Can anyone shed light on whether it is permissible under the McNamara-O'Hara Service Contract Act for an employer (the contractor) to discharge his fringe benefit payment obligation through making unvested matching contributions to his 401(k) plan, or whether the fact that the matching contributions are not immediately vested is something that the DOL will not approve. The 401(k) plan has 3-year cliff vesting for the match which satisfies ERISA, I'm just not sure about whether it meets SCA requirements.

The DOL WHD Field Operations Handbook dated 10/25/2010 on the WHD website appears to indicate that as long as the 401(k) plan complies with ERISA vesting requirements, contributions made to it will satisfy the SCA fringe benefit obligation, but other posts I have read here made me question whether that is accurate.

I've had a participant death over the weekend where the participant was age 65 and his surviving spouse is age 76. Normally she would have the 5 year window in which to decide how to handle the distribution, but I'm wondering if an immediate RMD to her must be processed before I do anything else. And

if she doesn't request his vested account balance immediately would I continue to process them annually until distribution has been completed?

Hello,

I'm having a hard time verifying my thinking on this subject. I found a good link one time but I'm having a problem finding it again. Maybe someone can point me in the right direction.

It is my belief the make up payments for a retroactive annuity start date are not rollover eligible. The plan I'm working on does not pay lump sums and gives an interest adjustement for the make up payments per RASD rules. I don't believe the make up payments should be allow to be rolled over.

The trustee/administrator is pointing to 1.402© as justification for the amount being roll over eligible but when I read it I just see it as it falls under the special exemption from not violating the equal payment rule.

Basically employees are going missing/not electing at NRA and then being able to elect rollovers which I just don't see as being permissable.

Any help is appreciated.

Client has come to us. The client had a SEP and then dropped the SEP and added a Profit Sharing Plan.

Has not filed any Form 5500s. They did not know they had to (their words). This I can fix using DFVC Program.

There are also a number of missed RMD payments. How can this be corrected without penalty to affected participant?

A 403(b) plan is changing from one approved vendor to another. Does the plan administrator have an obligation to notify terminated participants who have accounts or annuities at the old vendor that the plan's approved vendor is changing? The terminated participants are no longer receiving contributions on their behalf. On one hand, the individuals at issue are participants in the plan and likely have the same right to receive notifications regarding the plan as active participants. In addition, if the plan allows for contract exchanges, it seems the terminated participants would have a right to know about the switch so they can decide whether to transfer their contract to the new vendor. However, if the plan does not allow for contract exchanges and the terminated participants do not contribute to the plan, it seems the change does not affect the terminated participants and perhaps notice is not necessary.

Just completing my personal first gov't plan year-end. I know there's no 5500 required, but what about an SAR? Since that's a summary of the information on the 5500, my gut says to not prepare one, but the overly-sensitive-to-ten-million-disclosure-notices side of me shudders at the thought that these participants aren't getting anything that summarizes the plan in whole (and worse, it's a pooled profit sharing plan). Who is right - my gut or my paranoia? Thanks.

This post relates to counting hours of service.

DOL Reg 2530.200b-3©(2) provides that: "A plan may use different methods of crediting service, including equivalencies permitted under paragraphs (d), (e) and (f) of this section and the method of crediting service under the general rule set forth in §2530.200b-2(a), for different classifications of employees covered under the plan or for different purposes, provided that such classifications are reasonable and are consistently applied."

I've seen this typically applied by plans that use actual hours for hourly employees and an equivalency for exempt employees. I have not seen this applied to use multiple equivalencies for different groups of employees.

Example: A plan applies the following:

Hourly employees - actual hours

Exempt employees paid on semi-monthly basis - 95 hours per pay period equivalency

Exempt employees paid on monthly basis - 190 hours per month equivalency

Does anyone have any experience with this or comments?

Thanks

Here is my scenario:

Company A contracts with Company B as their EGTRRA document provider. Company A provides a partially completed Adoption Agreement to Client X. Client X completes the Adoption Agreement, signs it and returns it to Company A. Company A confirms that they did receive a signed copy of the Adoption Agreement.

Here is the kicker: In the instruction letter to Client X, Company A tells the client to send the signed Adoption Agreement directly to Company B who will then generate the SPD. Well, it appears that Company B never received a copy of the signed Adoption Agreement so no SPD is generated.

Client has come to us for assistance. Does the client have a valid EGTRRA document or not?

I am still trying to find out who Client X paid to provide the document? The client is a bit 'green' and any time I ask a question, they get very nervous.....

Any suggestions? Thanks.

Hello everyone!

I managed to save the $5,000. for my 2013 roth contribution a little early this year, and will be able to deposit the whole sum in January of 2013. Are there any disadvantages to doing it this way? Should I spread the $5,000. over the entire month of January with seperate transactions on different days, or is it better to do it in one lump sum? Does it make a difference either way? In the past I have always made my contributions on a monthly basis, as I never had the entire amount at one time. It is a target retirement fund if that makes a difference. Any feedback would be greatly appreciated. Thanks, Gracey

If there is a loss, how is this taxced? Do they get a loss to offset their regular ordinary taxable income (i.e., the direct opposite effect of positive income on their taxes?) Any web-sites that discuss would be very much appreciated.

Single Employer has two 401(k) plans (for good reasons). Wants to set up a master trust (for a good reason), and understands potential recordkeeping complications. From a qualification perspective, does each plan need to have its own trust that then "funnels" everything into a master trust (so that there are three trusts), or can there simply be a single trust for both plans?

