Fredman

I take "Participant Directed Brokerage Accounts" to mean any participant directed account that is not part of the normal group of investments offered in the plan. A brokerage account could have mutual funds, stocks, bonds, insurance, etc. Example: A plan has only has a group of mutual funds for participants to direct their investments, I would NOT use code 2R. If the same plan also allowed a participant to open an account and buy stocks/bonds, then I would use 2R. This is how I use code 2R. There might be some users that buy the 5500 books that would be willing to respond with a more precise response.

would you be asking the same questions if you were sitting at the bar drinking a beer? for example: CFO: i think we should make some changes to the 401k plan. YOU: yeah i agree, i think we should, blah, blah, blah CFO: i left my wallet in the car, can you buy the next pitcher? if all they are asking is for your opinion i see no harm. if they are asking you for formal recommendations that will reflect your next job performance review, then you might have something to consider. i've seen many plans with "advisory boards", which are usually top paids trying to figure out whats best for them, but sometimes rank and file participants are asked to join in and offer some suggestions for the plan. maybe your best recommendation could be that you would be willing to round up an "advisory committee" for the plan that will meet on a regular basis and offer suggestions.

some questions: why do you want to use ages? what happens next year when the 35 year old turns 36? will they want a boost from 8% to 20%? If you set it up like this, i think that you're setting yourself up to amend the plan each year to juggle the ages/percentages.

What a pain! You didn't say when you answered the initial inquiries, perhaps they crossed paths in the mail. A year or two ago we received duplicates of several inquiries days apart. We would receive an inquiry on Monday and two or three days later we received the exact same inquiry. These weren't second requests, so we replied to the first one received and pitched the second and haven't heard back.

Easy enough, just tell them that for a living, you run a web site devoted to employee benefits. No one would want a wacko like that!

A few years ago I would've said file an amended return and forget about. Things have changed. There is a good chance that the DOL will consider the first filing incomplete. In their eyes, an incomplete form is the same as a non-filed form. If an extension was filed and the audit and form is filed by 10/15 (assuming 12/31 year end), you should be ok. If not, you might want to consider DFVC. DOL DFVC FAQ

From purely a system (and not a loan policy/compliance) view: Check data element PL886. This field controls whether a loan is required to be paid by normal retirement age (or whatever age you enter). For example, if a participant is required to pay off a loan by or before his or her retirement age of 65, then enter 65. Disclaimer: the loan policy should be reviewed to determine what this field should be set at.

Kirk...at least they diversified their investments! Maybe we can give Mr. Miller his thread back and start a new one under the humor board and let people add some more to this list. I want to see if someone can beat Kirk's.

Not to overlook the obvious, last time I checked you can still mail things to Africa. The original post doesn't say, so I'm assuming that the ER doesn't know where in Africia, but if they learned that he moved to Africa, then I would think they should be able to track the guy down and get him his money. I guess what I'm really trying to say and as QDROphile points out they, they must make a reasonable effort. If they learned he moved to Africa and then quit looking, is that reasonable?

As much as I hate agreeing with anything to do with "disco", I do agree with Stu's answer.

try this link (its the latest i have...someone please correct me if its outdated):http://www.milliman.com/files/0205_DoLDFVC.pdf late 5500s are filed with the DOL under the Delinquent Filer Voluntary Compliance (DFVC) program. also, don't forget about Dave's fantastic search engine here at Benefitslink. Search for DFVC.

food for thought: when we raise fees, we talk/visit with our clients. we don't have a huge client base (in the hundreds), so with a little good planning we can talk with every client and notify them of the increase face to face (or via phone if we can't get in front of them). its not always fun to be face to face when the client starts swinging thier fists, but its also nice to be able to address any concerns and questions they might have. sorry i couldn't provide you with sample language.

this sounds like a possible partial plan termination, which would mean the affected participants would become 100% vested and be eligible for distribution. i'm sure others will add sound advice/comments, but i think your best bet would be to seek out a professional (perhaps the plan's recordkeeper) that can review all of the circumstances and come up with the correct solution to your question.

Not sure if the last comment was meant to be sarcastic, if not... The term "brokerage accounts" is usually inter-changable with self-directed, segregated, sub accounts, etc. If a participant has the option of buying a stock, bond, mutual fund or other investmetns that are not part of the plan's normal offering of investments then its deemed to have a brokerage account option and 2R should be used. Keep in mind 2R also allows gives you the option of "lumping" amounts on the other lines of Schedule H. See this discussion for additional info: http://benefitslink.com/boards/index.php?showtopic=14861

I've been using Relius HyperPrep for the last 5 or 6 years. Its a Windows based program and its pretty easy to setup and use. You basically tab around the forms and fill in your answers. It does have a "checking" mechanism that will catch some simple mistakes you might make. My only beef has been with its printing abilities. Finding the right print driver can take a little patience. If the end user has never filled out a 5500 then they'll spend more time learning the forms rather than the software.

