Concerning a small-business defined-contribution retirement plan that provides participant-directed investment, what (in your experience) is the "top five" things that can go wrong that get the employer (in its role as the plan's administrator) or the plan's trustee stuck answering a court proceeding?

(For this query, leave out IRS and EBSA administrative enforcement, and consider only something that results in court proceedings in which a plan's administrator or trustee is some kind of defendant.)

This is a church plan so maybe this works but I have my doubts:

A) Monthly benefit defined as NRA Cash Balance Account divided by a annuity factor based on 417(e) mortality table and

30-year Treasury rate @ first day of year of retirement

B) Benefit accruals frozen as of 1/1/2007

C) As 30-year Treasury rates tumbled recently (and for 2009) the annuity factor rose and monthly benefits dropped so that

someone retiring at age 65 would get a monthly benefit about 15% lower if they retired now (or in 2009) than they would

have had they retired in any other year since the freeze.

Any problems?

This is a church plan so maybe this works but I have my doubts:

A) Monthly benefit defined as NRA Cash Balance Account divided by a annuity factor based on 417(e) mortality table and

30-year Treasury rate @ first day of year of retirement

B) Benefit accruals frozen as of 1/1/2007

C) As 30-year Treasury rates tumbled recently (and for 2009) the annuity factor rose and monthly benefits dropped so that

someone retiring at age 65 would get a monthly benefit about 15% lower if they retired now (or in 2009) than they would

have had they retired in any other year since the freeze.

Any problems?

Am I correct that a 401(k) Plan and a 403(b) plan cannot be invested under the same insurance contract? I have one issue in particular which is that the 401(k) Plan has a trustee? Combining all the assets in one investment contract and recordkeeping the source separately would not be sufficient, correct?

If loans to participants from a qualified plan were otherwise set up correctly per the terms of the plan's loan policy but failed to apply the plan's interest rate for loans (e.g., prime +2%) and, further, applied a rate that would be considered below market, is correction available under the Voluntary Fiduciary Correction Program (VFCP)?

In taking a look at Section 7.2 of VFCP, which provides for correction of loans at below-market interest rates to parties-in-interest, the example is not exactly on point (i.e., it describes a 30-year mortgage loan secured by a Deed of Trust) and the correction involves the establishment of a corrective interest rate using an independent commercial lender (rather than just correcting at the plan's normal loan rate). So, before going down this route, I really want to make sure that VFCP is applicable.

In addition, it also seems that there is no correction for this under EPCRS, which only provides a few situations (e.g., default) for which correction can be made under the streamlined procedures.

I think we're definitely in ERISA-land, because the loan was not good when made (i.e., both the loan documenation and the loan itself reflect the below-market interest rate) rather than a simpler matter of the loan documentation being good and the repayment amounts simply being too small due to the incorrect rate.

Thanks in advance.

Looking for testing options for non-safe harbor floor offset. DB offset by profit sharing that started in the same year.

Questions:

1. Is there anything that prevents the minimum aggregated allocation gateway from being measured using the accrued to date method?

2. If ok and using the accrued to date method, all investment income attributed to employer profit sharing allocations during the measurement period can (but is not required to be) included, right?

p.s. I think the answer to 1 is that it is prohibited, but I am not sure.

The plan document currently states the safe harbor match is made on a payroll basis.

The employer would like to change this to an annual basis.

Can the plan be amended in midyear to allow with this change

The loan policy states that loan payments must be withheld via payroll and upon termination the loan balance is due or it defaults.

Scenario:

Participant terminates with an outstanding loan and sends personal checks for loan payments to the record keeper. The record keeper accepts them and does not default the loan. The plan sponsor realizes that this is happening six months later. What is the proper correction method?

My thought is that this is an operational failure similar to the inclusion of an ineligible employee who is allowed to defer. In that scenario, either the plan is amended retroactively (411d6 issues may apply) or the ineligible deferrals are returned to the employee. Is it a stretch to apply the same logic in this loan scenario?

