TIAA reports asset totals based on Total Assets under management which includes contracts that may other wise be excludable (e.g. participants who terminated prior to 1/1/09). For 5500, Sched A, H reporting purposes is it advisable to use those values or do they need to be adjusted down to reflect those accounts that are excludable. Thanks for your thoughts.

I have two companies, Company A has 48 NHCE and 0 HCE, deferral and match

Company B has 167 NHCE and 49 HCE

Am I thinking correctly that Company A will pass 410b since no HCE benefits?

Company B is passing as well for match since no HCE benefits. Correct?

for the profit sharing part, there are 215 total NHCEs and out of that 148 are benefiting. 68.83%

for the HCE's 46 out of 49 are benefiting = 93.88%

So it is passing at 73.32%

Since the plan is passing the coverage test, can all other testing be done separately? Company B is a New Comparability Plan.

Do they have the option of doing the adp/acp test together if it helps the plans to pass?

thank you, just want to make sure I am thinking correctly of I am missing something that I am not aware of.

I got a call today from an advisor describing a problem he is having. I may not have all the details correct since this isn't my client, but I'm looking for some thoughts on how to tell him to proceed.

It sounds to me like a client at one point in time had a profit sharing plan. The plan was terminated. Everyone got paid out. There were probably some illegal aliens with account balances, because they "remembered getting thousands of dollars from the plan." Fast forward years and the company is starting up a new Safe Harbor 401(k) plan utilizing the Safe Harbor Match.

The record keeper (unknown which firm, but it sounded like a bank) has told the plan sponsor that they can not enroll some of their employees because either they didn't provide a social security number or the social security number provided was invalid. I don't know the detail of how the record keeper came to the conclusion the employees are likely illegal aliens. My gut feeling is that because the record keeper is a bank and maybe there are more stringent banking laws now that make them scrutinize who they are opening accounts for?? I'm kind of guessing here. I would have thought that a record keeper would just use whatever SSN was provided without doing any sort of due diligence, but maybe no SSN was provided and that's how we go to where we are now.

I have never seen a plan that allows you to exclude illegal aliens. Regularly you can exclude non resident aliens, but we are talking about resident aliens (presumably living and working here illegally). Whether they are here illegally is not for me as a TPA to determine. I think the employer has an issue if they have employed illegal aliens, but maybe if they are not new hires and have been in their employ since before E-VERIFY that they are sort of grand fathered from checking?? This is outside of my concern. I'm not an attorney and can't advise them on this issue.

I think they have a real problem though. These eligible participants (whether they are working in the US legally or not) are eligible for the plan. This whole thing came up because the (presumably) illegal aliens tried to enroll in the 401(k) plan. They tried to enroll in the 401(k) plan because they "remembered getting thousands of dollars from the last retirement plan."

My thought is that ERISA is going to require that they be allowed to enroll in the plan. The fact that the record keeper won't allow them to enroll is not for the record keeper to decide. If there is some banking or financial law or procedure that is preventing them from enrolling now we just have conflicting laws and someone needs to decide which law not to follow, right?

My thinking here is that #1 they should determine the legal status of the employee and if they are illegal they should terminate their employment. Assuming they won't do that, then #2 the employees should contact the Social Security Administration and apply for a Taxpayer ID Number. It is my understanding that under our current political leadership that an illegal alien can receive a Taxpayer ID Number without any consequences of Immigration being called. Assuming the (presumably) illegal alien won't take a chance of taking that step and risk deportation (even if it is safe today it may not be tomorrow), then #3 they should allow those participants to enroll in the plan and invest their money in a pooled balance forward type account.

My thought is that the pooled account won't have an account in the participant's name. Then at distribution, whatever SSN/TIN the participant provides is what is used on the 1099. If it is a bogus number... well that's an issue for the IRS? If the participant gets deported or moves back home or whatever then the money could escheat back to the state and then the state can put them on the list of unclaimed property.

What if the rest of the participants are not in a pooled account, but have their money at John Hancock? Obviously there is still a discrimination issue, but not allowing them to enroll seems like a worse discrimination issue. Take the whole plan to a pooled balance forward scenario? Ugh...

