Brian Gallagher

I didn't think you could reallocate as match. You can realloc forfeitted match money, tho'. Our doc and all the other docs that I've seen that reallocated forfs, have them gived to everyone as an employer non-elective contribution (profit sharing, not QNEC). That would mean if someone did not defer, the person could still get a part of the reallocation. That money may be "coded" as match in his account, but is really just the reallocation. So, to me, you can't reallocate as match.

Can there be a Last Day rule for Safe Harbor match or non-elective contribution?

At my company the mantra is..."once in the trust, always in the trust." We very rarely send money back to companies after it has been invested in the trust. If there is a mistake made, we will certainly take the money out of the person's account, but hold it in reserve and the plan can short the next check by that amount. About the only time we send funds back to the employer is in the case of a mistake of fact. However, you situation certainly does not sound like a mistake of fact. Mistake, maybe, but not MOF.

First of all, does your prototype allow for dual eligibility characteristics? Our new prototype allows for this, but our previous one didn't.

we do our 5500's on a cash basis. does that matter? (we have a seperate dept. that prepares our 5500 and it's been a long time since i really worked with one)

I believe under 404(a), the maximum a company can deduct is 25% of covered compensation. What would happen if everyone who was eligible was putting away 30% of their comp? (far-fetched I know, but stuff like this keeps me up at nite) I am also under the assumption that non-deductable contribs (ie over 25% of covered comp)are not allowed. I'm probably wrong somewhere, I'm just wondering where. Does the company just deduct the 25% and ignotre the additional 5%?

But when you do coverage testing you need to test each money type seperately. i would say if the person is not eligible to receive a match due to the last day rule, he is not benefitting under the plan with respect to match. (at least that's what I've been assuming all these years.)

Just create one with an old date. (he says with a sly grin)

OOOOOPPPPPPSSSS! I meant form 5330! And we neither received the money nor the data.

I have a plan who inadvertanly did not send us a payroll deduction file from December 2002. The company will send it this week. I know it is to be reported on form 5558 which we usually send in along with the 5500. We haven't done the 2002 form for him yet. Sjould that be included in the 2002 5500? The 2003 5500? Can the 5558 be independently filed from the 5500 now? Thanks for your consideration. PS: can somone do something "advertantly"? (just a thought)

The blackout notice only needs to be provided if the people OTHERWISE would have had access to the money or to make changes. If they couldn't NORMALLY do anything during the time of the switch, you should be okay not doing the notice.

Honestly, I think the only reason this came up is because one of the partners in the company is having money problems. He maxed out hardships and loans and he's being a pain in the ass (pardon my French) about getting as much money as he can. The PA was concerned mainly about fiduciary exposure of letting people take almost all of their money out whenever they wanted. I told him that as long as he is pretty much following 404c, he'd probably be okay.

401(k) contribs (aka elective deferrals) are not allowed to be withdrawn before 59 1/2 (with a couple of exceptions--hardship, corrective distrib), but other employer contribs (401(m), 401(a)) may be allowed, if the document so permits. (safe harbor match or non-elective or QNEC/QMAC's are not)

Our current Prototype allows for in-service distributions under 59 1/2 for match and profit sharing. Is there any material out there that may discuss the pro's and cons of 1) actually choosing that option for a plan or 2) benefits/drawbacks for participants? Your thoughts are appreciated.

Does the plan document address the fact? Our document does. It says if you are to reallocate, you do so per the employer contribution. In the absence of an employer contrib election, it will be "so-and-so".

I was always thought that is was the check date, becasue that is the date that the person could have received the money in cash instead of putting it into the plan. But I have heard arguments the other way as well. Maybe as long as it is consistent pay period to pay period it's okay?

Sorry, I meisread your question. I missed the salient point about FORMER ee's. I'm sure you want current ee's to be allowed to roll in. I'm sure something could be written into an IDP, but I deal mostly with prototypes. That's no help I know. Sorry about that.

Sure. A plan can be set up that doesn't allow rollovers in. I have several plans that do that now. It's actually a selection on the Adoption Agreement.

Say the plan investments, for simplicity's sake consist of the minimum three asset classes: Money Market/Stable class, Income class, and Growth class. Also, say the income class is invested in the XYZ Bond Fund, and the growth class is invested in the XYZ Large Cap Fund and both are consistently in the bottom 10% for their classes. Isn't it incumbent upon the fiduciaries to review the available fund lineup to make sure they are performing consistent with it's investment policy? (And the policy is not to invest in funds in the bottom 10% of the class). in this case, the participants do have investment direction over their funds. Does it say so in the code (ERISIA, IRS, etc), or is it implied under the "prudent man" rule?

Does anyone know if it says anywhere in the codes that a plan and/or other fiduciaries have to review the investments in a plan? All I can find is under ERISA 404(a) and © that the investments must be diversified and there must be at least three options with differing risk/return. Any thoughts would be appreciated.

we have always taken the stance of "as soon as administratively feasible" to resume deferrals. i would say that he could start deferring in the pay period following the six months. it's the same as becoming eligible for the plan--say the first of the month is in mid-pay cycle. the person would start deferring the next cycle; the participant won't defer for half a pay period! i wouldn't go as far as to say the next entry period as if the person decided to stop deferrals. it is a bit counterintuitive, because when a person takes a hardship, it is tantamount to stopping deferrals, but we always just do the next pay period

But does a person had to have had a vested balance before the forfeitures can be restored? Take these four examples; who can have forf's restored upon rehire (assuming w/in the 5 yrs)? At the time of full distribution: A) $10,000 acct bal 8,000 401k 2,000 match 0% vested 8,000 distribution 2,000 forfeited B) $10,000 acct bal 8,000 401k 2,000 match 50% vested 9,000 distribution 1,000 forfeited C) $3,000 acct bal 3,000 profit sharing 0% vested 0 distribution 3,000 forfeited D) $3,000 acct bal 3,000 profit sharing 50% vested 1,500 distribution 1,500 forfeited According to some in my office, it's B & D (but not S & M...lol) who can get the forfeitures reinstated.

Hopefully, the plan is on a prototype, and it doesn't exclude any employess (other that the stautorial excludable ones). f that's the case, the T is merely just checking off a box.

I understand how a person can "buy back" the forfeited amounts under a plan. However, in my office there is some dissent on whether or not someone who was 0% vested can get the forf'd amount back. The pension answer book says that as long as the person pays back the entire distribution, the forfeited amount can be restored. Some people here believe that if the the person was zero % vested, he could not buy back because he could not pay back the vested portion (because there was none). Any thoughts? (I also understand the 5 breaks in service stuff, too)

Yeah, I'm wrong. I guess I had one of my patented brain farts. Seems like I'm having a lot of those these days. Maybe I need a vacation.