Currently, our Health Care FSA limit is $2,500. However, for new employees, we pro-rate the maximum amount they can contribute in their first year of eligbility based on their hire date. I wanted to see if anyone else had similiar experiences with pro-rating or do companies typicaly let someone contribute the maximum amount regardless of when they are hired during the year.

Any thoughts would be appreciated.

Thanks.

If a plan is changing investment providers and the assets will be mapped do the mapping instructions need to be included on the blackout notice?

Every time an answer seems obvious to me, that's when I get nervous that I'm missing something!

Here's the situation. Employer sponsors a deferral only 401(k) plan (or even if they had a match, for that matter). Currently there is no employer profit sharing contribution provided for under the plan.

They MAY want to amend the plan to provide for an employer contribution for only 2 NHC. There would NOT be any PS contribution for any HC, and not for any other NHC either.

So after you disaggregate the plans, you are just testing the PS, on an ALLOCATIONS basis - no cross testing, no gateway. Since no HC receives a contribution, then you automatically pass the rate group testing using the ratio test, right?

Am I suffering from brain cramp and missing something?

I have 2 401k plans that are merging 10/15. The plan to merge has a last day of the plan year rule, the plan year is calendar year. Does the plan that is merging has to allocate the match as of the 10/15 merger date since essentially that is the last day of that plan's year? It seems to me they would need to since they chose a weird date to merge the plans.

Thanks!

An HCE from a large corporation is retiring (he is age 65). He has around $1M in the corporations 401k plan. $900K is pre-tax money. The other $100K is after-tax (but not Roth) money. Can he roll the after-tax money into a Roth IRA?

Thanks

We amended our plan to include a provision that is only applicable for a limited time. We sent an SMM to our employees to notify them of the change. Do we need to amend the SPD to cover the provision, even though the limited time will have expired by the the time the new SPD is issued and future eligible employees are not affected by the provision?

I have an integrated SAR SEP PLan.

THe owner and his employees do salary deferrals ( subject to the 1.25% test )

The owner then contributes 3% for himself and his employees. He is self employed and his income is capped at the $245,000.

( his actual Schedule C income is over $300,000 ).

Because the plan is integrated I am claculating his excess comp over the TWB at $138,200 ( 245,000 ,imus 106,800 ). If you multiply this by 2.7% you get an additional allocation for him of $3,631.

Does this make sense ?

Are there any on line calculators out there that can do this calculation ?

American Funds does not have one .

THank you,

Bob

My understanding is that assets need to be 110% or more of Funding Target after taking into account distribution in order to pass this test. Am I thinking about this right?

Total Plan FT = 3,597,271

Total Participant FT = 279,619

Total Plan FT After Payout = 3,317,652

Total Assets = 3,491,773

Total Lump Sum Payout Amount to Participant = 328,305

Total Assets After Payout = 3,163,468

So if the assets remained where they are the ratio after the payout would be 3,163,468/3,317,652 = 95%

In order to get this up to 110% there would need to be a contribution of approximately $486,000.

if a daughter in-law works for her husbands parents and they are 100 pct owners of a company...does that make her a key employee?

What "rules" govern the payment of plan expenses from governmental plan assets? Do governments use plan assets to pay expenses? If so, on what basis do they pay those expenses?

The "exclusive benefit" rule under the Code and Regs don't specifically address expenses. I'd like to think that this rule would work similar to ERISA's "exclusive purpose" rule, which obviously doesn't apply to governmental plans.

I'm not very familiar with gov't plans and don't want to assume anything. Any help would be appreciated. Thanks.

Employer has a educational assistance program that generally meets the requirements of Code Section 127. The only possible issue is that, although all employees are eligible to participate, full-timers are eligible for reimbursement for up to $5,000 in expenses, while part-timers are only eligible for half that amount.

Will this program fail the nondiscrimination tests because of this discrepancy? Or does the reference in the regulations to the 410(b)i)(B) tests only require that all employees be eligible regardless of the maximum benefit?

Thanks!

2 quick questions:

Am I correct that under Heinz, a frozen DB plan that currently has no suspension of benefits provisons cannot be amended to provide for suspension of benefits on those benefits already accrued?

Also, just soliciting opinions - if you were installing a new DB plan, would you normally recommend that they do have a suspension of benefits provision? They can always amend to remove it, so would there be any particular downside?

This is really just a matter of curiosity, so please don't waste your time if this requires a lot of research or time to offer an opinion. Thanks!

If an Employer neglects to stop the participant's contributions for 6 mos after a hardship withdrawal of deferrals is the proper correction to (1) return the contributions, plus earnings to the participant and also

(2) forfeit any associated matching contributions plus earnings to the plan forfeiture account?

The Plan Doc does utilize the safe harbor hardship rules.

Bueno?

As I much as I know the answer to my question, I thought I would throw it out there for any comments...

Small company has never deposited 401(k) late. In 2011, one check was lost in the mail and no one noticed it until reconciling year end accounts four months later (there were three payrolls that month so everything appeared normal on quick glance). So contributions were late and now must be reported on 5500, and lost earnings restored to trust. My question is - is the company's record of having written the first check enough to not treat it as a reportable late contribution?

Has anyone run across guidance regarding what happens when an employer sponsoring a 403(b) plan dissolves? I am aware of the myriad problems with terminating a 403(b) plan and that option appears to be out. Since we can't force distributions to terminating employees, what will happen to their accounts when there is no longer a plan sponsor to "maintain" the plan?

For a calendar year plan, say 12/31/11, we typically get the stock price in June and do the annual recordkeeping. The Distribution Policy states that the Plan will designate a distribution date and make distributions once per year following the annual valuation.

If a participant terminates employment subsequent to 12/31/11, and submits his distribution request at approximately the same time as the "distribution date", would that person be paid out on his 12/31/11 value or since he terminated in the new plan year, have to wait until the 12/31/12 valuation is done?

Is there ever a time period or deadline where someone is made to wait until the following year? Say if someone terminates 12/20/12. Can he get his distribution request in and get paid on the 12/31/11 value even though it's past the "distribution date". Or what about July, August or September?

Thanks

I have a SH 401k Plan. The formula for allocating any profit sharing contribution is integrated. Although there’s a last day requirement for sharing in the ps contribution, I can’t amend the formula to cross tested for 2012 because I can’t amend a SH plan during the year. I think (hope) that the sponsor could just adopt a 2nd profit sharing plan that would be cross tested for 2012. The 401k and SH contributions would be made in the existing plan, and they could make a ps contribution in the new plan. Am I missing anything that would prevent me from doing that?

Can a participant in a US company designate a foreign beneficiary on their 401(k) account? the foreign beneficiary is a relative, the participant has no relatives in the US.

If a Plan allows participants to direct their investments on their deferrals, but the Plan trustee retains the power to direct the employer contributions (which are valued annually), is there any authority that states the quarterly statement should include the portion of the participant's account balance that is not directed by the participant?