ccassetty

Don't get me started. I've been following this story for some time and the parents have at least some proof that Terry's condition may be a result of strangulation by who else but her "loving" husband! The courts refuse to even look at this evidence. This makes me so angry I could spit nails! We depend on our legal system to do the right thing, well it sure has failed this time. This whole "right to die with dignity" thing has become a license to kill people that have become an inconvenience or cost "too much" money to care for. People in this country better wake up and start fighting back before it's their turn to be killed..er "allowed to die with dignity". There was a doctor not too long ago who killed a patient without getting any permission from anyone. Said it was a "mercy killing" and because the women was 85 and very ill, it was just accepted and has been swept under the rug! Read about it here: lifenews.com Carolyn

You got it right! Only those who don't meet the one year, age 21 would be tested separately. There would not be any HCEs unless you have new 5% owner( or new family member of a 5% owner).

Yes, there is a look back year. It's the 12 month period prior to the testing year. Generally, that will be the prior plan year. It is always a twelve month period, regardless if the prior year was a short plan year. There is a special calendar year election for fiscal year (non-calendar year) plans that allows the plan to use the calendar year beginning in the look back year as the determination/look back year for the compensation test but not for the 5% owner test.

I don't know how to set up a link, but there was a thread on this very topic not too long ago. It is titled "401(a)(17) and calculation of match" and the last post to it was 7/30/03

I wouldn't do it. It's giving the HCEs the avantage of earnings throughout the year that the NHCEs aren't getting. If they have a last day requirement, funding it throughout the year opens up a whole other can of worms if an HCE should leave during the year. Finally, funding it throughout the year for the HCEs takes away the "discretionary" ability of the employer at the end of the year to determine a contribution level based on company performance. If the employer does have a situation where they can't afford to make the total required contribution to the NHCEs at the end of the year based on what has already been contributed to the HCEs, then what are they going to do?

Look at 414(u) (2)©.

JanetM An employee can take a hardship for anticipated medical expenses - last part of 1.401(k)-1(d)(2)(iv)(A)(1) .....or necessary for these persons to obtain medical care described in section 213(d).

Are you saying that unless his plan balance is transferred from the non-union to the union plan he can't make loan payments? I have to disagree. Just because he is no longer eligible to make deferrals, I don't see why he can't make loan payments. I agree that it would be easier if the money can be transferred to the union plan providing that both plans allow for it.

No, he cannot take a distribution because of termination of employment because he is not terminated, he is currently employed. If he had requested and received a distribution during the two months he was gone, that would have been OK, but now that he is back at work, termination of employment will not work as a reason for distribution. On the loan, without being able to see what your plan says about loan administration, it is hard to say. So, be sure to read the plan document, the plan's written loan program and the participant's loan agreement thoroughly to be certain you are handling the situation correctly. My best guess is that if the loan has not already been defaulted, you should begin taking loan payments again from the participant's check, with some sort of arrangement to take out additional amounts until any missing payments have been made up.

I agree with BFree that there is "double taxation" for lack of a better term, on the loan INTEREST but NOT on the principal. The bottom line I keep coming back to is that whatever the source of the money the participant uses to pay back the loan, in most cases, it has already been taxed at some point, even if not in the year in which it is used to pay back the loan. But rather than create a tax basis in the participant's account, it is taxed again when it comes out. I haven't read anything in this thread that convinces me otherwise. Granted there will be exceptions since some types of income from which the participant could take the loan payments are tax free such as income from municiple bonds and the death proceeds from a life insurance policy, but absent these, I believe that the interest on a participant loan is taxed twice.

I agree with BFree that there is "double taxation" for lack of a better term, on the loan INTEREST but NOT on the principal. The bottom line I keep coming back to is that whatever the source of the money the participant uses to pay back the loan, in most cases, it has already been taxed at some point, even if not in the year in which it is used to pay back the loan. But rather than create a tax basis in the participant's account, it is taxed again when it comes out. I haven't read anything in this thread that convinces me otherwise. Granted there will be exceptions since some types of income from which the participant could take the loan payments are tax free such as income from municiple bonds and the death proceeds from a life insurance policy, but absent these, I believe that the interest on a participant loan is taxed twice.

You will also want to check the plan document. If it is using the safe harbor rules, then number 5 is not available until such time as congress sees fit to add it to the safe harbor list of allowable reasons for hardship. If the plan is not a safe harbor plan, then #5 may be available. Look at the plan document.

I don't think they can exclude employees on the basis of currently making deferrals or not currently making deferrals (if an employee is eligible to make deferrals, he or she is already participating). For one thing this would violate the requirement that no other benefits than match can be based on whether an employee is making deferrals. The exclusion would have to be based on some other business aspect. i.e. office v. shop, div A v. div B, delivery v. manufacture, etc. Have you checked to see how the plan fairs in the non-discrimination testing with all of the office A employees excluded? Then of course there is the perennial favorite: Why are they doing this?

one more: Take a maximum loan (less accumulated PS-58 costs) on the cash value of the contract. This loan value is rolled with the rest of the participant's account value. The policy is then distributed to the participant tax free but with the death benefit still available. However, the death benefit is reduced by the outstanding balance of the loan.

I'm still not comfortable with this. First of all, once employer B was purchased by Employer A, they are not separate employers, they are one employer, so using reg. 1.411(a)-5(b)(3)(ii) to exclude service prior to the purchase date doesn't hold water. However, I have to admit that the 5(b)(3)(iv)(B) cite is more compelling. Still, something about this just doesn't smell right. I'm going to keep looking for my own knowledge.

