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You can still merge the plans but you cannot do it retroactively since the 204(h) notice did not go out. You will have to restate both plan docs for GUST and do a final 5500 for the 2002 plan year.

I am referring strictly to your financial statement accounting. You definitely need to keep your participant accounts valued on a daily cash basis. We are referring strictly to your financial statements that are prepared in accordance with GAAP.

I agree with Jon 100%. What are your qualifications for managing money? In my experience with plans that allow these self-directed accounts, I see participants losing their retirement savings because they think they are smarter than your professional investor. For some reason people think they automatically know how to invest professionally when they do not have the slightest clue. I personally think that it is best to turn your account over to a money manager and let them do your investing for you. I think you will see that they have average to above average returns compared to the market.

No, I didn't have a personal experience. I just think that is a very imprudent investment decision.

I agree with IWIS. If I was a participant in that plan and found out about this, I would be furious and the DOL would be the first place I called. You defiinitely don't want those guys around.

You would treat it as a regular distribution. That is one of the disadvantages of a participant taking a loan.

I think it should be treated just as your forfeitures are treated for profit sharing forfeitures. Since you are not making anymore MPP contributions, you obviously can't use it for that source anymore.

I have a client that answers YES to the question, "Did the ER get the deferrals into the trust on a timely basis". However, I know they did not get them in under the legal limit of 15 business days. Does anyone know of any guidance from the IRS regarding the 5500 preparer's responsibility in this situation?

Here is a link that may serve useful. http://www.cyberisa.com/erisa_new_current.htm There is actually no guidelines published by the gov't but they have issued several private rulings dealing with issues such as this. Basically, if the expense or loss is feasible then you can't reimburse. If the loss or expense is due to negligence, then you can reimburse the losses.

No, if fees are reimbursed, then you must treat it as a contribution. Then you have to allocate it according to the plan document. If the client does not like this, then they need to start paying the bill instead of having it deducted from plan assets.

When filing the form 5500, a company can provide financial information by either the cash or accrual basis of accounting. You have to be consistent though from year to year. If you are a large plan (over 100 participants), your audited financial statements will have to be kept on the same method. I personally recommend doing the accrual basis for all plans including daily plans.

Sorry, Rob. I missed the 2/28 plan year end piece. You can still go ahead as long as you get the notice out by the end of this month. I do recommend using the safe harbor match. You can apply it to the NHCEs or you can apply it to both NHCEs and HCEs. This match will satisfy the top heavy minimum for plan years beginning after 12/31/2001. If participants choose not to defer, that is there problem and the plan will be safe from the testing.

You are out of luck for this year. You have to notify your participants 30 days before the beginning of the plan year. However, it would be a great idea for 2003. I would recommend using the safe harbor match which will now satisfy the top heavy requirements just like the 3% nonelective. I also recommend amending the plan to allow for a maximum of somewhere in the neighborhood of 75% max deferral percentage. This gives everyone the opportunity to defer as much as they like.

In every one of my plans that I administer, the HCEs get the safe harbor contribution. They love the contribution without the testing.

Okay everyone. Here you go. It is in a trifold format. Hope this helps out.

As soon as I find it, I will post it for everyone.

I agree that the sample can be confusing to those that are not familiar with tax law. What I did is rewrote the example to be a little more reader friendly.

I think I have a pretty good understanding of the example. Let me know what your having trouble understanding and I will see if can help.

You can use either method up to the point that the Employer adopts its GUST restated plan document.

I found an old Corbel document and I see what you are talking about. I would be inclined to interpret as you did. The document I use allows us to put a max of 500 hours for allocation accruals. If you did not amend the doc to have a 0% contribution before the plan year, I would agree with you. Anyone else have any additional thoughts?

I would think that is true. If your adoption agreement says that you have to work 0 hours to get a contribution, then you have to give them a contribution. Double check your document to make sure. What document are you using?

Tom is right. I would definitely advise the client to let the participant back in due to administrative burdens. Double check the document. Some documents do not allow the one year wait after rehire.

No, if the employer decides to do the match, the nonelective does not have to be funded. It is the employer's choice to provide one of the two formulas to all participants. If someone did not make deferrals then they are out of luck.

The employer must make contributions according to one of two formulas: 1. dollar for dollar match up to 3% of pay 2. 2% of pay nonelective contributions for all eligible participants No other contributions are permitted.

I don't know of anyway. The employee has to be let back in the plan.