Now MAYBE... just maybe... they can design the plan's eligibility so that they still pass 410(b) coverage and exclude these participants from participating in the plan. Yet, if they are already eligible, you'd be moving them to an ineligible class of employee. I don't know. It sounds messy. How do you describe a class of employees in a non discriminatory manner to exclude these people? Could you say "All Mexican citizens are excluded from the plan." That sounds horrible. Maybe "all non US citizens are excluded from the plan."

At the end of the day, I'll hedge my answer and tell them they need to talk to an ERISA attorney, but I'd love to hear other's thoughts.

Does anyone have any experience of paying out someone from an US ESOP that is Canadian and living in Canada?

They are asking me about a T4 form and as I read the descriptions of when you use it on Canadian tax authority websites it sounds like it applies more to stock options, stock purchase plans and so forth then an ESOP.

Any help guidence would be appreciated.

I'm hoping someone has dealt with this one before! Nebraska Statute 42-372.01(3) provides that "for purposes of continuation of healthcare insurance coverage, a decree dissolving a marriage becomes final and operative six months after the decree is entered."

Do you think a self-insured plan whose terms require a loss of coverage upon divorce - is required to treat an employee as "married" until 6 months after divorce decree is filed?

This issue was brought to the plan's attention by the attorney of the employee's spouse.

I'm thinking the plan would have to honor the statute, since requirements re: divorce, marriage are typically state law issues.

Any thoughts would be appreciated.

In October of 2012 the IRS announced the definition of an HCE for 2013 remains unchanged at $ 115,000.

So this implies the prior compensation limit for 2012 was also $ 115,000.

And the amount for 2011, announced in Oct of 2010 I presume, was for 2011 $ 110,000.

Fine...

Now...as we sit here doing our 2012 plan year testing....our lookback year is 2011....so, ( I'm speaking in general here, ignore the top 20% issues, etc...) , anyone who had gross compensation over $ 110,000 in 2011 is in the HCE group when we test for 2012...Correct? Even if their compensation was much less than that in 2012....Correct?

And, let's say hypothetically the IRS in October of 2013 raises this definition to $ 120,000....A year from now, when we're doing 2013 testing anyone with gross comp above $ 115,000 in 2012 will be an HCE in our 2013 testing....so we won't use the $ 120,000 level until 2015...when we're testing 2014 plan years.

Confirmation and/or corrections would be really appreciated. I just don't like assuming everybody knows this when it's so easy to make this a systematic error.

thanks.

I understand that an RMD in the year of death gets calculated as if the person was still living.

Does the assumption of still living apply to age consideration as well?

For example: someone is 73 and dies on Feb 1, 2013, and her birthday is October 11.

Do use the life expectancy factor for 73 (when she died) or 74, the age would have turned in 2013?

I have a doctor client who was fortunate enough to have a plan in force at the time of TEFRA and has a valid 242(b) election and he is not going to retire anytime soon.

The plan is a profit sharing plan and he needed to take an inservice distribution in order to purchase a primary residence.

I do not believe this has any affect on the 242(b) election??

Is there any flexibility in the restricted distributions to HCEs in a plan that would be LESS than 110% funded after a proposed distribution to an HCE if there are no NHCEs in the plan and never has and never will be. For example if you had a permissively aggregated DB-DC combo plan arrangement and only HCEs are in the DB plan (pass 401(a)(26) due to high volume of HCEs) does the DB plan still need to be 110% funded after a proposed distribution to an HCE in order to be able to do the HCE distribution ? Does the 1.401(a)(4)-5(b) restrictions ALWAYS still apply in this situation ? Any way for all the HCE or Employer to elect not to impose them since there are no NHCEs to discriminate against ? Thanks for any thoughts and opinions.

We have a client using the VS Corbel document. They selected 18 and 6 months of service for eligibility with quarterly entry. The document reads,

Months of service. For purposes of this Section, an Eligible Employee will be deemed to have completed the required number of months of service if such Employee is in the employ of the Employer at any time after such months after the Employee's employment commencement date. Employment commencement date shall be the first day that the Employee is entitled to be credited with an Hour of Service for the performance of duty.

They have an employee (over 18) that was hired 5/15/12, terminated 8/15/12, rehired 10/15/12, terminated 10/20/12, rehired 12/14/12. Would that person be eligible on 1/1/13?