How long has the business been around? Most documents I've seen credit years of service prior to the effective date of the plan. If you can prove the business has been around for 6 years, then anyone earning a year of service in those 6 years will already be 100% vested. I think an auditor would have a problem if you have one schedule in place for one day (the effective date) and then switch to a 2/20, especially with 4 out of 5 participants being owners. Can't the owners just "hold their horsies" and wait to earn their vesting like everyone else?

veba-thanks for the response. for me, a profit calculator will be able to tell me the bottom line profit for a client. in other words, fees paid-our expenses=profit (you can also divide profit by our expenses to come up with a %). we are a full service shop to our clients (rking, trustee, documents, etc.) and work off a fee schedule. time and extras don't get billed, we consider it part of our service. i realize that only i will be able to come up with the right variables to determine the formula for our shop, i was hoping to find some existing examples to work off of. thanks again.

True. I'm sure we have plans that have been here for years that would fall into that category. Its time to weed the garden.

Does anyone have a profitability calculator they'd like to share? More specifically, I'm designing one for our office so we can determine the profitability of each client. We are a full service 401k shop. I realize that each shop will have a different model, but I'm looking for something to get me started. If you don't want to share with the group, feel free to email off the board. Thanks much!

My understanding is that nonconforming states cause headaches at the participant level and not so much at the plan level. Here's a Q&A from the Technical Answer Group (www.tagdata.com) that might be helpful: Question: State tax law and EGTRRA - I have heard that some of the states do not recognize the changes made by EGTRRA. Is this true, and what impact does it have? Should I advise clients not to incorporate the EGTRRA changes unless and until their state complies with EGTRRA? Answer: Most of the states automatically comply with changes to the federal tax code. However, there are some that do not. These states are referred to as nonconforming states. When there is an amendment made to the Internal Revenue Code, the nonconforming states must amend their state tax codes if they want to adopt the same tax provisions as are included in the amendment of the federal code. This is an area of particular interest with regard to the EGTRRA changes. For example, the nonconforming states do not automatically recognize the increased contribution limits under Code Section 415, the increased deferral limits under 402(g), the availability of catch up contributions, or the expanded rollover rules. Participants in these states can make catch up contributions, but the amount of the catch up contribution would be included in income for purposes of applying the state income tax. The same would hold true for the other EGTRRA changes. . . . ...even if the states do not amend to raise the deferral limits (or other EGTRRA changes), the changes will still apply for purposes of the federal tax code. While the changes may not be as advantageous in states that elect not to comply with EGTRRA, the affect on federal taxes is still significant. I would not make the decision to adopt or not adopt the EGTRRA changes based on state tax law." I've never seen a plan disqualified at the state level. I don't think this is possible. Good Luck.

Woo-hoo, Iowa is a conforming EGTRRA state. IN YOUR FACE-WISCONSIN!

Because you are beyond the 2.5 month after plan year end deadline... Participants should get a 2002 1099-R with an '8' in box 7. This means taxable in the current year or 2002. Distribution is not eligible for rollover and not subject to 10% early withdrawal penalty. As a side the note, the client will also need to pay a 10% excise tax on the refunds and file form 5330.

I've seen this corrected by issuing the participant a corrected 1099-R with zeros on it (use the same distribution code) for the loan default. It would also be a good idea to send a copy of the rollover 1099-R along with a letter of explanation. This can be very confusing to participants and the more info you give them the better. The participant will need to file an amended 2000 tax return. Don't forget to send the corrected 1099-R info to the IRS.

I'll save pax the trouble: What does the document say? Some things to check: Has the HCE met the eligibility requirements of the plan? And if so, have they passed an entry date? Does the plan have a deferral limit, based on percent of pay that is payroll by payroll specific? Does HCE have enough comp in their first month to defer this much? I've seen situations where an HCE will put in 402g limit during the first payroll of the year, so its possible, but make sure you don't break any plan rules along the way.

I think you'll need to ask Penn Mutual. A schedule D is required when plan assets are invested in one or more common/collective trusts (CCTs), pooled separate accounts (PSAs), master trust investment accounts (MTIAs), or 103-12 Investment Entities (103-12 IEs) at any time during the plan year. I would contact Penn Mutual (where the money is held) and see what they say. If its one of the above, then they should also be able to tell you what goes in what boxes. If not, then the first list you gave is how I would fill it out. Penn Mutual will need to give you the name of the PSA.