rcline46

You cannot convert a defined benefit plan to a profit sharing/dc plan. You must do a termination of the DB plan. The problem is protection of benefits in DC plan where account values can decline.

We use the Corbel documents. When date of particpation is chosen, it has language that says participation in the component of the plan being measured. So we have a 415 comp which is full year, a participation comp for the profit sharing from July 1, and a participation comp for the 401k SHNEC from 10/1. What does your document actually say?

Of course you can define comp as full year. You even get to do the 3% SHNEC on the full year pay! For the 401(k) portion, why? It only buys the client higher contributions to the employees. Usually. My point was that REGARDLESS of how you define pay, no one can contribute more than 100% of their pay from 10/1 to 12/31! For example - a person makes $24,000 per year, and wants to defer $12,000. No can do, they only earn $6,000 in the period in question. (Not adjusted for the usual fica, etc).

Its a case of following the bouncing ball. a '401(k)' is a CODA, Cash or Deferred Arrangement. That means in order to get a tax break, you must defer before you have constructive receipt. That means you have to defer from FUTURE pay only. You cannot take it from your personal checking account. Therefore, you can (in your case) only defer from pays from 10/1 to end of year. You imply this will be a Safe Harbor plan, but not whether matching or 3% non-elective. In either case, the match or 3% should be defined (normally) as pay while a participant (eligible). And NO ONE can satisfy this rule prior to 10/1 even if in the Profit SHaring part - so you will have issues with testing pay to confirm the proper Safe Harbor contributions. Then you will have to watch for Top Heavy issues if applicable.

Harwood, we need your opinion on this, your interpretation of the quote as it applies to this situation. For example, Sarbanes-Oxley requires a 30 day notice before the black-out. How does that relate to suspension of services when the record keeper is not sure when or if they will suspend services. Is it the record keeper's responsibility to issue the notice, or does it belong soley to the sponsor and/or Plan Administrator and/or Trustee?

Have the person who suggested the concept cite code and regs where that is true. They can't.

If filing for a determination letter, the IRS can request all plan documents back to the last Letter of Determination, and they do. So if your last letter was for TRA 86, they want all documents back to then, so you have to keep them.

Uh-oh - if no merger resolutions, then the plans did not merge. No resolution to terminate, the plans have not terminated. The only thing that happened is the assets were comingled with the assets of other plans, which is perfectly legal. You either have 3 plans which are in a controlled group (probably because everyone is in one plan) or you still have 3 separate plans. I think you now need some competent ERISA attorney type advise here.

For the ABPT just answer N/A. That is correct when the ratio % test passes.

Also note that if the termination is filed with the IRS, you must receive a notice, and that notice tells you where to file an exception to the termination of the plan.

We have had success with 'interns' some of whom worked full time. But of course we had to include them in all tests if >21/1000 hrs.

Have the auditor's read the AICPA guide again. They DO NOT AUDIT the 5500, they are required to audit the PLAN, meaning participants and assets. As an asset audit, they determine the r/ur G/L. YOU prepare the 5500. Guess what? It is the auditor's problem to reconcile their audit to your 5500!!! Reality says you change your 5500 to match the audit, especially if you goofed. We always change because the auditor said so (right or wrong!)

You can only use permitted disparity for 1 of the a4 tests, either in the DB or in the DC.

Consider the collective bargaining process. If the union agrees to freeze a plan, it does not happen until the agreement is ratified. But then according to the union, the plan is frozen as of the contract date. The CBA is distributed to the union members with the freeze in it. The question is, does the CBA count as a 204(h) notice? The PBGC thinks not, I think does.

Very good question. I reason this way: There is no buy back for a 100% vested plan distribution, so 401k does not count (remember, for Schedule T purposes you have 3 plans here!) For the other two plans, I think you have to do both, but the document (most likely) does not specify the buy back is by 'plan' and the entire distribution must be returned. In your example, the entire $1,300.

