We amended a plan last year to add a participating employer based on the plan sponsor's representation that it was acquiring the participating employer. It is set up as a cross tested allocation with each employer as an allocation group. We now have been told that both companies are part of a much larger controlled group that includes at least one other plan. (Apparently this was also true in 2011 and the other company's TPA did some sort of combined testing, but didn't feel the need to share it. I have no idea where they got the data.)

I've never done a cross tested allocation that included only some of the companies in the a controlled group before. Do I have to include the other companies' employees in the 401(a)(4) test as zeros, or just in the coverage test?

Can a plan that currently allows for immediate distribution (upon termination of employment) be amended to allow distributions only in the plan year following termination of employment without violating the anti-cutback?

I think you'll be very impressed with the way the message boards now work on your smartphone's web browser due to the recent software upgrade.

The software running the message boards will detect that you're using a smartphone to view the messages, so it will reformat and display the messages in a very user-friendly way for your small smartphone screen.

You can log in via smartphone the same way you'd log in with your office PC (with your email address or username, and your password). Then the New Content button will work on your smartphone just as if you were sitting down at your office PC and you clicked on View New Content link! In effect your smartphone knows the date and time you last visited the message boards on your office PC.

The URL of the message boards is unchanged. Just enter it manually into your smartphone's web browser:

http://benefitslink.com/boards

Tip: bookmark that URL on your smartphone, once it opens the page.

Or, once you've clicked the New Content button, you could bookmark the resulting page, which means you'll have one-click smartphone access to newly added content. Kewl.

I have small 401(k) plan with 1 HCE deferring and 2 NHCEs. The plan initially failed both ADP & ACP, but passed ADP when excess deferrals recharacterized as Catch-up (over 50). The calculated reduction for Match is $470.21.

Question: Per plan formula, the sponsor still owes HCE $100 additional ER match. Can they skip that and reduce the match already paid by $370.21 (move to cash account), or must they still contribution the $100 to fulfill the match required by formula, then reduce by $470.21?

Wondering if anyone can point me to something concrete here. It comes up occasionally that I've got HCE's that wind up in each other's group because of the disparity between the EBAR and MVAR.

Is there anything out there or does anyone have negative experience that this accrual rate "straddle" should be avoided or somehow is abusing a4 testing?

Comments are appreciated.

Hey everyone, I'm new here. I was wondering how much you, or your clients, pay for plan audits. Is it worth it to go with a big firm, or is a small firm that specializes in 401ks or DBs usually good enough? I'm inquiring about limited-scope (possibly full scope too) 401ks and DBs. Does the fee vary much based on the number of participants? If location makes a difference, I'm located in California. Also, could the auditor be from another state, thereby giving me a larger pool to work with?

Anyone else receiving new spam sales messages? It seems to have started with the new version of the message boards. This is a great Forum for benefits people! I hope you can filter out these unwanted messages. Thanks!

Hi all-

I have read articles, blogs, posts until my head is spinning.

Here's my situation.
Husband participates in HDHP HSA through his employer; single coverage. Contributions are via payroll deductions his employer makes a contribution as well.
I participate in non-HDHP plan, single coverage through my employer and just signed up for an FSA for 2013. (not a limited FSA). F

From what I'm reading,
I should not have signed up for the FSA is that correct? Even though there have not been any deductions from my paycheck for the FSA; my employer only allows one time annual enrollment in the FSA.

My husband has already had a HSA contribution deducted from his paycheck in 2013 for $100 his employer contributed $50 for a total of $150.

Do I have him stop the HSA deductions until we zero out the FSA? What about the $150 that was already deducted/contributed in his HSA? Also, once we spend the $1200 I am contributing to the FSA; then we
can resume the payroll deductions to his HSA correct? Sorry, for all the questions...what a mess!

Thanks in advance for any and all advice!!

We have a Profit Sharing plan that the sponsor wanted to terminate in 2012. All termination paperwork is complete and all remaining participants (about 20) have been paid out. Total distributions approximately $773,000

All money had been moved into one checking account. I received confirmation from the plan administrator that all final checks as well as the taxes withheld were cashed as of 12/31/12 (PYE) EXCEPT for one IRA rollover in the amount of $20,000.

