Jean

We sponsor a standardized prototype plan. We have just found out a client also maintains another plan. What are the GUST determination letter filing responsibilities of this client? I know that they cannot rely on our notification letter when it is received.

It was not believed to be intentional. The check was considered to be a special bonus. There were no other benefit contributions deducted -- such as health, life, and dental from the check. Only the appropriate taxes.

The plan document does require that all W2 income is compensation for deferrals. I believe this is an operational failure. Any suggestions for how this could be self corrected?

The plan document defines compensation as W2 for all plan purposes. The last paycheck for 2000 was a bonus check. All employees (HCEs and NHCEs) received a bonus, but no salary deferrals were taken. The bonus wage was included as compensation when the 2000 ADP / ACP test was run. I cannot seem to find any answers on this type of operational failure. If the contributions were made, the ADP / ACP and Top Heavy test results would not change significantly. Any suggestions?

Thanks for answers. Tom's summary basically covers my questions. One additional one: If the plan is top heavy (again, 2000 plan year, using 12/31/99 determ date), then would that individual considered a key, and in our plan, not receive an allocation?

This is the 2000 plan year test (calendar yr)using the 12/31/99 account balances. The individual was not a key on 12/31/99, but is one in 2000. There seems to be a conflicting answer.

How is the top heavy test ratio calculated if an individual is a key employee in the plan year (2000), but was one not as of the determination date (12/31/1999)? I am not sure if the 12/31/99 balance is include in the key employee total balances. I know the individual would not receive the top heavy contribution.

2001 ERISA OUTLINE Book, ELECTIVE TRANSFERS page 6.42. This discussion of elective transfers is not a scenario that our company has been exposed to. It is not clear from the examples as to when this type distribution would occur. Is it only when the employer maintains more than 1 qualified plan?

Total was > $5,000. Tax withholding was correct, as second check was a repeat of the first. Thanks for feedback, will issue one 1099R with total amount and distribution code as 1.

In error, a participant is sent two distribution checks. He received 2x the amount he should have received. He cashed both checks and refuses to return overpayment. Employer has already returned the overpayment to the plan. How should this be reported on 1099R?

I believe that the plan doc used is a function of employer size. We deal with small employers. The plan doc is a standardized / prototype plan which requires contributions to be allocated on annual comp. The operational decision to collect the match electronically each pay period is for administrative ease of payment, reduce processing of checks, and to reduce the volume of year end contributions. Not to mention that the contribution is invested much earlier than a year end payment. It does require a year end calculation to ensure the proper match was received. Another match example for everyone is a plan with a discretionary match feature. During the year, the employer issues an internal memo stating a match would be made, and the percentage amount. It did not specify that is would be made for that plan year only. Upon plan audit, it was viewed to be a plan amendment from a discretionary to a required match. An additional match contribution was to be paid for every year after the memo was issued. Resulted in 3 years of missed contributions. YIKES!

Another reason for collecting the match on a per pay basis is to budget the cost of the contribution. Many employers are more receptive to a match if it can be paid over 12 months, rather then on lump sum at the end of the year. Back to your original example, I believe the calculation of the match is the same regardless of the collection method. The deferral and match are a % of annual compensation, not partial year comp. Your employee employee earned 170,000, therefore his contribution should be determined based on that dollar and not the $105,000. You would need to collect the additional match. Also, if this is employee will always earn this much comp, he should consider making a per pay contribution of 6.1% and then there would be no need to make the additional year end contribution.

Can someone please explain the answer? Based on the following information, what is the participant's annual top-heavy minimum accrued benefit as of June 30, 1997? The participant works over 1000 hours per year and only participates in this plan. The plan has always been super top-heavy. The top-heavy min benefit is based upon years of service. The plan year is July 1 to June 30. DOH = 7/1/90 Plan Effective = 7/1/86 Annual comp: 6/30/91 = $20K 6/30/92 = 25K 6/30/93 = 25K 6/30/94 = 15K 6/30/95 = 22K 6/30/96 = 23K 6/30/97 = 10K ANSWER = $3080???

Is there any guidance within top-heavy regulation regarding the correct way to test plan year the amends from fiscal to calendar, thus creating a short plan year? Plan Year #1: 07/01/98 - 6/30/99 Plan Year #2: 07/01/99 - 12/31/99 Plean Year #3: 01/01/00 - 12/31/00 What is the correct determination dates to test this plan for year 2 & 3?

I not sure if this will get you the result the Plan Sponsor wants, but amend the money purchase to 0% contribution rate. This will eliminate the need to merge, but now you have two plans to administer.

So what is the "ideal" 401(k) package for plan sponsors and participants? Do you limit the types of funds, restrict the percent of participation in co stock, or hire an investment advisor?

When a fiscal year plan is amends to a calendar year plan is the top heavy test applied correctly in this example? Year 1: 9/98 - 8/99 Year 2: 9/99 - 12/99 Year 3: 1/00 - 12/00 Determ Date yr 1 = 8/99 Determ Date yr 2 = 8/99 Determ Date yr 3 = 12/99

Does anyone know of a source to start searching for a daily recordkeeper for DC plans?

That is how I have interepreted it.

Does any one know the answer to the original question? We require that that the election must be made before the end of the plan year, but the contribution does not have to be paid until the partnerhships tax filing due date. Would be interested to know if this is correct.

What is the correct 1099R reporting in this example for the company making the distribution? Does the the plan accepting a loan receivable provide any statement to the employee for tax reporting purposes to show that the taxable portion (loan balance) is being paid under the new plan?

2 401k prototype plans are adopted. One plan covers non-union only. In operation it is intended that the second plan covers only union (although not an option to exclude nonunion). There are no HCE in union. If both plans provide for same salary deferral but "union only" receives match and /or profit sharing, will this pass 410(B) if the nonunion do not receive the same match or profit sharing?

How is a penalty calculated when you do file a timely extension but still do not file by 10/15? Is the penalty calculed from the original due date (8/2/99) or 10/15/99? In addition, does the number of days include sat / sun or just business days?

Company has an existing money purchase and profit sharing plan. They want to establish a 401(k) safe harbor effective 8/1/99. 1. Would the safe harbor be considered a a newly established plan as described in Section X of Notice 98-52? 2. Would it be possible to amend the profit sharing to include the 401k safe harbor effective 8/1/99?

Any help with this question: 1. List 4 reasons why it is difficult to determine if a vertical partial termination has occurred. 2. Why might two practioners come to different conclusions concerning whether there has been a horizontal partial termination? 3. Identify the procedure that a plan sponsor can take to be assured about whether or not a partial plan terminattion as occurred.