apologize if this has been asked but i did not seeing it looking

through past posts..my question is what is the definition of self-employed

for characteristic code 3b..better yet what does a plan covering self employed mean

exactly? are we talking about sole proprietors/partners/llc members or

is a one person c corp included in this description? what about a two person

c corp with a 100% owner and a secretary..it still covers an individual who surely would

claim to be self employed...

all responses appreciated.

Underfunded amount is more than $50 million on "regular" basis, but less than $50 million on MAP-21 basis. Is this over the $50 million threshhold for providing a copy of the AFN to the PBGC or not?

We have 401k plan where each participant has their own account. Rather than everyone being invested at one company, each can pick whoever they want. There was a participant who terminated and wanted to cash out. He conacted his investment company, obtained their withdrawal form, had the trustee sign, and he was distributed. We were unaware of the distribution.

For our plans we have our own "plan distribution election form" which has a Speicial Tax Notice. We have them complete this form which serves to not only keep us in the loop but ensures the participant receives the proper notices, and the proper distribution amount. The participant in quesiton was 100% vested, so no issues with the amount.

What is the "correction" here, if any? Does the entire distribution need to be reversed? Do we merely need to send the Tax Notice and have him acknowledge? Should we have him complete our dist form for the files?

An excluded person(excluded by class) in a ps plan is brought in to pass 410b testing because he is nhce.

He gets top heavy contribution.

the following year he is hce;and doesnt have to be "brought in" to pass 410b

Q: must he be considered participant for top heavy?

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Slipton@intpen.com

Employer desires to merge two 403(b) plans and transfer all assets from one to the other. After the transfer, there will be no assets in the transferring plan. Must this plan continue to be maintained, languishing in the file with no activity?

How do you actually get it to go away?

Thanks for any thoughts.

This is one of those basic questions that seems too good to be true when you see it in action.

2 companies owned by the same individual, 1 has a 401k plan with cross tested profit sharing, other company has no plan

So long as the company with the plan can pass the ratio percentage test taking into account the employees of the controlled group we're good to go with no further combined testing (once we get past coverage we can test the 1 plan as if the controlled group doesn't exist)?

Thanks

Family Trust X is the majority owner of Company A. (We have asked for exact ownership.)

Family Trust X is also 19.5% owner of Company B. (We have asked for remaining ownership information.)

My question is: how is a trust handled when determining if a Control Group exists?

Good morning! Code Section 401(a)(17) places a limit on the amount of compensation that can be used to determine the amount of a defined benefit plan participant's benefit. There is a special transition rule for governmental plans. That special transition rule for governmental plans provides that the Code Section 401(a)(17) limits will not apply if such limits will reduce the amount of compensation that was taken into account (for purposes of determining a participant's benefit) under a governmental defined benefit plan on July 1, 1993. The governmental plan however, must be "amended so that the plan incorporates by reference the annual compensation limit under section 401(a)(17), effective with respect to noneligible participants for plan years beginning after December 31, 1995 (or earlier, if the plan amendment so provides)."

It's unclear to me whether the foregoing language means that a governmental plan (i) only has to be amended to incorporate the Code Section 401(a)(17) limits; or (ii) has to be amended to incorporate the limits effective with respect to noneligible participants. Can a governmental defined benefit plan apply "special" Code Section 401(a)(17) limits to eligible participants if that governmental plan (i) was amended to incorporate the Code Section 401(a)(17) limits by reference, but (ii) did not indicate that such limits applied only with regard to noneligible participants?

There seem to be varying opinions on this issue. I appreciate any thoughts.

A retiree in a multiemployer pension plan returns to work with a participating employer in covered employment. Is there any reason why the employer would not be required to make contributions on behalf of this individual?

I am handling a DFVC correction for failure to file Forms 5500 for three plan years. The following questions have arisen:

(1) Is an ERISA 403(b) sponsored by a 501©(3) entity which is neither a government nor a church and which is funded solely with an annuity contract eligible to file Form 5500-S/F? In other words, would such a 403(b) plan satisfy the requirement that 100% of its assets constitute "eligible plan assets?"

(2) Is such a 403(b) plan subject to ERISA's minimum funding standards?

Thank you.

We have participant who was convicted of murder of his spouse in 2011 and has since been in prison. Expected to be there quite a long time. He also has an account balance in his former employer's retirement plan. He expressed a desire to "get his money" to a friend who happens to be employed with the company and relayed the information to us.

