BFree

How is top-heaviness corrected by a distribution? 20% is withholding. See the 1099-R instrutions. Don't know about the 10%.

hodag - look at the allowable investments for auto-rollovers. You can't lose money except perhaps on setup of the account.

DBTech - how do you square those instrutions with your first post? At January 1, the person in question is not an active participant. At January 1, this terminated person is not eligible to make salary deferrals.

Others have opinions on how to interpret 3405. http://benefitslink.com/boards/index.php?s...t=0entry71567

Do you believe your Profit Sharing plan is fully insured?

What documentation is need to terminate a nonqualified plan? Thanks-in-advance.

The VFCP guidelines on late deferrals and lost earnings may give you some guidelines. The PWBA published a FAQ with sample calculations.

To verify that receivables have been deposited and to see if there were benefits due but not paid at year-end, that were paid after the PYE.

Thanks. I am wrong to keep thinking of the gateway provisions of cross-testing when I mention average benefits testing on a benefits basis (for Match contributions)? I thought that if you were going to test using benefits/EBARs, you had to meet the gateway/broadly available/smoothly increasing. For instance, a Match in one plan is up to 1% and in the other is up to 5%.

Roughly: 90 HCEs in one location; 10 in another. 1000 NHCEs; 500 in the first location and 500 in the other. Location with large amount of HCEs has greater match formula. Okay - two plans will satisfy 410b ratio test combined - no problem. What if the desire, because of ADP/ACP testing, was to test separately? Can we move from ratio test to average benefits (tested separately), and can avg benefits be done on a benefits basis?

Okay, thanks. I appreciate the replies. I see that ACP test takes care of nondiscrimination in amount of contributions. When testing benefits, rights and features in -4, what does "satisfies 410(b) witout regard to 410(b)-5" mean? Does it mean that you need to satisfy the ratio test or the Average Benefits Test (sans the average benefits percentage test of 1.410(b)-5). Which leaves only the classification test and the ability to go substantially lower than 70%? Lastly, I am still unsure about whether an ABPT could be (or even needs to be)prepared on a benefits basis for the Matches of both plans. Assume 410b is not satisfied via ratio percentage and is not satisified via avg benefits test using contribution basis. Thanks again.

Plans cannot satisfy 410(b) separately via ratio test or ABT using contributions basis. Hence, the inquiry about ABT and cross-testing regulations. When you say that match components are tested for BRF, are you saying that 1.401(a)(4)-2 does not apply (or is deemed to be satisfied given what I have described) and that only -4 does?

Yes, that is correct. 2 members of controlled group, each with a separate plan and separate provisions.

This seems to be somewhat analgous to the above... - Separate Match formulas - Do not meet gateway 5%; are not gradual age or service Avg. benefits test can use cross-testing 401(a)(4) cannot unless allocation rates are broadly available Is the above correct? In determining "broadly available," is 70% or the safe harbor percent used?

2002 Instructions - When to Report: "Do not report a participant more than once unless you wish to revise or update a prior Schedule SSA..."

We have submitted the Relius nondisc test results and had no problem with the IRS interpreting them. We've handwritten Demo 6, etc. at top.

Search the message boards for "restoration payments."

To illustrate double taxation: I take a loan for $10,000 from a plan. I don't spend it. I earn $600 in the year. That earnings is taxable. Net of taxes, I have $500. I pay $10,500 into the plan, representing principal plus interest; payment in full. I need $500 the next day. I go to the plan and withdraw $500. I like to compartmentalize. The $500 I withdrew represents the interest on the plan. I receive $500 and it is treated as ordinary income; the end result is I don't have $500 anymore, I have some lesser amount. My $600 of earnings for the year has now been taxed as payroll income and as retirement plan income. ----- So, while I agree there may be no tax disadvantage in comparing a 401k loan and a non-401k loan, I don't think you can dismiss talk of double taxation as invalid or equate the two issues. I forget what the original question was. If I diverted from one issue to another, I apologize.

Katherine, thanks for the reply. Essentially, you indicate that there is no difference in the two scenarios - and I'll take that as a genuine reply, even if I don't agree. To answer your question: "never taxed" is just that - 401k contributions and their resultant earnings inside a plan. But you also say that the bank is taxed on those earnings. That is of no consequence to a plan participant analyzing a plan loan. As such, that cannot be the basis for stating that there is no difference in the two scenarios. Your last paragraph is well-taken, although I don't think it is relevant.

rmeigs, I have added the two phrases in parentheses to your example. I cannot square them with your tax-neutral stance. Can you elaborate? 1. Loan from 401(k) for $10,000 at 5% for five years. Loan is repaid with after-tax dollars. (previously taxed) Earnings on the loan taxed at retirement. 2. Loan from a bank for $10,000 at 5% for five years. Loan is repaid with after-tax dollars. (never-taxed) Earnings on this income is taxed at retirement.

"since I couldn't imagine anyone doing this." When a client instructs a TPA to complete a form in a certain manner, I can't imagine them not following instructions (given that they believed the form was going to be correct when filed).

Does that mean that no terminated employees with balances in the plan need to receive an SPD? Is this the same definition of "participant" as the one that is used to distribute SARs?

You can try to print it to an acrobat file and email it. However, I have gotten the word "Draft" or "Copy" on my tries at adobe acrobat.

Yes, given the facts presented, you have no extension if no 5558 is filed.

"Or is there an entry I can put in that they did not provide it?" Yes - see the Schedule A instructions about what to put if you have requested the info and the insurance company will not provide it.