JanetM

Maybe I am missing your point. Why send a stmt to someone explaining diversification and all that jazz when they have zero balance?

theedge, Just checking, are you maxing out on 401k plan?

Also keep in mind if you do non qual for this benefit it will be subject to 409A. Very bad and expensive if you mess up. Why not just give the guy the 3% (grosed up if the amount was to have been to the plan). He can put it into IRA or Roth IRA. Boss was wrong, EE contract doesn't trump plan.

Ria, Does the 1099 have a code 1 or code G? You only have a problem is the code is 1.

IRASue - PiP has a good point. Is there any "catch" (last day rule, 1000 hours) to get the match? I know you see this is an unfair, but to be realistic, any matching from the company is free money. Seems 2 weeks is plenty of time to change a single number in a payroll system. Reductions could be result of business decision to reduce expense in tough business cycles.

It is that easy, ask participant and IRA custodian for statement that the funds and earnings are pretax and you are covered. Also make sure the plan is amended so that it allows IRA rollovers to the plan.

Thank you pax.

Am still getting used to the new layout on message threads. Is there any way to epxand so that you don't have click on each posting in a thread?

The length isn't found in section 72, but 10 to 15 is normal. Have seen some plans allow 20. But since the interest ins't deductible it makes sense for most folks to get a bank loan instead.

Yes if the match is discretionary it is legal. Ask for a copy of the SPD and see what it says about the match.

Treasury reg 1.401(k)-1(d)(3)(i) says distribution can not exceed the needed amount. Can't exceed contributions and grand fathered amounts. I would say this does not qualify since the participant can't be precise as to the amount.

Line f is total of active, deferred vested and deceased and beneficiaries. Line g is count of those with balance. These normally are the same or about the same. There could be problems counting alternate payees or beneficiaries.

From 5500 preparers manual [C] Welfare Benefit Plans Required to Report Any employee welfare benefit plan that covers 100 or more participants at the beginning of the plan year must file Form 5500 each year, whether it is funded or unfunded. In addition, any funded welfare benefit plan with fewer than 100 participants at the beginning of the plan year must file an annual Form 5500. In either case, only certain items on the Form 5500 must be completed. However, a welfare plan with employee contributions that is associated with a Code Section 125 fringe benefit plan (i.e., a cafeteria plan) may file as an unfunded welfare plan if it meets the requirements of DOL Technical Release 92-01. [57 Fed. Reg. 23,272 (1992) and 58 Fed. Reg. 45,359 (1993)] For purposes of these rules, a welfare benefit plan is "unfunded," if benefits are: 1. Paid as needed solely from the general assets of the employer or employee organization that sponsors the plan; 2. Provided exclusively through insurance contracts or policies, the premiums for which are paid directly to the licensed insurance carrier by the employer or employee organization from its general assets, or partly from its general assets and partly from contributions by its employees or members (which the employer or employee organization forwards to the insurance carrier within three months of receipt); or 3. Both.

One of our plans (am plans sponsor) has provision that if monthly benefit is less than $75 then you have the option of lump sum. Plan has about 875 active, deferred and retired. We cash out all the under $5K as soon as possible. About a dozen a year elect the lump sum, averaging about $11K. We figure we save on fees from bank that processes the monthly checks as well as PBGC fees. Note that if the plan isn't well funded, the participants will get the lump sum but Owners, Key & HCE won't.

Just be mindful of the turnover. If turnover is high, you will have lots of small account balances and make lots of small forced distributions. This will lead to increased costs and administrative burdens.

Does participant have copy of prior plan SPD? That should answer the question.

J4FKBC - that is great. Thanks again.

You need to get a W-8BEN from them. If you don't you are required to withhold 30%

We had a pension plan and froze it to new entrants and accruals in 2002. We started a cash balance plan in 2003 woth every one starting off with a zero balance. Old DB plan was left intact to pay annuities accrued. I read section 701 of PPA to require only converted cash balance plans to adopt 3 year vesting. Since we didn't convert, but started new plan, I think we can keep the 5 year vesting. Can someone please correct me if that is incorrect. The more I read PPA the less sense it makes.

So let them in but have two years of service to recieve company contributions. Would have to be 100% vested. Or start separate plan with deferral only and then merge the two 1/01/09.

Well if you are in a hurry the IRS doesn't look like they will be of any help. Why not use a locator service.

In place due to IRS regs. Only allowed if plan provisions allow them.

YIKES that is high. Does the TPA charge $60 for all distributions? Seems draconian. If the fee is included in gross distribution it is taxable to participant. If they deduct from the account before issuing payment it isn't.

Give notice that future accruals to MP plan will be 0%. Start new plan for P-401K. If you want you could merge the plans later. Be aware that the J&S provisions will stick to MP balance even after they are merged to PS.

I have never seen anything on the cost. We do get people who wanted us to copy the entire filing and send it to them so they could see it. Had one guy who wanted on the DB plan filings. Schedule B is 52 pages, 4 As, audit report. When I said it would run him about $25 he said never mind - he was just wondering what it was. Said the summary was fine.