pmacduff

We have a plan terminating and there is one partially-vested terminated participant with a balance who left in 2004. The Plan Sponsor/Administrator has repeatedly tried to get said participant to take his balance out (he is not "lost" - the PA has a valid address). Plan Sponsor thinks it unfair that he should benefit from the Plan Termination because he left his balance in these many years. They took the approach that he has passed 5 breaks-in-service and is not entitled to the non-vested portion. His non-vested portion will be moved to the plan forfeiture account and he will be paid (or rollover) the remainder of his balance for the Plan Termination. All other participants will be 100% vested on Plan Termination. Anyone see any issues with this?

For what it's worth, since it was set up as a multiple employer plan, I would check the multiple employer box and report the one company making 100% of the contributions. I think avoids any future issues when the next return is filed.

Are people still having issues? We are - cannot believe the intial log in is SOOOO slow and then when you finally do get in, even just going from page to page takes FOREVER Crazy!

one more comment - if you are "totally and permanently" disabled, even if under 59 1/2 you may not have to pay the additional 10% penalty. You should check with your tax advisor.

Thanks Lou. I was thinking correctly but then second guessed myself because my memory "ain't what it used to be"!

Two companies (A & B) with idential ownership: owner #1 = 25%; owner #2 = 25%; owner #3 = 25%, owner #4 = 8%; owner #5 = 8%; owner #6 = 4% and owner #7 = 4%. I've had a brain freeze...where the CG rules state "the same 5 or fewer", it doesn't matter if there are more than 5, just that 5 or fewer own 80% or more, correct?

thank you both for the comments. Larry - yes - Between us and the client we will be doing what we normally do to search for these folks. We're just now waiting on the client to confirm the final listing of those she cannot locate. Client wants to try and have everyone paid out by 12/31 so I'm getting all the information together ahead of time for client's options for those we can't/don't find. thanks again.

We have a long term balance-forward client plan where we, as TPA prepare the distribution paperwork and subsequent reporting (ie. 1096, 1099-Rs, 945 etc.). The client handles the actual payout from the investment funds based on the completed distribution form when returned. Said plan is now terminating. The client has valid contact information for the vast majority of the participants - address and such - so we'll prepare distribution paperwork for those folks. There are a few former employee participants, however, where the client has no valid contact information and only "old" addresses. Let's say there are 5 people and the total of their balances is only about $13k. (Each individual balance is over $1,000.) We're hoping to be able to send those funds to a vendor and they will set up the IRAs and take it from there. I have contact information for Penchecks and plan to call them, but am more or less wondering if others have experience with Penchecks or any of the vendors that have these services and what is the opinion on the process? Don't have many balance forward plans left and plans that have terminated with the usual large 401k vendors (i.e Nationwide, AF, John Hancock, Empower, etc) have a pretty straightforward process for these types of "lost" participants to get them into an IRA or cashed out as applicable so that the plan can close down. Thanks in advance.

"Ditto" what Belgarath said... ?

We know that a safe harbor 401(k) that "consists of solely a cash or deferred arrangement and matching contributions that satisfy the safe harbors of 401(k)(12)/(13) and 401(m)(11)/(12)" gets a pass on the top heavy requirement. I'm sure I'm overthinking but if I have a Plan with employee deferrals and SH match basic formula, then an additional 100% vested ER match of 25% up to 4%, I still get the TH free ride, right?

BG5150 - I agree - and usually do all of mine in June - but this year things got hectic! Then when the batch I sent certified in mid-July was never confirmed I resent them with others that someone else in the office was sending on July 31st. Next year plan to make extra effort to do them in June again !

Still haven't received confirmation of the first batch but did resend those extension with the July 31st batch. Have another question, though, I seem to recall a few years back when the extensions were filed late in July that the IRS did not get them timely to the EBSA. Some of our clients that were filed in early August got a letter from the EBSA that the filing was late. I know they can prove the extension was filed, but my question is do others wait a certain amount of time into August to file to be sure the extensions are on record and have been shared by the IRS with the DOL (EBSA)?

anyone ever have an issue with the actual delivery? I sent eight of them out certified (in one package) on July 12th and have USPS tracking through July 22nd that says "package is enroute through the delivery system". No updates after that. The package was in Salt Lake City on July 18th according to the tracking. Just seems like its been way too long and it should have been there by now so I'm wondering what others have found?

