pmacduff

Ok Tom - Sorry to be off topic - I wanted to be sure you saw this so I'm using your forum! How was the ASPA conference?

mbozek - sounds like she's saying the VCR was filed because the participants were not given distribution options when the $ transferred. I'm assuming the DB must've terminated, not merged, to the DC so distribution options should have been offered???

Our Corbel prototype allows us to choose, i.e., per payroll, monthly, quarterly, annually, etc. This is Employer $, so I don't know why the client would be forced to contribute quarterly...

82 to go...jevd looks close, but I'm betting on tomorrow, not Wednesday....

As WDIK points out - even if 92 is your EOY count for 2003 - if there were 8 or more "new entrants" as of 01/01/2004, it could take your count up over 100 for the 2004 plan year(BOY count) so be sure and check carefully. (Sorry - I had to edit the plan years per the original thread!!)

rc - here is a *.pdf file from 2002, I don't have anything more recent yet... state_withholding_information_sheet.pdf

Thanks Pensions - I guess I still don't consider it "mandatory" withholding because the participant can elect out of it. (It's kind of like those Columbia House cards referenced in another thread where you used to have to send them back if you didn't want the tape sent automatically!!) I don't think a Plan Administrator or Trustee would suffer the same fate for not withholding the 10% that they can and do for the 20%. Anyway - thank you for the cite!

Pensions - I beg to differ...do you have a cite? I'm 99% sure there is no longer any MANDATORY withholding on hardship distributions of any kind. I think many of the investments companies out there state that they will withhold 10% unless the participant elects out, but I don't think that is required by the Code.

There is no longer mandatory withholding on hardship distributions. I think it used to be that some investment firms had standard amounts (i.e., 10% withholding) on hardships just as part of their own systems & rules. The participant then had to "elect out of" the withholding. Some may still. Many of mine now have optional withholding elections right on their hardship forms. As far as the previous years where 1099-Rs may not have been done...how long ago are we talking?

there are some previous threads on this very topic. I don't know how to put in the link to a thread, so go to the search feature and key in top heavy or top heavy contribution, a LOT of threads come up.....

Employee Assistance Program???

Are these individual accounts or pooled funds? If individual - did each partcipant get the correct allocation and there was $ left over or did one or more participants get too much allocated?

Maybe a "2" or a "7" depending on the taxpayer's age?? The 1099-R instructions do not specify, but do indicate in the Box 7 instructions to "be careful which code you use because this is the code the IRS uses to determine if the taxpayer properly reports the distribution." This is why my initial response was a "G" because we all know that we do not want this amount taxed to the participant when the annuity is purchased. So - I'd like to know also......

Bird - Thanks - I asked because, like FundeK, I was under the impression that a Qualified Plan ALWAYS reported any $ leaving the Plan on a 1099-R form. I've only seen monthly payments made directly from the plan or the participant takes a lump sum, rolls to an IRA and purchases an annuity outside of the plan. Does the annuity remain under the Plan "umbrella" of assets for reporting purposes? Is this why there is no 1099-R form initially by the plan? Maybe this is just a recordkeeping function of the annuity company (to prepare the 1099-R forms) since the annuity was purchased by the plan?? How are others reporting this on the 5500 form??

Bird - why wouldn't the plan report it on a 1099-R as a direct rollover code "G" - not taxable to the participant. Then the annuity company would report the payments as taxable when they come out.

Whether the annuity is paid directly from the plan or the plan purchases an annuity, or the entire balance in the plan leaves the plan to purchase an annuity, the plan would still prepare the 1099-R form. Is the plan purchasing the annuity or is the particpant getting a lump sum with which he/she is purchasing his/her own annuity?

I didn't see anywhere where Linda said her plan has a last day rule. IMHO, the amendment to recognize comp from date of participation only would have to be effective 01/01/2005 and cannot be used in 2004.

No pax - I was just trying to say that you can't have a "standard" 2/20 vesting in a top heavy plan with 5-year cliff for the reason that Archimage cited. Our standard prototype plan gives the option of either the 2/20 or 3 year cliff for top heavy years so I thought maybe Nancy's did also. You could of course use the schedule you cite if it is in the doc.

Sorry Nancy, what Archimage said is what I was trying to point out. If you have a 5 year cliff vesting schedule and the plan becomes top heavy, your top heavy schedule must be the 3 year cliff not 2/20. That is not new.

Nancy - thought it might help if you saw the Code Section US CODE TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter D > PART I > Subpart B > Sec. 416. Sec. 416. - Special rules for top-heavy plans (a) General rule A trust shall not constitute a qualified trust under section 401(a) for any plan year if the plan of which it is a part is a top-heavy plan for such plan year unless such plan meets - (1) the vesting requirements of subsection (b), and (2) the minimum benefit requirements of subsection ©. (b) Vesting requirements (1) In general A plan satisfies the requirements of this subsection if it satisfies the requirements of either of the following subparagraphs: (A) 3-year vesting A plan satisfies the requirements of this subparagraph if an employee who has completed at least 3 years of service with the employer or employers maintaining the plan has a nonforfeitable right to 100 percent of his accrued benefit derived from employer contributions. (B) 6-year graded vesting A plan satisfies the requirements of this subparagraph if an employee has a nonforfeitable right to a percentage of his accrued benefit derived from employer contributions determined under the following table: The nonforfeitable Years of service percentage is: 2 20 3 40 4 60 5 80 6 or more 100 Hope this helps.

Nancy - Although a 2/20 schedule is most commonly seen in docs for when the plan becomes top heavy, the 3-year cliff is also a top heavy vesting schedule. I'm not sure if they still do, but I know our old FDP prototype documents referenced both the 2/20 and the 3-year cliff in top heavy years so the plan would use the appropriate schedule. It is a valid request.

Ok - I have an Employer in a multiple employer plan with no non-key participants or NHCE employees. Is this Employer even considered to be top heavy? The Employer is not using the safe harbor provisions at this time as they have no NHCE employees and don't want to fund the SH match, but the 2 owners are deferring @ >3%. Plan Document says that top heavy is allocated to all, including keys. If this plan is top heavy, is it necessary that they key employees who are deferring receive a 3% top heavy contribution?

Thanks to you too John...most helpful!

Just to expand on what others are saying...IMHO (I'm pretty much strictly in the small Employer market as a TPA) In this day & age & economy, many of our clients have eliminated any employer funded "pension" plans they may have once had. In order to encourage these small Employers to maintain any type of qualified plan at all, we need to make the plan as attractive to the owners as possible. One way to do that is to show them how they can maximize their own benefit with the least amount to the rank & file. I understand that it can sound like a negative for the employees, but is it really? I, for one, know that many of the clients my company services would not offer any type of plan at all for their employees if the owners were not realizing the maximum benefits at the lowest cost. Isn't that better than the alternative of offering no plan at all?

Thanks Tom - Most of my xtested plans are small companies with older owners that we maximize with no NHCEs over age 50 so I don't even have to impute disparity. But on this new plan looks as though imputing will help them pass testing. I can certainly check it by hand, I just wondered if Relius was "reliable" in its computations!! Thanks again.