R. Butler

R. Butler, Look carefully at the documents by which the plan currently exists (hopefully, EGTRRA restatement documents). Does it mention that the owner is signing the adoption agreement or plan document for Business A only? For example, /s/_____________________ Joe Jones d/b/a Business A If so, then I think you perhaps have an argument for excluding EEs of Business B, particularly in light of the fact that two separate Schedule C's are filed with his Form 1040. On the other hand, if the plan is just adopted for employees of Joe Jones, then I think they are entitled to be included. The argument you suggest is what we are hoping to make. The individual doesn't use his name in either business; they each have their own business name. The Adoption Agreement references "Business A" as the plan sponsor and the employer on the signature page is listed as "Business A". We wouldn't have the problem is these were s-corps. The fact that a sole proprietorship is not a separate entity is a personal liability issue more than a retirement plan issue. I've seen positions that were bigger stretches, but I'd feel a lot better if there was a PLR or soemthign out there that lended some support. Thank you.

Thank you for these references. Maybe I'm wrong, but I am not sure that they help in my specific instance. Sole proprieterships are generally not separate entities from the owner. My question may not be clear either. Here is an example that hopefully makes my question clear: RMB owns Business A (Sole propreitership). Business A sponsors a a retirement plan for NHCE's & uses a non-standard prototype. RMB also owns Business B (Sole propreitership). The operations of Business A & Business B are not related. they are located in different states, fiel different Sch. C's, etc. Business A plan was adopted 20 plus years ago. The plan does not specifically exlcude employees of Business B. Is there a basis for excluding employees of Business B just by virtue of business B not adopting the plan? Clearly we would be okay if corporations were involved, but sole propreiters are generally not considered separate legal entities from the owner. Thanks again.

Self-employed sponsors a retirement plan. Plan has been in existance for years. I found out today that the self-employed has another separate sole proprietership. The plan document is non-standard; the self-employed doesn't benefit and there aren't any other hce's so coverage testing not an issue. The issue is whether we the seperate business can be exlcuded just not having adopted the plan? Generally that is the case, but can a self-employed really have 2 separate sole-proprieterships? Thanks in advance for any guidance.

Participant termiates, is later rehired. Under the plan document this participant is immediately eligible. Plan has an automatic enrollment feature. If the participant doesn't make a new salary deferral election should that participant be automatically enrolled? My inclination is yes, but I don't see it specifically addressed in the plan document. Thanks in advance for any guidance.

Participant failed to pay property taxes on his principal residence. The tax lein sold at auction. The purchaser of the tax lein is going to forclose. The regs provide that Payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence; will qualify for a hardship. Is there any guidance that suggests that payment of the tax lein to prevent forclosure is permissable? Thanks in advance.

I think it is a positive also for similar reasons. While I can sympathize with the ASPPA designations holders, the ERPA was designed for that purpose. If they exempt ASPPA designations then you NIPA designees wanting an expemption. If you exempt ASPPA & NIPA, some other organization will want an exemption. Didn't necessarily think ERPA was good at the time, but since we have it, it meets this purpose.

Thank you for your reply. They will correct either through SCP or VCP depending on whether they had procedures in place that just weren't followed. We just wanted to verify that we weren't supposed to report it somewhere on the 5500. The auditor is also researching whether it should be inluded in the audit report. Thank you for your reply.

Plan sponsor failed to implement the automatic deferral provision in 2009. Just noticed the error today. Does this affect answers to the compliance questions to the Sch. H? I don't see that it is a failure to transmit participant contributions (4a); it is a failure to withhold altogether. The other possible question I see is 4l, but it is my incllination that a failure to pay a benefit when due refers to a failure pay a disitribution and doesn't relate to this issue. Thanks in advance for any guidance.

Plan granted a hardship distribuion for payment of post secondary education expenses. Plan sponsor did collect a Hardship Statement signed by the participant stating the prupose of the withdrawal, but did not ask for evidence of the requested expense. The employee did not in fact end up attending school. The plan sponsor did have procedures in place requiring that some type of written evidence be collected, but in this case those procedures were not followed. They have had 6 or 7 previous hardship requests and in each case collected written evidence. A few questions: 1. Can plan sponsor use SCP since procedures were in place, but just not followed in this isolated instance? 2. The general correction is to request that the participant repay the money with lost earnings. In this case the participant has terminated employment. He is not going to cooperate with any correction. What would be an acceptable correction? The concern with an employer corrective contribution is that the participant walks away with that corrective contribution. The plan only contains employee deferrals and safe harbor match and the participant was under 59 1/2, so I don't see that plan amendment is not an option. Thanks in advance for any guidance.

Tried that. The agent focused on "the such as GIC's" and took that mean to only GIC's. I really need something referencing group annuity contracts. My impression is that at a minimum the agent knows the position taken is reckless; I'm just trying to avoid the fight altogether. (Kind of like the OJ Simpson trial. Everyone knows he did it, but since they didn't produce a video he was somone able to maintain innocence.)

