Jim Chad

I would think that as soon as someone makes an affirmative election, the auto enrollment no longer applies to that Participant. I would tell our payroll department not to increase his deferrals until they recieve written instructions from the Participant. FWIW

jpod just hit the only reason I would ever recommend life insurance in a qualified Plan. Besides guarenteed issue of a policy, there is also the possibility of a very high premium because of health or hobby factors. For example: someone who skydives or has a history of heart problems might have to pay twice the normal premium. But the PS 58 will be at normal rates. I have seen a case where this made sense. I have also heard of people who are seriously afraid of a depression wanting the guarenteed values along with all the stocks, but never seen one.

OK I'll bite. What is an RFP? How about a new rule? UNA In the military it means "use no acronyms".

When you say aftertax, you do mean the old after tax and not ROTH, don't you? Is there a reason for someone still doing the old after tax?

His self employed income should not be reduced by his $18,000 deferral. In this area he is treaed like the other employees.

This is detail that hopefully is in the document. But if it is not there, I would allocate to them because 1,000 hours and last day usually refers to employment with that employer. FWIW, I have never seen these terms used for a division or includable class.

I think you have a "benefit, right or feature" you need to test. It sounds like the investment with a $50,000 minimum we have heard about over the years. It is effectively available only to HCE's.

According to the speakers at the Corbel conference last week, you can do pretty much anything like this you want. Since they have the option to opt out, nothing is really bad.

You may want to post this question in the cafeteria plan section. I seem to remember that years ago we stopped putting 401(k) plans into cafeteria plans, but I can't remember why.

Ineligible employee deferrd in 2005. We followed the instructions in the ERISA outline and forfeited the account and the employer wrote a check to make him whole outside the plan. The Accountant is now asking me how this should be reported. Does she have to amend the w-2, 941 etc. for 2005? This would require him to amend his 2005 tax return? Can she issue a 1099 of some sort for 2006? Which one?

I can't say I have ever heard of this happening, but my first thought is that you would handle it the same way as when an ineligible employee is allowed to defer. The Plan would forfeit the money, including gains, and make the employee whole outside the Plan. The forfeitures would be used according to the provisions of the Plan document. Anyone else have any thoughts on this?

Executed.

A zero check bonus might look like this: gross bonus=$10,000 FICA and Medicare at 7.65 % = $765 401(k) Deferral = $9,235 net check = -0- Sometimes a note form the accountant looks like what I have typed above. But often, it does not come out exact and the extra $30 or $40 is sent in to the federal government as fed income tax withholding: still leaving a net check of -0-

It sounds to me like she received a bonus early in the year besides her $1,000 per week salary. Do you know if the accountant paid FICA and Medicare on this bonus ? I work for a CPA firm and it is not comon for owners to get a "zero check bonus". But it is not that rare either.

As far as the part of your question dealing with reporting delinquent contributions: there really is no such thing, if you are thinking of the rules for deferrals. If the deduction deadline is blown, it is deducted the next year, if the 415 deadline is missed and it is discretionary, you do not put the match in the Plan. If a missed match is a fixed match in the document, it is an operational error and it would be advisable to file under EPCRS.

Is this a Safe Harbor match and is it based on compensation for a period less than the whole year?

In English, I would answer by saying that all Plans will have to be tested together for coverage and nondiscrimination. This probably will not work if the HCES are all in the salaried Plan. This would be a good time to involve an experienced, Third Party Administrator (with good Pension Software).

I see why she didn't type it all in. The answer runs 4 pages in the 2006 version (11.47 to 11.50). I highly recommend reading it all. I would summarize it this way. Within 2 1/2 months you can let the seperated employee defer. If the normal practice is to let the seperated employees defer out of the final paycheck, then you would include them. If the normal practice is to not allow them to defer because they are no longer an employee, you would exclude them from the ADP. Additional thought: If they are normally not allowed to defer from final paycheck, than anyone terminating mid year would hurt your ADP test because turnover would be higher among NHCEs. Does anyone have an opinion on how this should usually be done. My guess from looking in my crystal ball is that it would help more to exclude than it would hurt? One other question: I use microsoft internet explorer here. Is there any sort of a spell check?

Page 11.451 of the ERISA outline says that the statute does not require any specific definition of Comp with safe harbor plans. It then goes on to say that the IRS has clarified that the definition should be a safe harbor definition under 1.414 or else you will have to satisfy nondiscrimination testing on the comp definition. It seems to me that you can have quite a bit of flexibiltiy in the two definitions being different.

A CPA wants me to take over a 401(k) Plan where each person has an individual brokerage account. The only contributions are Deferral and SHNEC. Since there is no vesting and no Hardship withdrawals allowed, CPA was thinking we don’t need to do annual statements showing the value of each type of money. I keep thinking there is some regulation that requires that gains must be allocated by source at least annually? This is a Corbel Prototype and I have not been able to find it in there. Does anyone know of any requirement like this? If not, would you consider it prudent in case of future law change?

Have you looked at Derrin Watson's book, "Who's the Employer?" Great Book for info on ASGs. It might answer the questions being asked.

Does anyone still have the letter the IRS sent confirming the EIN. This usually goes to the employer and is the best way to fix this. Failing that, call them. The Phone number for IRS- Entity control is 800-829-4933. If you ask them I think they will tell you to send a letter and they will give you the address. It would help if you had the authority to talk to them ready to fax. (Form 2848 or 8821) You might be able to talk to them in generalities. But I have had trouble doing this.

Has anyone looked at the TAft Hartley Act? Wouldn't this be an unfair labor practice? The DOL might call this union busting. Any attornies out there willing to weigh in?

Page 2.41 of the ERISA Outline (2004 version, my 06 version has not arrived yet) Sal says ..the employee must become a participant by the later of: 1. the statutory entry date described in IRC 410(a)(4) or 2. the date the employee satisfies the other eligibilty conditions(e.g. eligible job classification) imposed by the Plan. If 2 above is the later date, the employee must enter the Plan no later than that date, even if such date is not an otherwise scheduled entry date.

I am not saying this is right. But it is as much of an amendment as I have often seen. I would suggest preparing a Summary of Material Modifications and distribute copies as soon as possible. Since they did receive the SH notice, doing this now isn't too big a deal. Any ERISA Attorneys want to weigh in?