A one person DB Plan "distributed" a notice (to himself) on 12/15/2011 that basically said 'The Plan Sponsor wishes to and will be freezing the DB Plan effective January 1, 2012". But then they never actually amended the Plan to freeze it. Can he still amend the PLan prior to the end of the year 12/31/2012 so the plan freeze is effective 1/1/2012? Assume 1,000 hour accrual requirement has been met already.

In situations where an employee is terminating employment, but decides to take all of his accrued vacation first, does that employee continue to be an eligible employee for purposes of making 401(k) deferrals? For example, if an employee has six months of accrued vacation, works for the employer through 12/31/2012, then takes vacation for the first six months of 2013 and officially terminates employment 6/30/2013, may 401(k) deferrals continue to be made from the compensation paid to the employee for the first six months of 2013 while he is taking his accrued vacation? Or would the employee be treated as not being an eligible employee after 12/31/2012 because he is no longer performing services for the employer after that date?

Elective deferrals in 403b plan, with match in a 401a plan. Is there anyway to do this w/ Sungard? We have the 403b prototype and the 401k prototype, but I can't come up with a darn thing on coordinating the two. It seems to be a complete and total overhaul if I even try.

I am taking a course on Defined Benefit plans and my study partner and myself are conflicting on a certain situation. We have a participant who is age 66 and has not commenced benefits. The NRA is 65 and no suspension of benefits notice was provided. I believe that the benefit would be the greater of NRB actuarially adjusted OR the NRB recalculated by plan formula to include the additional year of accrual. Therefore, I used the following formula to determine the actuarially adjusted benefit...

NRB times APR@65 times (DX65/DX66) divided by APR@66

Now I would compare this to the adjusted accrued benefit by plan formula and use the greater of the two... correct?

A self-funded health plan has been properly modified to extend coverage of adult children to age 26. The plan uses a composite rate for coverage, so once an employee gains eligibility the cost is the same for single, two-person or family coverage.

Recently an employee asked to drop coverage for a deadbeat adult child.

Are there any ramifications to the plan to honor this request? A plan amendment would likely be needed to clarify that the parent has this right, but are there any other pitfalls for consideration?

In the past we have denied similar requests for minor children (b/c the parents wanted to keep them on CHIP).

Thanks.

A plan sponsor had their payroll system set up incorrectly for much of 2012 and withheld Roth deferrals on net compensation instead of gross compensation. Roth deferrals are, therefore, slightly less than they should be. Plan has a 3% safe harbor non-elective contribution so employer contributions are correct.

What does the plan sponsor do to correct this?

Can a plan provide the following:

1) A percentage of compensation noneletive contribution for all employees, and

2) For employee's contributing more than 2% compensation, an additional percentage of compensation match.

There are two unusual things here.

First, the "match" doesn't kick in until we get to 2% contribution.

Second, the "match" is a percentage of compensation, not a percentage of elective deferral.

I do not see a prohibition for either, but I've also never seen either used before. Is this an allowable structure?

401k plan had a partial termination in 2011. Participants affected were made 100% vested.

In 2012 one of the terminated participants was rehired. If she had not been a part of the partial termination, she would only be 40% vested.

I assume with her rehire, she will pick back up on the vesting schedule and not continue to be 100% vested?

Thanks.

If a 5% owner (who statred ompany in 1980)

established a new plan on 1/1/2012 and said owner turn 70 1/2 on 10/1/2012.

The contribution will be made 12/2012.

When do RMD commence. I think 4/1/2013, but I am not sure.

Thanks

There's a terminated employee in one of my plans that has a vested account balance that flucuates above/below $5,000. If I'm reading the regs properly, and please correct me if I'm wrong, I cannot autoroll the participant account unless it's below $5,000, even if the vested value was below $5,000 at the time the participant terminated employment.

I have a client who was approached by an insurance organization which states it converts uncovered medical expenses into insurance premiums by processing them through an insurance company. This would allow the S-corp owner to get an above the line deduction for items that would otherwise be deductible only on Schedule A. This plan only covers the owners. The process begins with the client submitting medical expenses to the primary carrier. When the expense is rejected, the client pays the bill and submits the claim to this company's claim processor (along with a processing fee of course). The company then reimburses the client for the claims and submits a bill to the client's corp. for premiums equal to the amount of the claim plus 10%. The S corp then pays the bill as a health insurance premium and according to the company, can treat it as such for tax purposes.

This seems wrong on many fronts. Has anyone dealt with this type of "plan" or know if this type of arrangement is view by the IRS as legitimate??

Plan doc states that we will perform a true up each year to those who contribute the 402(g) limit and have an average rate of 4% or more.

Match is 4%

Vesting is 3 year cliff for all ER including True Up.

Most we allow any participant to contribute is 50% of their pay up to the $17,000, or $22,500, limit.

90% of our work force is NHCE. Of the 90%, 43% make $34,000 or less.

We have never tested for BRF as our ERISA attorney says we don't have to. Do we have any issues with this test as it relates to our true up rules?

We have a 403(b)(7) plan that wishes to allow participants to withdrawal rollover contributions at any time. §403(b)(7)(A)(ii) provides "under the custodial account no such amount may be paid or made available to any distributee before the employee dies, attains age 59-1/2, has a severance from employment, becomes disabled (within the meaning of section 72(m)(7)), or in the case of contributions made pursuant to a salary reduction agreement (within the meaning of section 3121(a)(5)(D)), encounters financial hardship."

Would you agree that under a 403(b)(7) plan, rollover withdrawals could not be permitted at any time?

Is there a way to code the following type of match formula in Relius?

0-2 YOS: 25% up to $400

3-5 YOS: 25% up to $800

etc.

I'm new to relius and can't see that this can be coded in the plan specifications.

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?