PFranckowiak

Thanks for your help. PF

Company just established. Cannot have plan before company started.

Plan started 10/1/2012. 401(k) 415 limit is 50,000*3/12 =12500 Do they get to take the catch up on top of the 12500 for a total of 18000? Haven't had one of these short plan years in awhile and want to make sure they don't exceed the 415 limit . Thanks Pat

According to the DOL seminar I went to - that DOL speaker said that you must issue it within 12 months of the last time you issued the disclosure. Not over 12 months. I asked the stupid question about what if you went a few days over. She said they weren't looking at it to penalize people for missing it by a few days - just that they are complying. So take the date you gave it out and you get 12 months from that date to producte a new disclosure unless you have changes that need to be disclosed. If you produce a new fee disclosure before 12 months are up, then your clock starts again for the next 12 months. At least that I how I understood what she said. I wish they would have just put the notice to go out the same time as the safe harbor notices - with a date range before the beginning of the plan year - but that would have been reasonable. Pat

I have had clients voice concern. Also with a small employer - the 5500 will let the other employees know exactly what their co-worker got for a distribution from the plan since only one person terminated that year. The information is of no use to the rest of the world - so why it has to be public record is beyond me. Pat

I have a client that wants to be nice to the little guy. Sponsor Wants a regular match formula of say 25% up to 6% Then for every participant that defers at least 1%, they want to give a minimum match of $500.00 Note: Eligibility is one month, Match requires 500 hours/ last day. Potential for HCE owners family members to fall into the minimum $500.00 match. So someone that works 500 hours at $10 per hour - earns $5000 for year year a defers 1% or $50.00 would get $500.00. Someone with less than 1% would just get the 25% match. I can see where this might become a problem if any HCE's fall into that category. Any suggestions??? Anthing discriminatory - if the ACP test passes? Thanks Pat

What does the document say? I would think that fees either have to be prorata, or specific fees for that participant.

As you state - another potential layer of fees has been added to plans. I would lable those fees as fees to meet DOL disclosures rules!!!!!! We have clients getting letters from local CPA's that are now going into the business of fee reviews. Their letters are scare tactics to promote business. They are probably going to use some benchmarking source that others are using. We are in the position that we need to do some education or our clients will take the disclosures and file them in the shredding pile. They don't wnat more work to do with the plan. (We have disclosed these fees in the past and reviewed with clients but now they need to take more action and better document their decision making process) Many smaller clients have no HR department to help them with this. We cannot review ourselves, but we need to give them information on what they should do with the material provided or someone else will. We need to prepare them for potential employee questions. Gettng disclosures from many sources that might duplicate some of the fees is another problem. Oh well - they have to be out in a couple of weeks - then making sure that the Participant Annual Disclosures include everything. Note the Client is really the one responsible for those - most of our clients are not prepared to handle anything like this. P

OPps - I meant to say Now gong to code as D and take off - just easier to keep track of years down the road. Pat

Ok per my phone call this morning from the DOL. Code rehires as a "D" because they are now an active employee again and not eligible for a distribution. He said that was the common sense thing to do. (I didn't know we could go by common sense) I asked why it was not clear in the instructions - he said the instructions could not contain everything - they would be too long?? Guess they would rather pay someone to answer our questions than to make it clear for everyone on something that is common. So per the DOL I am not going to code our rehires as a D as they are now an active employee again. Hope this helps. Pat

I just called the IRS - was on hold for only 10 minutes. Talked to a person that didn't have a clue. They took my questions and said they would have someone in the technical department get back to me in 15-30 days. I didn't realize I had a techinical question. Maybe if we call called - they might clarify instructions in the future - we can always dream. I will post when I get some answer - hopefully before I decide we need to get them filed. Pat

What are most people doing with rehires that were previously reported as an A? One of my sources says the D means distributed. So just leave the Rehires as is until they are paid out. Another Source says D means Deleted. So Take the rehires off. Suggestions??? Pat

My boss just asked me where we could be a plan document for a nonqualified plan. Any suggestions? Pat

Sponsor wants to allow for transfers between the plans as the employees switch from Union to nonunion and the reverse. Document allows for it. I know the money must be kept separate. what about the forfeitures? Would those transfer back to the original plan? What about participants with loans? Seems like a lot of work to me for participants that just don't want to get two statements. Am I missing anything? Pat

Thanks - not in an IRA yet - still in the plan. The spouse is the beneficiary so do we pay her the money and 1099 the deceased? Pat

Plan fails the ADP test. Money needs to be returned to HCE. HCE is deceased. (Died late 2011) Who does the excess get paid to? (I.e. what SS# should the 1099 be for?) Thanks Pat

Okay another question. If she sets up her own plan and wants to transfer most, but not all of her money is their a problem with a distributable even since she did not terminate employment, but her company terminated participation in the plan more like a spin off plan. Suggestions? Thanks Pat

I have a PSP that is a controlled group. Two companies, one owned by wife and one by husband. They have the plan together. No other EE's. They are going through a divorce. Company's will no longer be a controlled group. As a result Company A (husband) will retain his plan and Company B(wife) will cease to be a participating ER. The wife wants to set up her own plan and be able to put a contribution in for 2011. Company A plan does not have a last days requirement. For the year end PS contribution for Company A - would Company B have to deposit the same percentage as company A for payroll through date or cessation? In Company B's new plan for the year then would I have to count only pay from the date the plan started. Goal is to separate ASAP and have each make their own year end contribution in their own plan. Thanks for your help. Pat

Okay - what about a spin off. Company was part of a controlled group - but is no longer. Splitting off into their own plan - identical. Calendar year end. New Plan will be SH - old plan - not. Old plan had only two EE's, 1 in each company. Now one each, but the new plan ER will be hiring some people in 2012 - so notice won't be late, except for the owner. thanks Pat

My boss feels that if anyone can rollover an IRA into the plan and have a rollover account that they could take a loan. Most people probably have IRA's that could be rolled over. I think the ER does not want to restrict money that the people rolled into the plan, but doesn't want to open the door for a lot of loans from the plan as they want people to think retirement savings, but not limit money they could roll in and out of the plan. I am still on the fence with this. Appreciate the comments. P

Plan currently does not allow for loans. Want to add that participants can take loans from Rollover account only. Two owners have Rollover Accounts 25% of other participants have R/O accounts. Do I have to pass nondiscrimination tests - as all are allowed R/O accounts - they just don't have them. Thanks Pat

Thanks - that is what I thought. Just wanted to make sure as I don't deal a lot with such small pay. Pat

Am I missing anything here. 1 person 401(k) Plan Owner is taking only 12500 in compensation (Assume net of FICA) He is deferring 12,500. Can he contribute 25 % of pay (12,500) or 3125? If he does he exceed the 415 limit as 100% of pay is 12,500. But then can he reclassify 100% of the PS contribution as Catch up and then end up with over 100% of pay as EE plus PS? Not used to working with such small pay amounts. Thanks Pat

That is what I have been telling the advisor. So I thank you for confirming what I had been telling him. It's participant directed daily account. They wanted to set up a separate account just for the PS contribution and then allocate the PS contribution as deducted and any g/l would be to those participants that got the Contribution. Would have had to change the document etc. I have told the advisor that I think the better approach is the Corporate Account. Thanks for a prompt response. Pat

I have a client with a last day 1000 hour requirment. He wants to prefund his PS - say $50,000 At year end we would allocate the $50,000 What about the earnings or loss on the $50,000 Who would that go to ? Thanks Pat