Potential plan has 28 employees. Sole owner has daughter/son working. They are the only 3 HCE's. Fails ADP. When using Top Paid Election, the son/daughter are excluded correct, unless their income falls in Top 20%?

We have an ESOP that covers a Canadian employee. She is on maternity leave. She did not work 1,000 hours. The plan requires one to credit someone on maternity leave with enough hours to avoid a break in service. But you aren't required to give enough hours to put her over 1,000 hours if she did not work it. But they are telling us Canadian law requires us to give her a contribution.

What do you do when another countries laws appear to require you to violate the terms of the plan?

Anyone ever work with them? Pros Cons?? I have a plan that is being courted by an advisor that wants to use Alerus Open Architecture. This is a small plan, 25 participants 1 mil in assets, 401(k) participant directed. I'm proposing one of the Insurance Companies. Feel free to email me privately if you would rather. I have no background with them and am very hesitant. Also, seems they look fully bundled and I"m a TPA so not sure if the advisor is trying to oust me.

Can a plan be amended to remove a lump sum distribution right for participants who have termianted employment but are not currently entitled to commence distributions (for example, until the following year) without violating the anti-cutback rule? The new distribution rules would comply with section 409(o).

Section 411(d)(6)© permits the modification of a plan's distribution options in a nondiscriminatory manner. The regulations are more specific and include the condition that the elimination of a lump sum benefit apply with respect to all participants.

Does this also allow benefit commencement to be delayed in accordance with 409(o)? Does it matter whether a participant has satisfied the other conditions for benefit commencement, such as having terminated employment?

What is everyone doing for the notice? Attaching a separate fund sheet for each target date fund? I know some providers have one sheet that cover all the target date funds, but not all do so.

Bob works for Company A who in turn performs a management function for Company B. As a result, both companies are related. Bob is paid by Company A and participates in Company B's retirement plan.

Effective 7/1/12, the management function ceases and both companies are no longer related and Bob is no longer a participant under Company B's retirement plan. Bob wants to take a distribution from Company B. Ideally he wants to roll the assets to Company A who has a retirement plan.

IT would seem that according to Notice 2002-4 (part III) as well as GSM 39824, he is considered to have severance of employment due to the change in the controlled group status. My confusion relates to another "requirement" which is that no assets of the plan follow the participant by being transferred to a plan maintained by the participant's employer.... That would seem to indicate that he can take a distribution and roll his account to any IRA, just not the Company A retirement plan....thoughts? Let me now if more information is needed.

Bob works for Company A who in turn performs a management function for Company B. As a result, both companies are related. Bob is paid by Company A and participates in Company B's retirement plan.

Effective 7/1/12, the management function ceases and both companies are no longer related and Bob is no longer a participant under Company B's retirement plan. Bob wants to take a distribution from Company B. Ideally he wants to roll the assets to Company A who has a retirement plan.

IT would seem that according to Notice 2002-4 (part III) as well as GSM 39824, he is considered to have severance of employment due to the change in the controlled group status. My confusion relates to another "requirement" which is that no assets of the plan follow the participant by being transferred to a plan maintained by the participant's employer.... That would seem to indicate that he can take a distribution and roll his account to any IRA, just not the Company A retirement plan....thoughts? Let me now if more information is needed.

A church's HDHP plan has a $5,000 deductible. They have one employee, the pastor, who is technically self-employed as pastor's generally are, but self-employed for tax withholding purposes.

The employer (the church) has adopted an HSA plan and has decided to contribute $5,000 toward that in 2013. Is this allowable? If so, how/when should the $5,000 be deposited into the HSA account? Can the employer deposit the entire $5,000 in January 2013? If they do, what issues could arise?

I'm looking at a CB plan for my client and we have some potential RMDs, and it appears that they will want to take annuities. I'd like to make sure that I am thinking of the initial and annual recalculations correctly.

They also do not issue SOB Notices, so I'd like to confirm what I suspect is the calculation methodology going forward.

RMDs

Accrued Benefit is of course defined as the SLA of the AE of the account balance (subject to prior plan min benefits). Plan has frozen service accruals.

