JanetM

You didn't say if the sum was significantly large or anything. Couple ideas - based on idea that the sum, if allocated to all current participants , would not be large amount. You could simply allocate prorata across all participants. You could use the funds (plan doc allowing) to pay for communication campaign about the danger of company stock in plan. You could (doc allowing) toss in forfeiture account and pay fees. You could only allocate - prorata - to those participants in plan now who were affected during the 1999-2003 time period. Just my thoughts....

402(g) allows for the pre-tax deferral of income. The after tax amount could be as high as $29,000. 415© allows for annual additions of up to $44,000 in 2006. Person could do $15,000 pretax and $29,000 after tax. That of course means there can't be employer contributions or forfeitures. The total contributions - employer, employee and forfeitures can't exceed $44,000. Am thinking the old 10% is from back when you included the employees contributions counted in calculating the maximum deductible amount for the employer.

The one who termed previously, was it voluntary or involuntary. You only count the involuntary terms when looking at partial termination. Facts and circumstances are what is needed. Look at big picture over period of time, was there planned decline in staff over few year period? What are the plans for future staffing, will it increase of decrease?

Here you are. Internal Revenue Service Memorandum Date: March 13, 1998 To: Robert Padilla, Chief, EP/EO Cincinnati Key District From: Director, Employee Plans Division, CP:E:EP Subject: Requirement for definitely determinable allocations On September 8, 1994, we issued a field directive concerning whether a profit-sharing plan that provided for employer discretion to determine amounts allocated to particular groups of employees satisfied the definite predetermined formula requirement under section 1.401-1(b)(1)(ii) of the Income Tax Regulations. The field directive concluded that this requirement was not satisfied for such a plan. On July 30, 1996, we issued a second field directive which rescinded the prior field directive and illustrated several plan designs that satisfied the definite predetermined formula requirement. You have asked whether the first field directive was rescinded in its entirety or was limited to the illustrated plan designs. The first field directive was revoked in its entirety. Consequently, the second field directive should not be interpreted as applying only to the illustrated plan designs, but rather to all plan designs. A plan would not violate the definite predetermined formula requirement if the employer has discretion to determine the amount of the contributions to be allocated to particular groups of employees defined under the plan and the plan specifies the method for allocating these amounts among the employees within each group. The number of people in each group or the number of groups is immaterial provided that each group is identifiable under the plan and the identity of particular employees in each group is not subject to employer discretion. It is also immaterial that the purpose for forming the groups is to satisfy the cross testing requirements under section 1.401(a)(4)-8. For example, a plan with defined groups including a group with one person (i.e. 100% shareholder) would not violate the definite predetermined formula requirement. Although the plan can provide for employer discretion to determine the amount of employer contributions for each group, the plan must require that the employer notify the trustee, in writing, of the amount of contributions for each group. This requirement does not mean that the plan must provide the specific amount of contributions for each group. Instead, the plan must provide that the trustee be given written notification from the employer as to the amount of the contribution to be allocated to each group. If you have any further questions regarding this matter, please call Mr. Al Reich of Technical Branch 5 at (202) 622-7976. Date Published: 03-13-1998 Date Added to File: 05/03/99 09:55 PM EDT Microfiche Number: Doc 1999-15303 (2 original pages)

I agree with WDIK, one puzzle at a time. YIPPY it's Friday!!!!!!!!!!!!!!!!!!!!!

Yes Tom is does give us a break from the pension circus. I for one am glad you put these puzzles up for us to play with, gives me a few minutes to excersize the brain on fun things. Please don't stop contributing to my delinquency!

They would make me run far and fast.

Here's another post that will surely contribute to the delinquency of some out there. Make sure you click on manic mode try that too. http://resinrealm.net/indexpics/bubblewrap.swf

WDIK I am not a lawyer but IMHO Tom seems to contribute to a lot of people's delinquency - mine included.

You report all qualified distributions on 1099R - note AndyHs caveat regarding the deferred comp.

In the interest of full disclosure, why not show them the fees. IMHO if you have self directed investments you must think your participants have the investment knowledge to make good choices. This would include the cost of those choices. If it were my plan I would show the fees clear and up front.

OH NO, Tom it is only Tuesday.............. nothing will get done this week.

LOL not really

Yes Doombuggy we both like cats. Mine is 14 years old next week, has extra toes on each foot, weights in at about 18.5 lbs. Part Maine Coon............. have hauled his fuzzy but all over the world with me. OMG you did pick a hot place to live. We have been having a heat wave in Denver lately, but thank goodness we don't have humid weather.

Under EGTRRA the 2007 amount will be the adjusted by cost-of-living increases in $500 dollar increments. Doubt we will know the amount until late October or November.

10 Bat Masterson JEVD already named the others I know.

You have it right IMHO. Simple to do, A does resolution ensuring that B does not participate. New plan is formed to accept transfer of assets. Then terminate the plan and allow cash out or rollover. Your problem is that the B folks don't have a distibutable event so they can't take the funds from As plan.

It should be simple matter for TPA to post the transactions and correct the account. One issue to address, is there forfeiture account to get from or send to the difference? The account needs to be corrected, the plan must be operated in compliance with its terms. Gut reaction is the participant is going be out a bit of money when this is all said and done.

Run and hide? These folks have a problem. Write up a nice little memo listing the issues that need to be corrected. Plan termination, distributions, and all that stuff. Offer services to fix all that is broke. Send it to them and wait and see. If they send you back reply that they are just going to let the issue go, you have CYA letter. Is going to be plan sponsor not you to take the heat.

Have this vauge hazy thought that relates to IRC section 3405 - income tax withholding.

Maybe. Why not just acquire, have new company adopt plan and merge old plan into buyers plan. Is this being done to give folks access to their money with out termination? Depending on plan, you might be able to amend to allow in service distribution. Not really enough facts to give you concrete answer. Find ERISA counsel.......

Blinky, go figure, it was someone at EFAST who told me to do this back in January.

The alternative is to just wait, file and extension and hope the new forms are available by 12/15/06 and file on the 2006 form.

If you are using the safe harbor rules for hardship you have to meet one of the provisions to qualify. In this case it would be foreclosure/eviction. If the plan allows hardships for financial distress then a statement from the participant covers it.

You have to use the 2005 forms until the 2006 are available. Make sure you show the dates at the top of the form and you can cross out 2005 and write 2006.