One of my clients reorganized in 2012 and as a result now have 4 unrelated employers in the plan. there is not enough common ownership to be considered a controlled group but I think they could be a ASG.

These are all companies that handle investments.

Company A is considered a Management company. They have all the administrative employees under them.

Company B handes the insurance investments,

Company C handles private investments

Company D handles real estate investments.

Could this possibly be an ASG?

We have a participant who died in February of 2009. He was age 63 at the time of death.

The beneficiary is a Irrevocable Trust. The Trustee of the Irrevocable Trust wanted to delay distribution until one of the beneficiaries of the trust attained a certain age.

He now wants the plan to distribute the deceased participant's balance to the trust, but he does not want withholding.

Since the 5 year rule states the distribution must be made by the end of the year which contains the 5th anniversary of the date of death, can this be considered a RMD?

Is there any way that this distribution can be considered not eligible to be rolled over, and therefor mandatory withholding would not apply?

Thanks

I need to reallocate forfeitures in a plan with a group based allocation. The plan entry requirements are age 21, 6 months of service, monthly entry. My idea is to allocate forfeitures to those participants with 1000 hours and who are employed on the last day, but I do not want to give an allocation to the otherwise excludable employees (all are NHCEs). This is possible 1) because it is a group based allocation where each employee is in their own rate group and 2) though I am giving nothing to the otherwise excludable employees, they are tested seperately from those participants who are not excludable. Am I correct?

Plan document's eligibility is 6 months of service. Entry is 1/1 and 7/1

Employee A has has following employrment history:

1. hired 1/7/2008

2. terminates 3/31/2008

3. rehired 6/9/2008

4. terminates again 9/28/2008

5. rehired 1/25/2012

6. terminated 6/22/2012

Has this person met the eligibilty requirements for the plan? I don't believe so, but the software system is giving him an entry date of 1/1/12.

Any thoughts...

A company sponsors a 401k plan where the two owners are the only participants (they are the only employees). They are planning on hiring dozens of people within the next few months and were wondering whether it was possible to "freeze" the plan via amendment so that these employees cannot become participants even if they would otherwise satisfy the plan's eligibility requirements. They do not want to terminate the plan because they will probably be back to just employing the owners in about 5 years, at which point they would "unfreeze" the plan and resume making deferrals and profit sharing contributions. Even though it's very likely that the overwhelming majority of these new employees will not defer and, therefore, not have any account balances in the plan, they would rather not have them participate as it would significantly increase the plan's administrative cost. Is it possible to do this?

Hello all,

I have a client who would like to open up payroll and make a bonus for 2012. Then he'd defer most of that bonus as a 2012 401(k) contribution. This doesn't sound correct to me, but I'm having a hard time finding something that spells it out. Any pointers out there?

Thanks!

Are rewards or incentives for participants who defer certain rates, or increase their rates of deferral during the year, allowed outside of the plan? Inside the plan we have Match, outside could be some kind of non-(or not so)-monetary reward like a gift card of certain levels based on rates of deferral or rates of increase?

Example, when analysing year end data, employees who defer as follows get the following:

6% - $100 gift card, 3-5% - $50 gift card, 1-2% - $25 gift card

I admit I have not thought this through, and wonder the role of nondiscrimination testing, but I have been tasked to look at non-traditional non-plan design related ideas for boosting partipation rates without auto features.

The situation is this. The owner fathered a child many years ago and now that child works for him. At the age of 5 (i think that's correct), the child's name was legally changed and the biological father says that the child is no longer legally his. Does family attribution apply here for purposes of Key Employee determination?

An accountant has asked me the following question, which I haven't heard before, and I am not an IRA expert.

He has someone that files jointly and the employer does not have an employer sponsored plan (his wife's employer does if that matters).

Their combined income is over the limits so that he cannot make a Roth IRA contribution. He can make a deductible regular IRA contribution, but he doesn’t want to.

The question is, can he make a regular IRA contribution and elect it to be non deductible?

If that is possible, he then wants to know if after the non deductible regular IRA contribution is made, can it be rolled to a Roth IRA.

I told him if he is able to make a deductible IRA contribution, he could do that and roll it to a Roth IRA, but since the regular IRA contribution would be for 2012, and the conversion would be 2013, he doesn't want to do that.

Thanks

We’ve gotten involved with a small db plan that allows active participants who have reached normal retirement to start receiving benefits. The plan also does not have a lump sum option.

Once an active participant reaches NRA and goes into pay-status, the trustees purchase an annuity (based on the participant’s AB and payment option) which is owned by the plan’s trust and monthly payments are made to the trust. On a monthly basis, the trust will then distribute a check to the participant. Note that because of post-NRA adjustments to the participant's AB (increase in salary/service), the annuity contracts do not match the actual payments distributed to the participants.

Question: Should the market value of that annuity contract be included in the funding calculations, or can the value of the contract (and liabilities associated that that portion of the AB) be eliminated from the funding calculations? Also, what about the AFTAP?

Any opinions or a regulation site would be appreciated.

I have a client who wants to terminate their 401(k) and start a SIMPLE 401(k). There have been no employee deferrals to the 401(k) plan this year, but the two outstanding loans have continued to be repaid. Does that violate the rule about not "benefitting" under another plan this year? Thanks.

DB plan starts termination process. 8 out of 30 participants choose annuity instead of lump sum. Lump sums are paid out. When annuity information and quotes are assembled, the cost is up to double the lump sums.

Can the termination be amended to only pay out the lump sums, and the sponsor wait 3 to 5 years to see if interst rates change and therefore cost of annuities comes down?

I've been trying to move a Mass Mutual VA SIMPLE IRA account into an IRA held by my BD. We fill out the paperwork and send it off. However, Mass Mutual refuses to move the assets, and they will not give a reason. I am guessing that they want the request on their own paperwork? Can they do this? The client made a request to move the funds, yet they are refusing.

For ERISA exempt public entities (such as publicly funded charter schools), who is a good vendor that can be used? I am an advisor desperately seeking a lower cost option. All that is out there are high fee VA companies & Lincoln Investment Planning who puts a 1% wrap on their plan. These non-ERISA 403b accounts are just as easy for these companies to maintain as IRA's are, yet IRA's come with $20 or lower yearly account fees.

Anyway, anyone know of a good low cost vendor for ERISA exempt plans?

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.