KateSmithPA

At the IRS Q&A at the end of the ASPPA conference, there was a discussion about amending safe harbor plans mid-year. I got the feeling that one should be very careful about doing that, especially if the amendment affects something in the SH Notice. A client has a 401(k) with the 3% non-elective contribution. The plan allows for quarterly changes to deferral %. This is reported in the SH Notice. One of the doctors just discovered that she is not going to max out and wants to change her deferral % now. The employer would like to allow the change. Under the section, "Deferral Modification", the docoument states that "the Plan Administrator may adopt procedures that override any election in this section without a plan amendment." Any thoughts about this? We would not want to put our client's plan in jeopardy. Thank you. Kate Smith

The 6-month suspension period has ended for a participant who took a hardship withdrawal. Does the employer automatically re-start salary deferrals based on prior elections, or does the participant have to re-elect to begin salary deferrals? Thank you. Kate Smith

Joe: Did you ever received an answer from Relius about this question? Thank you. Kate Smith

Client does not want to fund the 2009 Safe Harbor Non-Elective Contribution. They want to know what the consequences are. The only thing I can think of is that the plan could be disqualified for not following the terms of the plan. Any chance they could fund the NHCEs but not the HCEs? Thank you. Kate Smith

A recent ASPPA asap stated that the mailing address for 2008 returns has changed. According to the asap, the mailing address changed from PO Box 7043 to PO Box 743. The two are so close that I wondered if that was an error. I called the DOL Public Disclosure Room (per the asap) to ask about the address. The fellow I spoke with did not know anything about the address change but said we could mail the return to them and they would date stamp it and forward to Kansas. Can anyone confirm that the address provided by the asap (PO Box 743) is indeed correct? Thank you. Kate Smith

Participant, age 68, is taking a total in-service distribution. He is rolling the distribution into an IRA. $48,000 of the balance is after-tax money. Can he receive a non-taxable $48,000 lump sum distribution and rollover the balance to his IRA? Thank you. Kate Smith

Kathy: Congratulations! I also took and passed the exam and even got that answer right, though I just guessed at it. Isn't it good to have that behind you? I also have not had confirmation from ASPPA that I passed the exam but I went ahead and applied for my CPC credential. I will look forward to hearing from ASPPA as to the way they came up with the answer. Kate

Kate, I wrote to ASPPA on April 6 on this issue and completed the required form on the website. The website information indicated that if I did not get a response from ASPPA within 10 business days, that meant there was no change to the information. So I am really confused. Kate, what answer did you get for the problem? Is my thinking correct or did I miss something in my analysis. I do understand what QDROphile was saying, but the question specifically asks for the particiular employee's annual addition AND not the annual addition limit for 2010. Kathy: Based on the example in the study guide I had the same analysis as you. And, even using QDROphile's advice, I cannot come up with any of the answers they list on the exam. Thank you for letting me know that you had already contacted ASPPA. I guess I will submit my exam by guessing at this one. I think I have enough right answers to pass. I sure hope so because did you notice that we can only take this exam once? All the others you could take twice (thankfully I did not have to). This is my last exam before CPC and I just want to be done! Kate

Kathy: I had exactly the same questionabout question 12 and I still don't get if even after the response from QDROphile. I sent an email to ASPPA, yesterday asking them to confirm that one of the answers on the test was actually correct. I am still waiting to hear from them. Kate Smith

First of all, I know almost nothing about top hat plans but have been asked to find an answer to a question. I have checked the EBSA web site, downloaded 29 C.F.R. 2520.104-23 and a copy of the DFVC program. A new client has told us that they established a top hat plan in 2004 and they do not think that they filed the registration statement with the DOL. Is the only consequence that they have to complete Form 5500 and need to go through DFVC to correct the missed filings 2004 - 2008? Secondly, does the top hat plan file all the same forms with the 5500 that would be filed by a 401(k) plan, e.g. Schedule A (if applicable), Schedule I, etc.? What about the participant count? Thank you. Kate Smith I should have read the DFVC program more carefully before posting this question. I found the answer in there.

