I am a 44 year old practicing phyician in a solo practice with a few part time employees. In past several years, I tried to max out my SEP-IRA but now I need to have more tax-deduction if possible. Some agents are trying to sell me DB plan for higher deduction but I am afraid about all the restrictions and hidden rules as well. Especially some aspects they mentioned I am afraid it would be too aggressive that eventually IRS will dequalified the whole plan. I hope you guys here can give me some tips:

1. I have steady income about $400k - 600k every year from the practice. I will have no employee work more than 1000hr for year 2013, but for 2012 one of the employees works more than 1000 hours. If I set up a DB plan starting 2013, could it be a solo DB (assume no employee will work more than 1000hr in the following years also)? One company told me it is OK, another complany claimed that I can not exclude this employee unless the plan is for 2014.

2. If after several years I have some high-paid employee and DB becomes too expensive, can I terminate the plan in 5 years without IRS frown upon?

3. Does it make sense to have whole life insurance in DB plan at all or should I just do a cash balanced DB plan? The person who wants to sell the DB plan to me is a life insurance company agent, so she keeps on pushing the idea of whole life in DB. But after reading lots of articles, it seems not ideal.

4. If DB plan is not a good option, what other plans shoud I Consider? I try to avoid SEP-IRA or 401k etc startin this year since most of the plasn require me to cover employees and that become too expensive to me.

I am not sure it is appropriate to post this here, but your help or any discussion about this matter is greatly appreciated.

The issue arises out of an incorrect operation regarding the definition of compensation. The error affected three plans and our proposed correction is identical for all three. Can we submit together, or does each need its own application (and fee)?

A participant was terminated but they administrator continued to send in two payroll deposits that were not actually deducted from the participant since they did not have a check. So there is about $120 in employee deferral and 120 in safe harbor match that the participant was not eligible for. Whats the best way to correct this? It all happened in 2013.

Thanks.

I have a plan that allowed a participant to join the plan in 2012 but the participant was not eligible until 1/1/2013. The participant deferred and received safe harbor match during the 2012 plan year. What is the best way to correct this? Can we forfeit the deferral and sh amount? And the plan will pay the deferred amount to the participant?

My client has both a SEP and Money Purchase Plan. She went to the bank and opened Cetificate of Deposits for both MPP and SEP for the 2012 contribution.

The bank issued 1099INT for the interest in both plans. This has been going on for a few years. The 1099'sINT have been issued in the name of the Corporation. I looked at the original paper work and it said the name of the co. EX ABC F/B/O Joe, however they have been issueing the 1099INT .

The assets in the pension plans are handled by the employer.

I would like to resolve this without making an additional mess. Thank you.

I'm working on a plan in which a highly compensated former employee is currently receiving benefits. The Plan Sponsor is considering terminating the plan.

The active highly compensated employees will have to waive benefits to ensure the participants get paid.

My question is: Can the Highly Compensated Former Employee also waive some of his benefits at plan termination?

Thanks!

Company A has acquired Company B, and pre-acquisition they use different definitions of HCE (Company A uses standard defintion; Company B uses top-20%).

I assume that the definition of HCE must be amended for all of the plans in one of the Companies (doesn't matter which one I don't think) in order to make the definition of HCE consistent amongst all plans in the "new" controlled group (i.e., the group that now includes both Company A and B).

Is there any sort of transition period allowed before this amendment is required? (Similar to the transition period for 410(b) testing?) I would guess the amendment has to be done immediately as of the date of the sale, but am not sure.

Also this is an asset sale, not a stock sale (not sure if that would change the answer).

Participant requested a Roth Hardship withdrawal. Client indicated to withhold 20% but system will not allow this. The participant is not 59.5 so should this be processed tax-free?

If a plan's AFTAP is barely above 80% and a lump sum would lower the AFTAP below 80%, is the full lump sum permitted?

I have a couple of 403b plans looking to switch providers. Any recommendations?

In order for a corporation to open an HRA plan, does the corp also have to offer health insurance? If not, is it necessary for employees to have individual health insurance plans in order to take part in the plan?

I find a lot of information on Health Reimbursement Arrangements online, but not all of my questions have been addressed. Where is THE BEST place to get answers to questions on setting up, administering, etc.

Participant is requesting a hardship distribution to provide enough funds to create 20% equity in the home he is acquiring, presumably to avoid PMI. The safe harbor language says "costs directly related to the purchase of a principal residence."Any comments would be appreciated.

Employee elects to participate in an FSA during open enrollment. After the beginning of the plan year, the employee is promoted to position where she becomes eligible to participate in a taxable MERP-type benefit, which reimburses the same expenses as does the FSA.

Can the employee cancel the FSA election mid-year? I think the answer is no but I thought I'd see if anyone had any thoughts.

Any help is appreciated.

