Hello,

Been a while since this came up. Plan currently has a fixed option and are moving to our platform. They would incur about $20k in penalty --employer asked about making the participants whole and "repaying " their accounts the surrender penalty.

I thought if it is allowable, it would be treated as annual addition, and would be a contribution to the participants accounts. Because not all participants are in the fixed option, it would be a non-uniform allocation --therefore general test it (?)

Has anyone run into this ?

Thanks

My client who is an S corp has 2 s/h that > than 2% .They have 2 types of medical plans through the company/ There are 15 employees. 7 of the employees do not get medical insurance because they are either covered by a spouse of they were government employees and have insurance elsewhere. They opted out of the plan.

There are a total of 8 employees on both plans.The owners are over 65 and they are on medicare . They also have a medicare supplement through the company.

3 employees have either a family plan or a single. and 5 are on a medicare supplement. The company pays for both plans 100%. 

Question: The owners want to have reimburse their Medicare premiums ( which is taken out by social security) reimbursed by the company. They pay more in because there W2's are more than the employees..

1) Can they be reimbursed by the company for the medicare that is taken out of their social security? Would this be discriminatory  because their reimbursement is higher than the other employees? 

 2) Also would it be discriminatory because the other 8  employees WHO have insurance elsewhere also have medicare. DO they need to be reimbursed . They are not part of the medical plan. Thank you

I have a client that was covered by insurance in his 401k plan. Each year we received a letter from his insurance agent with the PS58 costs (Table 2001) and included that amount on his personal income tax return.

In the middle of 2012 the plan sold the policy for cash -- so as of 12/31/12 there was no insurance policy in the plan.

What do I have to report for the PS58 cost on his tax return? Here are some options

1. Nothing -- because there was no life insurance as of 12/31/12
2. A prorated amount based on the number of days the policy was owned divided by 365
3. It depends on when the premium was actually paid. If paid while still owned by 401k, then a full year’s PS58 cost has to be included --- and if paid after policy sold then nothing to include
4. Other

I was trying to post a poll but I am not sure if it worked.

We currently use Relius for Documents and Government forms, but ASC for reporting/report writer.

I used Datair for the past 8 years, half of that time the DOS system, but since 2009, the WIN system.

I was wondering what you use in your office?

Does anyone know the withholding and reporting requirements for SARs exercised by a former employee? The rules are pretty clear for nonqualified deferred compensation paid to former employees, but the SARs at issue are designed to avoid 409A, so they don't fall under those rules.

Should this be reported on a W-2, even though the employee is no longer with the company? Does withholding apply (and, if so, at what rate)?

In taking a spin through DOL 2550.404a-2( c), I don't see anything specifically permitting (or prohibiting) taking the intial set-up fee from the former participant account holder on whose behalf an automatic IRA has been established. Subsection ( c)(3)(iv) only states:

Would it be permissible under PPACA to require that a participant have two years of participation in the plan before they are eligible for a particular benefit? Would it matter if the benefit is not an essential health benefit (e.g., weight loss surgery, TMJ surgery)? Thanks.

Company A has a 401k plan. Company B has a 401k plan. Both companies are unrelated. On 12/30, company A terminates its 401k plan. On 12/31, Company B purchases the stock of Company A.

What is the impact on the retirement plan of Company B...and even Company A?

It is our understanding that the the intent of Company A was to allow its employees to distribute their account balances before they were considered employees of Company B.

Due to the stock sale, wouldn't we have a controlled group and therefore no "severance from employment" due to having the "same employer", and wouldn't that prevent the participants from taking distributions (successor plan issue)?

Or does the fact that Company A terminated the plan before the sale take precedence?

Pursuant to California Gov’t Code § 31838.5 and a case interpreting it, Block v. OCERS, in a situation where a member retires on disability from one public system and receives one-half his or her compensation as disability retirement benefits, and also retires from and receives service retirement benefits from another reciprocal public entity for which he/she has also worked, the combination of disability and service retirement amounts cannot be greater than the amount the member would have received if all of his service had been with one entity. If it is, Section 31838.5 states: “Each entity shall calculate its respective obligations based upon the member’s service with that entity and each shall adjust its payment on a pro rata basis.”

I don’t understand how the entities are supposed to adjust their payments. As an example, the member retires on disability after 7 years with System B, at a disability retirement of $3,000 per month. Member worked for System A for 15 years and would have received an additional service retirement of $1,800, except for the cap of "all service with one entity." Due to the cap, the most John can receive is a total of $3,300.

The original calculation was $4,800 total--$3,000 from System B and $1,800 from System A. But per section 31838.5 it is now $3,300 total. How do the entities subtract the $1,500 from their respective payments—what percentage of a reduction can they each take, and what is that percentage based on?

