I have a takeover DB plan in which the accrued benefits were frozen back in 2008. When the benefits were frozen in 2008, the plan had non-owner participants (PBGC covered) and was underfunded. Since that time, all the non-owner participants approximately 5 left employment and were paid a lump sum distribution. Also, the employer has hired several more employees since that time.

Does anyone have experience in testing a frozen DB plan for 401(a)(26) compliance? My understanding is that the 401(a)(26) would look something like this:

Prior Benefit Structure:

Participants with AB / Total Non-Excludible Employees >=40%

Participants with AB = Number of participants with an accrued benefit under the Plan = 1 This category does not include former participants that have recevied a lump sum distribution.

Total Non-Excludible Employees = Total number of employees who met the eligibility requirements of the Plan, including terminated employees and former participants that received lump sums = 8

Participants with AB / Total Non-Excludible Employees = 1/8 = 12.5% Plan fails test.

Has anyone had to deal with a situation like this?

1. Company A sponsors Plan.

2. Father is 100% owner of Company A.

3. Son is member of LLC.

4. LLC and Plan become limited and general partners of Partnership.

Son is a disqualified person by virtue of his relationship to Father (who is the "fiduciary" and the "employer"), but is LLC a disqualified person? It doesn't appear to fall under any of the definitions. If LLC is not a disqualified person, how sound is the argument that this transaction was solely between LLC and Plan and Son was not part of that transaction (despite being a member of LLC)?

HELP!

have a daily val 401k plan in which the plan sponsor is so nice that at the end of the year he reimburses the participants the daily Asset Management Fee that was deducted from their accounts throughout the year. He does so, by cutting a check and redepositing it into the trust. I was under the impression that this was OK, but that the reimbursment would be considered a profit sharing contribution and thus subject to testing and limits.

Another TPA is telling them its not so. Anyone know for sure and have any proof.

thanks

415(b)(1)(B) limits the benefit accrued to 100% of the high 3 years of compensation. Owing to actuarial increases, it's not unusual that the actuarially increased normal retirement benefit could exceed the 415(b)(1)(B) limit. In such case, it would appear this limit could conflict with 401(a)(9).

I have a take-over where this has occurred. The employee is 72 (with 51 years of service!), the AAC=$60,000, the NRB=35,000, the LRB=44,000, and the actuarially increased NRB=69,000.

To protect the employee against forfeiture, the Plan would need to incorporate a retroactive annuity start date.

Any thoughts?

Hi all, I have a 403(b) sponsor who wants to limit employee deferral elections to either Roth or traditonal 403(b) but not both. So for instance, if I wanted to contribute 10% of papy and have half be traditional deferral and half be ROTH, I couldn't do it. Does anyone see a problem with this?

Thansk in advance for any help you can give me.

Do you think that it's a good thing, or a bad thing, that a 2012 Form 5500 permits reporting information about a preparer?

http://www.dol.gov/ebsa/5500main.html

How would showing preparer information help or hurt you?

Here is the plan specifics:

Full timers: Immediately Eligible, Daily Entry

Part Timers: 1000 Hours, Daily Entry

Plan Year: 2/1/11-1/31/12

Safe Harbor Plan: 1 YOS required to receive SH match

Here is my problem, I have 1 HCE that is in my disaggregated population (under 21/less 1-YOS). Hired 4/19/10. Termed 2/2/11.

The plan has an extremely large part time workforce. The ratio test is at 19.53%. We have confirmed all the information with the client and it appears to be accurate.

With a ratio that low, Average Benefits does not seem to be an option.

We typically run the ratio test on an Annual basis. We are looking into running it on a snapshop basis. Is this possible? What date would be "reasonable"?

Is there anything we should be concerned about? In past years, we have not had any HCEs in the under 21/less 1 YOS group.

Any thoughts?

Seems like the regulations produce a possibly unintended consequence, and I'd just like to see if I'm way off base on this.

A person starts a new business when he is 75. According to 1.401(a)(9)-2, Q&A-2©, this person wouldn't be a 5% owner, becasue he wasn't a 5% owner with respect to the plan year ending in the calendar year in which he attained age 70-1/2.

Under the prior regulations, there would have been a different result, and the RBD would have been April 1, 2013. But the (current) final regulations changed this - whether intentionally or unintentionally I don't know.

Does anyone disagree with this? It makes a difference, because if my reading is correct, then any distribution taken at this point would NOT qualify as an RMD, and would be an ERD and subject to 20% withholding.

