sdix401k

Thanks Mike. The plan will be just be terminated due to the sale with no change in the document. You bring up an interesting point. To confirm the termiantion of a plan does not create a short plan year. Thanks

I am only aware of the ability to suspend the Safe Match becuase of a severe business financial hardship. In that event you would still need to provide TH contribution. Were the deferrals less than 3% of salary?

I have a control group situation where there are two seperate plans with identical provisions. They are bothe Safe Harbor Match plans with a crosstested profit sharing. I have combined testing in the past to pass the general test. Plan B is now being terminated as of 07/01/12 becuase of a sale of that business. My question is in regards to combining testing for the 2012 plan year. I have read that in order for plans to be aggregrated that the plan year needs to be the same to determine non discrimination classification and the ratio test. They can be different to perform the Average Benefits Test. Can the plans be aggregated for testing? If they cannot I assume that an employer contribution that is nuniform across all participants would be the only acceptable ps contribution. Any thoughts??

I am looking at the same situation. I referenced the ERISA Outline Books. This is what I came up with: I believe differential pay should be excluded. This would be considered normal plan compensation. To determine make up compensation it would be the amount that would have been earned based at the time of deployment. The amount that can be made up is the difference between anything deferred in that year of leave minus the 402(g) limit in effect that year. Employer would be required to make up missed matching based on make up compensation. Both deferrals and match are disregarded in ADP/ACP tests. Employer must match if employee deferred. Contributions for employer are deducted in year deferred. Employee's W2 is coded in box 12 with the amount that was deferred under USERRA and some other designation. My question would be how long does the employee have to make up contributions from a prior year. I did not see anything on this.

With the new rules on deposits we have people starting to send contirbutions in prior to the paydate. My undertanding is that if this is done the contribution can be considered an employer contribtuion not employee deferrals. Is the date that is important here the paydate or period ending? For example if the employee earned the money but has not been paid yet would it be feasible to process a contribution prior to the paydate?

Thanks!! This what I would have thought as well. That is the case to be consistent with the DB.

A DC plan is a combo plan with a DB plan and has recently been amended to add an optional form of benefit besides lump sum, a QJSA. If a participant in the plan's spouse will not sign off on the waiver when the participant terminates employment, what options does the participant have if they do not want an annuity option? Lets assume that the husband and wife are not in any divorce they just disagree???? Is the fact that the benefit is an optional form override any requirement. I understand in the DB plan the QJSA is the normal form of benefit. Thanks

Here is the scenario - Company A has a 401k PS; Company B has a Simple IRA Company A&B merge 05/01/09 Merged company wants to rename and adopt Company A's plan and credit service etc for participants in company B under company A's plan. Company B only has one participant who is a non owner currently contributing in the SIMPLE IRA. Is there any issue with all employees under company B participating immediately, ( credit service there by automatically becoming eligible ) in the renamed plan. I know that the one participant cannot exceed the irs limits on a combined basis. Thoughts? I have gotten an opinion from an outside person that everyone under company B would be eligible except the one participant who was participating in the Simple because it is a "continuation" of a plan?

Thanks for all your posts. This is what I belive as well. I am not an expert in ESOPS. A law firm is telling them is possible so I just wnat to be informed.

The company still intends to make a 10% contribution. They do not want to get out of it. I agree that a benefit once accrued cannot be taken away. Without any specific guidance from the IRS I guess the question is whether the act of making the contirbution to another plan IE ESOP and or PSP would be considered a cut back??? Does anyone know of any cites on this favorable or unfavorable?

If you froze the plan wouldnt a contribution still be required? Also regarding the ESOP; They do not want to conver the MPP to the ESOP they are looking at making a contribution to the ESOP instead of the MPP. I beleive based on a prior IRS views that you could terminate the MPP plan and the required contirbution could be made to the a profit sharing plan. I am wondering if the same would be true for an ESOP.

Any comment on my second question or should I move it to the ESOP Board.

A money purchase plan has a 10% contribution rate with an allocation condition of 500 hours of service or employed at year end. Employer wants to terminate plan effective 01/01/08. I am telling them that since the benefit has been accrued that they will need to make the 10% contribution. Is this correct? I have seen multiple sites that since the benefit has been accrued participants have completed more than 500 hours that the contribution is required. On another note I have seen information that the plan can be terminated and the required contribution be made to the PS plan. They are looking into doing an ESOP plan so my second question is that could they terminate the MPP plan and make the required contribution to an ESOP? Thanks in advance.

Plan has failed the ADP test and the participant who is supposed to get the corrective distribution has rolled the money over to his IRA. So, in this case who is the reporting agency? Do we report the taxable distribution or does the IRA institution distribute the corrective distribution and report a 1099R? If the IRA institution distributes the money to the participant, is the plan sponsor liable for the 10% excise tax (distribution is past the 2 ½ months deadline) even though the distribution will be done from the IRA?