I believe what I want to do for the initial RMD is calculate the SLA as of the 12/31 prior to the Req Beginning Date, based on age and assumptions applicable at that date, and assume that that would be my initial RMD. Let's call the 12/31 balance A and the SLA that X. I would grow A with investment credits for the year, back out 9 months of payments of X (without interest), and annuitize using age and assumptions applicable at the 12/31 after the initial RMD began; let's call this Y. Y can be less than X. I don't believe I have to actuarially increase X to age at Y and compare to Y, like I may have to in a late retirement calculation as described below. This iterative process would go on annually. If ee takes a lump sum at initial RBD, they would simply get their Account Balance.

Late Retirement without SOB Notices

Client also has not made it a practice of issuing SOB Notices to those coming up on NRA. I think here I would calculate ABs at NRD and subsequent EOYs until commencement. At the 12/31 after NRA, I would compare the AE of the AB calcd at NRA to the AB at 12/31 after NRA and take the greater of the two as the AB as of 12/31 after age 65. Then at the following 12/31, again compare the AE of the winning AB from the prior 12/31 to the AB at the current 12/31 and store for future use. (I would use age and assumptions applicable at each date for these calculations.) Continue this iterative process until commencement and/or RBD.

Any thoughts on these questions would be greatly appreciated.

Thanks much

Forgive me for placing this post in this forum but the Relius forum doesn't seem to get as much activity. I can make a reasonable argument that it belongs here anyway so here goes:

We use Relius for daily val. Now that there are such stringent requirements for electronic delivery of 404a5 notices, to fully comply with the letter of the law, it would be easiest to mail statements. Dealing with electronic delivery to terminated participants is very difficult. So I am looking for a printing company where I can batch send my Relius statements and they can print, fold, stuff, stamp and mail out. There must be other recordkeepers that do this. Potentially, I can use this for my annual 404a5, QDIAs, SH notices, etc. as well.

Does anyone have any ideas? Thanks.

I'm working with a takeover client whose understanding of their existing plan provisions is consistently proving to be incorrect. Among other things, the HR director told us that it was not a safe harbor plan, and that the owner could not defer. The document clearly shows that it has a basic safe harbor match. Further discussion with the HR director brought up the fact that, for tax purposes, the business owner is a resident of Puerto Rico. He maintains homes in both Kansas and Puerto Rico and works part of the year from each location, but his primary residence is Puerto Rico.

I know there are a number of different rules about Puerto Rico plans, but I'm having a hard time finding information about US plans covering Puerto Rico residents. Other than the lower deferral limit, can anyone point me to information that I need for this situation? Does the work done while in Puerto Rico need to be treated differently than the work in Kansas, or is it strictly based on where the participant files their taxes?

Notice 2012-58 describes safe harbor methods for determining if variable hour and seasonal employees worked an average of 30 hours per week or 130 hours per month, to meet the requirement of no more than a 90 day waiting period for plan years starting on or after 1/1/2014.

I'm wondering if an employer with a calendar year plan year can use a Standard Measurement Period and Administration Period for ongoing employees that doesn't end on 12/31/2013. Are they able to use a Standard Measurement Period that starts in 2013 and ends in 2014?

I have been working for a company for the past 7 years. I am considered part-time because I only work 30 hours a week. I knew the company had a 401K Plan but didn't think I could participate because I was never notified by my employer that I was eligible and never invited to attend 401K Plan Meetings. Quite the opposite, I was instructed to answer phones while the rest of the employees went to the meeting. It wasn't until a few days ago that the Financial Advisor came into the office to meet with newly eligible employees that I thought to ask what the eligibility requirements were. To my surprise I was told the only criteria was to have completed 6 months of employment. There was absolutely no hourly requirement. I was devasted at the realization that I had lost thousands of dollars in savings, tax advantages, investment increases, and company matching funds.

I notified the President of my company, via e-mail, that I was extremely disappointed in having been deprived the opportunity to participate and that I was never informed of my eligibility. He replied that he was sorry for the misunderstanding and was consulting with the plan advisor and would get back to me. He advised that I fill out the enrollment form and hand them into HR as soon as practical.

My questions are....

