KateSmithPA

Several members of our firm recently attended a SunGard Corbel 5500 Workshop. We all have notes on one case study with regard to a 401(k) plan that provides ancillary life insurance. In this case, we were told to check Box 8b on the 5500 and put in code 4B. Many of the plans we prepare 5500s for are invested in Group Annuity Contracts through a major insurance company. The plans do not allow for life insurance as an investment option. We have always included "Insurance" as a funding arrangement and have completed Schedule A. But, we have not checked Box 8b to call the plan a welfare benefit plan. Our manager has now directed us to check Box 8b - indicating a welfare benefit plan and Code 4B for Life Insurance. Is this correct? Also, we cannot locate our email contact information for sending this question to Corbel. If anyone has that, we would sure appreciate having it. Thanks.

Maverick: Thank you very much. I tried it and it did work well. Unfortunately, I also got disappointing information. Thanks again for your help. I will add that number to our resource list. By the way, loved your tv program.

Employer has 2 plans; a profit sharing plan and a separate 401(k) plan. The plans are aggregated for testing. There are more than 100 participants in the 401(k) plan but fewer than 100 participants in the profit sharing plan. We know the 401(k) plan must include an audit with the 5500. Because the plans are aggregated for testing, does the profit sharing plan also require an audit? Thank you.

Bob K. Thank you for the response. That was the number I had called previously when I called the EBSA. I guess I am going to have to conclude that this plan has never had a 5500 filed for it, as hard as that is considering how long the plan has been in existence.

I, too, am trying to determine if a plan has ever filed a 5500. The plan was effective 1994. The client has no idea. I have called EBSA and have checked FREEERISA.com, neither of which has any mention of the plan. I tried the phone number listed in the above post by wmyer, but that number does not work. Should I assume the plan has never filed, or is there some other place I should look? Thank you.

One of our clients was recently told by their payroll company that he had read that the safe harbor match contribution must be contributed each pay period, as the salary deferrals contribution. This make no sense to us, but my manager asked me to look into it. Has anyone out there heard of such a requirement? Thank you.

I know very little about SARSEPs, but have been asked to research the following: Client has existing SARSEP. Original documentation was signed with ABC investment company. That documentation has no requirement that all assets be invested with ABC Company. Broker recently adds investments from XYZ Investments as an option. XYZ requires company to fill out new documentation through them. Company complies, using original effective date. Is this all okay? Does the new document supercede the old? This seems too obvious to me, but I was asked to find an answer. Thank you.

I have searched this forum and found this question asked before, but nobody answered it the first time. We have to amend a 5500 for an incorrect Employer EIN. Amended returns are to include Form 5500 and any affected schedules. Since each schedule has the Employer EIN on it, should I conclude that all the schedules filed with the original 5500 must also be filed with the amended return? Thanks. Kate Smith

We have determined that an employer failed to include one eligible participant in the profit sharing allocation for 2001, 2002 and 2003. We have calculated the amount the employer owes to this participant plus lost earnings on those contributions. The employer will deposit the total amount this week. Can anyone tell me if these contributions are deductible contributions in 2004? Thank you.

Hey John: I saw your post on the message boards and was talking it over with one of my managers. She found a site in Tripodi - 2002 edition - Chapter 6.160 - first paragraph. It appears that the participants with account balances in excess of $5,000 can remain in the plan of the controlled group and cannot be forced out. Say hi to everyone for me. Kate

Lynn, Thank you for your reply. I will have the client contact a Traverler's agent to see if they might be able to help. Kate Smith

I have searched the boards on this subject, but I haven't found an answer to my client's dilemma. If it has been addressed. I probably did not ask the right question in my search. Plan has about $1,660,000 in non-qualifying assets. Total plan assets are $2,723,000. Therefore, non-qualifying assets are greater than 50% of total plan assets. This seems to be the problem for obtaining a bond on the non-qualifying assets. If the non-qualifying assets totaled less than 50% of the total assets, then client could get a bond on the $1,660,000. Are others finding this to be the standard? Or, are there those of you, out there, who are aware of companies that would issue a bond to a client in this situation. Thanks.

There is nothing in the very limited instructions that says to circle anything. I did not. But then, this is my first experience with amended returns.

BFree: Thanks for your advice. I will go back and do my reading.