Question: We end 2012 with a checking balance of $20,000 and an outstanding check for $20,000. Can we consider the plan terminated in 2012 since the net trust balance is $0, or must we carry it over into 2013 since technically the trust still had some assets?

Plan Sponsor is considering terminating their Plan. Their used to be three owners. One terminated 9/30/2011 and they have not been able to pay him out the lump sum due to the 110% restriction on HCEs. They are considering terminating the Plan. Normally how it would work in an underfunded status I believe is they either fund the shortfall or they pay out all the NHCEs and then the owners split pro-rata what’s left in the Plan (essentially taking a haircut on their benefits). Does the fact that one of the former owners is no longer an active employee change that? Would the former owner still share in the shortfall, along with the two owners who are left? Or would he be lumped in with the other employees who get paid out first. FYI, this is not a PBGC Plan.

A DB plan with a calendar plan year terminates on January 1, 2012, with a contribution during 2012 and final distribution during 2012.

Does this plan need a valuation for SB filing purposes?

Question if my client is using compensation from the "date of entry" when calculating they company's 2012 Safe Harbor Contribution. I thought that Safe Harbor contributions followed elective deferrals when it came to Pre-Entry Date Compensation, but wanted I wanted to check?

Can an employee choose to opt-out of receiving Short-term Disability benefits because their immigration lawyer suggested it? The employee would take unpaid leave for giving birth to a child. What are the potential liabilities for the employer?

Private company sponsoring a participant-directed 401(k) plan with employer match and profit sharing wants to offer company stock as an investment alternative to all participants. Participants will be permitted to purchase employer stock with its current matching and profit sharing dollars in the plan. Company will need an annual valuation, document amended, etc. Any issues with doing this with private companies...outside the risk of litigation related to stock drop, etc? Administratively, how does this work? For example, Participant A wants to move $20,000 of profit sharing dollars from current mutual fund investment to employer stock. The $20,000 is distributed to the company and the participant now has X number of shares? I could see this resulting in cash flow concerns if years down the road if a large number of participants with employer stock terminated employment and were looking to cash out. What type of restriction on distribution is typically seen?

A 401(k) allows for participant loans, which are repaid through payroll deduction. An employee who is out on disability leave and having financial difficulties would like to take a participant loan.

The loan (at least initially) cannot be paid via payroll deduction since they aren't working and it's possible that the individual won't return to active employment.

The Plan's loan program includes language indicating that the Plan Administrator should check the creditworthiness and ability to repay in determining whether to approve a loan. This might lead the Plan Administrator to reject the loan request. But, we don't want a situation where the Plan is not making loans available on a "reasonably equivalent basis" and possiblity discriminating against an otherwise eligible employee because they are out on disability.

Are there any loan rules that would lead one to lean one way or the other in this situation?

Thanks.

I have read articles that say an employer (fiduciary) should get proposals from other firms or use a bench marking service to determine if the fees disclosed under 408(b)(2) from their current provider are 'reasonable'.

What I have not found is a discussion of how many proposals or how often the proposals should be obtained so t hat the fiduciary should feel they have done their due diligence and therefore be protected.

Is there any direct reference in the DOL promulgations as to quantity and timing? Is there any kind of concensus in the literature as to quantity and timing? Or is it being ignored.

Thanks all to your insights.

My cape doesn't flutter any more.

Can we no longer use .gifs for our avatars?

Hi Dave,

When I click on the 'like' button for a post, I get the following message ( evem after the first attempt at 'liking' a post:

Suppose you have a one participant plan that has a plan year that begins 9/1/2012 and ends 8/31/2013.

If the plan terminates 2/28/13, the participant has 10 years of participation, maximum average salary and is age 65, would his 415 dollar limit be $17,083?

Thanks.

How does a recipient qualified 401(k) plan report (and thereby comply with TR §1.402A-2 Q&A-3) receipt of a roll-in to its RothK accounts from a new participant's previous employer's RothK account where the rollin was not directly transferred but rather first paid to the participant and then paid in?

I didn't find any clues in the 2012 instructions to Forms 1099-R or 5498. Did I miss it? Is it some other form?