Brain weary after a week at ASPPA and now trying to find the bottom of my desk, so please forgive the easy question, but I don't see these too often:

Company A has a 401(k) plan and Company B has a 401(k) plan. They are unrelated companies. They form a new Company C and want to establish a new plan and merge the other two plans into the new C plan. A was a safe harbor (k) plan and B was a (k) plan with a match. When we create the C plan (which will be a safe harbor (k) plan), do I need to include matching provisions in the C plan (although they won't be used) to "house" the matching contribution money that will come into the plan via the merger??? [Expanding on the question --- with the merger, it is my understanding that all monies transferred in to plan C retain their money source (401(k), match, SHNEC, rollover, etc.]

Thanks.

We are a TPA firm and over the last couple of days we have received over 15 IRS Proposed Penalty Notices on 5500 filings from different clients. All CP 213N notices and the date of the notice is 10/29/2012. All clients have filed an extension and all clients had filed timely (before 10/15) - no problems there. We know from previous IRS "notice glitch" experience that a faxed response is necessary to stop the notices, but I was curious if others have had a similar experience. If so, any insight on if the IRS has fixed the issue or will our staff have unnecessary task responses for the next week or so?

Wonder how many more of these we will receive..........

A friend of mine works for a small doctor's office and has been employed there for 4 years. In lieu of health insurance coverage under their plan, employees may take a stipend. My friend became aware of the stipend recently when the office manager informed her of it after auditing the office's books. My friend never elected health insurance, never paid a premium, but does not recal ever formally decling it via written notice. Of course, she has never received the stipend, either. The office manager cannot find her election form declining coverage.

Question: Should she be entitled to back payment of the stipend?

I have a client who is very concerned that public display of a company EIN (via EFAST2, BrightScope, or otherwise) is an invitation to possible fraud, hacking and other indentity theft at the corporate level. Also of concern, especially for very small plans, is that the plan balance essentially publicizes the account value of the owner.

I have not personally heard of any adverse situation arising out of the public information available on Form 5500. However, I wanted to ask this community if clients have ever expressed concern over the public information on Form 5500, or if any adverse situation has occurred based on the public information reported on Form 5500.

Additionally, has anyone ever heard any governmental agency express any concern over the public information on Form 5500? (my client believes that a company EIN should be protected the same way we protect SS#'s)

Assuming that nobody has expressed any concern to you over this information, I would ask "why not?" Is name, address, phone and EIN insufficient to do any harm? Is the EIN of a company available elsewhere and readily accessible through other sources?

I am certain if company EIN's were subject to the same identity theft issues that are associated with SS#'s, we would have heard about it by now. Obviously, there must be a difference between EIN's and SS#'s. If you know what those differences are, please let me know so that I can assure my client that Form 5500 is not an invitation to identity theft.

Trying to clarify the use of QMAC in the ADP Test.

Here is the situation:

ADP HCE=7.0 NHCE=4.10

ACP HCE=2.0 NHCE=0.9 (this is a QMAC)

Can I reverse borrow/shift the .9% of the NHCE Match to the ADP test? Result would be NHCE average of 5.0..So my ADP test would pass.

Then "Shfit" 2.0 from both the HCEs & NHCEs over to the ACP side so that would pass at 4/2?

Something seems fishy. I didn't think you could "reverse borrow" if it cause an ACP failure? Something also tells me bring the NHCE acp down to 0.0% is problem as well.

Any thought would be greatly appreciated!

When determining whether a plan covers only a select group of managment or highly compensated employees, can we count (i) everyone in the controlled group and affiliated service group or (ii) only those who work for the specific employer?

Hello.

I recently withdrew my money from my companys' 401k plan. I was vested as i had been there 25yrs. However, i want to say that i still work at the firm - but only part time.

Left behind was a Qnec of $133. I was not allowed to transfer that to my IRA.

I noticed that in 3months - there has already been 12dollars removed from the QNEC in fees. I annuallized that at approximately a 40% wouild be removed for the entire year. Seemed rather exhoribitant - so i asked the administrator to find out why i can't have the QNEC and why i have to lose the fees if it was mine.

The answer was that 'outside' plan administrator stated that a QNEC could not be distributed to someone who is still working at the firm. The only time it can be distributed is if that person is terminated.

Does anyone know if this is correct - since - doesn't seem quite fair to the participant that worked 25yrs that all their vested money should go into fees of the bookkeeper.

I am thinking also, of all those other employees, that might have QNEC fees...... thanks for listening..

Little Plan merges into Big Plan as of 9/30/2011. Question is, do we need to send the SAR to the participants of little Plan, who, as of 9/30/2011, have no money left in Little Plan (it was all transferred to Big Plan).

If Little Plan was TERMINATED, I typically would not send anyone an SAR, for the same reason that I would not send SAR to a participant who closed their account during the plan year. But in this situaiton, Little Plan sort of exists within Big Plan because Little Plan was MERGED INTO Big Plan. So for that reason I struggle not sending the SAR to the Little Plan Participants.

Please let me know what you think!

A large 401k plan pays one group of employees weekly and another group is paid semi-monthly. They only submit 401k deferrals and loan payments on a monthly basis, however. The TPA involved said the plan was fine to do this since the employer says they're segregating the participant assets from the general assets of the employer. Their auditors have not asked them to make up earnings on the late contributions.

Since the employer is stil holding the assets, it is my understanding that this would constitute a prohibited transaction because the assets are not invested in the participant accounts within the plan. Who is correct? Me or the TPA?