Lynn Campbell

If a participant inadvertently rolled over the entire account balance to an IRA in 2003 (non 5% owner, over age 70 1/2 when he quit working in 2003), and the excess is withdrawn by 4/15/2004 with applicable earnings, what penalties are there? Has anyone had success in convincing the IRA Custodian to remove these funds, and what is the best way to start? Thanks for all input.

zero divided by zero is "undefined" as the math majors say.

Plan was amended for GUST effective April 1, 2003, with a March 31 Plan Year end. What is deadline for SPD to be given out? Thanks!

Appleby, re question 2: assuming a one-person or very small plan, with the owner/participant having a substantial balance and eligible to take a distribution from the plan, is this a good reason to roll the funds to the IRA prior to death, so that payments may be made to the non-spouse beneficiary over their lifetime (compared to the qualified plan, which might not be able to stay "in existence" for that many years just for the purpose of making the death benefits payable over many years). I am assuming there is no spousal beneficiary or that the spousal beneficiary is deceased and the actual beneficiary is a 30 year old child. Thanks for all input.

This is what a client might say - it only takes 5 minutes - so the fee should be negligible - but in reality we know it usually takes a lot longer to gather the financial data, reconcile the assets, etc. Anyway I can certainly understand a client's motivation in avoiding the 5500 requirement for as long as possible, it avoids a possible random audit for one thing...

It appears that if assets were less than $100,000 at the end of every plan year beginning on or after 1/1/94, you are exempt. The plan would have to permit the distribution in question, so check your documents.

That was my attempt at including all the participants in the group eligible for in-service distributions, so I could at least theoretically pay them all off - assuming each participant consents as required. Thanks!

http://benefitslink.com/IRS/revrul2004-13.pdf This just came out today on Benefits Link and seems to answer your question. I do not think the SEP affects the top heavy status...does anyone disagree? Have you ever had profit sharing contributions? because if you have any forfeitures, that will require top heavy contributions.

The Opinion Letter is an IRS approval letter to the Prototype Sponsor. The Determination Letter is from the IRS to the specific employer that used the prototype and requested a Determination Letter from the IRS. That is my understanding.

I am asking about an in-service distribution provision. I realize we cannot force payment of the $$. Thanks.

QDROphile - morale aside, would it be permissible for the criteria for an in-service distribution to be one of these: all accounts that are fully vested (we would amend the Plan so that all accounts would be fully vested) OR upon attainment of an age such as 25 or some other age that would include every affected participant? Thanks for all input!

I use Relius Govt. Forms 1099 software, provided by Corbel in Jacksonville FL. and have been happy with it.

who else is REALLY glad the GUST extended period is finally over?

The deadline depends on your withholding schedule...not necessarily end of quarter. Anyway, how much was the withholding?

In a 401k plan, what is the best way to remove the discretionary profit sharing accounts altogether? There will be no future discretionary profit sharing contributions, and we will 100% vest these accounts. The client wants to pay all participants their funds in these accounts to simplify recordkeeping. We could add in-service distributions using the "2-year rule" but that would not permit us to distribute all funds at this time. The 401k deferrals and matching contribution funds would stay in the plan and these contributions would continue. Thanks for all your input and ideas...

My understanding is he must submit by January 31 and pay the regular user fee plus $250/plan penalty for late amender. Per Rev Proc. 2003-72.

The most recent amendment to the Plan - when was it done, on a prototype or what type of document? If you meet the IRS rules in Rev. Proc. 2003-72, you may be able to amend now for GUST and submit by 1/31/04. What sort of plan is this?

which of these employees are participants in the Plan?

Form 5307 #2 asks for the person to contact if more information is needed. Instructions to the form indicate that the person listed will get copies of all correspondence. Does this mean that if question 2 on Form 5307 is completed, there is no reason to do the 2848 anymore? Thanks for all help!

R. Butler, did you ever find a template for Demo 5 and/or Demo 6? What are you using? Thanks.

I firmly believe that all individually designed plans should have a determination letter to protect the client (and the TPA). I am not sure what the deadline would be for an IRS submission of these Plans. I am sure others can help with that info? Thanks.

What I have done is: FAX Form DE 1P to California Employment Development Dept. to get a State Tax ID# for the Plan itself. You can get this form on the internet. I put my office address on the mailing address, so the new number and coupons come to my office. In a few weeks you should get notification of the new account number along with some coupons to make deposits. Quarterly returns are due on Form DE6 and there is an end of the year form (not sure the number). The deposits for my clients are all done manually, nothing electronic, so I hope this is of some help.

For new plans where the User Fee is waived, isn't there some value in getting a letter that addresses the methodology used in cross-testing? What are others doing when they submit for GUST? I hate to ask a very basic question, but which Demo would be the one to use in this case?

Will you be submitting your Volume Submitter "word-for-word" Plans to the IRS? Why? Thanks for all input!

Brian, if the Plan is not a 401k Plan already, you can add Safe Harbor mid-year, under the "new plan rules". Right?