I'm not an expert on this, but I don't see how you can use the exclusion of service prior to the adoption of a plan in a case were there was no plan. I think you are stuck counting all service with B unless plan A did exclude service prior to its effective date. If the current plan of employer A excluded service prior to its effective date, then I think you can exclude service for the acquired company B prior to that effective date also. If the current plan doesn't already have that provision, you can’t add it now. If prior to the acquisition of company B by Company A, company B had adopted a new plan and excluded service prior to the effective date, then when the two plans were merged, you would have been able to exclude the service with company B prior to the adoption of company B's plan. It doesn't sound like this happened. I hope one of the experts out there will respond to this.

I'm curious how you got to the date of acquisition on a stock sale?

I think that if you get back 10% of your questionnaires you should consider the exercise a success. As to the questions to ask? Put yourself in your clients' shoes. What do they want? Such things as: responsiveness to questions and problems, easy to understand correspondence that contains useful information, confidence that they are dealing with knowledgeable people, etc. Once you have a list of what your clients want, build your questions around whether or not you are delivering. Stay away from questions such as "Are reports timely and accurate?" In the first place, how would the client know if the report is accurate? Sure they can check the participant data, but they haven't the foggiest idea how to check the tests, nor do they want to take the time to check the reports, that’s your job. Secondly, this type of question could lead to doubts in the clients mind that perhaps the quality of your work leaves something to be desired. As to timeliness, you know already if you are meeting industry standards and your promise to the client on turn around time. Also nebulous questions such as "How would you rate our services?" don't tell you anything. Ask concrete questions such as: "Is the correspondence you receive from us clear and useful?" You can ask for comments, but most will only check the boxes provided. So, it is important to word your questions so that a yes or no answer or a scale of 1-10 will actually provide useful information. Limit your questions to one page, the less time the survey takes, the more likely you are to get responses back. Be sure to enclose a SASE for return of the questionnaire. If you can think of some incentive that you could provide to encourage return of the questionnaire, that might increase your response rate. If you tell the recipients of the survey that they will receive a little thank you gift for returning the survey, it might encourage a few more responses. Regardless of whether you include a gift or not, a thank you note to the client for taking the time to respond would be in nice. Another point is to be careful about who receives the survey and that they can actually answer the questions. If you send the president of the company a questionnaire about the day to day operations of the plan, you are likely to not get the survey back, and if you do, the answers may not be helpful because this is not the person that deals with the plan on a day to day basis. You will also want to ask for permission to call back the respondent with questions. If you get particularly bad grades from someone, I’m sure you would want to call them back to find out what you can do to turn things around and to find out more details about what has happened to cause them to be so dissatisfied with your service. Hope this helps

FormsRmylife Do you have any links to the cites you provided. I was able to find Public Law 93-516 but I have been unsuccessful with the other two. Thanks so much!

Thank you! I would appreciate a copy of the document. I sent my email address to you via private email.

Under Ch 94 of the Texas Human Resources Code which is under the auspices of Title 20 of the USC, the state of Texas "licenses" handicapped people (with preference for blind people) to manage vending machine sales at government (state and federal) buildings. Under these rules, the state can provide retirement programs for these folks out of the proceeds of the sales. Can anyone point me to cites that would provide further guidance on what types of plans are allowed under these rules and any other special rules under which they must operate? What about Social Security taxes? Based on what I've read in the above cites, it sounds like the licensees are a mix of independent contractor and employee. They receive "commissions" but the state highly regulates how they operate their "business". The state government can set up a retirement program for these folks only if a majority of the licensed vendors approve the program. Then the state can fund the retirement program with part of the proceeds from the vending machines. Any help would be greatly appreciated.

If you insist on going forward with this scenario, which I strongly advise against, I would add two things to jfp's advice. 1st: don't rehire the employee prior to the payout being made, because the employee has to be terminated when the check is cut for it to be a valid pay out. 2nd: If the employer just pays lip service to no guarantees about rehire, but fully intends to rehire the employee regardless, then I think the "termination" would still be questioned. What about actually beginning the processing of looking for a replacement? What about providing the COBRA notice? If this is to look like a real termination, the employer should treat it like a real termination. Is the employer really willing to do that?

If the plan allows distributions only for termination of employment, and the employee is being "terminated" with the guarantee of being hired back in X days, I would call that a leave of absence, not a termination eligible for a pay out. I don't need any cites to tell me that. Sham terminations are just that, don't be a party to it.

I would not make the employee liable for paying back the deferrals but would treat this like an eligible employee who was treated as ineligible by mistake. The employer should make up the deferrals, any corresponding match and also reasonable market gains. See Rev Proc 2003-44 Appendix A, Sec. .05. You did not specify how long it took to discover the oversite. The reason this is important is Rev Proc 2003-44 Appendix B, Section .02 (1)(ii)(E) provides that no make up contribution for deferrals is required if the employee was able to participate for at least 9 months in the plan year. However, if there were matching contributions, those would have to be made up. See Example 7 in the Rev proc.

Thanks, that is an issue I hadn't thought of, but, absent that situation, I am wondering what the time frames would be. At an IRS Q & A a few years ago, the answer was prior to the beginning of the year being tested. Follow up question. If the plan simply references 414(q) for its definition of HCE, what then? How are these elections made and do they still have to be reflected in the plan document? Thanks!