Jim Chad

I think this is a serious problem. This Plan is now out of compliance. This is going to seem cold but I would either file under EPCRS or resign as TPA. By the way, now that I have been doing this for a while. I would have refused to not send the 1099 or I would have resigned that year. My experience with people who don't care about the rules (as in the LAWS) tend to be bad news in other ways, too. FWIW

Keep accrueing the interest forever....... But at the end of the cure period is the amount used on the 1099 reporting the deemed distribution as taxable. However you keep accrueing interest until there is a distributable event. You track the interest because the laon balance reduces the $50,000 available to this employee for another loan. Treas reg 1.72(p)

What you are describing is a "basic safe harbor match ( other choices would all be called an enhanced match). When a document is prepared it will probably clearly state that this is the match paid to all NHCEs and HCEs. I can't even imagine the mistake someone is making that would have them telling him that he has to give more to the NHCEs. Can you ask that person to give you something in writing? 1.401(m) (3) is the regulation to back up your position.

When I do a mail merge to send a letter to many of my clients, I have always saved a photocopy of the letter in their file. I am taking (baby) steps toward going paperless. Does anyone know how I can end up with seperate files for each letter?

An owner of a corporation should be treated like any other employee. It is too late to get it out of a January paycheck. However, he can put $12,500 in as a discretionary nonelective contribution. (provided he had the Plan set up before 1-31-07.) If there is not a 401(k) Plan already set up, he might be able to put the same amount into a SEP. I'm not sure when the deadline is to set one up.

Even though you have 1 Plan document, it looks to me like you have two seperate employers, so you have two seperate plans for ADP testing. This means you have the higher percentage, based on the lower comp. Also, if he is not an owner, I would guess he is an HCE in one ADP test and an NHCE in the other. By the way, is it correct that he met eligibility and passed an entry date fast enough to get into the second Plan?

You might take a look at the employee leasing rules and see if any of B's employees would come under the leasing rules and need to be "counted" in A's plan. Other than that, they look like seperate employers to me.

I have been using SunGard's Relius system since 1994 and I think it is very good and well worth the price. I use it for administration and 5500 etc. Both systems work very well by themselves and they are getting the information to flow between the systems better every year. Also, I was really impressed with all they did so quick to help with the new reporting required by PPA 06.

A question first: Is this LLC taxed as a Partnership, C-corp or Sub S?

FWIW I think you may be right. It depends on when they put in the SHNEC and when their tax return is due counting extensions. They may want to put this in more than 30 days after the due date so it can count as an 07 annual addition.

If the broker is in the process of correcting the transfer to make account b an IRA, than you will not need to declare any of this a distrbution or taxable gain. Is the broker fixing the mistake?

I heard something like this last week from an attorney who set up a cafeteria Plan for a corporation a few years ago. Because of Michigan taxes, the attorney changed it to an LLC taxed as a corporation. He said the owners are still eligible to be in the cafeteria Plan because it is a corporation for federal tax purposes. I wonder if it means that for 401(k) purposes, you disregard the LLC and treat the employer as a corporation.

Probably, yes. But remember it is based on 5 calendar years.

Robert Rickter, from Corbel, at a seminar said you can exclude those expected to work less than 1,000 hours but you had to have language in the Plan that if any of them did work 1,000 hours in a year, they had to come in to the Plan. And he said this language would be in the next corbel volume submitter.

Quick addition: There must be at least one employee covered. It does not apply to a "solo-k".

Janet, it sure seems pointless to me. I wondered if I was missing something or if it is specifically required somewhere. Right now, I'm leaning toward skipping all eligible Participants with no account balance. Some of my 401(k) Plans have many of those.

Do the new requirements regarding Plan provisions apply to all eligible Participants or only those people who have an account and are receiving some sort of statement?

The mailing from Ameriprise and the mailing from Corbel both matche my understanding. If the Participant can direct investments, we have 45 days after March 31, 2007 for a calendar year Plan.

No one else has answered so I will take a swing at this. I can't think of annywhere to look for an answer. But my gut feeling is that you have one Plan here and if the document says you are supposed to use forfeitures to reduce Employer Contributions, in an MPP, I would use any forfeitures ot reduce any Employer Contribution. One caveat is that the document doesn't specify what kind of Contribution. I have seen some Profit Sharing documents seperate match Forfs form nonelective Forfs and have dirrent provisions for each.

MIke, I like your sense of humor. And I agree with you. We don't have all the facts. But I can't see any way this could pass testing.

I can't see this as a do it yourself job. There are so many options that will do so many different things. They all have advantages and they all have disadvantages. I highly recommend talking this over with an experienced administrator. I would suggest calling ASPPA for members in your area. 703-516-9300

It sounds likethey did a conversion or distribution- instead of a rollover. By this, I mean, a conversion to an after tax IRA or maybe an outright distribution. I would suggest calling them and see if they can: 1. Verify that the new account wats titled correctly. If not, ask them to fix it. 2. Send a corrected 1099 to you showing -0- (zero) taxable

If you have contributions in 2007 to the SIMPLE PLan, it would be a bad idea to start a 401(k) in 2007 because this would disqualify the SIMPLE Plan, at least for that year. I think the exclusive Plan rule is section 408(p) (2) (d).

I would think the employer should ask an ERISA Attorney to look at the lien, and if it does not say anything about loans, probably approve the loan.

I'm hoping that all of your questions will be options in a prototype document. I have seen nothing that said that any of these isuues must be handled a certain way.....unless it is a safe harbor Plan. Then, I think, we need to hire everyone the same. What I want to choose is: Anyone who is currently deferring, leave alone. Anyone eligible who isn't, even if they have opted out earlier than today, is autoenrolled. Does anyone have any experience on problems with this approach?