jmartin

Participant hired contractor to remodel bathroom. Before the job was completed, the contractor left the country. The participant has been left with an unusable bathroom (non working sink/toilet, holes in floor and ceiling, etc.). Expected cost to finish the job is $3k. Question: does this qualify under Section 165? The damage was not "sudden" but could be considered unintentional. My guess is that if the repair was not "needed" and was primarily for cosmetic reason as most remodels are, it would not qualify.

Sorry if I keep repeating myself here.... Here is where I get confused. When the guy termed in '95 he was 100% vested. Let's say he had a balance and took a distribution in '96. Upon rehire in 2011, he has zero balance. I am confident that he comes in right away. But for the new contributions starting 2011 and forward, will that money immediately be 100% vested (due to the 8 years of service) or does the vesting start over at 0%? One person in our office took the approach that because he had more breaks in service then years of service, he comes in right away but 0% vested.

Just to confirm, it all comes down to if he had a balance or not. If he did have a balance, it would have been vested. Therefore he would come back in right away with 8 years of service no matter how long he was away?

Facts: Hired 4/17/89 Terminated 8/31/96 Years of service at termination: Approximately 8 Rehired 8/8/11 Breaks in Service - approximately 15 Service requirement for new employees: 90 days Wording from plan doc: (b) Reemployed after five (5) consecutive 1-Year Breaks in Service ("rule of parity" provisions). If any Employee becomes a Former Employee due to severance from employment with the Employer and is reemployed after a 5-Year Break in Service has occurred, Years of Service shall include Years of Service prior to the 5-year break in service subject to the following rules: (1) Rule of parity. In the case of a Participant who under the Plan does not have a nonforfeitable right to any interest in the Plan resulting from Employer contributions, Years of Service before a period of consecutive 1-Year Breaks in Service will not be taken into account if the number of consecutive 1-Year Breaks in Service equal or exceed the greater of (A) five (5) or (B) the aggregate number of pre-break Years of Service. Such aggregate number of Years of Service will not include any Years of Service disregarded under the preceding sentence by reason of prior period of five (5) consecutive 1-Year Breaks in Service. 2) Participation in Plan. A Former Employee shall participate in the Plan as of the date of reemployment, or if later, as of the date that the Former Employee would otherwise enter the Plan pursuant to Sections 3.1 and 3.2 taking into account all service not disregarded in this subsection. © Vesting after five (5) consecutive 1-Year Breaks in Service. After a Participant who has severed employment with the Employer incurs five (5) consecutive 1-Year Breaks in Service, the Vested portion of said Participant's Account attributable to pre-break service shall not be increased as a result of post-break service. In such case, separate accounts will be maintained as follows: (1) one account for nonforfeitable benefits attributable to pre-break service; and (2) one account representing the Participant's Employer derived account balance in the Plan attributable to post-break service Question - When does the employe re enter the plan and what is their vesting? My thoughts is that the employee re-enters the plan right away with 100% vesting. He was 100% vested when he terminated. Even though he was gone longer than he was there, I do not think that matters. I do not think Rule of parity would apply here either.

I know that SEP IRA's do not have to file 5500. Is there a cutoff regarding assets? If the the SEP has over $250,000 in assets would we then have to file a 5500 (similar to a dc plan with form EZ)?

Facts - Plans can be amended to permit HCE's to contribute $0 deferral. Anything over that would be immediately re-classified as catchup (for those over 50). ADP test would be zero. - If a HCE does not contribute to a 401k plan (or contribute $0), they could potentially contribute to an IRA (assuming other requirements met) - If a HCE does contribute to a 401k plan (or contributes greater than $0) they cannot contribute to an IRA - If a plan has poor NHCE participation and low NHCE adp %, HCE's may be better off contributing to an IRA Question - In a plan where HCE's are limited to $0 (anything over is catchup up to 5500), can a HCE contribute 5,500 and also to an IRA? The 5,500 is classified as catchup and therefore not really counted towards ADP, 415limit, etc. If they can do both you would be looking at a 11k plus contribute (IRA plus catchup)...even more if spouse can do an IRA...

Thanks for the replies... example one is a no which is what I thought. Example two is a maybe but why take the risk. Sounds like I should go with door # 3 and place a limit of 1% or say $500. Just to confirm. I can make an amendment saying that owners are limited to $500 (or even 1%)? And in this scenario if the owner contributes $5,000, he would immediately have $4,500 reclassified as catchup and the adp test would only show the $500.

Facts: - 401k plan hired a new manager who is not a US citizen. She is working here under a permanent resident card - She lives in the US - Her primary source of income, if not her only source of income, is US income - Taxes are withheld and paid on her us income - I believe she has a SSN Question: Can she contribute to the 401k plan? Note: I looked in the plan document and did not see anything regarding exclusion of resident or non-resident aliens. This plan does exclude hourly employees and that is clearly listed under eligible employee (as excluded)

Facts: A contribution becomes a catchup in one of three ways: Contribution in excess of 402 g limit Contribution in excess of plan limit. Failure of adp test and reclass as catch up Issue: I have a client where an hce contributes 16500 and the owner does 5000. The owner is 50. Since the 5000 is not in excess of 402g and the plan has no limit, the 5000 is in the adp test. The non owner hce gets a refund. Goal: I would like to count the 5000 as catch-up, and have the owner in the adp test as a zero. Question 1: Which "wording" below can I use? Question 2: Would the owner still be in the adp test as a zero or be removed from the test completely? Example 1: "for any hce age 50 or over, the first 5500 of 401k will be treated as catch up" Example 2: "salary deferrals for owners are limited to 0%" (with the thought being an owner over 50 contributes 5,000 and it is immediately reclassified as catchup)