Thank you, Everett. I figured it was too good to be true! Kate Smith

I was opening up investment statements and included with the statement was a letter from the investment company. The letter started out, "The Economic Stabilization Act of 2008 contained a provision that extended the date by which Form 1099 must be mailed to February 15." This is the first we have heard of this. I tried to find an answer at the IRS web site but was unsuccessful. Does this apply to all 1099 filings, or does someone know if this is specific to brokerage firms? Thank you. Kate Smith

Company has SIMPLE IRA. They do not want to fund any match for 2009 and they have never given out notices to the eligible employees. They want to terminate the plan but have already withheld from the 3 participants' first paycheck in 2010. They seem to think they do not have to fund a match if it is not "feasible". I told them the must fund at least 1%. I don't know how you terminate a SIMPLE IRA. Just stop making contributions? I told them they should refund the amounts already withheld from the participants wages but she couldn't figure out how to do that because of the taxes, etc. I guess I have 2 actual questions: 1. Must they fund a match for 2009, and since they never told the participants they were getting anything, may it be 1% instead of 3%? 2. How do they terminate this plan? Thank you. Kate Smith

A client received a call from a former participant. He requested a cash out of his account balance in the plan. Balance is below $1,000 (about $980). Can the client cash out the participant without having the ususal participant distribution election form completed? Thank you. Kate Smith

An auditor has determined that for 2 hardship withdrawals, the 6 month suspension occurred, but not right away. The first participant went 4 pay periods after the hardsip before the suspension started, but they did suspend deferrals for 6 months. The second participant received a hardship on 11/4/2008 and HR did not start suspension until 4/7/2009. If they did not suspend at all, I would know what to do, however, what about the delay? We want to impress on the plan sponsor the importance of following the rules. Thank you. Kate Smith

Participants are paid weekly. This week, for some reason, the deferrals were not withheld from the participants' wages. This is a one time error - they have already fixed the problem for next week. Does the employer have to contribute 50% of the deferrals that should have been withheld, or, can they double up on next week's payroll? If doubling up is okay, do they need to notify the participants? This is a large plan which is why that question comes up. Are there other options? Thank you. Kate Smith

61 year old participant dies leaving a benefit of about $400,000. 47 year old spouse is sole beneficiary. In the following few months, she has withdrawn about $138,000, most of it going to children and who knows what. Broker would like to help her protect what is left (really). From a tax aspect, may she roll the balance of the account into her own IRA and begin taking substantially equal installments and avoid the 10% penalty? I believe she can roll into an inherited IRA and withdraw without the penalty but she may run into the RMD rules sooner than later. Thank you. Kate Smith

The SSA instructions read, "A participant is not reuqired to be reported on Schedule SSA if, before the date the Schedule SSA is required to be filed (including any extension of time for filing), the participant: 1. Is paid some or all of the deferred vested retirement benefit.

Thank you, Sieve, I get lots of requests! I hope I asked my question correctly. For example, hardship amount is $1,000, plus $200 for federal, plus $40 for state taxes, plus $100 for penalty. So participant can take a cash withdrawal totalling $1,340 with no withholding? Again, thank you. Kate

I know that a hardship withdrawal may be grossed up for taxes. May the participant receive the total grossed up amount in cash without any withholding at the time of the distribution? We know the participant will have to pay the taxes eventually. Thank you. Kate Smith

Is there any reason why an employer who currently has a large plan could not seperate his employees into 2 plans, in order to do away with the annual audit? There is no desire to be discriminatory, they just don't want the expense of the audit. Thank you.

One of our physician groups added the Roth 401(k) feature. The assets are held in self-directed brokerage accounts at Schwab. Schwab insisted that the Roth contributions go to a separate brokerage account, even though we do the trust accounting for the plan and the other sources are co-mingled in one brokerage account. Does anyone know if there is a federal requirement that Roth contributions be held in separate brokerage accounts? It doesn't make sense since the funds are comingled when invested in platforms like American Funds or MassMutual. Thank you.

When I was at the ASPPA Conference last October, I attended a session on Plan Documents. I wrote a note during the session that said if there is a feature in the plan that is not being used and probably will never be used, then don't put it into the plan on restatement. For example, a discretionary match that never happens. I know the reason to do this made sense to me as I sat in the session, but I cannot for the life of me remember why it was important to remove unused features. Can anyone out there tell me why it would matter? Thank you.

I have truly tried to find an answer to my question by searching the boards, but after reviewing post after post, I have not come upon this question. I have, however, learned some very scary things about Multiple Employer Plans and SEC rules. We are TPA for an MEP. An eligible participant moved from one employer to another employer, within the MEP, mid year. She had 834 hours with one employer and 1400 with the other. I know that her hours are combined for vesting purposes. However, if the allocation formula requires 1000 hours and employment on the last day I believe she would not be eligible for an allocation from the first company because she only worked 834 hours and was not there on the last day. Would someone be kind enough to confirm or refute this? Thank you.