M Norton

401(k) with cross-tested PS allocation puts both spouse HCEs in one allocation group. They choose 15% PS contribution, but doctor (husband) gets lower allocation because he is capped at 9.21% due to annual addition limitation. Can spouse (wife) still get 15% allocation? Or is she limited to the same percent as husband because they are in the same allocation group? Thanks!

thanks!

SEP plan has eligibility requirement employment in 3 of last 5 years. Former particpant terminated in 2011, rehired in 2016. Does eligibility carry forward or does rehired employee have to meet eligibility again?

I have a client with a defined contribution 403(b) with deferrals and match, on a 2008 Ascensus 403(b) document provided through TIAA-CREF - considered a large plan and requires an audit. Qualified plans were required to restate their plan documents for PPA by April 30, 2016. Is there a similar restatement requirement for 403(b) plans? If so, what is the restatement deadline?

Thanks so much for the response! We were concerned about processing divisions and also about component testing - big drawback not to have that capability.

Relius docs are a lot more expensive than ftwilliam docs and with restatements coming we were looking at their docs package. While we were looking we thought we would check out their other software. pmacduff, you said there were quite a few things that the ftw system wouldn't do. That's what concerns me, that we might switch and then realize we were losing some capability. Can you elaborate on what those things were? A_Dude, so you used the ftw 5500 and then went back to Relius? Why did you leave ftw? Thanks to all for your replies!

We are considering switching from Relius to ftwilliam for plan administration. Does anyone have any information on how the two products compare? Thanks!

When calculating compensation for a self-employed participant, we use the Schedule SE formula - multiplying by 92.35% and deducting 1/2 SE tax. Doesthe Medicare 0.9% surtax figure into that calculation and if so, how? Thanks.

Employer maintains large 401(k) plan, not a safe harbor plan. Eligibility is age 21 and 3 months (“1/4 year”) of service. Hours of service are determined on elapsed time method for all purposes. Entry date is next paydate after meeting eligibility requirements. Company uses a staffing firm to provide potential employees on a temporary basis before the Company offers them a full time position. The decision to hire is usually made within the first 90 days of temporary service. Very few employees are hired direct; most come through the staffing agency. The adoption agreement has an option (not previously selected) to exclude Temporary Employees. The Company wahts to use this option to exclude time worked by employees (and associated compensation) while they are temporary workers. Once an employee is hired as a non-temporary employee, his or her retirement plan eligibility and benefits would be counted from that date; the employee would receive no credit for time worked while a temporary employee and no contribution based on wages earned while a temporary employee. Question: If the Company uses that option to exclude time worked while an employee is considered a temporary worker, (1) will the coverage test be satisfied and (2) will excluding vesting credit be a disqualifying issue? Thanks!

Thanks for the response. One of my associates agrees with you, but I am not sure how you get past the SH requirements for eligibility and participation. This is a small plan, 2 HCEs and 4 NHCEs work for plan sponsor; 4 other NHCEs work for newly acquired separate business that is now part of the new controlled group. How do you keep the 4 NHCEs in the new business from becoming eligible and participating in the SH part of the plan?

Small employer has SH 401(k). Owner recently purchased second unrelated business and is now a controlled group. Can otherwise eligible employees of newly acquired business be excluded from participation in SH 401(k) if plan can pass coverage using ABT?

Sponsor of large 401(k) plan remitted deferrals and loan payments monthly, although payroll is biweekly. So at least half of pay periods, amounts were remitted after 3rd business day following payroll. We have calculated lost earnings on deferrals and loan payments using DOL's VFCP calculator. We will prepare 5330, and sponsor will deposit lost earnings and pay excise tax. Question: will the fact that the loan payments were remitted late to the plan change the outstanding balances on the loans? The amortization schedules are based on biweekly payments, not monthly payments. Thanks.

