IRA owner's portfolio includes IRA ($100,000) and non-IRA ($200,000) funds. Investment advisor's fee (say 1% of the entire $300,000, or $3,000) is paid from IRA assets even though only $1,000 of the fee is allocable to IRA assets.

Any argument that this isn't a PT? Logically, it doesn't make sense to tax the entire IRA, because the owner could have taken a distribution of $2,000 (or perhaps more to cover tax withholding), and then paid the fee. Could the $2,000 be viewed is a taxable distribution to the owner? Citations appreciated.

Plan doc provides nonelective contribution by payroll. Employer makes miscalculation and does not withhold 401(k) deferrals or make nonelective contribution for a couple of employees. Error is discovered 3 months later.

Employer is restoring lost earnings on the 401(k) deferrals. Do they need to restore lost earnings on the nonelective contribution? Thanks for your replies!

http://www.dol.gov/ebsa/regs/fab2012-2R.html

From Today's Benefits Link. And just after I talked about this for half an hour in a training, and just after I finished my paragrpah in my cover-letters explaning how this was a big problem.

From BL:

The DOL has withdrawn Q&A-30 from Field Assistance Bulletin 2012-02, replacing the FAB with another bulletin that contains new Q&A-39, which does not include the former Q&A-30's requirement that the plan provide disclosure of costs for investments through brokerage windows that were not designated as "designated investment alternatives" but that were chosen in fact by specified minimum numbers of participants.

Here is the text of new Q&A-39:

"A plan offers an investment platform that includes a brokerage window, self-directed brokerage account, or similar plan arrangement. The fiduciary did not designate any of the funds on the platform or available through the brokerage window, self-directed brokerage account, or similar plan arrangement as 'designated investment alternatives' under the plan. Is the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement a designated investment alternative for purposes of the regulation?

"A39. No. Whether an investment alternative is a 'designated investment alternative' (DIA) for purposes of the regulation depends on whether it is specifically identified as available under the plan. The regulation does not require that a plan have a particular number of DIAs, and nothing in this Bulletin prohibits the use of a platform or a brokerage window, self-directed brokerage account, or similar plan arrangement in an individual account plan. The Bulletin also does not change the 404© regulation or the requirements for relief from fiduciary liability under section 404© of ERISA or address the application of ERISA's general fiduciary requirements to SEPs or SIMPLE IRA plans. Nonetheless, in the case of a 401(k) or other individual account plan covered under the regulation, a plan fiduciary's failure to designate investment alternatives, for example, to avoid investment disclosures under the regulation, raises questions under ERISA section 404(a)'s general statutory fiduciary duties of prudence and loyalty. Also, fiduciaries of such plans with platforms or brokerage windows, self-directed brokerage accounts, or similar plan arrangements that enable participants and beneficiaries to select investments beyond those designated by the plan are still bound by ERISA section 404(a)'s statutory duties of prudence and loyalty to participants and beneficiaries who use the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement, including taking into account the nature and quality of services provided in connection with the platform or the brokerage window, self-directed brokerage account, or similar plan arrangement."

A profit sharing 401k plan requires 1000 hours and last day for an allocation

in order pass a4 they want to give an allocation to an employee with less than 1000 hours and to another employee with less than 500 hours.

i recommended to 401k consultant to prepare an 11g corrective amendment.

consultant says that plan provides fail safe provision only if employee has at least 500 hours.

i looked at plan fail safe provision and saw a section that does not require 500 hours.

Questions.

1. the description of fail-safe allocation only references 410b. so does this mean that it doesnt even apply for an a4 allocation?

2. if it does apply then would consultant's comment be correct?

3. and if it does apply, does fact that there is a section that apparently does not require 500 hours enable such a corrective amendment to employee w less than 500 hours?

thanks much

If an original 8955-SSA was never filed, but it was discovered later that a participant needed to be reported, can an amended filing be submitted? Does anyone have any experience with doing so and if any errors occurred with the filing?

Hi all,

I am in the process of creating a Wrap (Document and SPD) for a client. I believe I have everything covered except the requirement to explain how insurer refunds (dividends, dmutualization, etc) are allocated. I understand this differs from carrier to carrier, but I am just looking for sample language for a jumping off point.

Any help or pointing in the right direction would be greatly appreciated.

Thanks

The instructions for 5500 say to efile with a DFVCP statement. Does anyone have a sample of what to put on this statement?

August 2010 employer incorrectly pays out a $10k account balance as a lump sum - $8k to participant, $2k FIT - participant was not eligible for distribution - $10k is noted on 5500 as a PT.

October 2011 participant pays back $8k that was rec'd - but the FIT is not recovered... As of July 2012, no 5330's have yet been filed - the kicker: the plan terminated 1/1/12 and the participant's balance has been paid out in full under the termination.

1) is one 5330 completed at this time for 2010 and 15% excise tax is based on lost earnings for the period 8/10-12/10? this 5330 is late...

2) is a 2nd 5330 completed for 2011 showing 2 PT's - the first for the lost earnings related to '10 reported on the late 5330 noted in item 1) above and a 2nd PT that is the lost earnings based on the full $10k from 1/11-10/11 + lost earnings on the unpaid $2k for the period 10/11-12/11? this 5330 can be extended still

3) since the plan is now paid out due to termination - how is the $2k portion of the PT that was never resolved handled?

