Can an individual, age 74, take in in-service distribution from her 401(k) plan (plan allows)in January, 2013, via direct transfer to a new IRA, and then make a QCD to charity prior to Jan 31, 2013?

Participant is an owner of the Employer and trustee of PSP. Self-direction for all participants. This participant invested portions of his plan account in property he owns outside the plan. Participant has access to other funds sufficient to purchase the bad asset back from the plan but refuses to do so.

Over $200,000 involved.

This is a sketchy facts situation, but I am hoping a quick answer may be found. A VFCP application was ready to go when the participant balked.

Thanks.

A 401(k) document says that the basic safe harbor match is to be calculated on compensation for the plan year, but the enhanced safe harbor match is to be calculated on compensation and deferrals per payroll period. This was a drafting error and they both should have been coded for compensation for the full plan year. The employer is making an enhanced SH match and intended to calculate on an annual basis and has been operating that way for years. What is the best method of correction? Can an amendment be prepared to cover the prior years stating that there was a drafting error? Please help me out of this mess.

Any Form 5330 experts out there, I'd love to speak with you regarding some questions I have on how to complete this form... these instructions are pretty intense...

1) A distribution was made in error to a participant in 2010 and repaid in 2011 - A) does this represent a prohibited transaction; if yes, B) do I use the FMV of the distribution made to determine the excise tax; C) - if the distribution to the participant was repaid, but not FIT withholding - is my transaction considered to be ongoing requiring continued 5330 filings until the FIT is recovered and re-deposited?

2) Most of the plan's elective withholding was considered to be paid late years 2006 - 2011 - A) when reporting the late deposits on 5330 can I enter on Sch C Line 2 "various dates" and note the months that had late deposits, indicating a total missed earnings figure for the plan year? If the detail is required can I use an attachment to provide the detail and reference it on Sch C Line 2.

3) Is it best to report the late deposits on one set of 5330's and the distribution made in error on a different 5330 (the instructions seem to request this).

4) For late filings of 5330 dating back several years - best to put them all in one big packet to IRS with a single check covering all excise tax due.

Any help anyone can provide, I'd greatly appreciate it.... Ted Triska 216.771.4242 ext. 209

Our parent company recently purchased another company. We're testing things to see how we'll pan out with the coverage test. Some of our plans now fail the ratio test (using the entire controlled group) so we're moving to the ABT.

As part of the ABPT on a stand-alone basis (no permissive aggregation yet), we need help with determining the denominator for each plan.

Plan A

NHCE avg benefit rate: 9%

HCE avg benefit rate: 10%

(1000 NHCEs and 200 HCEs)

Plan B

NHCE avg benefit rate: 4%

HCE avg benefit rate: 4.5%

(300 NHCEs and 50 HCEs)

Aggregate

NHCE avg benefit rate: 7.85%

HCE avg benefit rate: 7.25%

Are the results for Plan B 88.9% (ie 4/4.5) or as 55.2% (4/7.25)?

Is the NHCE Concentration 85.7% (300/350) or 19% (300/1550)?

Thanks.

I am somewhat familiar with SEC rules as they relate to employee benefits. Therefore, any guidance you can provide would be helpful.

SEC 10b-10(b) permits quarterly statements for investment company plans. One of the requirements under the definition of an investment company plan is to "advise each customer in the group if a payment is not received from the designated person on behalf of the group within 10 days of a date certain specified in the arrangement for delivery of that payment by the designated person and thereafter to send to each such customer the writen notification described in paragraph (a) for the next three succeeding payments."

Under 403(b) plans there is no date certain specified. There is some IRS and DOL guidance on when contributions should be made, but no date certain. The date seems to depend on the respective employers/TPA. Does this mean that the 10-day notification rule does not apply to 403(b) arrangements?

If it does apply, does this notice need to be sent by the vendor to participants who had been notified by their employers that future contributions will not be made to that vendor?

If a participant voluntarily changes vendors for future contributions, is he/she still a customer and therefore required to receive notice that the vendor did not receive contributions for him/her?

I did see some old (pre-final 403(b) regulations) no-action letters from the SEC. Could not find anything recent. In the prior requests vendors proposed getting around the 10 day rule by putting legends on their statements. This approach was approved by the SEC. But, I have not been able to find those legends on recent statements. What, if anything, has changed so that they are no longer required?

Thanking you in advance for your thoughts.

Our parent company recently purchased another company. We're testing things to see how we'll pan out with the coverage test. Some of our plans now fail the ratio test (using the entire controlled group) so we're moving to the ABT.

As part of the ABPT on a stand-alone basis (no permissive aggregation yet), we need help with determining the denominator for each plan.

Plan A

NHCE avg benefit rate: 9%

HCE avg benefit rate: 10%

(1000 NHCEs and 200 HCEs)

Plan B

NHCE avg benefit rate: 4%

HCE avg benefit rate: 4.5%

(300 NHCEs and 50 HCEs)

Aggregate

NHCE avg benefit rate: 7.85%

HCE avg benefit rate: 7.25%

Do the results for Plan B come out as 88.9% (ie 4/4.5) or as 55.2% (4/7.25)?

Thanks.

Taxing issues aside, does anyone know if there is a rule that requires periodic payments to be paid for no longer than the life exepectancy of the participant?

Can a plan be amended mid year to exclude a category of employees?