I think the answer is yes...but just want to double check.

I have a plan that have a 50% to 6% match with no hours or last day requirement. The plan has decided to make an additional discretionary match of 100% on 1%, but has an hours last day requirement. For coverage we are good since the first match everyone is eligible to receive. However, I believe the plan now will need a BRF test since not all employees are receiving the second match. Is this correct?

Can a plan with a 2 year eligibility/age 21 on the match amend to have a Safe Harbor enhanced match of let's say 100% up to the first 6% deferred?

Thanks

Twelve professionals are shareholders in Real Estate Corporation (REC). Same twelve professionals are also each a shareholder in his or her separate professional corporation that leases space from RAC. Each of the separate professional corporations maintains a PSP and each of the twelve professionals is also a trustee of the respective PSP maintained by his or her corporation. REC has a substantial loan coming due and the twelve professionals have come up with the idea of having each of their respective PSP's make a loan to REC pro-rata in order to allow REC to be able to pay off the loan. Based on the mechanics it appears that while it is a loan §4975©(1)(B) is not the problem unless you stretch "indirect" in the intro language of §4975©(1). Rather it appears that §4975©(1)(D) or (E) would make this a prohibited transaction in that the loan transaction would be "for the benefit of" each of the twelve professionals (D) or would constitute an act whereby each of the twelve professionals as trustee of his or her respective PSP would be "dealing with the assets of a plan in his own interest or for his own account" (E). Any thoughts greatly appreciated.

We have an interesting issue that some of you may have dealt with before. I haven’t. Plan A has a participant with the same SSN as a participant in a new plan that has just been brought on, plan B. We have confirmed with both plan sponsors that the ssn’s for these two individuals are accurate. We’ve also looked up the ssn through our locator service and there were 50 different aliases using that ssn!!! What do we do? The name for the participant in plan A has been overridden by the name of the new participant in plan B. They will both now have access to both plans since they have the same ssn. The participant in plan A is terminated but has a balance. 100% vested Safe Harbor money only.

Small business, husband and wife (as support staff), with 3 full time additional staff and new comparability plan design. Income for business is generated through monthly payments by contracts. Can they set up an arrangement so that a specific portion of a monthly payment is paid directly from payor into their retirement plan trust, which would then be treated as Employer contributions for the Plan Year? For instance 51,000 - 17,500 = 33,500 / 12 = 2,791.66. Contract generally pays up to $5,000 per month though changes every month. So, for example first $2,791.66 of one particular contract would be set up to go right into the trust for the husband.

If such an arrangement is possible, would it be discriminatory in not putting in moneys on an ongoing basis to the 3 additional staff, since it would then be getting difficult to add in payroll elements to a contract payment?

Relius is telling us that if we want a vesting schedule to be 1-33, 2-67, 3-100, that we are required to specify that vesting schedule in the PPA Amendment. If we do not use the PPA amendment for this, then the 6 year graded automatically shows up in the SPD, which is in fact what happens.

Has anyone found a workaround for this? Does everyone agree that this is a "bug" as it now requires the PPA amendment to be signed, when really it should not have to be?

Is there anything "wrong" with letting an HRA rollover to the next year. For instance, if yearly HRA is 5K, next year would be 10K, next year 15K....so that it could be tapped into for a really big medical expense.

Plan would be for a C Corp with only 1 employee. Participant may or may not have a health insurance plan in place or might be part of a healthcare sharing organization (like Medishare)..... therefore HRA would be acting as a self-insured plan. Basically wondering if there is a limit to how much an HRA can reimburse in a given year for medical expenses.

Has the PPA full yield curve (to be used for 2013 calendar year plans) been published yet? It's not on the IRS site. Thanks,

The plan permits entry at 1st of the month following 4 months of service.... The plan is cross tested...

When performing average benefits testing, is everyone regardless of service included in the average benefits test or only those who will be part of my nondiscrimination testing of the rate groups for the profit sharing? (i.e. those who are statutorily excluded will not be in my nondiscrimination test - therefore, should they not be in average benefits as well?) Any thoughts would be appreciated, Thanks.

403 with 165 employees subject to test. Only 2 exceed the comp limit for HCE's. Plan doc uses TPG election. Both would be considered HCE's for ACP testing purposes, yes?