During 2012 an ineligible employee had deferrals and employer contributions deposited. These contributions were forfeited (during 2012), he was made whole outside the plan for his deferrals and the employer will use the forfeitures as defined by the plan document, to reduce future contribuitons.

Would these contributions be included in the "other contributions" on the 5500 and would the sponsor be able to deduct them?

In designing a new 401(k) plan with a safe harbor hardship w/d option, the sponsor would like to discourage hardship withdrawals by making the compensation earned during the suspension period ineligible for the profit sharing contribution. I've not seen that before. Does anyone see a problem with that?

Situation is Plan terminated in 2010 and final 5500-SF filed for 2011 (January 2012) after supposedly all assets, including insurance contract cash values were distributed. Insurance agent who provided us with the information that everything was paid out, calls us beginning of June and informs us that there was one additional life insurance policy still in force in the name of the Plan. Kicker is the insured is now deceased and there is a $500,000. death benefit to be paid.

Questions are:

1- We presume that we have to file an amended 5500-SF for 2011? If so, do we just show the assets as the 12/31/11 cash value or the cash surrender value?

2- If the presumption is correct for 2011, then we would do the same for 2012, using the 12/31/12 cash value or surrender value?

3- For 2013, there will be a $500,000. payment to the beneficiary (wife), how do we account for the increase in value? Should we just show the cash surrender value as the distributable amount?

Any help in this matter will be greatly appreciated!!!

Thank you.

DPS Rich

Are there any investment restrictions regarding how a 457b for a tax exempt organization can be invested? This plan covers just the CEO. For example, can they invest in stocks, bonds, ETF's etc, or does it have to be exclusively mutual funds or insurance products, etc.

Any sites you can provide regarding restrictions would be very helpful.

Has some good ideas, but this one caught my eye as a HORRIBLE idea:

• QDRO expenses—retirement plans of all types would be required to allocate QDRO expenses to the plan as a whole and not to the individual(s) involved in the specific domestic relations order.

Here is the situation:

A money purchase pension plan failed to make contributions for 2008 for a participant due to a payroll coding error. This was discovered in 2012 and corrected according to EPCRS.

Auditor is suggesting that we may need to file Schedule G, Part III for Nonexempt Transactions.

Is this correct? I have never before heard of a Sch G being filed for a case of missed contributions.

Plan document provides that forfeitures are added to the employer profit sharing contribution. Plan sponsor decided not to make a profit shairng contribution so they profit sharing allocation is the forfeiture. The HCE's ( the 2 owners are the only HCE's) want to opt out of that allocation and just have everything reallocated to the other employees, Technincally it doesn't follow the document, but I guess I just don't see a consequence. Would an IRS or DOL auditor really come in and force corrective action that results in the two owners getting additional allocations? I don't see that happening.

Any thoughts are appreciated.

Employee was a participant in a pension plan located in Massachusetts and also was a resident of Mass.

Participant terminated employment in March of 2013 and has moved to North Carolina (so was a resident of MA beginning of year, now resident of NC).

Has requested payment of his lump sum (not rolling over). Question is whose state tax do we withhold: MA (where he worked and where the benefit was derived from) or NC (where he is now a current resident)?

Is it possible to change from a participant. directed

account to trustee directed?

If it is, what steps must be taken?

Plan was established in 2008 as a safe harbor match plan.

Client decided to drop the safe harbor provison effective 1/1/13 and added a discretionary match and chose Prior Year Testing for 2013.

Prior TPA did not run an ADP/ACP test in 2012 since plan was safe harbor.

What do we do now?

Can a cross-tested profit sharing plan use accrued-to-date method based on average comp with a corrective amendment bringing in a NHCE who is not yet eligible?

Can't seem to find anything that prohibits this.

Thanks.

Are rural cooperatives, as defined under §501©(12), allowed to sponsor a 401(k) plan? Also, would the plan be maintained as an ERISA plan or a governmental plan?

Privately held corporation issues stock to employees upon board approval. Stock is fully vested at time of issuance and corporation treats issuance as payment of compensation to employee in an amount equal to "50% of book value", which amount is included on employee's W-2 for year of issuance. Stock issued to employee is subject to a stock purchase agreement that prohibits transfer and requires employee to sell, and corporation to purchase, the stock at "book value" upon employee's termination of employment. "Book value" is determined each year by the corporation's accountants.

Assume that the stock issuance is a "transfer of property" for purposes of Section 83. In the event it turns out that "50% of book value" is less than current fair market value for the stock at the time of issuance, is this strictly an issue under section 83 that is not subject to 409A (see Reg. 1.409A-1(b)(6)) or do we have a potential 409A deferral of compensation issue because of the undervaluation of compensation and right to payment potentially in a later tax year?

It seems to me this is a section 83 issue and to the extent "50% of book value" is less than current FMV, then the employee has not included sufficient income under section 83(a). I suppose the "payment" of the stock to the employee could also be excluded from 409A under the short term deferral rules, so long as it is paid within the applicable 2 1/2 month period following approval by the board.

Any thoughts would be appreciated.

Is it possible to have two separate match formulas in a plan?

There are no HCEs who work for the non-profit company, and the question was asked if 2 groups of employees can have separate matching formulas.

a plan has an illiquid asset allocated proportionately to all participants. when participants terminate it wants to pay out the liquid portion of their account balance but retain the illiquid real estate until it is sold. in researching this i determined that these distributions wouldn't constitute lump sum distributions. can anyone tell me what that would mean to participants and whether this is a problem?

an advisor for a small MPP plan is considering adding new annuity investment options to the plan. The document currently allows for annuities and there is an old one being used as an investment. Assets are currently trustee directed and advisor wants to provide more flexibility and options to some participants who are getting older by introducing newer annuity products. Is there anything that would preclude a frozen plan from doing so? The plan may need to be amended to self direct?

Anyone have a checklist they run through when processing plan amendments? For example, cut-back issues, BR&F issues, audit concenrs (if liberalizing eligibility)

Effective 1/1/2012 the eligibility for both the DBP and the PSP was changed to 2 years (and 100% vesting). This brought up two issues this year:

(1) The 2 year requirement in the PSP cannot apply to deferrals or safe harbor. An employee hired in 2010 entered the PSP on 1/1/2012, and gets the 3% safe harbor. For testing purposes in 2012, the combined GW turns out to be 7.5%. By virtue of receiving the 3% SH, doesn't this trigger the TH and GW contributions, and thus this participant must receive 4.5% PS contribution to get to a total of 7.5%? (Because of the two year requirement he is not in the DBP for 2012 so received no accrual).

(2) The amendment does not specify the 100% vesting applies only to PS contributions made after the effective date of the amendment. So, what about a participant who terminated in 2011 that was 40% vested, and has not taken a distribution yet? Is he now 100% vested in his PS contributions, or still 40%?

This is purely idle curiosity, so please don't waste any time if you don't know this off the top of your head.

Just wondering why the regs were written to make non-deferrals eligible for pre-59-1/2 in-service from an annuity contract, but not from a custodial account (other than hardship).

Intentional? Oversight? One of those items lost in antiquity in the days when 403(b)'s were all annuity contracts?

Again, doesn't matter - just seems odd.

We have a 403(b) plan in which there is one participant who took out a 5 year loan in May 2008. It was scheduled to be paid off in last month.