1. What correction is my employer required to make?

2. Should I wait for my employer to make this correction before I enroll in the 401K Plan as he has directed me do?

3. Am I required to report this violation to the Dept. of Labor?

4. Should I consult with an attorney before I meet with my employer?

Thank you for any help or guidance you can provide.

I need to do a document correction on a plan subject to 409A. The problem is there are some noncompliant definitions, including a definition of Change in Control. For simplicity, we'll pretend that is the only error.

I can correct by amending the definition of Change in Control. So long as a Change in Control under the bad definition does not occur and trigger payment within a certain time period thereafter, I'm golden.

Here's the rub: The employee has already been paid out. But he hasn't been paid out under Change in Control, so there is no issue there.

I don't see anything in the correction procedures that says the employee can't be paid out already. The correction seems to comply with the requirements -- the definition will be changed and no Change in Control under the bad definition will trigger payment. But does this violate some other rule or the "spirit" of the correction in some way?

Is it too late to correct?

I have a client who makes health care contributions on behalf of its employees to the City of San Francisco under the City's health care ordinance. The contributions are allocated by the City for each employee to either Healthy San Francisco or a medical reimbursement account, depending on the employee's eligibility for Healthy San Francisco. The contributions for the fourth quarter 2012 are not due until January of 2013 (and the employer won't have sufficient data to determine the contribution until early January).

I am trying to determine whether the employer must include these contributions as part of the new W-2 PPACA reporting requirement. Also, if these contributions are reportable, are the 4th quarter contributions reported on the 2012 W-2 since the employer will not actually pay the contributions until January 2013 (and will not have calculated the contribution amount until January 2013)?

My initial thought is that these contributions would have to be included under Q&A 13 of Notice 2012-9 since the definition of GHP includes a plan of (or contributions made by) an employer for the purpose of providing health care. However, there is an exemption under Notice 2012-9 for coverage under a health reimbursement account (which may eliminate any need to require reporting for employees in the medical reimbursement account option). Also, all the IRS examples address the cost of coverage for each period during the calendar year (and there are no references to when the premium or amount was actually paid).

Has anyone dealt with these issues? Thanks

An employer wants to pay ee portion of employer sponsored insurance premiums for one month. Can this be considered to be a non elective employer contribution and therefore not taxable income?

I've got a client with a C Corp ESOP that is struggling. The Plan holds Preferred Stock and very little cash. Any sizeable distributions over the last couple of years have involved the participants Putting the stock back to the Company for a 5-year note.

Printed on the back of the stock certificate is that the price per share will be the most recently audited fully diluted book value at the prior November 30.

The certified appraised value is just over $8 but the book value is negative. The client thinks that participants Putting the stock to the Company at this point get nothing because the book value is negative.

That can't be right can it?

When a foreign employer sponsors a 401(k) plan for U.S. based employees, what address and EIN are used when completing the "Employer" or "Sponsor" sections of the necessary paperwork (i.e. adoption agreement, custodial agreement, disclosure statement, SPD, W-9, etc.)? The foreign headquarters address? Or the U.S. branch address and EIN?

A plan accepted a rolled over loan note from an unrelated plan. The participant wants to take another loan. Do you take into consideration the rolled over loan note when determining the maximum loan amount the participant can take?

IRC 72(p)(2) says ... (A) GENERAL RULE. --Paragraph (1) shall not apply to any loan to the extent that such loan "(when added to the outstanding balance of all other loans from such plan" whether made on, before, or after August 13, 1982), does not exceed the lesser of –

If you take "from such plan" literally, you could make a case I doesn't since the original loan was modeled in a different employer's plan.

Has anyone had any experince with this? Do you have any cites?

Thanks.

Is a multiple employer 401k plan eligible to maintain a pre approved plan doc? Or are they required to maintain an individually drafted document? The document provider is asking our client to complete a Form 8717 and Form 5300 to request a determination letter. Is this necessary or can we adopt a pre approved plan? The current doc is individually drafted and has been for many years. If we can avoid it then we should. There are no provisions in the current doc that a pre approved plan would not allow. It is just the multiple employer issue (not an open mep, these are two related employers).

Thanks

CPC, ERPA