I've read that a participant can continue to defer and receive match on compensation over the annual comp. limit as long as they don't exceed the 402g limit, and the plan's match formula limit.

I have a participant though that has not deferred all year, their compensation so far in 2013 is over $255k, and they now want to start deferring and receiving a match. Can this person "start" contributing on comp. over $255k?

I was thinking that if they weren't contributing prior to reaching $255k that they couldn't then start on comp. over $255k.

Anyone have a rational explanation for the changes TIAA made to how they are reporting defaulted loans? They're driving me nuts with this topic

We have client filing 5500-EZ (just husband and wife). In one plan year, they deducted $4,000 more than they contributed. The next year, they deducted $4,000 less than they contributed. Net deductions and contributions are the same. Accountant is aware of this (we don't know if he is doing anything about it or not).

Any concerns from the stand point of the plan that we, as TPA need to address?

I was talking with our client's representative at a well-known investment company's retirement department. They will be helping our client make a correction to a couple of errors that occurred last year relating to employee deferrals. (The client's spreadsheet was off a line, so a deferral from one participant went into the account of the next participant on the spreadsheet.) We talked about VFCP and I asked if they would prepare the submission to the DOL. She responded that this is a voluntary program, the correction is made and documented, but nothing is submitted. What? I guess it makes sense now why I felt like her side of the conversation meandered back and forth between the EPCRS Self-correction program and the DOL's VFCP. I was having a hard time keeping up, even though I've been doing this stuff for a long time. Even her e-mail communication to the client was lengthy -- and very disjointed, discussing both EPCRS and VFCP interchangeably, which was why I wanted to have a verbal conversation with her. Stuff like the withdrawal part of the transaction comes under VFCP, but the deposit side comes under EPCRS (or visa-versa -- my head was spinning, so I'm not positive which way she said it). So, now I'm starting to second guess myself. We do need to submit an application to the DOL when we use VFCP, right? And, when she talks about the deposits and withdrawals to make the correction coming under different programs? Holy cow. Where have I been? If you tell me she's right, I'm putting in my papers because clearly, I shouldn't be doing this any more.

Model allocations are vey common in our plans. Most of the time the funds within the models are different than the core options.

We are in the process of updating the models which means fund replacements and changes to the target allocations.

Is the plan sponsor required to provide a fund change notice 30 days prior to fund changes to the model.

Participant A elects the Moderate Model. The investment strategy does not change even though the funds that make up the model change, so I do not see why a notice must be provided.

If a notice is required, can it be sent elecotnronically and then mailed to those particiapnts without email addresses?

This seems like a ridiculous question. However, I'm suffering from pre-holiday brain cramp...

Suppose your plan defines comp as W-2. Further suppose that the employer buys shoes for its factory workers, and, I don't know, maybe something like gym memberships. The employees don't have the option to receive this money in cash, but it is still taxable compensation, and included on the W-2 because it is a "nonaccountable" plan according to the employer's CPA. I proffer no opinion as to whether that is correct or not - I'm assuming it is correct for purposes of this question.

From a practical viewpoint, how would this be handled when calculating the deferral amount to come out of the employee's paycheck? I assume this is really a payroll/employer problem. For example, base pay that would otherwise be paid to the employee for the year is $10,000, and employee defers 5%. But, there is TAXABLE fringe benefit of another $1,000, and the employee's W-2 is going to show $11,000. Does the employer/payroll company, at some point, have to withhold another $50 from the employee's paycheck? Or, since the employee could never have elected to receive this compensation in cash, is it simply ignored for deferral purposes?

Participant took a loan out in 2010 and the repayments were so small they did not even cover interest (new client, mind you ).

Does anyone have a problem with the participant taking out a second loan to get "caught up" on the old loan as part of the correction? We're doing a VCP submission to ask for tax relief (the participant got a letter from the IRS b/c the old recordkeeper sent out a 1099 defaulting the loan). Purely reamortizing the loan does not work because the participant would not be able to "survive" on what would remain in their net paycheck. So we want to pay-down part of the loan with a new loan. Making a lump-sum catch-up payment is clearly provided for in EPCRS, but what they don't address is whether or not a new loan might be used to come up with the lump-sum payment.

