IF AN EMPLOYEE IS REHIRED , LESS THAN A YEAR AFTER HE TERMINATED....WHAT PERCENTAGE DOES HE COME BACK IN WITH? THE 3% MINIMUM....OF IF HIS YEARS OF SERVICE INDICATE HE SHOULD BE AT 6%...DOES HE COME IN AT 6%?

AND DOES HE COME IMMEDIATELY BACK IN AT THE PERCENTAGE? or DOES HE HAVE TO WAIT UNTIL THE BEGINNING OF THE FOLLOWING PLAN YEAR (1/1) ...WHICH IS THE DATE THE REMAINING POPULATION HAS AN INCREASE?

WE WOULD PREFER THAT HE COME IN IMMEDIATELY AT REHIRE, INSTEAD OF WAITING

If an eligible participant has a loan but then becomes part of an excluded class, is the employer still obligated to withhold and submit his loan repayments? I think yes.

A plan was originally designed years ago with a 5-year cliff schedule and a 3-year cliff for top heavy years. When the plan was restated for EGTRRA in 2010 the vesting provisions were changed to say that a participant's interest will vest according to a 2/20 schedule, but for amounts contributed prior to 2007 the original cliff schedules would apply, specifically stating that the 3-year cliff schedule would apply for top heavy years prior to 2007. The plan actually operated liked this beginning with the 2007 plan year, although the doc wasn't amended until the EGTRRA restatement (the TPA said an amendment wasn't needed at the time and it was OK to wait until the restatement). The plan first became top heavy in 2011.

There's a participant who terminated in 2008 with a very large account balance, the great majority of which was allocated to him prior to 2007. At the end of 2006, he only had 3 years of service and his entire balance was 0% vested under the old schedule. The small contribution he received in 2007 was vested under the 2/20 schedule and when he terminated in early 2008 he had a total of 4 years of service. From 2007 through 2010 he was shown being 0% vested in the large pre-2007 amount and 40% vested in the tiny 2007 amount. Now that the plan became top heavy in 2011, I am wondering if the vesting language, which is literally written as simply as I've described above, is adequate and whether it would be correct to still consider the pre-2007 amounts 0% vested? All help is greatly appreciated.

When the employer funds a QNEC to correct a missed deferral situation, how is the deposit allocated?

I am being told that the 50% (of missed deferral) portion is allocated to the participant's Deferral Source, the 100% match portion is allocated to the match source, and only the earnings portion is allocated into the QNEC source.

If the whole correction is referred to as the QNEC, shouldn't it all be allocated into the QNEC source? Aren't there certain restrictions on QNECs that requires them to be separately recordkept?

Any IRS guidance/citations would be most appreciated. Spent more time than I could afford to already in rev proc 2008-50

thanks!

The elective deferral limit for 2012 (under age 50) is $17,500. That is across all plans, correct? So if an individual had the ability to participate in both a 401k and a 403b plan, the most she could deposit in 2012 is $17,500 total, not $17,500 to each plan, correct?

Thanks

Can I waive elgiblity for anyone hired on a specific date (i.e., 11/15/2012). There 3 other employees not eligible who would not benefit from this amendment (because they were hired on some other date), though the benefiting employee would NOT be an HCE (salary is $50,000). Is this OK?

A participant wants a hardship to purchase what will be her primary residence. However apparently her uncle is actually buying the home and will be the title holder, the participant will not appear on the title at all. She apparently needs to kick in this hardship distribution for the purchase however.

Is this permissible? 1.401(k)-1(d)(3)(iii)(B)(2) says "Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);

One could certainly infer from the reg that it means the employee is the actual purchaser of the home, but it does not say that, it just says it must be a principal residence "for" the employee.

Thanks.

Anyone done this with the Corbel Prototype 401(k)? Is this covered somewhere in the plan document? Does it need to be? Is there a write-up out there by someone going over how to do this?

If a company has fewer than 25 employees and includes in its cafeteria plan the option for payment of premiums to pay for State Exchange purchased health insurance beginning 1/1/2014, may the cafeteria plan impose minimum service and entry date requirements that would put cafeteria plan eligibility beyond 90 days after employee begins working 30 or more hours a week?

Generally, Obamacare requires health plans not require more than 90 days. So the question is whether a cafeteria plan that allows for payment of State Exchange purchased insurance, whether such a cafeteria plan is a 'group health plan' or merely a mechanism for paying premiums. If just a payment mechanism, the 90 day requirement should not apply. If such a cafeteria plan is itself a 'group health plan', then the 90 day rule would apply.

