JanetM

My advice - 401(k)(3)(E) 401(k)(3)(E) For purposes of this paragraph, in the case of the first plan year of any plan (other than a successor plan), the amount taken into account as the actual deferral percentage of nonhighly compensated employees for the preceding plan year shall be -- 401(k)(3)(E)(i) 3 percent, or 401(k)(3)(E)(ii) if the employer makes an election under this subclause, the actual deferral percentage of nonhighly compensated employees determined for such first plan year. If you don't have to consider then HCEs then this wouldn't be in the regs.

Yes you would consider a single mutual fund or pooled account a single security. The plan must not be participant directed investments.

We decided the same thing. It is better to remind them that they can diversify any time and the importance of diversification.

See IRS Notice 2004-8 for what not to do.

Yes, you add medicare wages to section 125 to get gross. What are you trying to get from W-2?

As I recall, the states that didn't match the IRS code on treatment of Roth all passed legislation to do so. That is except for the 12 states where this is moot point. 10 states with not state tax -AL, FL, NV, NH, SD, TN, TX, WA, WY, and 2 states don't tax retirement income MI, PA. I don't know of any site per se. Google it and see what you find. Maybe someone in a contrarian state will chime in.

I don't believe you can gift a qualified plan balance. I think that to do it the person would have to take the distribution and then give it to the charity. I think they are confusing the new IRA gift to charity that are part of PPA.

I would quickly provide them with the SPD and beneficiary form. As far as paperless goes, there are couple ways. Participants call on phone to automated system or go online. When they use combination of ID (maybe SSN) and PIN or password they are deemed to be issuing direction to the plan. Just curious about one thing, have they directed their investments? How do they go about that? Is there phone or online site to manage investments or make changes?

Seems to me it would.

Maybe I am missing your point, but if employees asked to have money put into the plan why would you return it? If the forms are that important just send them a form and ask them to complete and return. Many plans operate in paperless environment.

Our withdrawal liability calculated by Sheet Metal Workers Pension Fund is the basis of my statement. After triggering this WL we did a lot of research into WD calculation and found the Plan tells the participating employer the amount due and rate used to calculate it. To make it even worse, you have the pay the amount up front before you can even question the calculation.

You don't have to vest Company A amounts since you are not terminating the plan. Company A match will continue to vest. Just curious, do A and B both have the same vesting schedule? Since these are not safe harbor matching amounts you can change them at any time.

You have to use the plans assumed rate of return for the withdrawal calculation.

What does the plan say? Are auto enrollment and default fund tied together. Say someone gets auto enrolled and elects something other then default. Not that they elected deferral, just the fund. Seems to me the auto enrollment increases would still apply. The flip side it someone who elects a deferral amount and allows it to go to defualt fund. My take on this is the person is still part of auto enrollment group and subject to increases in future. Only an affirmative change in their deferral amount would take them out of the auto enrollment status.

Don, I understand how self funded H&W plans are ERISA plans and not payroll practices. OP asked about vacation/sick policies. Those are usually based on the method of funding.

It is my understanding that the method of payment is the determining factor when the question comes up. When an employer pays benefits (vacation or sick pay) from general assets they have not created an ERISA plan. See ERISA reg 2510.3-1 for more.

No 10% penalty on earnings if you are over 59.5. If you are not older then 59.5 you will have to pay the 10% penalty on earnings. There are exceptions - if you are disabled, or if this is for qualifed purpose - eg first time home purchase.

Has always been my experience that the ER/plans sponsor names Trustee. That could be themselves or someone else. But whoever it is is a fiduciary of the plan and now responsible for selecting and monitoring the funds offered by the plan. Make sure the ER understands that they can delegate the responsibility but are required to monitor those they delegate to.

The participant can always take more then the minimum required distribution. As to the second part of your question - I have to assume since you don't allow annuities that this is DC plan. Answer book states: No. If, for any distribution calendar year, the amount distributed exceeds the minimum required, no credit will be given in subsequent calendar years for such excess distribution. [Treas. Reg. §1.401(a)(9)-5, Q&A-2]

Depends, will there be black out, is new plan safe harbor, use autoenrollment or any other feature that requries notices? We have spun off a number of groups to new or existing plans over the years. We notify them of each step in the process, especially if it involves mapping of funds to new funds. The 404c issues and all that are the reason. Doesn't hurt to ensure all participants are aware of all aspects of the transition.

Correct, you have prohibited transaction until you make up the lost earnings on original contribution. So now you are filing the 2005 5300 to calculate the 15% excise tax on the lost earnings that should have accrued between 110/16/05 and 12/31/05 and then filing a 2006 5300 to calculate the 15% excise tax on the lost earnings between 1/01/06 and the date you funded the lost earnings.

No it is not taxable to employee who receives it. See IRS publication 970.

IMHO the custodian/trustee is requried to properly classify all assets, income and expenses on certified statements. Auditors of the plan can not rely on record keepers numbers unless the trustee certifying the statements will certify the record keepers numbers. The custodian needs to have the details to properly record transactions.

Tracing the history of plan design and employee communication/education? Early days it was ER directed balance forward plans and no participant interaction to total EE directed plans. You could get 20 pages on that if you covered the asset/investment angle, the shift from PP/MPPPs to 401k, and the shift in responsibility for decisions.

The way I figure it, catch up stays at $5,000. Does anyone disagree?