I was reminded of an incident some thirty-five years ago where an actuarial student confronted with doing a benefit calculation for a salaried union employee asked how to determine the hourly rate. I advised to look to the plan document and if silent, look to past benefit calculations for a precedent, and if there were none, we would contact the Plan Administrator about adopting an administrative procedure or amending the plan. Meanwhile, I advised, simply divide the annual pay by the total number of hours.

The actuarial student returned a bit later and had taken the annual pay and divided it by 365 and then by 24 hours. "How many union employees do you know," I asked, "who work 24 hours a day year round?" The student replied, "I don't know any union employees." Shortly thereafter the student left the profession to pursue other interests.

Let's say you pair a 403(b) Plan with a 401k covering just the HCE's. Let's say there are two HCE's, one of whom is an office making more than the officer threshhold, and is therefore a key-employee.

Assume further that more than 60% of the assets in the 401k plan are allocated to the key employee. Is there any opportunity to aggregate the 401k and the 403b?

I attended the advanced pension conference in Chicago and learned during one of the sessions that a plan that holds certain unusual assets, such as collectibles, cannot file a 5500-SF, but must file a Form 5500 instead.

Does this apply to a plan that files a 5500-EZ?

Thank you.

Large non-profit selected a corporate trustee for their 401(k) plan at a time when the plan was bundled with the trustee's record keeping and compliance services. In 2008, they unbundled it, moving to a different TPA, but retaining the record keeping services of this provider. In early 2010 the restated document, drafted by the new TPA, was signed by the plan sponsor and sent to the trustee for signature.

Fast forward to this year. Plan sponsor decides to amend the plan, signs the amendment and forwards that to the trustee to sign. At that point it is discovered that the trustee never signed the restated document due to objections to some of the language. Both the TPA and the record keeper have had changes in personnel, making it difficult to determine exactly what happened (or didn't) in 2010. I work for the TPA and have been able to locate the message sending the document to the trustee, but nothing after that.

Can a restated document that was signed by the employer but never signed by the trustee be considered a timely restatement? Are there any possibilities for a self-correction at this point?

EBSA audit happened in 2011. EBSA only asked for 3 years of late contributions but there were 5 additional years going back of delinquent employee contributions which were disclosed in Schedule H, as well as completely disclosed upon EBSA audit. EBSA auditor did not enforce the additional 5 years. Plan Sponsor repaid lost earnings and plan received a closing letter with no further enforcement.

For 2011 Form 5500, I realize you will have to report all 8 years of delinquent contributions but you get to attach a schedule that shows at least 3 years were corrected (outside of VFCP).

Does the 5 years of delinquent contributions have to continue to be reported as uncorrected in 2011 and beyond, until you actually correct it? That seems like a harsh result if even EBSA doesn't enforce this in an actual audit of a plan. Are there any statute of limitations issues? Some input on this would be appreciated. Thank you.

BL

A plan was submitted for a favorable determination letter (not part of a VCP submission). The reviewing agent discovered that an interim amendment was missing from the submission and suggested that we would have to go to closing agreement if the amendment is not located. I believe the "fee" for the failure to adopt this interim amendment (which for the record is literally a 4 sentence amendment) would be based on Section 14.04 of Rev. Proc 2008-50. Has anyone ever been through this before? Are they really going to impose this ridiculously high fee or are they generally willing to negotiate based on mitigating factors?

Is it even possible? Would it even be a program governed by ERISA? I understand there are potential tax issues, but I'm trying to figure this all out (seems a little odd to me, but an employer wanted to know the pros/cons, but I can't seem to find much out there on this topic...)

Let's say an employer mails an automatic rollover notice by first class mail to a participant's last known address. The notice is not returned. Can the employer safely assume the employee is non-responsive, and therefore, rollover the benefit to an IRA? Or, should the employer take additional steps ("due dilligence") to prove that the participant received the notice?

If additional steps must be taken to prove that a participant is NOT lost, what would you suggest? Certified Mail would provide proof only if you can confirm that the Participant signed the receipt. What if the Participant refuses to sign the receipt; how do you document that? Should you use a locator service to confirm you wrote to the correct address?

