I am completing the PBGC Schedule 501 for a Defined Benefit plan that has terminated. During the distribution process, we performed a diligent search for 19 missing participants whose lump sums were less than $5,000 and then automatically rolled over the money to Millennium Trust, providing them with the participant information, etc. Do I answer "No" to question 5 on Form 501 ("Were you able to locate all participants and beneficiaries?") If so, would I need to complete a Schedule MP for them? I don't know how I would do that, as the Schedule MP seems to assume that you either purchased annuities or are transferring the money to the PBGC.

Any help would be appreciated.

Thanks!

Plan A is safe harbor 401k with a match ( 100% vested safe harbor match).

Plan B is 401k non safe harbor with a match subject to vesting schedule

Plan A is going to merge into Plan B ( Employer B acquired Employer A).

Do the participants in Plan A have to maintain 100% vesting on all future match contributions to Plan B? Does the merger mean it is an amendment to the vesting schedule? OR can the Plan A safe harbor match contributions merge into their own source in Plan B ( remain 100% vested) and then the match for all participants ( Plan A and Plan B merged together) be subject to a vesting schedule?

Has anyone ever heard of first filing a late 5500 thru DFVC and then going back to the DOL to ask that the penalty be refunded if we can demonstrate reasonable cause for the late filing?

5500s were timely extended to 10/15; however due to some technical problems, 5500 was not filed until several days after the 15th.

Without considering a reasonable cause letter, we filed thru DFVC. (Small plan)

Thanks!

Hello all,

I have a strange situation wherein there was a master trust with a few different plans participating. However, all of the plans but one have pulled their assets and are using a different trust.

1) Is the trust still considered a "Master Trust" event though there is now only one plan? I am assuming it is, since that is how it was set up.

2) If so, is the master trust still required to file it's own 5500?

3) If not, what would be deemed to be the "end" of the master trust? The date all of the other plan's assets left the master trust, or the end of the current year?

Thanks!

I just recieved a call from a sole prop solo DB prospect who is having a really good year (900k) and wants to max his 2012 deduction. Unfortunately, he already contributed 50k for 2012 in 2012 to a solo(k) plan. Because 50k is over 6% of pay, he would be limited to 31% of pay on a combined basis. I can't think of a legitimate way to get that money out in a manner that won't get him in trouble so he can open a DB plan and get the full DB maximum.

Besides the discussion of "is he going for a one year deduction or is it indefinite" which I already had with him, is there anyway to make this work. I'm lost.

Does anyone recall the regulation that discusses discontinuing all contributions in a defined contribution plan, and essentially the dangers of not 100% vesting all account balances? Are there any IRS Q&A's on this subject?

Thank you

2011 ADP test looks like it's going to fail so the plan is amended before year-end (let's say 12/21/11) to impose a limit for 2011 on the deferrals of two named HCEs (let's say $15,000) so as to pass the ADP test and not have to make corrective distributions to other HCE's who are either not 50 or had already put in their $22,000 for 2011.

1) Any problems with this?

2) If not, any time constraint on when the amendment needs to be adopted?

Company A sponsors a 401(k) plan with 10,000 employees.

Company A is selling off a piece of their business to another company.

This is an asset sale.

Company B sponsors their own 401(k) plan.

Company B is buying a small portion of the assets of Company A.

As part of this transaction, approximately 500 employees of Company A will terminate employment with Company A and be rehired with Company B the next day.

Option 1 - The 500 employees are sent a distribution form and they can do what ever they want with their 401(k) at Company A.

There are no protected benefits, no crediting of prior service, everyone is a new hire at Company B.

Option 2 - Is there an option 2? Can these 500 employees be spun out of the Company A 401(k) plan and be transferred as a plan-to-plan transfer and not be given the opportunity to take a distribution?

Please let me know your thoughts in as much detail as possible.

Thank you for your assistance.

In the case of a multiemployer plan where every participant is a collectively bargained EE or alumni, there is no need for the nondiscrimination testing. While DB plans are subject to the annual benefits limitation, I believed that an ER could theoretically contribute as much as the ER wants so long as it meets the minimum funding rules and recognizes that overfunding a DB plan may result in excise taxes on the excess contributions. I can't think of any rule that says the ER is limited in the amount it can contribute on behalf of the EE based on the EE's compensation when you're dealing with a DB plan like this... In other words, if the ER wants to pay $500 in wages, but contribute $1000 to the plan, as long as the EE's AB is limited to $500, there's no problem. I feel like there is something missing here...

Without getting into too much detail, we have a handful of employees who we have over withheld premiums for their health insurance. We would like to cease deductions until the deduction bucket is empty (meaning we have spent or applied their deductions to the premium amount due) and restart the deductions at a future date (2 to 4 weeks). Is this allowable, or are we better off refunding as a taxable distribution the over withheld amounts?

ok, inherited a target benefit that goes way way back, with an unconventioanl formula. they want to go safe harbor target, so I know enough I have to create a theoretical serve. But if someone could translate what the govt indicates into something I can understand it would greatly help. (e.g. so if the benefit through the new formula is $1000, and the interest rate is 7.5% and the person has 9 years to retirement then....