Owner and his wife, both employed, they have been taking RMD's. She dies this year at age 81. He is beneficiary, currently age 87. Law states you should use single life table in 1.401(a)(9) using beneficiary age instead of Joint Life for her current year RMD. For future plan years how should RMD's be calculated for beneficiary? How should his RMD be calculated in current year? using Joint Life Table?

We administer a calendar year 401(k) profit sharing plan, and for plan years 2011 & 2012 there are no employer contributions or forfeitures allocated to participant accounts. It is our understanding that under this arrangement, if the owner elected not to make 401(k) deferrals for 2012, the "Retirement Plan" box checked on his/her 2012 Form W-2 is not checked.

Is this correct?

Thanks for your input!

Does anyone have experience or recommendations for resources discussing a regular US 401(k) plan that has covered Puerto Rico employees without regard to the dual qualification requirements and/or specific rules / limits, etc. applicable to Puerto Rico employees. (Basically employer treated adding Puerto Rico employees just like adding employees of a regular state for 401(k) purposes and did not realize the issues with that until a former PR employee tried to roll over his distribution.)

I feel like I have seen this issue discussed on boards here or possibly in some journal articles before but cannot seem to find much information. I'm thinking this must not be an completely unknown issue but not sure how / if they could go about correcting with the Hacienda and/or IRS. Thanks

Client is interested in contributing (right now) as little as law permits. Here are the facts:

FT=18,000,000

AVA=18,100,000

PFB=500,000

TNC=200,000 (frozen plan, expenses only)

Amortization payments prior to 2012 = 600,000

Amortization payment after MAP = 150,000

(1) If PFB is waived, bases are eliminated and MRC=18,000,000-18,100,000+200,000 (TNC) = 100,000

(2) If PFB is not waived

The catch-up (calendar) limit used for an off -plan year is the year in which the plan year ends. But what if there are no deferrals in that year?

4/1/2011 to 3/31/2012 ADP test failed. John needs an ADP refund of $900. John deferred all of his money from 4/1/2011 to 12/31/2011. He has not deferred anything in 2012 yet.

You can NOT take that $900 and consider it 2012 catch-up, correct? So do you have to look at 2011? If John did not max his catch-up for 2011, can you apply the $900 as catch-up for 2011? Or does it need to be refunded?

Participant terminated many years ago and rolled distribution to IRA.

The Ex-participant is now getting divorce and wants to get a balance as of date more than 10 year ago. Presumably to determine pre-marital portion.

Is the plan under any obligation to dig though it's old records and find such a balance? The participant was paid more than 7 years ago.

I'm pretty sure the answer is no they don't have to unless they want to be really nice for some reason.

Our company has a VEBA for a legacy retiree life insurance plan and is considering a buyout/transfer of this liability to an insurer. This is beyond my area of expertise.

What potential pitfalls do we need to look out for? For example I have heard that retirees who retired due to disability may not be covered. If that is the case are there any solutions for them? Or do we have to maintain the VEBA for that small group?

Any other things to look out for?

Thanks in advance.

Hello everyone,

I have read through similar topics, but have not found one that matches this case specifically.

In my particular case, the document clearly includes bonuses in the definition of Compensation. The plan sponsor is not trying to amend to exclude bonsuses.

Rather, they are giving employees a form that gives them the option to "Take 401(k) deductions from my standard earnings only," OR "Take 401(k) deductions from all earnings including any commission and / or bonus received."

My take is that if a participant *does* chose the first option, this would be akin to him or her saying, "reduce my deferral percentage to zero on the bonus check," if the bonus is paid separately, or "for this check, reduce my deferal percentage to the equivalent rate that it would need to be in order to effectively exclude deferral on my bonus."

This seems fair to me, and would not require a 414(s) test.

Agree? Disagree? I've never seen this type of form before and can't find anything similar in my research.

Thanks!

Small employer has SH 401(k).

Owner recently purchased second unrelated business and is now a controlled group.

Can otherwise eligible employees of newly acquired business be excluded from participation in SH 401(k) if plan can pass coverage using ABT?

What is the rationale for taking an existing DB plan and splitting it up in 2 separate plans - 1 for actives and 1 for inactives? I know that this leads to additional administrative costs (two 5500's, plan documents, etc.) but what is the advantage?

Can reimbursements from a FSA be made over multiple plan years for a service rendered in one plan year?

Example:

Lasik surgery is performed in 2013 for a fee of $2,400.

Can payments be made from the FSA account at $100 per month for plan years 2013 and 2014?

Thanks.