rcline46

If the person was eligible during the year and not excludible due to the 21/ 1year rules (statutory exclusions) then they MUST receive the 3% non-elective. A person who terminates with <500 hours is not a statutory exclusion.

Does the plan contain a force out rule? If so, just issue the check to participant, withholding the same as on prior distribution (if <$200 and prior was R/O then no WH, if prior had WH do again regardless of current amount), issue 2 1099's at year end if necessary. If not then either use prior form for issuing 'additional' checks. If too agressive for you, the go through the whole procedure again. Then stop issuing distributions until last payroll has cleared!!!!!

Let's put it this way. In ANY account (tax sheltered or not) was opened by the broker / mutual fund without a properly executed document, then the broker/mutual fund has a MUCH bigger problem than your client. If you think the IRS or DOL is tough, you haven't seen what the NASD/SEC can do. Push the issue! Now I agree completely the client is responsible for keeping the documents necessary to support his plan. But certain other documents which would indicate at least intent must be kept by the other parties, so get copies of them.

By law, all investment houses, brokers, etc MUST keep the original application. Therefore the broker and/or the fund must have the application. They just might find that the application is part of an adoption agreement! Threaten the broker with the NASD if he can't produce a copy of the application! Then the mutual fund (or brokerage account) - they have SOMETHING on file to hold the account as tax sheltered. Get a copy of that! How about the accountant - any records from that tax year? For taxes filed in 1995 we are just beyond the 6 year statute so they might still be available.

Should be 2001 limit for compensation testing. However, the 10,500 / 11,000 deferral limit is really a calendar thingy. So, if the participant could defer 11,000 from 1/1 to 3/31/02 and 10,500 from 4/1/01 to 12/31/01 they could have 21,500 in the test legally. Of course could only do a catchup the balance of 02 unless that also went in by 3/31/02!

To DaveL - No, No, No. Once merged there is no MPPP. It is a Profit Sharing plan, and allocation of any forfeitures, whether from the protected MPPP accounts or from the PSP accounts is PSP forfeitures and you must follow the rules of the PSP doc for allocation. As a rhetorical question - how can you follow the rules of a non-existent plan?

Easiest thing - raise that client's fees to cover the extra so you don't have to nickle and dime them.

The allocation to any person is limited to $40,000 or 100% of pay whichever comes first to any DC (PSP, MPPP, etc) plan. The deduction limit is 25% of pay EXCLUSIVE of 401(k) deferrals. So, in simple terms, not adjusting for 1/2 Self Employment Income, you can put $8,000 into a PSP plan PLUS $11,000 into a 401(k) arrangement as part of the PSP, and if 50 or over this year, another $1,000 into the 401k portion of the plan.

Because a new comparability plan requires the sponsor to specifically allocate the contribution by group (X$ to Group A, Y$ to group B and so forth) then the allocated $ might not pass the test. If I can save a client several thousand $ by choosing the allocations correctly and live within the guidelines the so be it. That is my job! That is what new comparability is all about. To be more conservative is fine, but to even suggest that not doing everything in my power to provide the best benefit to the owners might be too aggressive... In LWilson's case the most aggressive approach is necessary. However, the client needs to pay, and pay well for the work. If they don't, then they will not appreciate the effort.

Tom, you are very conservative. We actually make ALL of our cross testing plans fail (after the 3 or 5%). Then selective raise 1 or 2, one time 3, NHCEs to pass the ABPT and rate group testing. We do not believe the IRS can do anything about how often a corrective amendment is used. As to bottom up QNEC (providing in doc of course) you are right that its usefullness is now limited. However, a QNEC is not required to have economic substance while the -11(g) must. Its worth a looksee.

In general, a TPA is not a fiduciary to a plan. Assuming this is the situation, the claim may be much more difficult in that a state suit for malpractice would have to be instituted. You would have to determine that statute of limitations in the relevant state for this claim. Have they tried negotiation?

You did not say matching or non-elective. If a matching SH then I totally agree with above, the notice is critical. However - the notice requirement of at least 30 days is a safe harbor time. If the SH will be non-elective, then I have no problem doing it now (as long as the ENTIRE year is covered) with the December notice. Why would the IRS say a 100% vested contribution not be allowed and make it a vested normal profit sharing contribution??? Note there is no citeable source here, just my interpretation, and I am not an atty.

First, I assume the QDRO applies to a key employee. Then I assume the alternate payee is/was spouse, so if employed would also be a key employee by attribution. I consider the distribution to first be transferred to an account for the alternate payee. The money is still counted as key. Then the key becomes a former key. Under new rules the money for a former key disappears from the calculation after 1 year, regardless if distributed or not. I do not feel the money remains counted as an inservice distribution because it would be double counted - consider the ex-spouse still working - how would you count the money?

check the document. in most cases this employee is a participant as of date of rehire. this is because they have satisfied eligibility and enter on and entry date, or if not employed, on rehire date.

The no HCE can get a match box is a given. As to discretionary match, in my opinion not a problem BUT it also tends to indicate a flat % of deferral in the underlying language. That is NOT good. Have the doc provider give you volume submitter doc for the same price, and put the language in there. Its the best method. Obviously they screwed up by not recognizing you had special language. Note, at the volume of docs we are restating, in spite of our best efforts I know we will miss something. Hope the client will find it so we can correct. So screwing up with this massive restatement project is to be expected.

Where in the LAW does it say the testing method (or top paid group either which is part of testing) is sacrosanct? You can disaggrate or use statutory exclusions, use component plans, all without putting that in the document, so what's the difference? The IRS by REGULATION say it must be in the document. If I had deep enough pockets I would sue for a change in regulation. I don't think the IRS would win in court. Its plain foolishness. However, if required in the document, they can get you for failure to follow the document and that is not pretty.

This is BRF problem. Do the testing to make sure it is a non-discriminatory group it is offered to. Don't forget the BRF is a double test for current availability and effective availability. Generally speaking, this is not a good idea as the trustees still have the problem of insuring that no prohibited transactions occur and most don't have the knowledge or time to watch it and the brokers frankly don't give a d... hoot.

Simple, the regs allow a plan to disgorge 'tainted' assets if they are found to be 'tainted' after the transfer. No affect on the recipient plan, only the person who now gets taxable income. No big deal. Be Happy!!

Use the comp of anyone who was eligible for either plan at any time during the year - use full pay as defined in the plan, but not limited to pay while a participant.

TOtal of 9%, only 6% more to pass the 1/3 test. And don't forget you cannot used imputed disparity on the 3%.

Two items - recent court case said 'affected' participants were those who were NOT 100% vested. Then - affected participants would ONLY be those from the plant closing. Even if from that plan, employees who were fired for cause or quit for reasons other than closing are NOT affected participants. Note - participants, not employees. If not in the plan, they are not counted. Of course if you went and 100% vested all employees at the one plant, good for you. However, you may not have had an actual partial termination.

Save the excel sheet as a comma separated file (CSV). Then write a DER import routine matching the fields and do a DER import.

First, I would STRONGLY recommend restating the disappearing plan before the merger. It is just too messy to put two plans into one document. Even do it for free because it will make your restatment of the surviving plan much easier. As to a 12/31/01 merger date and the MPPP contribution, if you feel more comfortable doing it, put into the resolution the contribution will be made. Make you life easier, not more complicated!

In our business we provide whatever document fits the clients needs. We do not have different charges for different documents because a document is part of our 'package'. This goes for amendments, restatements, whatever.

12/31/2001 is the deadline for true individually designed plans to either restate (like esp ESOPs) or sign a certification they will adopt someone's (identified) VS or prototype, which they can rescind later.