Brian Gallagher

They may be, but my point was that if I went and paid for their premium service, I couldn't charge that back to my 401(k) plan. Just like the example at the top, Morningstar would be providing participants with the advice, not necessarily the plan. Maybe I should have used the Wall Street Journal as my example.

try this: http://www.benefitslink.com/erisaregs/2520...-proposed.shtml

i would say no. it is not an expense incurred by the plan. i would say that this advisor is neither a fiduciary nor party-in-interest. if that was allowed, it would be like me signing up for the morningstar premium service and charging it to my 401k account. all the people in my plan have access to it, but certainly you would never consider morningstar a fiduciary who was providing investment advice to the plan.

if the plan doesn't make the safe harbor contribution, it becomes a regular ol' 401(k) plan for that year, subject to the top-heavy rules and the adp/acp testing

Please see question #'s 66, 67 & 68 in the "Correcting Plan Defects" secion of Q & A columns. (I'm no good at inserting links into messages; sorry). It seems that the excesses need to be removed before a distributable event because there is an operational defect if someone has violated the 402g limit. you will have to go thru one of the correction programs, too.

i thought regs took precedence over rev proc's. the regs seem to say if the x/s is not out by 4/15, it can't come out until a distributable event.

thanks, all! just what i needed!

it seems that you would indeed need a distributable event. my firm distributes them after april 15th all the time. maybe we should revisit our procedures.

maybe i should elabotrate... when is the latest i can take out a 415 excess without running afoul of qualification issues? (i'm looking for a date similar to the date for adp/acp excesses--last day of plan year following the year in which the excess occurred)

Below is Sec 402(g). See part A(ii). It says distributions are made notwithstanding other provision of law...meaning to heck with 401(k) (2) (B)!! Limitation on exclusion for elective deferrals (1) In general Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual's gross income to the extent the amount of such deferrals for the taxable year exceeds $7,000. (2) Distribution of excess deferrals (A) In general If any amount (hereinafter in this paragraph referred to as ''excess deferrals'') is included in the gross income of an individual under paragraph (1) for any taxable year - (i) not later than the 1st March 1 following the close of the taxable year, the individual may allocate the amount of such excess deferrals among the plans under which the deferrals were made and may notify each such plan of the portion allocated to it, and (ii) not later than the 1st April 15 following the close of the taxable year, each such plan may distribute to the individual the amount allocated to it under clause (i) (and any income allocable to such amount). The distribution described in clause (ii) may be made notwithstanding any other provision of law.

at my firm, we've never ran into trouble distributing adp/acp excesses after 2 1/2 mos.

can someone tell me where in the code it tells the timing of correcting (in this case, removing) excess annual additions (415 violations)?

tom also misspelled "irrevocable" above, too. but, hey, who hasn't misspelled (or, rather, probably mistyped) a word here or there?

don't excess deferrals have to be out by April 15 of the calendar year, rather than 2 1/2 months after the plan year?

a possible reason for electing out: was the P/S cross tested? maybe the HCE would want the maximum contribution without an "expense" (to himself).

thank you for your compliment. :-)

i guess excess deferral.

if the plan did return these contributions, how are they reportable to the participant? should a 1099-r be generated? if so, what code would be on it?

we do that because of our mantra around here: once in the trust, always in the trust (except in the case of the rare mistake of fact) i didn't make it up, just follow it.

would this case be a plan defect? or operational defect? i always thought that one the money is in the trust, it must stay in the trust, except in the narrow case of "mistake of fact". this situation is certainly a mistake, but it certainly does not sound like a mistake of fact. what my company would do is remove the affected money, plus/minus earnings from the account, still hold it within the trust. when the plan send in it's next contribution, it could short the check by the removed amount. the plan would then have to pay the original amounts to the participants, with taxes withheld. also, w-2's may have to be adjusted.

from the pension answer book (2001) 25:2 With respect to severance pay...IRS representatives have opined that elective contributions can be made only by an active employee. Consequently, if such payments are available prior to termination of employment, a participant can make a cash-or-deferred election if the plan so permits; but, if the participant has terminated employment and such payments are made thereafter, the election cannot be made.

and who's gonna pay the $1000 a day fine? (going back to july 31!)

do you submit the ENTIRE 5500 (including scheds) for the amended return? the sched P instructions explicitly says "a seperately filed Schedule P will not be accepted."

i don't hink it matters, because i'm sure each representative has his or her own priorities when they look at the forms. some may look at sched H first, while others might think that the T is more important; certainly both of those are more important than the A. plus, since most of the forms are machine scanable these days, how does the PWBA scan them? does it pool together all the 5500's in one pile, all the A's in another, the C's in a third and so on? and if they get scanned as they come in, it really shouldn't matter in what order they are scanned...they're all computer coded! sorry, i'm rambling...it's getting late. time to go home!

and, if the document allows, any pre-tax amounts recharacterized as after-tax amounts due to a faild adp.