Harwood

From 1099-R instructions, page 5 Losses. If a corrective distribution of an excess deferral is made in a year after the year of deferral and a net loss has been allocated to the excess deferral, report the corrective distribution amount in boxes 1 and 2a of Form 1099-R for the year of the distribution with the appropriate distribution code in box 7. If the excess deferrals consist of designated Roth account contributions, report the corrective distribution amount in box 1, 0 (zero) in box 2a, and the appropriate distribution code in box 7. However, taxpayers must include the total amount of the excess deferral (unadjusted for loss) in income in the year of deferral, and they may report a loss on the tax return for the year the corrective distribution is made.

"Financial Focus" quarterly newsletter at http://fc.standardandpoors.com/corp_v3/retirement.htm

Check out Rev Ruling 2004-60 that Kirk Maldonado recommended: http://www.irs.gov/irb/2004-24_IRB/ar13.html

This was at the Corbel site in 2003: 401(k) Plan Participant: The 401(k) Plan failed the nondiscrimination test (1) for the plan year and must make corrective distributions to bring the Plan into compliance. We are enclosing a check for your corrective distribution amount. (2) This letter also indicates the taxable year in which the corrective distribution amount is includible in your gross income. (3) If you already have filed your income tax return for the taxable year, you will need to file an amended return in order to include the corrective distribution in your gross income. The Plan will provide you with a Form 1099-R by January 31 of next year. The Form 1099-R will show the corrective distribution as reportable income for the above taxable year. However, you do not need to wait for the Form 1099-R to report the corrective distribution on your income tax return. (1) ADP or ACP test. (2) The corrective distribution must include allocable income. Treas. Reg. §401(k)-1(f)(4)(ii); Treas. Reg. §1.401(m)-1(e)(3)(ii)(D). (3) See Treas. Reg. §§1.401(k)-1(f)(4) and 1.401(m)-1(e)(3), Notice 89-32 and the Form 1099-R instructions for guidance regarding the taxable year corrective distributions are includible in gross income.

How to Treat Severance Pay for Purposes of Salary Deferral Contributions and Discrimination Testing http://www.jenkens.com/jenkens/newsletters/BIB/bib_v3i2.pdf Eligible Deferral Wages http://www.reish.com/practice_areas/Techni...ps/IRStip85.cfm

IRS thinking; not definitive: http://www.asppa.org/archivepages/gac/1999/99irsq&a.htm 67. What is the IRS position on elective deferrals from certain payments following the termination of employment, such as severance pay, accumulated vacation pay, and bonuses? These payments are not eligible to have any part of them deferred under 401(k) since the participant MUST be an employee in order to defer and the employment relationship has ended prior to the payment of these amounts.

http://www.corbel.com/news/technicalupdates.asp?ID=303&T=P

The cram sessions have questions http://www.asppa.org/archive/conf/2003/ann...rbon-c3cram.pdf 677 pages http://www.asppa.org/archive/conf/2004/sum...rbon-c3cram.pdf 717 pages http://www.asppa.org/archive/conf/2004/sum...augh-c3cram.pdf 83 pages

http://www.asppa.org/archive/conf/2003/ann...rbon-c3cram.pdf 677 pages http://www.asppa.org/archive/conf/2004/sum...rbon-c3cram.pdf 717 pages http://www.asppa.org/archive/conf/2004/sum...augh-c3cram.pdf 83 pages

QDRO payments to spouse and ex-spouse Alternate Payees are taxable to the Alternate Payee, not the Participant.

Does the non-qualified plan document even allow for this type of distribution [which is taxable on the participant's W-2] ?

Are exams from December 1996 to June 1999 of much use in the age of EGTRRA? If so, contact me.

"Despite widespread publicity in the HR, tax, and benefits field, some employers still transfer employee contributions into their retirement plan once a month. That deposit schedule becomes an ERISA violation unless the employer’s payroll occurs only once a month. In most cases, employers are required to transfer assets as soon as is practicable to the plan’s trust, and the DOL will generally assume that to be within 7 days." http://www.aspenpublishers.com/PDF/SS10802142.pdf

Now: http://benefitslink.com/boards/index.php?s...28029&st=30&hl=

Effen: Please explain germane Germans

"Now, something tells me you were't smiling when you wrote that. Bad boy Dunc. " Ah, Ritchie, I am smiling now. But I am not Duncan Harwood

I would not grant amnesty to people who post sports-related comments in pension-related threads, such as http://benefitslink.com/boards/index.php?s...28060&st=15&hl= Certainly wastes my time when looking for relevant information

The CDs are worth it. You can do word searches; print pages; save selected pages. Everything is in adobe .pdf

An abbreviated summary of some of the options: If the document deals with the issue, report disgorgement on a 1099. [An early version of the Corbel GUST document had an "Inclusion of Ineligible Employee" clause but it did not make it to the IRS approved version]. If the document is silent, forfeitures need to occur and the employee will "have to be made whole outside the plan." IRS correction procedures suggests you amend the plan to let the person into the plan early so that the money stays in their account. Of course some employers do a negative 401(k) deduction, but this option is definitely not available once a calendar year-end has occurred.

If the levy truly garnishes a 401(k) plan [read it carefully] and if the payment is a lump-sum payment that would be eligible for rollover, it is subject to 20% withholding. PLR 200426027 states the IRS position

If the Plan document says to distribute the deferrals, plus earnings, then this would be reported on a 1099-R.

http://www.irs.ustreas.gov/pub/irs-pdf/p15.pdf "Supplemental Wages"

Can't help you on definitions, but here are the limits from 1989 - 2005 http://www.irs.gov/pub/irs-tege/cola_table.pdf

http://benefitslink.com/boards/index.php?s...=0entry110057

Thank you for the 318 reference. Reg 1.416-1, T-16 and T-17, refer to " the outstanding stock of the corporation" and "all stock of the corporation." I think your denominator includes all shares, including those in the ESOP: 105,000 in your example.