I have run across two companies whose 401(k) plans are part of a control group. One is on a calendar year and the other on a fiscal year ending 3/31. Does anyone know how such a control group should be tested? If the census data is simply combined over the differing periods of time what deadlines regarding testing (such as corrections occurring within 2.5 months of plan year-end) would be applicable? Thank you in advance for any help you may be able to provide.

I am working in with a company right now that has just begun offering such a product. It looks like it has a lot of potential. Easy to use no software installation. They are doing a beta right now. www.retirehq.com.

Thanks for all the info. Actually with good software it is not difficult at all. ( All bokergae accounts are at one institution.) (( For Us.)) My main question is it GAAP to use percentages based on sources against total balances. Thanks in advance.

The sources are tracked separately and are identified separately for distribution and numerous other reasons. So we know exactly by source what the total account make up is. Austin mentioned that the instructions indicated you could use a pro-rata amount to break up a brokerage account. I have read the instructions AGAIN. I see some mention to this but it is not spelled out clearly to me. Page 39 column 2 Can anyone point to this specific section. There are two separate plans governed by two plan documents. I should also mention that each person maintains their own brokerage account which contain the assets of both plans. The auditor is insistent in not feeling comfortable using a pro rate amount for shares and earnings. Thanks

I have spoken with the client about merging the plans some years ago. For whatever reason they did not want to do it. The Cpa isnow talking $15,000 per audit of each plan, so they might be more inclined to do so. By the way does this seem high for an audit? We are talking 115 active participants full scope audit. Thanks for all your reposonses, especially on a Sunday morning!!

One plan conists of bi-weekly 401k deferrals and match and an annual allocaiton to the MPP.

We are having an audit ( CPA for Form 5500 Schedule H ) on a plan that is governed by two separate documents but the assets are combined in one brokerage account. The accountants are having trouble verify unit information for the 5500 using a percentage based computation on mutual fund units. They also indicated that they have never seen this before. Assets being combined. I have seen other circumstances where this is the case. Anyone have any thoughts or suggestions. They now want to do an audit on the entire plan. Thanks in advance.

Yes, B2 was selected so it appears that is was done improperly since the plan is not top heavy.

(a) If the Employer has elected in the Adoption Agreement that the Plan shall be integrated with Social Security, then the applicable contributions plus Forfeitures shall be allocated to Participants' Accounts as follows (provided that Steps One and Two, below, need only be applied in years in which the Plan is Top-Heavy): STEP ONE: Contributions and Forfeitures shall be allocated to each Participant's Account in the ratio that each Participant's Compensation bears to all Participant's Compensation, but not in excess of 3% of each Participant's Compensation. STEP TWO: Any contributions and Forfeitures remaining after the allocation in Step One will be allocated to each Participant's Account in the ratio that each Participant's Compensation for the Plan Year in excess of the Social Security Integration Level bears to the excess compensation of all Participants, but not in excess of 3%. STEP THREE: Any contributions and Forfeitures remaining after the allocation in Step Two shall be allocated to each Participant's Account in the ratio that the sum of each Participant's Compensation and Compensation in excess of the Social Security Integration Level bears to the sum of all Participants' Compensation and Compensation in excess of the Social Security Integration Level, but not in excess of the Maximum Profit Sharing Disparity Rate. STEP FOUR: Any remaining contributions and Forfeitures shall be allocated to each Participant's account in the ratio that each Participant's Compensation for the Plan Year bears to all Participants' Compensation for that year. The Maximum Profit Sharing Disparity Rate is equal to the lesser of: (1) 5.7% (minus the percentage of Compensation allocated in Step One, if any); or, (2) 5.4% (minus the percentage of Compensation allocated in Step One, if any) if the Social Security Integration Level (SSIL) is more than 80% but less than 100% of the Taxable Wage Base under section 230 of the Social Security Act at the beginning of the Plan Year (TWB); or (3) 4.3% (minus the percentage of Compensation allocated in Step One, if any) if the SSIL is greater than 20% of the TWB, but not more than 80% of the TWB, and greater than $10,000. -16- (b) In the event the Plan is Top-Heavy and the Employer elects to use Steps Three and Four of paragraph (a) above, then allocations made on account of Compensation greater than the Social Security Integration Level shall be reduced proportionately to the extend necessary to provide all Employees entitled to a Top-Heavy Minimum Allocation with the required allocation.

The plan was not top heavy in this valuation period. I have read the document and I see specific steps fors computing the allocation. ( as well as skipping the first two steps if the plan is not top heavy.) There are four steps but it does not seem like I have the ability to alter these steps and the document requires if elected to integrate to us the maximum disparity amount. Thanks for the input.

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