I would suggest that due dilligence follow-up is required only if there evidence that the Participant is lost. That is, only if a first class letter is returned.

Thanks

There is pension code of 2T in the List of Plan Characteristics. The instructions state to use this code if the plan is a total or partial participant-directed plan that uses a default investment account for participants who fail to direct assets in their account. My question is this: Do you only use code 2T if it is a qualified default investment alternative where the employer must provide notice to participants?

Thank you,

Annette Leerhoff

I think I know the answer. But I hope I am missing something. 401(k) Plan was "cancelled last summer. The last money was rolled to an IRA on 2-3-12.

Is there any way to start a Safe Harbor 401(k) prior to 2-4-13?

We already know that non-U.S. property should not be in the profit sharing plan and we know it needs to come out. Of course, the plan could sell the property to someone who is not a party-in-interest at market value, which would avoid the prohibited transaction penalty. However, if there isn't a buyer, we're thinking that another option might be to distribute the property to the participant (he is over age 70 1/2) and have him pay income tax on the full value as another option to avoid a P.T. Has anybody run into this before?

Pardon my ignorance, as I'm not a DB person. I'm trying find if there is a relatively straight answer (hah!) to this:

For plan terminations, one would normally use 417 rates, yes? If so, under MAP-21, must you still use 417 rates, or are you allowed to use the "annuity substitution" rates, and therefore possibly reduce the lump-sum payout? I'm under the impression that it is the former rather than the latter.

Thanks!

P.S. - as I look over my question, I think perhaps there is a defference for plan terminations and for normal plan FUNDING. So, for example, when calculating funding for lump sums for a non-terminating plan, you can use annuity substitution rates, even though the lump sum benefit itself does not change? Maybe I'm just confusing the issue more...

I know this discussion has come up on the Boards before, but I cannot seem to find it.

A DB plan has a participant who will need to take an RMD by April 2013. We have contacted the participant but he absolutely refuses to cooperate with the plan. He will not complete paperwork or return calls.

Before wasting half the day researching this, can anyone give me a push in the right direction? How should this be handled by the plan?

Thanks in advance.

I know the DOL's rules on deposit timing and the safe harbor, etc. What are the ramifications / issues if the employer deposits the 401(k) contributions before the actual pay date for the employees?

John is over the age of 59.5 and is permitted to take a withdrawal.

He is still under employment and would like to cash out his account, keep it active and keep repaying back on his loan.

Can John cash it out completely and repay per payroll or must he keep enough in his account to cover the loan balance?

If you have a DCAP consisting of employer contributions (assuming not under Section 125 cafeteria plan), can a participant carry over the employer contributions to the following year?

What are the requirements for Insurance complanies having to supply Schedule A information? I am working on a large welfare benefit plan that has individual AFLAC policies for those employees who have elected for such coverage in addition to their Life and AD&D policies. I have Schedule A informaiton for the Life and AD&D policies but not for the AFLAC policies. Is this because the AFLAC policies are all individual policies and not a group policy? Should I expect any schedule A information for the AFLAC benefits?

Thank you.

Plan has fixed interest credit credited at year end. Assume it satisfy's reasonable rate. Pay credits frozen in past so not an issue.

Plan terminates partial year, say 6 months.

How is intrest credit done in final year?

Though date of termination?

Through date of pay out?

Through end of Plan year, even if a futre date?

We don't want a prohibited cutback issue to crop up.

Co. A will be purchased by Co. B in a stock sale on 10/01. We found out today.

Co. A has a 401(k) safe harbor plan. Can they freeze the plan at 09/30 & maintain safe harbor status for the short plan year due to the acquisition? The Co. A employees will become immediately eligible in Co. B’s non-safe harbor plan. Co. A’s plan won’t be terminated because of successor plan questions that just can't be resolved in less than a week; it will just merge into Co. B’s plan at some point.

I'm fairly confident that a safe harbor plan can be terminated mid-year & maintain safe harbor status if the termiantion is due to a business acquisiton, but I do not know that it can merely be frozen and retain safe harbor status.

Thanks in advance for any guidance.

Is a plan sponsor required to provide a copy of the plan document to a former participant upon request (i.e. participant is terminated and complete balance has been rolled out of the plan)?