? The document calls for the addback of all deferrals to compensation used for benefits and testing. Does this get added back also since it is on the W-2? If the leftover 125 money gets added to compensation, does this cause ALL of the employer 125 contribution to be added back? Please provide any cites so I can see where I missed the rules. Thank you.

We are, as usual, short information. So I will posit (make up) the missing information. Miner88 you can make corrections as necessary. Sub X is being sold by Co. A to Co. M. The employees in Sub X participate in a plan of Co. A. Those employees of Sub X will now participate in a plan of Co. M. We will POSIT the plans are of the same type. Co. A could make all employees of Sub X 100% vested, and if a real grinch, add the increase in vested balances to the purchase price being paid by Co. M. Problem solved providing the amendment is non-discriminatory. Note that if the plans are of the same type and the document so privides, the accounts COULD be moved with a trustee to trustee transfer. Co. A is a real grinch and won't make the employees of Sub X 100% vested. Also, a trustee to trustee transfer or spinoff/merger will not happen. Always with an eye to the discrimination rules and the 415 limits, Co. M can make a contribution of restore the balances of those who rollover their distributions as Bird indicates.

If it were a defined benefit plan, check with the PBGC.

Watch out for a Partial Termination which would make the affected employees 100% vested. This could also be done by a plan amendment.

On date of sale, sponsor name on plan changed to Co. B, old trustees resign and Co. B names new trustees. Oh yes - and notify the investment provider!

Rollover to current private plan from a government plan? Better check what the USPS has and confirm that it is rollable into the current plan.

Of course you won't find any guidance. All allocation conditions/dates are plan year based and so must be within the plan year. You won't find anything speaking about outside the plan year because there is no need to address the situation.

Upon review of prior records for a new client, we discovered that the ADP failure giveback was not completed for YE 12/31/2003. Since the distribution will be after 3/15/2004, a 5330 must be filed for the amount of the giveback. Focusing only on the 5330 problem - does another 5330 have to be filed in 2005, and another in 2006, and another in 2007 for the same failure? In reviewing EPCRS on this item (QNEC or 1 for 1 correction) I don't even see the 5330 mentioned, let alone multiple forms as would be due for late deposit of contributions, or bad loans. Thank you all.

According to the regs on Safe Harbor Match, if computed on a per payroll basis, then they must be deposited in the quarter following the quarter of the pay.

According to the IRS, the PLAN SPONSOR needs to keep the records indefinitely.

Only if she had 1 hour of service in 2007!

I also believe it is the pre- rate, but not below 5%.

I agree with Mike! One, I believe this was stated at one of the annual conventions from the stage by one of the IRS representatives. Two, I agree that being ineligible to defer makes one ineligible for catchup. The agument centers on the 'exceeds a 402(g), 415, or plan limit' clause. And the operative words are that a participant's elective deferral exceeds one of these limits. Well, if you cannot make a deferral (0% plan limit), then you cannot have a deferral exceed this limit. Is therefore a $0.01 limit acceptable? In this case the Top Heavy Minimum would be to small to actually count. But we are not addressing THIS argument.

Follow the rules for 'combination' loans under the recent regulations for loan 3 and recast it, hopefully with this you can 'pay off' loan 1 or 2.

That QDRO and or its transmittal may also have put a 'freeze' on the account making the loan impossible to take. Also review the plan document and loan program, as they may preclude a former employee from taking a loan.

By putting it in quotes I made it a sarcastic remark - ie it is really NOT easy.

Am I safe to ASSUME you did every variation of possible tests to get the best results? Like using a 414(s) definition of pay, pay while a participant, Statutory exclusions - everything?

BXO - yes it is 'easy' to determine a controlled group (maybe) given only the direct ownership of the entities. And if you can get ALL the children, grand children parents, and grand parents named you have a better shot. Oh, did you mention that a trust was involved? Oh did the owners really tell you who held valid options on their owership? Is the a partnership or LLC in the mix, but brother sister and parent sub situations? Nah, it is NOT that easy. And the results of being wrong could be disastorous. Get a legal opinion. Oh, did you know they COULD be a controlled group for income tax purposes, but NOT for qualified plan purposes?

But NOT if the K-1 is for a Sub S Corp!

All I can say is to read the regulations. Also obtain a copy of the Pension Outline book by Sal Tripodi. All of these issues are discussed in detail in the Pension Outline book. There is no short cut, no 'Cliff Notes' version.