I am preparing the SAR for a small money purchase pension plan. Most the plan assets are held in an insurance company variable annuity product. However, one of the participants has his assets in two brokerage firms. I was listing the assets on the SAR and then realized that the participants have a right to ask for statements from the brokerage accounts, even though they personally are not invested in them. Is this correct? And, if it is, do they actually get to see an asset statement showing this one participant's balance in those accounts?

I had to amend a few plans this year. It was the first time I had ever filed amended returns. I read the directions in my Form 5500 Booklet. They say, "Only identify schedules that are being amended on line 10 of Form 5500." Since both my amended 5500's only had changes to the Schedule I, I only marked the box in front of Schedule I on line 10 of Form 5500. I hope this helps.

Boy, do I feel stupid. Thank you.

Company A becomes a company in 2002. Also in 2002, Company A buys Company B. Company B has an existing 401(k) plan. Company A assumes sponsorship of Company B's plan. The plan is amended and the name and tax i.d. number of the plan changes. I was going to file a final 5500 for Company B's plan for 2002 showing the assets transferring to the newly named Company A's plan. However, when I go to prepare the 5500 for the newly named (but not new) plan, I am perplexed as to whether to mark the box titled, "the first return/report filed for the plan" because according to the plan document, the effective date of the plan is in 1989. And, the beginning plan assets will equal zero. So, now I am confused. If I just change the name and tax i.d. on the form 5500 and file it as a continuation of Company B's plan, I assume the EBSA will wonder what happened to the plan with the old name and tax i.d. number. If I file a final 5500 under the old name and start a new 5500 with the new name, can I say it is the first return and still show an effective date of 1989? I'm sure I am missing something major here, but I have searched the boards and my reference materials and I just don't know what to do.

Thank you all for your help. Tom, I can't believe you noticed the difference. I feel much less fraudulent now that I have removed the MD.

Employer allows employees to make elective deferrals to a 401(k) plan prior to becoming eligible. I have read every post I have been able to come up with on this but I am still not certain of the correction. I understand that the plan may be retroactively amended to change the eligiblity requirements. That is one correction. I have read that it may be appropriate to return the deferrals to the participants (thank goodness there are no matching contributions to be concerned with). On the other hand, I have also read that you may not return the funds because there is no distributable event. If it is appropriate to return the funds to the employee, how is that reported on the 1099? Is an amended W-2 required? I think the final option I have read about is to transfer the ineligible deferrals to the forfeiture account and have the employer make up the amount to the employee through their paycheck. The plan document states that "If any person made Elective Deferrals erroneously, the Elective Deferrals and the associated earnings shall be distributed to that individual in the Plan Year in which the discovery was made. Alternatively, the Employer may determine if an alternative correction method may be avaiable and use said method to make the correction." I suppose it is obvious that we should follow the plan document, but I guess I just need reassurance that the money may be distributed to the participants, and how to report such distribtuion. Thank you.

mbozek, thank you very much. That is a big help. Kate Smith

A broker I do some business with called me today to ask for some help with what he thinks is a 403(b) issue. I don't have much to do with 403(b)s and I really don't know how to help him. A client of his is a public school teacher. She has been offerred an early retirement incentive. A part of the incentive is a $20,000 employer nonelective contribution to a 403(b). She currently has an employee funded 403(b) with Nationwide. Nationwide has informed her that she cannot deposit the nonelective contribution to that plan because it does not allow for employer contributions. The 403(b) contracts are in separate accounts through different providers. The employees do not have to have a 403(b) - it is an individual decision and is in addition to the state retirement plan the employees are also covered by. Only seven teachers are taking advantage of the early retirement incentive. Does this teacher simply need to find another provider for this one-time nonelective contribution? Is the contribution subject to any kind of testing since only 7 out of who-knows-how-many teachers will receive this benefit? I'm not sure if I am even asking the right questions here. Any advice would be greatly appreciated. Kate Smith

I love the new format, but I can barely read the topic titles. Can you please enlarge those letters? Thanks.

Thank you very much. I think these things get so confusing.

Company A incorporates in 2001. No employees. No plan. In 2002, Company A buys Company B. Company B has an existing 401(k) plan which Company A adopts. For 2002 adp/acp test - are employees who earned more than $85,000 in Company A in 2001 HCEs for the 2002 test? If the plan uses prior year testing, do they have to use the results from Company A for 2001? Thanks.