Based on some research, especially here, it does sound like we can send him a distribution form to complete and he can potentialy take a distribution. Doesn't sound like an IRA would be an issue, but rather a lump sum. Could he have a lump sum wired to his checking account? Seems like a check would be the issue.

Can anyone verify?

A plan has two eligible participants in 2012, a 100% owner, and a regular NHCE.

Plan waived eligibility if hired by 4/01/2012, and NHCE was hired 03/01/2012.

Vesting schedule= 2/20%.

NHCE termed 3/15/2013.

Question:

NHCE is eligible for 2012 profit share, but is 0% vested.

The document requires immediate forfeiture for anyone that terminates employment.

I believe that the IRS position is to partially vest in this case.

Is that correct?

An employer/plan administrator and its recordkeeper have a difference in views about whether the employer may use forfeitures to reduce the employer’s obligation to pay 401(k) salary-reduction contributions.

The recordkeeper says the employer may use forfeitures only against matching or non-elective contributions.

The employer might prefer to use forfeitures against any contribution that the employer otherwise would be obliged to pay.

The plan, which has not only a volume-submitter letter but also an individual IRS determination, states: “Forfeitures … will be … used to reduce any Employer contribution (e.g., matching, profit sharing[,] or ADP test safe harbor contribution).”

Even if the c in contribution were capitalized, the plan does not set up “Employer Contribution” as a defined term. And the exempli gratia (for example) signal that leads the parenthetical phrase means that the phrase is a non-restrictive illustration of less than all of the possible kinds of employer contribution.

Perhaps a convention suggests using forfeitures only against matching or nonelective contributions. But is this a hard constraint?

Isn’t a 401(k) contribution an employer contribution? (An employee agrees to a salary reduction in exchange for her employer’s contribution to the plan.) If so, isn’t it within what the plan’s text says about using forfeitures to reduce any employer contribution?

Or is there some other reason forfeitures must not be used against salary-reduction contributions?

We discovered 6 employees on a client's 2012 census who deferred to the 401(k), had never been listed in prior years and had hire dates going back to the 1990's. We found that these were employees from a company they purchased effective 10/01/12 and they gave them credit for service with the prior company so they could participate in the plan.

1) Can they adopt an amendment now, retroactive to 10/01/12 allowing prior service with previous employer for eligibility and vesting purposes?

2) If they cannot adopt a retroactive amendment, and short of returning deferrals to them as a mistake of fact, can anyone suggest any other solutions?

Participant in plan has an outstanding loan from 2008 (maturity = July, 2013). For 2 years, payments were made timely, but upon receiving Y/E data for 2012 we have discovered that she stopped paying on the loan in 2011 and made no payments during 2012.

Participant and plan sponsor both honestly thought it had been paid in full. We believe it was an honest mistake on both their parts, due to changes in payroll and no one paying attention.

The obvious answer is to declare a deemed distribution, and for her to repay the remaining balance plus interest. This would come to approximately $20,000 and since she is under 59 1/2, we are looking at a sizeable tax hit.

My questions are:

1) Do we have flexibility in how she repays the loan? Can we re-write it or must it be repaid by the original maturity date (07/2013)? Can we reduce the interest rate (was 7.0% but at current prime new loan would be 5.25%)

2) Is there any way to get around the deemed distribution and consequent tax hit? Would this qualify for EPCRS?

Again, it appears to have been an honest error. Granted participant should have known that she hadn't repaid nearly all the loan and that it wasn't being taken out of her checks, but as is all too commonly the case, no one was paying attention.

A client has several frozen SEP accounts and wishes to consolidate them. He has found an investment vehicle with a fixed rate of return, but the investment is only available to SEPs, SIMPLES and 403(b).

Can a SEP account be established just as a rollover with no additional contribution?

This is where I get to say I am sooooooo ooolllddd that I remember things that never were, maybe.

I seem to recall that at some time in the distant past, if NO officer made over the dollar limit, then the highest paid officer was considered key.

However, reseaching 1.416, 416, and the Erisa Outline Book, I see no mention of this.

So do I chalk this up to Fawlty Towers, that is faulty memory or did it change when I wasn't looking?

Maybe this should be posted under humor.

I'm looking into gap insurance for my employees. Any input is helpful.

Do they really pay claims?

What carriers sell the most affordable plans?

I have an employee with a 24 year old dependent on her plan. The 24 year old is about to become a mother and they want to know if the baby can be added to the plan. Employee pays 80%, employer pays 20%. Is employer still on the hook?

if you have a non amender using a prototype plan will the IRS accept the 5307 DL application with the VCP application in light of the fact that they arent accepting determination letter applications for prototypes anymore.