pmacduff

Loan repayments should not be reported with "salary deferrals"!?!?! Loan repayments are simply replenishing the principal portion of the loan and adding interest. The loan interest is included on the other income line with overall plan earnings/losses.

Does anyone know if it's ok to use the new EBSA (Employee Benefits Security Administration) name on client's tax form filings? I know the 2002 instructions still show the PWBA, but I wanted to change my filing instructions and cover letters this year so I don't have to do it next year. I know it's not a big issue as the address is still the same...........

Matt - For what it's worth, I agree with you. I was reviewing our Prototype EGTRRA amendments and it specifically says,"In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting "5-year period" for "1-year period". It sounds like your owner's distribution was not for any of the three mentioned.

Thanks everyone for your replies... Ken - When you say Control "C" to cut, did you mean copy or will the info in the original file be "cut" instead of copied? A minor point, I know, but if I "cut" instead of copy, it defeats the purpose. Fredman - the subreport is a great idea! I have six individual statements because as I mentioned earlier, I'm not the most proficient in Crystal yet, so with this small client it was easier for me to copy the 6 individual statements to their own Crystal file and edit them to add the info I wanted. The balance of employees in the plan I printed out all at once with the basic statement format in Relius. Happy Easter to all! Patti

I know another issue that has come to pass with the idea of a Plan checking account...with the DOL now enforcing the earliest possible date deferral contributons can be segregated from the Employer's general assets - many smaller clients are depositing 401(k) deferrals every payroll date into such an account and then moving them into the invested funds as splits are completed or monthly, etc. It remains to be seen if this will satisfy the DOL interpretation of the rule, but it is certainly better than having the assets comingled with the Employer assets, agreed? When I used to recommend that a client establish a Plan checking account to funnel distributions...many of my small employers told me that the bank charges unreasonable fees to maintain an account which at times had little or no balance. This is certainly a quandry for all clients. Whoever discovers a workable/acceptable solution to these issues will be revered in the Pension industry!

I had a client that for years used the Plan Sponsor name, but the address was that of the Accountant for the Company. The Sponsor name was not c/o anybody, but that way all IRS correspondence went through the Accountant's office. Never had any problems, in fact, in my case it worked out better because the Accountant would call me as soon as he got a letter (i.e., business code was wrong or some 5500 question was not answered satisfactorily) and I would respond. The client would have let a letter sit & sit ..................

Come on...realistically, how many of you have actually seen a plan disqualified...especially over an issue such as this. In my almost 15 years in Pensions/administration, I have seen many IRS & DOL audits and have yet to see a plan disqualfied. We even had an Employer who was not depositing deferrals & match to the plan for quite a time, they ended up (with the DOL blessing) using the owner account balances to replenish the deferral amounts to make the participants whole for deferrals, but the participants never got the match! The DOL/IRS also allowed all of the former participants in the plan to roll the balances to IRA accounts and avoid taxation. The Employer (who went out of business, surprise, surprise) was told that neither of the Trustees could ever Trustee a Qualifed Plan again. Go figure.......Seriously, I would like to know on average how many of you out there have seen plans disqualified and what was the reason? betheeg - I would report it on the 5500 form as "other income"........just my opinion....because of the amount involved. What were the total plan assets? What percentage does the $13500 represent?

R. Butler - Thanks for the cite....are you following me this afternoon???

I don't think this is true at least from a qualified plan standpoint. The mandatory withholding only applies to "eligible rollover distributions" which excess contributions are not. I think some investment firms tend to impose their own rules on these types of distributions, but to my knowledge there is no 10% mandatory withholding after March 15th. I wonder if someone was confusing the Employer excise tax on the contributions as they weren't timely withdrawn...????

Since this resulted from an "understated loss" per the original thread, I don't understand why everyone is saying it was unfair to the participants. Sounds to me like a loss was allocated, participants paid out and then when it was discovered that the loss was greater, the Employer "reimbursed" the investment fund. If the original loss had been allocated correctly, the participants would have gotten LESS, right?!?!? DOL's bottom line is always on the side of the participant, so I don't see where they would have a great problem with this situation.

I think TitusracerX is saying that the keys deferred and the client wants to return the key deferrals because, under the old rules, if ANY key deferred over 3%, you still had to give the non-keys 3% for top heavy, which they didn't in this case...is that right? I don't think you can refund the key deferrals, I think you have to make the top heavy. Just my somewhat eductated guess, can someone else offer backup?