(The theoretical reserve for the first plan year following any plan year in which the plan failed to satisfy this safe harbor is also zero. However, if the plan was adopted and in effect on September 19, 1991, and met the qualification requirements for target benefit plans under prior law, it may be allowed to take into account years of service for years in which this safe harbor was not met. In this case, the theoretical reserve as of the determination date for the last year before the plan satisfies this safe harbor is the excess, if any, of the actuarial present value of the stated benefit the employee is projected to have at NRA over the actuarial present value of future employee contributions required through NRA.)

Can someone confirm if this is true? A 401(k) plan that also has company match allows hardship withdrawals from any money type provided that the participant is 100% vested. At my previous employer, we operated such that if the hardship amount was withdrawn entirely from the employer money source, then the 6 month deferral suspension does not need to be enforced and the participant is allowed to continue deferring.

I tried researching this and can't seem to find any guidance which has me second guessing the process at my old company. Any insight is greatly appreciated!

Plan Year: 5/1/11 -4/30/12

Eligibility: 21/ 1 YOS

Entry: quarterly

Employee DOH 9/6/10 DOB 8/6/80

Met eligibility: 9/5/11

Terminated: 10/21/11

Employee would have entered the plan 11/1/11, plan doc states that rehired employees who met eligibility but did not become a participant enters the plan on the later of 1) entry date on which they would have entered the plan or 2) the date of their reemployment, which was 4/30/11 (last day of plan year). My software is wanting to give this participant a SH non elective allocation based on compensation earned during the 2011 plan year, but I think that is erroneous. The plan excludes comp before the participant actually enters the plan. Thoughts would be appreciated.

A client is thinking about investing in "pink sheet" stocks, which as far as I can tell are certain over-the-counter stocks that don't have to file with the SEC. Other than the normal Fiduciary prudence rules, etc., etc., is there any regulatory prohibition against a plan investing in these? I don't believe there is, but I never heard of them until today...

In the context of an asset purchase:

If the seller's prototype plan requires repayment of plan loans immediately upon a termination of employment, can loans be rolled over to the buyer's plan without amending the "immediate loan repayment" requirement (assuming both the seller and buyer plans otherwise permit in-kind rollovers)? It seems that this is done fairly regularly in the context of acquisitions, but I can't find anything indicating if the seller's plan has to be amended to eliminate the immediate loan repayment requirement in order for it to work.

It would be preferable not to have to amend since it would take the plan out of prototype status. However, without an amendment, how do you get around the immediate repayment obligation? Any thoughts would be much appreciated.

The plan sponsor had an employee making loan payments - For some reason, they stopped withdrawing loan payments from his check. (No one knows why)

At some point the loan was defaulted and deemed.

No notice was give to the employee. The employee apparently, never noticed that payments were no longer being deducted from his paycheck.

He is asking that the plan sposor reimburse him for the taxes and penalties he suffered at tax time.

I have never had such a request. Any thoughts or concerns????

Thanks!

Client was taking installment payments. He was age 80. He died this year. RMD regs says that the RMD for the year of death is calculated as of the participant lived until the end of the year. Is there any exception that would require the RMD for the year of death to be calculated using the spouse beneficiary’s single life expectancy ( and not the decedent's Joint life-expectancy of uniform table?

Thanks

Cass

A county is saying that if an employee has an employed spouse and the county employee is eligible for the spouse's employer's coverage, they are not eligible to be covered under the county plan.

Can you do that?

Next, the county is saying that they will reimburse the employee for the cost of covering the county employee under that employee's spouse's plan.

Then, they will reimburse the out of pocket expenses that the employee incurs if that expense would have been covered under the county plan.

Do you think that after 2014 they will still be able to offer that? There is no maximum stated in their benefits description, but it seems unlikey that this unlinked HRA would satisfy the no annual no lifetime max requirements that will be in effect.

Thanks.

Client has IRA. Only asset is investment in limited partnership. Owner turned 70 1/2 in 2011. Account balance reported on 12/31 (by K-1) $273,000. However, we have now learned that limited partnership is out of business; asset basically worthless. Custodian calculated RMD (to be distributed by 4/15/2012) based on 12/31 value from K-1. Obviously, there are no funds in the IRA to fund the RMD. Does 1.410(a)(9)-5, Q&A-1 solve this situation ("However, the required minimum distribution amount will never exceed the entire account balance on the date of the distribution")? Are there any reporting requirements we have to meet to verify the account balance on the date of distribution? Any guidance is greatly appreciated!

We have a governmental 403(b) plan that wishes to apply a three year eligibility requirement for employer contributions with an applicable vesting schedule? Is this permissible?