A participant turns 70 1/2 11/30/13. He is terminated. Since it is the first one, he can extend until 4/1/14. If the participant takes a lump sum distribution in August 2013, which is before he turns 70 1/2 but in the same plan year he turns 70 1/2, will it count towards the RMD for 2013?

We are looking at a cash balance proposal by a firm that involves 401(h) accounts and insurance within the plan. I have researched the issues a little but looking for someone to shed additional light. The proposal is for a law firm with five partners and about 45 common law employees. The law firm already sponsors a 401(k) plan with 3% safe harbor nonelective.

Q1. None of the partners are hitting their 415 limit. In which case what is the benefit of the 401(h) account -- is it simply that those contributions are made on a deductible basis by the employer and are not taxable to the participant when distributed to pay retiree medical benefits?

Q2. Under what circumstances is it appropriate to provide life insurance policy within a DB plan and to what extent? What are the pitfalls to avoid -- such as springing cash value, etc.?

We are a little nervous because part of the proposal involves product sales and not merely administration services. I am sure if done right all these pieces work, but I am trying to understand the nuts and bolts to determine if it is in fact appropriate for this client's situation or if the desire to sell product overshadows the needs of the client.

Thank you for the help!!

A dummy DB plan with the following assumptions:

• NRA 62
• 100% participants receive lump sum distributions (aka fund to lump sum)

Let's assume this is a 1-man plan who is age 60. His PVABs are as follows:

• AEQ LS: $350K
• 417(e) LS: $420K
• 415 limited LS: $380K

The current funding target, calculated by our 3rd party software is about $420k. My question is, should the funding target be limited to the 415 max? It seems odd to me that if this person were to put in $420k, and then terminate the plan, his lump sum would be limited to $380k. I've looked in quite a few places and cannot find anywhere that the funding target should be limited by the 415 max lump sum amount.

Any help, citings, etc. would be greatly appreciated on this one. Thanks.

The PBGC has indicated that a letter of credit held in escrow satisfies the bonding requirement, but it also said that it is within a fund’s discretion as to whether a given institution is an acceptable party to hold a letter of credit in escrow. See PBGC Opinion Letter 1981-32 (addressing buyer’s bond, but I believe same rationale would apply to seller’s bond). Are funds reluctant to agree to letters of credit? Is it the normal course to approach the fund for permission to use a letter of credit?

I have a client who is an employer participating in a "level funding" welfare benefit plan. This is a self-funded plan. The employer provides a monthly payment to the TPA based on projected claims amounts for the year, and if at the end of the year, there are amounts left over from their participants' claims, the employer will receive a portion of the excess amount.

The payments are kept in the TPA's own account (not the employer's account). Checks to participants are also written from this account. I understand the TPA (a major insurer) has had this type of plan in existence for 8-10 years.

How can this satisfy plan asset requirements? As this is not a fully-insured arrangement, wouldn't a trust be required as soon as the assets were segregated from the general assets of the employer into the TPA's account? What am I missing?

Thank you in advance for any guidance!

When an traditional IRA is transfered between trustees, which trustee (transforor or transforee-or are both) is required to file Form 5498? The instructions to Form 5498 state "File form 5498, IRA Contribution Information, with the IRS by June 2, 2013 for each person for whom in 2013 you maintained any individual reirement arrangement..." However, the reporting is based on the FMV on December 31, 2013. If the transferor trustee no longer holds the IRA it would not know the FMV at the end of the calander year. I understand that Form 5498 need not be filed upon transfer; but what about at the end of the calander year? If the transforor trustee is required to report, then how should it obtain the value infomration required?

Any direction would be much appreciated!

Here is my question: what is a "reasonable direct cost of processing and delivering the distribution" under EPCRS and the related "cost of making the distribution" under VFCP?

Under EPCRS, Rev. Proc. 2013-12, Section 6.02(5)(b).

under VFCP, Section 5(e).

Does this include the time spent in figuring out the amount of the distribution? Or does this calculation begin after all of the heavy lifting is done and you need to cut a check? If the distribution is to come from the plan, I suppose that normal TPA fees for making distributions would apply, but how about time spent by the employees of the plan sponsor? Attorney time in the application process?