Leave it blank since there weren't any distributions other than under the Employer EIN....

Your plan document will (should) state whether or not early retirees are fully vested. It is not REQUIRED to vest early retirees.

Really Pax - fudge the year...who would know??????????

I too am interested in the answer to this. The 20 % mandatory withholding only applies to "eligible" rollover distributions. Since the son as beneficiary is not eligible to roll, my feeling is that the mandatory withholding does not apply.

Ed - you are correct...Pension Answer Book - Q24:45 - "Which employees must receive the top heavy defined contribution plan minimum contribution? Ans: Those non-key employees who are participants and have not separated from service at the end of the plan year, whether or not they have completed 1000 hours of service must receive the top-heavy defined contribution plan minimum contribution." The employee is a participant as of the date eligible to defer; they may not receive an employer allocation until after 12 months of service, but are already a participant nonetheless. I hear people refer to "dual eligibility" all the time, yet it isn't REALLY dual "eligibility", there are just different requirements to receive an allocation of employer monies. Employee is still a participant from initial participation.

Plus - an apartment can be your primary residence and you don't "own" that.......................

Tom - wish I could - I neglected to tell you, we don't use the insurance module...I did everything with the user defined fields which I can use nicely for my Employer reports, but wasn't sure how I could pull the UD info for statements. I thought of that; putting it on and using a formula to keep it from the "non-insurance" participants, but I didn't have the energy or the time. The "cheating" way was to modify only the 6 I needed to.....Oh well...another project for down time:)

Does anyone know if there is a way to copy a complete section in Crystal (for example the report footer) from one document to another without copying each text item separately? What I've done is modify a benefit statement for those participants with insurance (I only have 6 with insurance) so that their statements show cash value, death benefit & premium amount in the report footer. I have to go from one statement to the next copying each text item and wondered if there was any way for me to copy the whole report footer at once from one to the next. Any input is appreciated. Patti

When a participant rolls their balance to a new employer plan and it includes a loan balance, how is that loan transfer balance reported? I didn't think you could prepare a 1099-R showing a loan as a rollover, or do you show the entire balance as a rollover, code "H"? Thoughts??

For most of our clients, we prepare year-end cumulative statements (the funding houses are usually only quarterly) and we do include the accrued contributions. One of the biggest factors for our clients requesting these statements is that they want the participant to see the vesting which is not provided on the quarterly participant investment statement. It may be extra work, but if the client pays you.....??? I know as KJohnson mentioned, it's not required, but in Pensions it's usually better safe than sorry and it might help your client if ever necessary.

Individual limit is the lessor of 100% or $40,000, so as long as the owner does not exceed $40,000 and the testing passes, you should be fine. Your addressing 2 different/independent limits, the 25% Employer deduction limit overall and the individual 415 limits of 100% of pay or $40,000.

The way I was taught, ownership of the policy can be transferred to the participant and they can take over premium payments. The problems lies in the cash value of the policy. If it transfers with the policy, it is really "taxable" to the participant and would need to be recorded on a 1099-R form for the year distributed. One way to avoid this (according to the "old school" way I was taught) is to take the entire policy cash value out as a loan and deposit that to the Trust. The participant can then roll the entire "side fund" monies. Note: It is just a transfer in of $ and NOT a contribution. The policy ownership is then transferred to the participant with the policy cash value at $0.00 (which avoids any taxable event to the participant). The participant must then, if they choose, repay the policy loan with personal funds to replenish the cash value. I'm no insurance expert, but I think if you talk to the agent, this is possible. Hope this helps.

The majority of the plans I work with actually state that you need 1000 hours to receive a "year-of-service" credit for vesting. No discrimination there - 1000 hours is 1000 hours whether you are part-time or full-time.

One of my clients threw that same one at me a few weeks ago. Apparently, they had gotten something from an Investment Advisor (go figure) telling them that the deadline was 5 days. I think many of the investment firms (in the best interest of their clients - of course - not to get funds invested sooner with their firm...) are trying to advise clients about this issue and they don't all have a really clear understanding of how it actually reads (earliest segregation date). Oh well. I guess it's better than clients taking too long for deposits........more bad info though