LCARUSI

See 98-52 sec VII. TIMING OF PLAN CONTRIBUTIONS. It spells the whole thing out.

What is Administaff?

I've never dealt with a plan that was vague on this issue. In fact, there was a great deal of detail and it was very difficult and tedious reading. I think there are limited situations in which you can disregard prior service for eligibility, such as if the employee didn't meet the eligibility threshhold during the first period of employment. I still think the first and obvious place to look is the plan document.

You haven't iven enough information for someone to answer the question (how is service calculated etc.), but you should check the Plan document. It should cover the rules for rehires.

There are several excellent threads on this message board concerning this topic. Do a search on the 401(k) Board on "Fees" AND "Distributions".

If the health-care "rebate" must go into the 401(k) Plan, it seems to me it's not a salary deferral contribution because the employee never had the option to take it as cash. Hence it should not count against the 402(g) limit.

You can't. Section 414(q) of the code itself was amended by the SBJPA. We now have the new and improved (and simplified) definition of an HCE. [This message has been edited by LCARUSI (edited 08-02-99).]

IRS says the maximum loan in your example is $10,000. DOL says not more than 50% of the participant's vested account balance can be pledged as collateral. Therefore, if the loan will be more than $7500, sponsor must take something else as additional collateral. Sponsors don't want to do that (additional collateral), so they limit the loan to 50% vested account balance.

I think Kelly's question is (and I'm not sure of the answer): The COmpany must calculate a single 404 limit based on eligible compensation for 401(k) contributions, and all other company contributions. If an employee is eligible to make 401(k) contributions , but chooses not to , and is not eligible for profit sharing, should his or her compensation be included in the total comp for 404 purposes? I believe the answer is yes, but I'm not sure.

jc7032 - Yes to your question: "do I retain the advantages if I leave it in the original employer's 401K program after I leave the company? Can I still withdraw the stock (with the advantages intact) years after I cease being an employeee - and having started another 401K with the new company?"

This topic comes up periodically on this board. Use the search function to find some prior threads (e.g. search on "lost participant" or something like that) New responses of course are welcome.

What's an NRA participant?

Following up on Mike Weddell's comment- If you have a controlled group, you would then calculate 415 limits on an aggregate basis - so the participant can't receive $30K in each plan. I'm not sure about 401(a)(17) limits. Thoughts on how that works from anyone?

Assuming they are unrelated companies... Yes, the employee can participate in multiple plans and each company will monitor 415 limits separately based on the employee's compensation at each company. However, it is the employee's responsibility to monitor the $10,000 to make sure he or she does not exceed it on a combined plan basis.

Assuming the plan year and company fiscal year are exactly the same (12/31), I believe the corporate extension to 9/15 gives you an automatic extension to 9/15 on the 5500. If you want the extension on the 5500 beyond 9/15, you can use the 5558 for the extra month, but as Ray said, you must file it by 7/31 and not by 9/15.

Tracy - Seems to me that if you do that, you would have to use the full year's compensation for ADP/ACP testing. Thus, if the employee joins the plan on 7/1 and contributes 5% of pay (pay from 7/1 to 12/31), then his or her deferral percentage would be 2.5% - you would have to use the full year's pay in the denominator. This probably wouldn't be helpful in discrimination test results.

Any contribution with respect to compensation previously received is not, by definition, a salary deferral contribution.

IRS examination guidelines for 401k plans state, in part, that a participant's cash or deferred election "may not be made effective prior to the later of the date the cash or deferred arrangement and the plan are adopted or become effective."

If you're talking about rollover of a hardship withdrawal distribution, you're right it can't be rolled over and that restriction would also apply to earnings.

Generally - employer Do you have a specific test or tests in mind?

Employee is limited by $10,000 limit and 415© limit. In addition to that, check your plan document for further restrictions - 15% is a common plan design limit.

That might be permissable assuming: 1) The plan doc allows contributions up to 15% of compensation, and 2) There is no specific language in the Plan that says the 15% limit applies to each payroll rather than to the overall annual comp. You get into some grey areas with highly compensated emplyees (>$160k). If someone earning $20k per month contributes 1% of pay, he or she has contributed $1,600 after 8 months ($20kx8x1%). In other threads, members have opined that this person has hit the 401(a)(17) limit for the year and must stop contributing. I don't agree. I think this person can "catch up" by contributing $8,400 over the remainder of the year and still satisfy the requirement to be at less than 15% for the year (and to have not violated 402g or anything else).

Kirk - Must the loan be reamortized to reflect the gap in the payments?

As I recall, the term "catch up contribution" was used in plans which allowed voluntary after-tax contributions. If the participant contributed less than 10% in a given year, he or she could catch up by making additional contributions in subsequent years (subject to current year 415 limitations). I don't think this concept is applicable any longer

Fred - Yes, he is an HCE in 2000 based on his compensation for 1999. He will be included in the k/m test for 1999 as an NHCE. He will be included in the k/m test for 2000 as an HCE. The maximum allowable ADP for the HCEs in the 2000 test will be based on the ADP for the NHCEs from the 1999 test (unless they make the current year election - in which case the maximum allowable ADP for the HCEs in the 2000 test will be based on the ADP for the NHCEs in the 2000 testing).