Thanks for your help!--Mary

I read the following article, which suggests that the pay or play mandate can be put off for almost a year if insured employers change their plan year.

http://www.huffingtonpost.com/2013/04/04/aetna-obamacare_n_3009589.html?utm_hp_ref=business

It’s my understanding, based on the January 2 proposed regs, that a plan couldn’t switch from a calendar plan year to another plan year and avoid the pay or play mandate; only plans that had non-calendar plan years as of December 27, 2012 were grandfathered in. I’m trying to figure out if I’m missing something. Has anyone else encountered this? Do you have any thoughts?

Currently my client sponors two plans: a prevailing wage plan and a 401(k) Plan.

Can the 401(k) plan be merged into the prevailing wage plan? If so, can the plan have different eligibility requirements for the 401(k) portion and prevailing wage portion? (It is my understanding that the prevailing wage plan must provide for immediate eligibility and 100% immediate vesting.)

If they terminate the 401(k), is the prevailing wage plan considered a successor plan?

Thanks,

m

Is it a prohibited transaction to pay life insurance premiums (for a policy held within a defined contribution plan) with personal assets?

Can a Simple 401(k) Plan be merged into a Traditional 401(k) Plan?

Treas. Reg. §1.401)f)-1© states that "Any custodial account or annuity contract which satisfies the requirements of paragraph (b) of this section is treated as a qualified trust for all purposes of the Internal Revenue Code of 1954. Such a custodial account or annuity contract is treated as a separate legal person which is exempt from the income tax under section 501(a). In addition, the person holding the assets of such account or holding such contract is treated as the trustee thereof."

It would appear based on this regulation that a governmental 401(a) plan administered under a group annuity contract or custodial arrangement satisfies the trust requirement and no designated trust is required.

Would you agree?

Can someone explain how partnership compensation works with respect to elective deferrals and which year the contributions should represent?

Integrated formulas are supposed to make up for the lack of employer contributions on the higher earnings of those who earn more than the taxable wage base. Now that some of that group will be paying a higher rate of tax for their Medicare premiums, will anything about Integrated formulas be adjusted?

Do we need to submit an FDL application at the same time with the VCP application in the following scenario:

• Plan sponsor of a DB individually designed plan failed to submit the plan for an FDL during its on-cycle year (Cycle E ending 01/31/2011 based on its EIN)
• Plan was not amended for PPA, HEART and final 401(a)(9), 415 regulations
• Plan Sponsor will submit the plan for correction under VCP this year (off-cycle)

We know that if the VCP application is submitted on-cycle an FDL is required at the same time. Just not sure if an FDL is required if the VCP application is submitted off-cycle.

Thanks for any input.

I have read that the DOL requires steps be taken to determine actual receipt of the SPD, such as a read receipt confirmation. Are you supposed to follow up with anyone for whom you did not receive a return receipt? I don't know of any reporting in Outlook that will give you a list of who didn't generate a receipt, which means you've got to have a paper list and check them off as they come in?

Is that what people are doing?

I just want to see if I'm off base here.

You have an ERISA 403(b) plan. It includes deferrals, matching, and employer discretionary contributions.

There is "base compensation" and there is "supplemental compensation." Deferrals are allowed for total compesation. Matching contributions and employer contributions are based upon "base compensation" only - the supplemental compensation is excluded for these purposes. Certain employees are excluded for all plan purposes (students who satisfy the requirements under 1.403(b)-5©(4)(ii)((D)) and certain other employees are not eligible for the match purely based upon the exclusion of "supplemental compensation" for matching or other employer contributions.Employer contributions other than the match are allocated under a "new comparability" formula.

So, when you get to doing your 414(s) compensation testing, the question becomes, which employees do you include?

Starting with the employer discretionary contributions, it seems that under 1.414(s)-1(d)(3)(iii)(A), you must take into account all employees who BENEFIT under 1.410((b)-3(a). And this means that if you don't receive an allocation, even though you are included in the rate group testing, you are NOT included for the 414(s) testing. Have I got that right, or am I missing something?

For the consideration of the matching contributions and doing ACP testing under 401(m), it seems a little confusing. If they are excluded due to, say, job classification or insufficient hours, then they would be excluded for 414(s) testing purposes for the ACP test. But, if an employee is excluded from eligibility for the match based purely upon the nature of the compensation, (say they receive supplemental compensation only) then it seems to me that this employee should be INCLUDED when doing the 414(s) testing. Thoughts?

A business owner has a 401k Plan and a DB Plan. He receives a K-1. Would like to contribute the maximum allowable -> DB contribution + deferrals + 6% profit sharing. Is the 6% profit sharing contribution calculated based on his net earned income prior to deducting the DB contribution?