Odd situation. Employee (Bob) terminates employment with Employer and begins taking distribution of a large benefit from Employer's nonqualified (stock unit) plan. That benefit is in 10 annual installments. If counted, each such installment is over the HCE comp threshold. Should those payments be counted when Bob is rehired to determine whether he's an HCE? If so, when? The question is crucial for Bob because Employer's qualified plan excludes all HCEs.

The qualified plan's definition of compensation for HCE determinations is--by cross-reference to § 1.415©-2(d)(4)--wages reported in Box 1 of W-2 that are "compensation to an employee by his employer." (Are payments to Bob from the nonqualified plan payments from Employer, for this purpose?) Per the 415 final regs, post-severance payments are excluded from this comp definition. (Are the installments "post-severance" even after Bob is rehired? Do the payments from the nonqualified plan count in determining whether Bob is an HCE his first year he's back? The next? Ever?)

I'm sure there's a rifle-shot answer to this that I'm not seeing. Thanks for any thoughts.

Can hardship distributions be taken from the SIMPLE match source in a SIMPLE 401(k) plan? I don't see anything that specifically prohibits it, but it seems that that source is akin to a safe harbor contribution or QNEC.

Thanks in advance for any guidance.

Small PS plan, making a cash distribution in January, 2013, for a participant who has terminated employment. 20% withheld will total $1,500.

Client is not set up to remit 20% electronically. Is the only other option that he sit on this $1,500 until next January, 2014 and then remit it with Form 945?

Thanks

Saw the following today - this could, if it is made reasonably user-friendly, be very good news in that a terminating DC plan with lost participants should presumably be able to transfer the funds to the PBGC. I've been waiting for this! I wondered if anyone had heard as to whether the DOL will be coordinating with the PBGC to deem such transfer as an appropriate fiduciary decision with a liability shield?

The Pension Benefit Guaranty Corporation (PBGC) has released its semiannual regulatory agenda for Fall 2012, which outlines regulations that have been selected for amendment during the next year.

Proposed rule stage

Among the items in the PBGC’s proposed rule stage are:

• Proposed amendments that would amend the PBGC’s regulation on Reportable Events and Certain Other Notification Requirements (part 4043) to conform to changes under the Pension Protection Act of 2006 (PPA; P.L. 109-280) and the PBGC’s regulations on Premium Rates (part 4006).

• A proposed rule to implement section 410 of the PPA, which allows certain terminating plans not covered by the existing Missing Participants program to participate in that program.

Our documents typically state that the safe harbor matching contribution and compensation will be determined for the entire plan year. However, I have come across a document that says that the safe harbor match will be calculated based on compensation and deferrals on a payroll period basis.

I assume this means that the match will be deposited on a payroll period basis, but may need to be trued up at year end based on annual compensation. The employer is interpreting this to mean that if a participant defers $17,000 in a single pay period in January, only the compensation for that one pay period is considered in the match calculation and the compensation for the remainder of the year is disregarded. Surely this can't be correct or the employer would need to give us compensation for every person for every payroll period. How do I explain this to the client? The document language doesn't spell it out clearly.

Plan uses SH definition of hardship.

Participant has mother who has Alzheimer's, and he is paying the medical bills.

Would this qualify under SH hardship?

Since IRS hasn't released the 5500EZ yet (I didn't find it when I looked a few minutes ago), is it ok to file a final 2012 5500EZ using the 2011 form?

Just a note to say thanks to all the folks who are reporting spam posts.

Happily, only a few are being posted each day, and we're able to nuke them within a matter of hours and sometimes only minutes.

To report a posted message that you believe is spam, click on the "Report" link that appears towards the lower-right corner of that message. The result is you'll be able to send a private message to the Moderator of that message board. The moderator then has the ability to delete the message.

Your report also goes to the Super Moderators and to me (Administrator, Czar, Potentate, etc.), so there are additional people who are able to delete the message.

It is rare that a spam post lasts long, due to all of those watchdogs.

Thanks!

I know the topic of amending a SH 401(k) plan during a plan year has been covered pretty well. However, I have a tangent that was touched on but I don’t think ever answered.

My question is if a plan sponsor issues a SH contingent (e.g., “wait and see” or “maybe”) notice and then decides not to give the SH contribution can that plan be amended? Is a plan considered SH for the full year even if it does not give the SH contribution (and just subject to ADP testing)?

In this case we are talking about the plan’s non-safe harbor nonelective allocation formula; client wants to amend from an integrated to a new comp. The plan does have a 1000 hour and EOY requirement (on the non-SH feature).

If a 403(b) that maintains annuity contracts with TIAA and MassMutual has less than 121 participants it can continue to file a 5500-SF and no audit requirements, yes?

Here are the facts:

2009 PY: Participants at beginning 94 Participants at end 102

2010 PY: Participants at beginnging 102, Participants at end 114

2011 PY: beg 165. at end 198.

They need to have an audit for 2011, correct

Hi,

I realize that Puerto Rico plans (non dual qualified plans) are not subject to all the testing requirements under the US regs, e.g., top heavy testing. However, my colleagues and I have not found any indication that PR plans are or are not subject to benefits, rights, and features testing. Does anyone know whether Puerto Rico plans (non dual qualified plans) are subject to BRF testing?

Also, does anyone know a good source where I can find an english version of the PR regulations?

Thanks for you consideration to these questions.