LCARUSI

Company is considering the follow safe harbor design: - Employee can contribute on either pre-tax or after-tax basis - 100% match on first 3% / 50% match on next 2%; employee receives match on first 5% of contributions regardless of whether they are pre-tax or after-tax or a combination of the two Assuming all other safe harbor requirements are met, my understanding is there would be no ADP testing under this plan. My question relates to ACP testing. Which of the following (if any) is true: - there is no ACP testing required, or - ACP testing is required on all employee after-tax contributions, or - ACP testing is required only on unmatched employee after-tax contributions.

Are any of the employees collectively bargained?

Two questions: 1)Have you ever encountered a ps plan with an annual contribution by the company that is - determined according to a formula contained in the Plan, AND -formula is based on a multi-year measurement period (An example would be a plan under which the annual contribution is determined by the company's average pre-tax profits over the previous three years.) ********** 2)I am looking for different examples of formulas in PS plans that are used to determine the company's annual contribution. An obvious example would the level of pre-tax contributions for the current year. Can you provide others? Thank you

I am unclear as to how a participant's benefit under a traditional profit sharing plan would be calculated if there is a period of military service. As an example, let's consider an employee who is earning $2k per month and is in military service for 2 months and returns to employment with the employer. How would the employee's allocation be determined? Based on income of $20k (income actually earned by employee) or $24k (assuming there is a requirement to impute income as there is for a defined benefit plan)? USERRA is clear that employees must make up missed contributions to receive matching contributions under a 401(k) Plan. USERRA is also clear that compensation must be adjusted under defined benefit plans for periods of military service. But I'm not sure how to handle the profit sharing plan. Any thoughts on it?

I can't tell you how much to contribute to your deferred comp plan for several reasons. I don't know: - what your retirement needs or expectations are - when you plan to retire - what you will avialble from other sources I can do the mechanical calculations for you and just tell you (as you requested) what $100 every two weeks will accumulate to after 20 years. I even question this calculation. Won't your contributions increase in the future as your compensation increases? If you are contributing $20 now, shouldn't you consider increasing it in future years. In any case, your deferred comp accrual will depend on the interest rate your account earns. I've calculated what your account will be worth after 20 years assuming several different interest rates. I'm assuming you contribute $100 every two weeks for 20 years: 6% $98,374 8% $123,496 10% $155,956 12% $197,932 14% $252,233 16% $322,471 18% $413,279 20% $530,589 Remember the impact of inflation. These amounts won't have the same buying power in 20 years they have now. Be sure to take that into account when you do your planning.

I would read the plan document carefully. It will probably specify a calculation resulting in a match of $530.59

401(k)Plan Sponsor receives a request from an employee to increase 401(k) contribution rate from x% to y% in 1999. Employer reports change to recordkeeper but fails to process the request on payroll. Therefore, the employee continues to contribute to the Plan at the rate of x% instead of y%. Employee never notices the error and the error is now identified by the sponsor. The participant's quarterly statements have all reflected the participant's actual contributions at the rate of x%. However, each quarterly participant statement incorrectly contained the following statement: "Your currrent contribution rate is y%" As a result of this error, the participant received compensation that should have been deferred into the Plan. The employee is an NHCE. No matching contribution was lost due to this error because the Plan does not match contributions in excess of x%. Is the Sponsor required to take any corrective action?

The 401(k) Plan probably has a loan provision - which you might appreciate having available someday.

Were there any employees who were eligible, but not deferring? If yes, you would include their compensation in the determination of the maximum deductible amount under 404(3)(A). That would help alleviate the problem.

If you are still employed by the sponsor of the Plan, the answer is no. There are limited circumstances under which you can get money out of the Plan - even if you are 100% vested. Those circumstances are generally limited to hardship withdrawals and distribution upon termination of employment. Hardship withdrawals cannot be rolled over. You should check your plan document or Summary Plan Description, but the answer wil probably be no.

QDROphile - Common sense dictates the sponsor would want its employees to have appropriate investment education before making investment decisions in a 401(k) Plan. Let's forget about whether or not they must.

There are other ways to provide quality education other than conducting meetings - an obvious way now is the internet. It has the advantage of being continuous as opposed to being a once/per year event. Another obvious strategy would be periodic mailings

If the participant had remarried, the new spouse would become beneficiary regardless of whether or not the employee had made a new beneficiary designation. Since he or she presumably did not remarry, I would say the previous designation of the prior spouse would still be valid and would override the divorce decree.

Situation seems pretty straightforward to me... You should request that the participant write a check to the plan to cover the loan repayment whenever the required repayment cannot be deducted from pay. If the participant will not or cannot make such payment, you should then follow standard loan default procedures.

Why do they want to make an advance contribution? If they wait until they determine which employees are eligible (after the end of the current year), they can make the contribution at that time and still get a curent year tax deduction assuming they make the contribution prior to the 404 deadline.