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?

ADP Test fails and after reclassifying most of the correction amount as catch-up. Only 59 cents remains to be distributed. Obviously, it will cost a lot more to get this distribution processed than 59 cents.

I can't find anything that would allow me to not make the distribution. I have re-confirmed everyone's compensation and deferral amounts. No new employees this year.

Any thoughts would be appreciated. Thank you!

Hedge fund has concentration of benefit plan investors (BPIs) nearing 25% threshold under ERISA 3(42) and 29 CFR 2510.3-101(f). However none of the BPIs are qualified retirement plans, only IRAs.

Were the level of IRA investment to reach 25% would the hedge fund manager be subject to full ERISA Title I duties when none of the underlying investors are ERISA-covered plans?

Given a SIMPLE IRA with a 3% matching contribution. Here's the situation:

1. Plan has owner and 2 employees

2. In 2012 owner deposited <3% for himself when he should have received 3%. The correction for the owner would be an additional $202.

3. In 2012 owner deposited >3% for employee who should have received 3%. The correction for the employee should be -$283.

1. Given that these corrections are somewhat de minimus, could we just adjust the 2013 contributions to wash out these differences?

2. Is it necessary to correct these errors through one of the IRS correction programs to avoid qualificiations problems in the future?

Thanks for the help

Just playing with my spreadsheet. While I realize that different spreadsheets may be off by a dollar or so due to rounding, I get a Schedule C income of $260,310 required to get the $250,000 comp maximum after SE tax reduction. (unrounded it gives me $249,999.82)

Taking into account maximum 401(k) deferrals, for a S/E to get the 415 maximum $50,000 account addition, I get a required Schedule C comp of $174,157.

Anyone getting anything different?

Have a takeover cash balance pension plan where actuarial equivalence is defined as 417 mortality and interest rates; interest crediting rate is defined as third segment rate for September of plan year (calendar year plan).

As of 12/31/2011, have my end of year hypothetical account balance; this is converted to a monthly benefit for funding using the interest crediting rate for 2011 and 2011 417. So I get a monthly benefit as of 12/31/2011 using the 2011 basis.

We now come to 2012. As we all know, 417 interest rates have nose dived. When I now compute the accrued benefit from the 12/31/2012 hypothetical balance, I'm now applying the 12/31/2012 417 basis; resulting accrued benefits (as expected) are much lower than 2011 basis due to effective higher annuity purchase rates. If I just stick with the 12/31/2011 prior accrued benefit for funding target, I'm getting trivial target normal cost in relation to allocation; for those with lower allocations, the 12/31/2012 accrued benefit is actually lower than the 12/31/2011 accrued benefit.

Approaches for determining FT and TNC?

1) Use numbers as they fall, don't let 12/31/2012 accrued benefit be lower than the 12/31/2011 accrued benefit for determining FT and TNC. Results don't appear to make sense (trivial or no TNC).

2) Use 12/31/2011 accrued benefit for FT; calculate 2012 accrual based on hypothetical allocation alone. Get reasonable TNC, but now my PVAB is higher than the ending account balance, which doesn't appear to make sense either.

3) Recompute the 12/31/2011 accrued benefit based upon 2012 basis before determining FT and TNC.

Most plans we have designed have gone with static interest rates for actuarial equivalence (typically 5% pre, 5.5% post with post-retirement mortality only) and a 5% crediting rate.

Thanks for any input.

We have a plan where one of the owners is in the process of a divorce and his wife - soon to be ex-wife - also works for the company.

Is there any point in the divorce proceedings short of the final divorce when the wife can cease to be considered HCE and Key? Or must we wait until the final divorce?