I agree with Bird. Would also wonder, though, what does the TPA service agreement with the client say, if anything, with regard to responsibilities?

One Plan; Two entities: one entity is a partnership, partners receive K-1s. other entity is a participating employer and a professional corporation (PC) (one person/participant). Participant takes a W-2 from the PC and makes the total ($18,500) deferral contribution on the W-2 wages but also has K-1 from the partnership (50% partner). Should the plan use as income the K-1 from the partnership and the W-2 from the participating employer PC?

Can an EACA arrangement be amended for auto escalation any time during a plan year or must the auto escalation be effective as of the beginning of a plan year? It has been an EACA arrangement but did not previously have an auto escalation feature and they want to add one. thanks in advance!

Can an EACA arrangement be amended for auto escalation any time during a plan year or must the auto escalation be effective as of the beginning of a plan year? It has been an EACA arrangement but did not previously have an auto escalation feature and they want to add one. thanks in advance!

FWIW - I took that second question to mean that the person is over 70 1/2 but still working and not a 5% owner, so did not have to start RMDs if the plan has that provision. If that is the case, unfortunately once the RMDs have started the Plan is not supposed to stop them.

thank you all for the comments. the key here was that the PA (client) wanted to keep things as "easy/simple" as possible as they already feel that plan loans take way too much of their time. I'm thinking that perhaps some reworking of the Loan Policy would allow them to stipulate that repays must be made according to the original amortization only. They have no issue with allowing complete payoff at any time, just want to avoid allowing odd payments.

So that would mean that the PA must track the loan reamortizing each time there is a repayment? See - most of our clients are small and simply use the original amortization for tracking. Participants in these smaller plans never seem to keep a copy of the amortization they are provided with, much less keep track of the loan, so are constantly going to the client to find out how much more they owe. I know banks do this on car loans or mortgages for example, but I didn't know if a Plan/Plan Administrator was required to allow for it. I suppose they could rework the Plan Loan Policy to more specific language if they don't want to be tracking those extra amounts and reworking the loan balance each time a payment is made.

Here is the only sentence I can find in this particular loan paperwork. It's in the Promissory Note: "The BORROWER may prepay the loan without penalty. Each payment first applies to the payment of accrued interest and the balance of each payment applies to the payment of principal." Trying mostly to ascertain if the PA MUST allow odd payments or if they can tell the participant that only regular weekly repays (or multiples thereof) and/or a complete payoff are allowed.

Plan loan policy calls for a "level amortization" and repays made through payroll deduction. Is the plan required to allow a paticipant to pay extra odd amounts (through payroll) if they choose? As an example, weekly repays are $88.52 and the participant wants to increase that by $20 and pay $108.52 weekly. PA is tracking the loans and not the investment vendor, which means the PA would have to keep track of the "extra" repays and where they apply, presumably principal only. thoughts?

Does he have any interest in adopting a seasoned pension administrator?! (hee hee). Sorry I know this isn't helpful to you in the least but I couldn;t resist!!

ok - so after no word back to my email, the client called and left a voice mail and sent an email (indicated in the letter) along with a copy of the filing acknowledgement. The guy from the DOL/EBSA called the client back the same day and told him that he had looked at the filing, saw the Accountant's Opinion and was not sure why the rejection letter was issued (!). He told the client to ignore the letter and that he was closing out the case. Obviously I'm happy for the client with the outcome but Jeesh! All's well that ends well I guess!!

Thank you Kristina and everyone for your replies. We never use the "Other" attachment type for the Accts Opinion. We have been filing this particular return for the client for a long time. We did send an email to the DOL per the information in the letter and will await response. I tried calling the phone number listed in the letter as well, however that was simply an automated system with direction to leave a voice mail. I explained to the client they are the "legal" Plan Administrator and I'm fairly certain that the DOL will not correspond with me as TPA. We shall see. I'll keep everyone posted on the outcome.