I'm aware that commissions earned on a Group Annuity Contract are reportable on the Sch. A or the form 5500-SF, however the case may be. I am being questioned on this point. The insurance agent is adamant that those requirements apply only to life insurance & not to other contracts with insurance companies. I spent three hours today arguing the issue without success. Is anyone aware of any guidance that mentions group annuities specifically. Although it seems clear to me, references referring to contracts with insurance companies is not sufficient. I need something that specifically references group annuities. Thanks in advance for any guidance.

This is more of an issue to me than some of the other situations mentioned. I expect that broker's have relationships with tpa's and if a broker sells a product to a client of ours he may try to steer the tpa business to the party with whom he has a relationship. I do not expect that investment companies with whom we work will try to move our clients to a bundled product.

You are probably right; the post just seems worded funny. The person indicates that the $3,400 is non catch-up and that the test fails. The test fails whether $2,100 is catch-up or whether all $5,500 is catch-up. Probably just siezed too much on that sentence. I get it though; plan sponsor wants it all catch-up so no top-heavy. Tough pill for the plan sponsor.

Soemthing seems wrong? Are you sure you fail the test? If you do fail the test could it be that the required refund is only $2,100 and that is why only $2,100 is being reclassifed as catch-up? If the over 50 HCE only deferred $5,500 there should not be a refund to him; that doesn't mean its all catch-up as Tom Poje explains, but you seemed concerned about a failed test when top heavy is the bigger issue.

Not that I am aware of. Controlled group determinations are pretty much based on a strict, numerical test.

We have 2 plan sponsors who are terminating their 401(k) plans in favor of 403(b) plans. Both plans sponsors are inquiring about simply transferring the assets from the 401(k) to the 403(b) without giving the participants an opportunity to receive a distribution. I don't see that it is permissable, but wanted to double check. Thanks in advance for any guidance.

Are you a tpa? The DRO really needs to give you precise dates. We wouldn't recommend accepting a DRO that says "amount accrued during marriage"

I agree with Laura Harrington. As long as the discretionary match satisfies the ACP safe harbor you should get the top heavy pass.

I don't know that that is a good option. I might be thinking about it incorrectly, but it seems to me that I would have to manually enter the loan activity for the year and also manipulate the financial extract file to prevent that loan activity from coming in. Manipulating the file isn't terribly difficult, but it can be time consuming.

Thank you. That is probably what I will end up doing, but I get nervous that I will screw up the math somewhere.

I have a new plan in 2009. Key employee takes a loan. About $2,000 comes from the employee deferral source; $18,000 from an unrelated rollover source. For this particular plan we don't build the loan onto Relius, we receive a financial data download from investment vehicle holding the assets. Although all the loan withdrawals & repayments are shown going in & out of the correct source, for purposes of top heavy the loan is a separate source & the entire outstanding balance is being included in the top-heavy test. My question is this -- Is there an easy way to manually play with the top-heavy balance to make it correct? Thank you for any guidancce.

Safe Harbor plan, match calculated over the entire plan year. Plan sponsor wants to change to each payroll epriod mid-year. Can that be done? My inclination is no, but I'm not positive. Thank you in advance for any guidance.

For whatever reason I can't seem to decide on this. Line 13 M on the Schedule K-1 is amounts paid for medical insurance. Do we have to adjust net earnings from slef-employment (line 14A) for the insurance premiums? It seems to me yes because they are being deducted on the partner's personal return, but I've looked at too many of these & feel a little shaky. Thanks

We have an with the 3% SHNEC & the prevailing wage offset. The Corbel prototype allows for prevailing wage contributions to offset the 3% SHNEC. Plan sponsor is being told that that is permissable for jobs subject to prevailing wage, but the previaling wage contributions can't be used to offset the SHNEC on jobs not subject to prevailing wage. For example: Participant earns $30,000; $25,000 on jobs subject to prevailing wage & $5,000 on jobs not subject to previaling wage. Prevailing wage contribution for the employee is $8,000 Plan sponsor is being told that it is permissable to use the $8,000 to offset the 3% SHNEC on $25,000 earned on jobs subject to prevailing wage, but that they can't use any of the $8,000 to offset a 3% SHNEC on the $5,000 earned on jobs not subject to prevailing wage. I can't find anything that says that? Can anyone point me to a resource that says that? Assuming that it is correct that the prevailing wage cannot be used to SHNEC's on money earned in non-prevailing jobs, does the plan sponsor need to go to an individually designed document if they want to continue to apply prevailing wage money to the 3%? regardless of what labor law says, I don't see that the Corbel document allows it. Thank you for any guidance.

Can repayments rsume on a loan default if after-tax contributions are not allowed?