It seems there are two options:

1. Stop accepting payments and default the loan during 2013

2. Return the loan payments and default the loan based on the outstanding balance at the time of termination (6 months ago)

Any thougths?

Thank you

when determining whether two entities are a parent/subsidiary controlled group do you apply attribution to the shareholders/members of the parent? in this case 10 of the members of one LLC each own 2.70% in that LLC and those same 10 own 10% each in another entity.

the RMD calc rules require a separate table of factors if the participant receiving the payout is married, their spouse is more than 10 years younger, and the spouse is the designated beneficiary.

Does anyone know of any specific exception to this rule - for example, if you are unable to acquire the beneficiary information, is it ok to just use the Uniform Life Table I?

Can a plan that had a J&S option remove that options from its provisions? Plan number is 002, but the only money in the plan right now is Profit Sharing, Salary Deferrl and match.

Employee is terminated and has money remaining in their FSA account from payroll withholding. Can that employee get reimbursed for medical expenses after their employment terminated? If so, is their a cite for that? Thanks.

Have an almost frozen DB plan. About 110 participants, most inactive. No lump sums, not even if <=$5,000. Only one (union) participant is still earning benefits -- about $12/month in 2013.

At 2012, we had under MAP-21:

FT 1,610,000

Assets 1,700,000

FSCOB 835,000

MRC=15,900

FTAP= 45%

AFTAP=105%

Assets yielded about 10% during 2012 and there were no unusual demographic changes.

At 2013, we have:

FT 1,755,000*

Assets 1,695,000

FSCOB 900,000

MRC=138,000

FTAP=45%

AFTAP=45%

Consequently, must burn about 260,000 of FSCOB to get AFTAP to 60% so that one participant can earn $12/month.

Assets would have had to yield about 12.65% just to avoid the burn of the FSCOB (i.e., maintain AFTAP at 100%). Only hope is that employee still earning benefits quits. May I be retired as interest rates decline and assets suffer a loss. FSCOB will disappear real fast and contributions will skyrocket.

In short, this example illustrates how Congress has eroded the efficiency of DB plans. And the Big Guys at the EA meeting are so optimistic about DB plans!

*FT using 2011 assumptions=1,640,000

Last year my Dad passed away and named me the beneficiary of a SIP plan. At the end of the year, they sent an automatic distribution. I had planned to keep it in place as a retirement plan for myself, but just received a check for the balance less 20% withheld for Fed tax and 6% withheld for state tax. Plan admins told me that plan rules required closing after 180 days. Question is: 1)could I have rolled this entire amount into another qualified plan for myself with no taxable event? 2) Can I take the balance I received and roll it into another qualified plan without creating another taxable event?

Does anyone know if the PPACA 90 day elimination period also applies to health FSA?

The health insurance company has released copies of EOB's to the employer. Is this a violation of HIPAA laws?

Happy 18th birthday to BenefitsLink.

Attaboy, Dave!

We have an employee whose individual health insurance policy will have a 35% increase at renewal in June.

She previously waived enrollment in employer health plan, but enrolled in the dental and vision plans under our Section 125 plan.

Is the increase in the cost of her individual policy qualifiy as a change in status and therefor she can enroll in employer health plan?

We have a safe harbor plan in which some participants are making dollar amount deferral elections instead of an allocation percentage of comp. Their pay fluctuates each pay period and the employer is submitting a safe match each pay period. However, the employer is not adjusting the match to that period's compensation. The SHM is the same amount each pay period just like the deferral.

The plan does not have a true up provision.

For those that contribute a dollar amount deferral election, it would appear that they should be receiving the match = to 4% (enhanced and assumed that their deferral => 4% comp) of that periods comp, regardless of the fact that the deferral amount is the same. Am I correct or am I missing something?

Anybody know where I can find a chart/list of the required cafeteria plan document amendments over the past decade or so?

Thanks