401k plan imposes a 6% deferral limit on all HCEs. New HCEs for 2012 were not limited to 6% until Feb/March of 2012. Deferrals for the first month were more than 6%. As a result, their rates at 12/31/12 are 6.08% and 6.22%. In researching in the ERISA Outline and then in EPCRS, I think I have an excess allocation issue and need to 1) distribute the salary deferrals, plus earnings and 2) forfeiture any subsequent match, plus earnings. What I do not find in EPCRS is how I code this when I do the distribution? When is it taxable? 2012 or the year distributed? I found only one other post on this subject and it was from 1999, which indicated coding/treating as a 402(g) limit. I don't feel comfortable with that since it was so long ago. Anyone have any insight aside from calling the IRS directly? Thanks.

I have a 401(k) profit sharing plan and the sponsor is an LLC with a Sub-S election. Currently, the plan consists of the three members only, but they just hired a new employee.

For plan purposes, how is the member compensation handled? (i.e. like a Corporation or a Partnership)

Thanks for your help!

I'm a recent retiree who questions the fairness of several aspects of my employer's DB plan as applied to my case. I have questions about ADEA in relation to early retirement benefits, SS offsets, and offsets from a pension at another employer (50% subsidiary of the first). Also, questions about conversion of an earlier traditional DB plan to a cash balance plan (I'm sure the company's attorneys looked at it carefully, but I'm still questioning some aspects and want to understand how it complies with IRS rules), and questions about how the cash balance plan meets accrual rules. Plan interpretation of average compensation for employees transferred in from a 50% subsidiary is another area of concern.

I have spend many hours researching the plan, the IRS rules, etc.--enough to know that this is very complex and it would take years to become an expert. I have already filed an appeal (rejected on all counts) with employer. Next step is to consider filing ERISA suit in federal court. I could talk to an attorney, but there are many specialties and I don't want to have someone who doesn't know the details of the rules and calculations for DB plans. Do I need an actuary? Are there attorneys who are also actuaries? Actuaries who work with attorneys? I'm willing to pay for expertise; I don't want to pay a lot of money to someone who has to go learn it themselves.

In short, what kind of professional has the training and knowledge about plan design, pension calculations, and related legal matters--and who works with retail customers (employees)--to look at my case?

I would appreciate any guidance you can give me. Specific firms or names welcome (if allowed on this board).

Thanks in advance!

(I'm assuming it would be an unwelcome intrusion for an employee to ask specific "newbie" questions about DB rules on a board dedicated to benefits professionals, so I'll refrain unless invited).

Have there been any "recent" (last 4 years, say!) developments on funding calculations for a DB plan that is partially funded with life insurance?

I had understood that, after PPA, you had to use the envelope method, and would calculate:

1. The TNC, by adding the one-year term cost of insurance to the regularly calculated number,

2. The FT, as normal, and

3. Assets, by adding in the value of the life insurance policy.

I have read that a modified split funding method is possible, but only if the participant's right to receive the insurance benefits is irrevocable (I am not really completely clear on what that means!).

I am running up against some proposals that appear to still be using the old split funding method.

Any comments about how life insurance can still be used to significantly increase deductible contributions?

Thanks!!!

401 (k) Safe Harbor Match Plan. Employer fails to defer on the the last payroll of the year which only has bonus wages. Plan has no compensation exlcusions.

Would therefore this section of self-correction under EPCRS be permissable for a Safe Harbor Match?

(F) Special Rule for Brief Exclusion from Elective Deferrals and After-Tax Employee Contributions. An Plan Sponsor is not required to make a corrective contribution with respect to elective deferrals (including designated Roth contributions) or after-tax employee contributions, as provided in sections 2.02(1)(a)(ii)(B) and ©, but is required to make a corrective contribution with respect to any matching contributions, as provided in section 2.02(1)(a)(ii)(D), for an employee for a plan year if the employee has been provided the opportunity to make elective deferrals or after-tax employee contributions under the plan for a period of at least the last 9 months in that plan year and during that period the employee had the opportunity to make elective deferrals or after-tax employee contributions in an amount not less than the maximum amount that would have been permitted if no failure had occurred. (See Examples 6 and 7.)

There seems to be no distinction between Traditional and Safe Harbor plans in the referenced section. Am I also reading the correction properly that it would make no difference when the failure to withhold deferrals took place provided that the participant had an opportunity to defer no less than the maximum amount in the last 9 months of the year. Would the participant have to be notified of the failure to use the special rule?

That's the way I'm reading this section, if I'm not reading too narrowly into the descripton. Thanks.

Dupicate Post

5% owner has been receiving RMDs for a number of years and dies late December 2012.

She was not married (husband pre-deceded) and her 4 childeren were each named 25% beneficiaries.

If I'm reading the 401(a)(9) regs correctly the RMD for 2013 is the single life expectancy of the oldest child.

But how does the RMD get paid? Do each receive 1/4th of the required RMD or is the RMD paid to the estate or can one receive the RMD and the others roll?

If one of the four wants a taxable distribution that is more than the RMD does that satisfy the RMD for all? That is can the other three roll over their 25% interest to inherited IRAs?

I'm sure this has come up before but I haven't seen it (or if I have it has been so long ago I forgot) and my quick search of the sub-forum did not yield any results directly on point.