wmyer

I saw a while ago a list of required provisions for EGTRRA, which I believe was provided by the IRS in order to assist practitioners with amending plans. Anyone know where I can get this? I also saw a similar one for GUST.

Federal withholding, and usually state withholding (depends which state).

Are you sure that a hardship withdrawal is required in this situation? Some plan documents will permit in-service distributions of rollover money.

Are you positive it's a control group? There is a spousal exception to the control group rules.

But why bother opening a SEP when he could simply shelter more of his income in the 401(k) ? She'd only be able to put away $4K or so in a SEP each year, but he could put in an additional $7K or so to the 401(k). Unless sheltering income isn't their real goal here.

Client CANNOT roll the nondeductible IRA into the 401(k) plan. Only deductible IRAs can currently be rolled into 401(k) plans.

If the problem is that they want to pay less taxes currently, a ROTH IRA won't solve that, because there's no tax deduction, although earnings on ROTH IRA contributions are generally tax-free. Why isn't he putting more than 7K in the 401(k)? Putting more in the 401(k) would reduce current federally taxable income.

A controlled group sponsors 2 401(k) plans, each for a separate location. One has a 2 YOS requirement for match, the other has a 1 YOS for match. Both use prior year testing. For 410(b) purposes, the plans are being tested together. Can you test them together for the ACP test? If so, do you only test those who have 1 YOS at location A and 2 YOS at location B?

This question has been asked a few times on this board, but never answered, as far as I can tell. Anyone have a definite answer to this? 1) Must 403(b) assets be included when determining whether a 401(a) is top-heavy? 2) May 403(b) assets be included?

You're not stuck with a short plan year if you restate the MPPP effective 1/1/2005 (assuming you can do this without 411d6 issues). A traditional 401(k) instead of the safe harbor 401(k) is also an option, especially because the plan may be able to rely on the deemed 3% rule.

Here are some thoughts -- 1) Unless plan has a last day of the year provision, can't amend until 1/1/2006. 2) Must provide 204(h) notice to participants. 3) MPPP assets must be accounted for separately, because J&S provisions will continue to apply to that money. Also, that money will not be available for hardships, and will not be available until normal retirement age for active employees. Spousal consent will continue to apply to that money.

A calendar year corporate profit-sharing plan has a matching contribution through 6/30/2004. Then, effective 7/1/2004, it eliminates the match and replaces the match with a nonelective contribution. Let's say you have someone who makes $150,000 in the first half of the year and $250,000 in the second half. Let's say the plan document doesn't address this, either. Do they get the matching contribution based on compensation of $150,000 or on $102,500? Do they get the nonelective contribution on $55,000; $102,500; or $205,000?

Assuming it's a 12 month year, max is lesser of $42,000 or 100%, plus catch-up if applicable.

Yes, you got it. And as you know, catch-up 401(k) amounts are not included in either the ADP test or the ABPT test.

1) 401k elective deferrals are tested under the ADP test. If you have a safe harbor formula and 414(s) comp, profit sharing contributions will not need to be tested under 401a4. However, if you don't have such plan provisions, then you must test under 401a4, and 401k deferrals will be included in the average benefits percentage test. 2) Yes, although it is probably better to use job titles than actual names.

The 3% nonelective can be used toward the topheavy contribution. Nonkeys must get 3% (or if lesser, the % that the key employees get) of their full-year 416 compensation, so if the 3% nonelective is given on a part-year compensation, for example, the topheavy may not be satisfied. Also, if the 3% is only given after 1 year or age 21, but deferrals are permitted with less of a wait or at a lower age, the topheavy may not have been satisfied.

What is the correction method if an employer does not stop taking mandatory contributions when an employee's compensation reaches $205,000 (for 2004)? This is a 403(b) plan with a 2% mandatory contribution (mandatory as condition of employment). Since mandatory contributions are generally treated as employer contributions, can any excess be forfeited and then paid as additional compensation outside of the plan? Cites?

A participant takes a hardship withdrawal and is suspended from hardships for 6 months in 2004. The employer unwittingly continues to take deferrals from the participant's pay. The vendor returns the money to the employer in 2004, but the employer doesn't cash the checks or take any action. Now it's 2005. How is the tax reporting handled? Are the 2004 W2 forms amended? Are the participants' federal and state taxes amended?

Appleby, see http://benefitslink.com/boards/index.php?showtopic=28235

I assume we're talking about 2005. So, if S-Corp owner is 50 or older and pays himself $20,000, he can get: $14,000 deferrals $4,000 catch-up $5,000 deductible employer contribution (25% of $20,000). Total $23,000 in contributions. I see no reason why he can't go over 100% of compensation if he's over age 50.

thx, austin. so i guess the panel publishers coverage and nondiscrimination answer book should be corrected: Q 4:36.1 What definition of compensation is used for purposes of determining 401(k) safe harbor nonelective contributions or safe harbor matching contributions? For purposes of determining safe harbor nonelective contributions (SHNECs) or safe harbor matching contributions (SHMACs) to a 401(k) plan, the allocation must be based on one of the safe harbor definitions of Section 414(s) compensation (see SQ 4:17). In addition, the same Section 414(s) compensation definition must be used for both the SHNECs and the SHMACs. Compensation can be limited to that earned while a participant in the plan. [Notice 2000-3, 2000-4 IRB 413]

there have been a couple of prior posts on this topic. if i recall correctly, tom poje does have a problem with this methodology, and that's good enough for me.

The full-day Corbel seminar on new comparability is outstanding (I'm not connected with Corbel). Also, the ERISA Outline Book, as Blinky mentioned, is a very good resource for learning cross-testing.

Yes.

Yes, assuming the plan document permits it.