I am studying for my ERPA and one of the topics I need to focus on is EPCRS programs. At some point, I came across a web page that summarized what types of defects can be corrected under SCP, VCP, AuditCAP, but I don't know where that site is.

Can anyone provide a link to a good website that will succintly identify what errors are eligible for each program?

I have passed ERPA SEE Part I and am studying for Part II (taking in January). I received something awhile ago about continuing ed - and I couldn't find the answer to my question:

Do I have any CE requirements BEFORE I pass Part II and have my ERPA designation?

Trying to determine the accrued benefit based on the following....

NRB = 2% average monthly comp per year of service up to 25 years

Accrual Method = Fractional accrual based on years of service

Average Monthly Comp = $3,000

10 years of service

NRD = 2032

I am calculating as follows: 2%x25yrsx$3,000=$1,500x.4=$600 monthly accrued benefit. (with the denominator being 25 years)

Is this correct, or should I be using 2%x25yrsx$3,000=$1,500x.33333=$500 monthly accrued (with the denominator being 30 years)

Hypothetical (real fact pattern changed to protect the innocent):

Employee is awarded restricted stock units that time vest in 2010. Upon vesting, out of negligence/ignorance/etc., the employer does not deliver the shares to the employee nor does it withhold and remit the applicable taxes or report the award at all on the employee's Form W-2 for 2010.

To correct this, does the employer just need to issue an amended Form W-2 and the employee just need to file an amended return for 2010 or is does this situation impose 409A penalties on the employee as well?

I think a strong argument can be made that this does not implicate 409A at all and it can be analyzed under the traditional concept of "constructive receipt" but I am interested in other thoughts.

401k small plan sponsor has just decided to terminate plan by end of year. Plan up to date on amendments but they no longer have a plan attorney. They will not be filing a DL. Is it acceptable to just create a plan resolution to terminate from a template?

We're putting together a determination letter filing for the Cycle B restatement of a cash balance plan for a new client, and the client cannot find any interim amendments for their original document. Do we need to go through VCP for non-amenders before we apply for the determination letter? Or do we file for the determination letter, and then have the reviewer assist us with the correction?

This seems like it should be an easy or simple question but I cannot seem to find any express discussion or guidance on this and so want to make sure I am not missing something. Company has a group health plan. Company is going to implement a wellness program. It is generally separate from the group health plan and will be available to all employees. It will reward individuals for achieving certain health status / factors (i.e., it is not a participation only program--you have to achieve a particular result or alternative standard). The plan generally complies with the five factor HIPAA nondiscrimination requirements--the reward involved is relatively small and there are alternative arrangements. Plan is to provide premium discounts or rebates for those in the group health plan and cash / card for those individuals achieving health status that are not in the group health plan (e.g., if covered by a spouse's plan, etc.).

Is there a problem with providing cash / rewards to those not in the group health plan since the cost of coverage for them is $0 and any amount would exceed 20% or is the 20% to be determined based on general cost of coverage for an employee / family under the plan if they were covered?

Thanks

Company with a 401(k) plan and a few hundred employees acquires a small company that maintains a Simple 401(k).

Is it true that the Simple 401(k) may not be maintained because the employer has more than 100 employees, and if so when must the Simple 401(k) arrangement be disbanded? (Is this the same timing as the qualified plan rules?)

Facts:

1) Participant born 7/2/1950

2) Terminated employment in 2007 and rolled over $100,000 into an IRA

3) In 2009 cashed in the IRA.

Question:

Would the age 55 exception from the 10% penalty tax to qualified plan distributions maintain after it's been rolled over to an IRA?

Client signs a document (on 10/26/12) effective 1/1/13. The plan is to provide a safe harbor 3% nonelective. This is a brand new plan. Client comes to us today and says that they will not be able to fund the 3% in 2013 and can they amend the plan to take the safe harbor out.

Client provided the safe harbor notice to partcipants in early November, 2012. Can the plan be amended today effective 1/1/13 with no safe harbor provisions? Is the client obligated to make some contribution for 2013?

if you look up one of the song titles you would find out the following:

This song was featured in "Christmas Vacation" and was written by R. Alex Anderson.

Mele Kalikimaka is the thing to say

on a bright Hawaiian Christmas day.

.......................

4 of the black and white pictures have a small paint can - an implication there must be a color involved.

looking at an illustration HCE gets a 13.2% all the NHCE's are getting 4.4%. The 4.4% includes the 3% nonelective. Is this acceptable? I have always been under the impression the nonelective had to be done separately.