We need assistance to fix efast. Who can we talk to that can make eFast more flexible to accept filings from plans that have 52/53 week years? This must be resolved quickly as the current plan year end is only two and a half months away. Client sponsors MPPP using non-std prototype document. Plan year is defined as 52/53 week year, ending on the Saturday closest to November 30 of each year. Plan has several hundred participants and must be audited every year. We contacted the Efast Help Line because the 2009 Form 5500 for plan year ending 11/27/2010 could not be efiled. We were advised that the only way to efile it was to check the box indicating a short plan year (364 days). The current plan year ending 12/3/2010 will be a 53-week year (371 days), which will be un-file-able because it will be longer than 365 days. If you can help, please respond to this post or email JMFPension@jmf.com

Has anyone heard any rumblings about disaster relief pertaining to plan loans and distributions in the aftermath of the April tornadoes that devastated parts of Alabama and other southern states? They passed something to help plan participants after Hurricane Katrina - just wondering if they might do something similar now. Thanks.

employer plan as a qualified retirement plan with a points system where they allocate X points for compensation and Y points for years of service. Do the limits for max compensation and annual addition apply to this type of plan? I would have said yes, but an attorney is questioning the salary cap. Thanks!

One individual is a 50% owner of a new LLC that wants to sponsor a 401(k) plan. The same individual is a 5% owner of another otherwise-unrelated entity that sponsors a SIMPLE IRA in which he participates (deferrals plus ER match). Is his contribution (employee and employer) in the 401(k) limited by his participation in the SIMPLE IRA? Thanks!

These are regular employees with no family or partnership relationships to the owners. The plan document defines the required beginning date as the later of the calendar year in which the participant attains age 70 1/2 or the calendar in which the participant retires (as long as the participant is not a 5% owner). Thanks for the replies. I think the employer and the participants will like the answer!

A client has two non-owner plan participants who would be subject to the RMD rules for 2010 except they are still working. Plan provisions allow participants to delay start of RMD until after retirement. Both of these employees are working maybe one or two days a week. Is that sufficient to allow them to postpone taking the RMD? Thanks for any input on this!

Business has been sold and long-standing PS plan is terminating. Plan has J&S provisions. One participant with account over $100K doesn't want to get his wife to sign off on distribution. They are estranged but not officially divorced. So he won't complete the paperwork to request a distribution. What are the plan's options for getting this account paid out?

45 year old male recently divorced, has IRA valued at $31,000, currently taking annual 72(t) distribution since 2005. Divorce decree says they must split the IRA 50-50. Continuing the same annual payments from 50% of IRA balance will deplete account prior to age 59 1/2. Can payments be reduced for IRA owner due to divorce decree without tripping the tax liability for all prior payments? Thanks!

Client has a cross-tested plan that is failing. It has been recommended to them that they put one HCE in a group by himself and test with a group of NHCEs based on contributions; then test the rest of the HCEs with the other group of NHCEs based on benefits. The two groups of NHCEs are already defined in the plan document. Can you group participants in a plan and test them in different ways?

2-physician practice has a profit sharing plan. One doctor took out a loan in excess of $50K. So the excess on the loan has to be reported as a distribution, plus he has to pay it back. That creates basis in the plan. If the doctor takes an inservice distribution as allowed (now) by the plan, how is the basis allocated? Can he choose to take out the basis money first? Does it have to be prorated? Thanks!

An employer has sponsored a calendar year safe harbor 401(k) for several years, using a 4% match to satisfy the SH requirements. They're thinking about discontinuing the plan but have handed out the SH notice anyway. Problem is that they did not indicate what the SH contribution would be for next year. Don't they have to give the notice at least 30 days prior to the beginning of the year? Or is it 30 days before the first payroll of the year? And if the notice is not distributed timely to participants, does that mean the plan will not be a safe harbor plan for 2010? Thanks!

shareholder took out a loan in December 2007 for $50,000. In November 2008 he took out another $25,000 loan. Plan does not allow for inservice distributions. The employer has been self-administering this plan. Their CPA prepares the 5500. The November 2008 loan is in excess of allowable amount and so is a prohibited transaction and a deemed distribution for 2008. The shareholder is making payments on the $50,000 loan and is current on that. He has not made sufficient payments on the second loan. He will repay the second loan before the end of 2009, with interest, which will cure the prohibited transaction. Under the Sec. 72 regs, is the second loan deemed again in 2009 because it was unpaid on January 1st? Thanks.

2%, really?! No. Sorry - mistyped - they're doing 3% NEC for SH 401(k), will probably do 2% for SIMPLE. Thanks.