I STRONGLY disagree with anyone who considers anything other than last $ in as catchup. Catchup is a appellation given to deferrals over the maximum permitted, so they must be last $! Consider the over age 49 HCE who is required to 'giveback' money for ADP failure. This giveback can be recharacterized as catchup, ney dare I say MUST be (as good service to your client!). Second, I have no rationale for ever limiting the deferrals to some % of pay other than 100% (of course this means net of mandatory taxes, etc), or $12,000. Therefore, the ONLY employees getting a match catch up (or at least 99.999999% of the time) are HCEs! Basicly, in my opinion of course, not matching catchups because NCEs will get them has to be a bad plan design unless you really have a really unusual demographic situation.

A loan agreement is a contract under STATE law, not ERISA. As such it must follow contract law. And I don't know anyplace that allows unilateral changes to a contract. I don't think you can change any existing loan agreements, on loan agreements from date of change to progam forward.

We have been running on 8.2 for a while now. Usual change over work for custom Crystal Reports due to table changes. Otherwise not bad. Problems are in odd ball areas - go to the support page, fixes and updates and look at the .htm files for what the fixes are. Also check out known issues under the administration section under support. It really isn't all that bad and a substantial improvment to 7.3

It may be that no testing whatsoever is necessary. Using Top Paid Group, we have 16 employees. 20% of 16 is 3.2, so we need 3 in the TPG. Assuming the Owner/Drs all make more than the Non owner drs, then regardless of income, the Non-owner drs just aren't HCEs. The devil is in the details, and we don't have all the details yet.

First, congratulations (I think) on having your letter rescinded. Thinking logically, which is always suspect when dealing with regs, a forfeiture becomes an annual addition when allocated. They are treated as if they were a new employer contribution. Therefore, as a new employer contribution to a participant they should be subject to all of the same rules as any other new contribution. Therefore they should be available as a QNEC, assuming of course the document permits such use.

Since the plan and trust are inseparable, if one says plan A is merged into plan B effective 9/30/2002, then there is no way that anything survives of plan A. Obviously you cannot reregister the assets of A to B prior to the merger date. You can only order the change after the merger has occured. (Unless all is liquidated and check written on 9/30 to B trust). So the assets may not have APPEARED to have moved until some later date, but in fact were in the B trust on 9/30. I don't see how any other interpretation can be made for a merger. (now I go on vacation for a week so I won't be able to defend my position!)

Also note that there is an obligation to determine if the person receiving the loan is able to repay the loan. If it is reasonable to assume they cannot handle the loan payments, then it is a fiduciary breach to issue the loan.

I would consider this two ways. 1. since the participant cannot take all of the money, he selects lump sum and the plan pays the coverted annuity until such time as the full (reduced) lump sum can be paid. Annuity payments cannot be rolled, but the final lump sum can. 2. Participant elects lump sum and takes each year what is available to be released that year. I think the lump sum can be rolled. I also think that the amounts released each year can be rolled because they can fluctuate form -0- to full remaining balance and are arguably the balance to the credit. (wasn't balance to credit removed several years ago as a restriction??) I do NOT think it is a stream of payments because the participant never elected a stream, they do not fit definition of installment payments or any other definition which precludes rollover. IMHO, and only the IRS can tell for sure.

McCarthism lives! There's a commie behind every door! Or now is it the Holland conspiracy theory??? Yes its nice to know what they are thinking. But remember they tried to kill grouped plans not more than 4 years ago? (my how time flies!) And they had to retract it? Then they put in the 5% gateway? Folks, they just can't kill grouping and all that it implies without a COMPLETE rewrite of the 401(a)(4) regulations. And that just isn't gonna happen soon. OF COURSE if the owner is in his own group he sets his contribution as the employer. Big deal. He ALWAYS sets his own contribution in ANY profit sharing plan!!! Think about it!!! And there is no move afoot to declare every profit sharing plan of every small employer in the country a 'deemed CODA'. (Said with a smile) - Or all of you abandon Grouped plans, please. Mike and I would like the extra business.

Under those conditions, yes - if in service is allowed at NRA. For MPPP or DB, must be at or beyond NRA for distributions.