R. Butler

I assume that currently plan doesn't sllow in-service distributions from the rollver source. Can you amend the plan to allow it? Each participant could then roll the money into an IRA & do what they want.

R. Butler, It depends on the angle from which you look at it. Generally, Per Stirpes does not mean the original beneficiaries receive equal shares. For instance, using your example, where beneficiaries are B,C&D Per Stirpes- B, C & D would get the share allocated to them by the IRA owner. For instance, the IRA owner could designate that B gets 50 percent, C gets 25 percent and D gets 25 percent ( All Per Stirpes). The equal shares part comes into play for the beneficiaries of B, C and D. For instances, if B predeceases the IRA owner, and B has three children, then B’s share is split equally among B’s children You are probably correct. This is topic I probably should have just stayed away from. I remembered the terms vaguely from law school & just got a little to cocky.

Now that I've thought about it a little longer I see that Funded K is right & really my post was wrong. Per stirpes means equal shares. So beneys are B,C&D per stirpes. They each get a 1/3. If B dies, his descendants split his 1/3 share. Per capita (which was not asked about, but I did mention in my post as a point of comparison) is where I was wrong. Per capita means per head. So if dies B dies with descendants, B's descendants share equal shares with C&D. Sorry for the error.

Really can't answer the question without seeing the precise wording the document. Having said that, I do exactly what the document says. If for hardship withdrawals from employer sources the Adoption Agreement references a section that requires the suspension of deferrals, we recommend that the employer suspend deferrals.

If I remember correctly per stirpes means that if the beney is deceased, that beney's descendants will split the beney's inheritance. The alternative is per capita which means the beney has to be alive to inherit.

I haven't thought too much about the issue, but initially I lean towards the mandatory rollover in all cases, assuming you can find an institution to take the rollover. In the recent guidance the DOL specifically stated that the preferred distribution option for missing participants is the automatic rollover. I realize that the guidance was specifically directed at terminating DC plans, but the reasoning they used would seem to apply to ongoing plans also. If you can't find an institution that will take the rollover then I would agree with mbozek that assuming the plan allows, you can forfeit after exhausting appropriate search methods.

Probably, I just hate to override data. This isn't a new rule, you'd think Relius could handle this without any overrides. Thanks though, that probably is the route I will have to go.

401(k) Plan requires only 3 months of service for entry. Plan has one HCE & several NHCEs not meeting statutory age & service minimums. We want to exlude the otherwise excludible NHCEs. How do I get Relius to do that? When I test the "otherwise excludibles" seperately Relius puts the one HCE in the "otherwise exlcludible" test. Obviously, when I include the "otherwise excludibles", I get not only the HCE, but all the NHCEs as well. Thanks in advance for any guidance.

Thanks. It looks like I'll just be "out of the know" until Feb.

We need to update our ERISA Outline Book. Does anybody know when the 2005 version is set to come out? They still have the 2004 version on the ASPPA website. Thanks

We don't gross up for lost earnings when calculating the amount involved. Honestly, I have never thought about it & this is the first time I've even seen it suggested. Having said that the suggestion doesn't seem that off the wall to me because the prohibited transaction really hasn't been corrected until those lost earnings are deposited. I'll have to think about that some more.

The amount involved is the interest on the late deposit, not the amount of the late deposit.

Although I do agree with the above posts about statistics, it wouldn't surprise if the savings rate was abysmal. I can just look at people I know & see that many of them take on way too much debt & have little thought about saving for retirement. I can look at the plans we administer & see low savings rates in many of them.

I'd be surpirsed if the ERISA Outline Book did not have this clearly spelled out for you. It answers every other question & this one is fairly basic.

Thanks. This really isn't an orphan plan. The plan sponsor has actually left the country, but he does have an attorney handling the termination for him. We are just trying to locate the last few participants & have not had luck the IRS or commercial locator services. Nonetheless I may try to call the number & see if they have suggestions. Thanks again.

Its just common sense you can't have a last day in in a Standardized plan. Standardized plans are designed to ensure that the plan will 401(a)(4) & 410(b).

Appleby & anyone else that wants to chime in. I have a similar situaion as jam10. Plan sponsor went bankrupt & ceased operations 2 years ago. Originally there were about 300 participants & now we are down to 10-15. Just can't find them & we really need to get this wrapped up this year. I understand that the IRS position is that you should not use 100% withholding. In onoging situations we don't use it. Most, if not all, of our plans have provisions allowing balances of lost participants to be forfeited. However, if the plan is terminating forfeiting is not normally a good option. Do you think that the IRS would maintain that position in this situation?

I am sorry. Thats even worse than being a Reds fan. Maybe not much worse, but a little.

Ok I see what you are saying regarding the ctach-up contribution. I missed the part "all catch-up under the 402(g) limit". (Somehow though, only because I haven't seen this situation, it looks funny.) Anyway all of the deferrals are deductible to the exent they relate to compensation paid for that fiscal year.

Maybe I'm missing something, but the catch-up contribution is determined at the end of the year. The catch-up limit is the limit that is in effect for the calendar year in which the calendar year ends (in your situation 2004). It seems to me that in this plan he has deferrals of $18,000, $3,000 of that is the 2004 catch up. There is no catch up for 2003. The maximum company contribution can be $26,000.

or me in supporting the Reds.

Reallocated forfeitures would take away reliance on the top-heavy pass. Also, if you have different eligibility for deferrals than for safe contribs. (i.e. immediate entry for deferrals, 1 yr wait for s. harbor) you don't get the top heavy pass.

I am a Reds fan. The Cardinals beat us about 100 times this year. Their bats are anything, but quiet. The top 5 hitters in that line-up are as good as any baseball. I suspect the series isn't quite over yet. The Cardinals bat should heat up & also no DH in St. Louis. Admittedly I don't watch much American League ball, but I can't imagine Ortiz playing anywhere other than 1st base, that means the Sox lose Millar. That may hurt.

Since that supports my response I'm going to go ahead and agree.

Is the LLC taxed as a sole propreitership? If so it seems to me that compensation will include both the W-2 income as an S-corp. employee and the earned income from the LLC.