I am not aware of any of these claims about the cost of cutting a check have been kicked back by either the IRS or DOL, but I don't want to find out the hard way.

Thanks.

When a participant request an after-tax withdrawal are investment earnings included in amount distributed? If so, am I correct that the Investment earnings withdrawn from the plan are subject to federal (and possibly state) income tax?

Company A ceased operations in 2010. No bankrupcty, just an assignment for the benefit of creditors. Assets liquidated, secured creditors paid. Nothing left over for unsecured creditors.

Company A had a defined benefit pension plan. After Company A ceased operations, no provision was made for terminating the pension plan or continuing its minimum funding . . . because Company A had no assets and no staff.

PBGC placed Company A's pension plan into PBGC trusteeship in late 2012. And, per same, used the date in 2010 of the Company's WARN Act notice to employees as the date of the plan's termination.

Companies B, C and D were in Company A's controlled group as of the date of the plan's termination. Some of their assets were disposed of in the normal course of operations between 2010 and 2012.

PBGC has assessed B, C and D, as controlled group members, with joint and several liability under ERISA section 4062 for the pension plan's underfunding, minimum contributions and PBGC premiusm.

So far, so good in the sense of the typical PBGC process.

The PBGC has also asserted a claim that, per ERISA section 4068, the federal tax priority rules of 31 U.S.C. section 3713 apply and that B, C and D must pay the PBGC first with the proceeds of any liquidation or similar action with regard to their assets . . . and that company officers or other fiduciaries of B, C and D may be personally liable to PBGC for same. And, the PBGC also asserts that this liability extends all the way back to the 2010 date of the pension plan's deemed termination (and not just for the period on and after the 2012 date on which the PBGC placed the pension plan into trusteeship).

Has anyone come across a similar PBGC tactic using ERISA section 4068's incorporation of 31 U.S.C. section 3713 to go after controlled group member companies and, more importantly, officers, shareholders, and fiduciaries of such members re the disposition of their assets and the assertion of personal liability for a pension plan's funding?

I have found nothing of note in the usual commentary and case law sources.

Thanks.

How long must a company wait following the termination of a 457(b) plan and distribution of all assets before starting a new 457(b) plan?

For 401(k) plans, you have to wait at least 12 months following termination and distribution of assets. 409A says for nonqualified plans you must wait at least 3 years following termination and distribution of assets to start a similar plan. But 409A doesn't apply to 457(b) plans.

I can't find a definitive answer as to what time period would apply to the termination of a 457(b) plan.

In the present situation, a new non-profit client terminated its 457(b) plan and distributed all assets when it became frustrated with the operation of the plan (and, in part, due to a lack of understanding of the rules applicable to the plan) -- without realizing that it might still be the best option for the company's higher ups who want to defer more than permitted in their qualified plan. The termination was already accomplished before we became involved.

It seems that a minimum of at least a year would be required. I worry that the IRS will assume that the distribution was an effort to accelerate access to the plan assets even though that was not the motivation here.

Does anyone have any experience with this? Thoughts? Cites?

Thank you in advance for any insight you can provide.

I'm looking at a bunch of welfare benefit plans for which it appears that SAR's have not been done.

I'm not aware of any guidance that says you don't have to do a SAR for these plans. Is there something I'm missing?

Who is responsible for ensuring compliance with a QMCSO? The employer? The health insurance company? Employer keeps sending me back to the insurance company....

Plan is self-insured. According to QMCSO, reimbursement payments are to be made payable to alternate recipient.; however, checks go to non-custodial parent.

DOL states I must file my own lawsuit.

This question pertains to a DC Plan only.

Assuming service with the same employer, does service prior to meeting the plan's eligibility criteria count towards eligibility? vesting? Is it optional or required to count service prior to eligibility?

For example, If the plan's age and service requirement is Age 18 and 1 year of service and a participant is age 17 and has been working for the company for 1 year. When the participant is Age 18, will the 1 year of service that the participant had prior to meeting the plan's eligibility criteria count towards eligibility? and vesting?

Can someone provide me with the cite or regulations that is associated with the answer? Thanks.