4) the employer had paid no lost earnings to the plan - and since it is now terminated and fully paid out, there is no plan to pay lost earnings to regardless, how are the lost earnings handled?

Any thoughts would be appreciated...

Several other threads on this board raise this issue, but do not answer it: When related employers sponsor a single plan, and mid-year a transaction occurs such that the employers are no longer related, there are multiple employers sponsoring the plan. Assuming no issues with plan document provisions, eligibility, etc., my sole questions concern the date on which the plan will be treated as a multiple employer plan:

When exactly is the plan treated as a multiple employer plan? As of the date of the transaction? As of the first day of the plan year in which the transaction occurred? As of the first day of the plan year next following the date of the transaction? Is there any official guidance on this issue?

Thanks!

I understand that Separate Trust Agreements were submitted along with the plan document providers EGTRRA Plans (Volume Submiiter etc.) for IRS approval. After approval, its typical for trust companies to make changes to the agreements. My question - do changes to the original trust agreement trigger a resubmission for approval or does the IRS accept changes that are not material?

I would like to know what the qualified beneficiary's rights are in choosing his/her health coverage. in other words, if it is during the open enrollment period, can the qualified beneficiary choose single coverage on an HMO plan while the former employee chooses single coverage on the PPO plan?

I know they do a HIPAA checklist and are going to make sure the health plan is doing all the notices and disclosures (WHCRA, mothers of newborn rights, special enrollment, creditable coverage, etc.). Will they be delving in PPACA enforcement? If anyone has had a recent one, I'd like to hear any kind of input on your experience. Thanks much.

Any thoughts on the elimination of a 410(b) fail safe provision mid-year? TAM 9735001 basically states you can't change allocations for anyone who has already satisfied the allocation conditions of the Plan for the year. But with the add back you are suspending your allocation conditions--so you don't know, who, if anyone, will have to be added back. It would seem that for the first typical add back--participants who are employed on the last day of the plan year but don't have the requisite hours of service--it would not be a problem since they haven't yet satisfied the last day requirement. But what about from there? Is this an issue? If so, any other issues other than TAM 9735001

Is VCP available for a 403b plan that wants to retroactively amend the plan for something?

Thanks!

Can an employer start a new 401(k) plan now, and give safe harbor notice at the same time

that the plan is effective?

The employer previously had a 401(k) plan that was terminated in 2009 or 2010. Employer

has not had a pension plan in effect between the termination of the prior 401(k) plan and now.

They want to start a new 401(k) before the end of this year and to have safe harbor matching

for the short plan year (from now until 12/31/2012).

Is the old 401(k) plan that terminated in 2009 or 2010 considered at all in determining when the

"new" safe harbor 401(k) plan can be established and when employees must be given notice?

I'm pretty sure the answer is "no" if we are putting our 8955-SSA on extension and we still having our clients file them on paper. Do you we have the client attach a copy of the 5558 to the 8955-SSA when filing on paper?

I acquired an individually directed 401(k) plan that transferred its assets from one brokerage firm to another. The date of transfer was around the beginning of April, 2012. Given that the client wants to terminate this plan, I requested all available monthly statements from the new firm so that i could balance them. I noticed that about a week after receiving the assets (20 mutual funds) about 5 were sold. Upon the sale of each investment, 28% was withheld and sent to the IRS. This is a small group with 1 lawyer, 1 secretary and 1 prior participant. The attorney had over $65,000 removed from his account on April 14th due to this error. It appears to me that the brokerage firm did not code the account as a qualified retirement plan. Whatever the reason was, monies left the trust that shouldn't have. I contacted the broker who was handling the account on Wednesday, 7/24 at about 3:00 for an explanation. He indicated that he would get right back to me. Not hearing from him, I contacted him again today, Thursday at about 9:30. He sounded almost surprised to hear back from me and indicated that he had given the problem to his "assistant" to look into and would, again, get back to me shortly with an answer. About 2 hours later, he calls back and says that he has good news. All of the monies were deposited back into the account. When I asked when this happened, he tells me the $65,000 was deposited back into the account just yesterday (coincidence?). All of this aside, I now have some questions:

1. This plan should not only be reimbursed for the monies incorrectly removed from it, but, for the lost earnings as well. Assuming a reasonable calculation of these earnings is performed, where should these lost earnings come from? I have been told that the local brokerage can't just write a check for the lost earnings as they are covered by FINRA and it could cause a problem. I also don't think that the Employer should be on the hook for these amounts either. Any suggestions?

2. Since these monies were removed contrary to the provisions of both the plan and trust documents, could we have a qualification issue here? I was going to terminate this plan informally, but, now I am thinking about a formal termination with the IRS being apprised of the problem and our solution and hope for their blessing by them approving the termination.

Maybe I am going a little overboard, but, I don't like my clients plans being put at risk to any degree without them knowing about it. It will obviously come down to the clients' decision on how to proceed.

Suggestions on how I should proceed and what I should recommend to the client?

Thanks,

Rick

I have been unsuccessfully looking fo a cite that I can share with my manager that outlines the acceptable ways that a SAR can be distributed. Can anyone assist me?

We use relius web client for efiling the 5500 form, I wanted to see what everyone else was doing now that you can efile the 8955-SSA through web client.

I know other people may not agree but we are finding it difficult to explain to clients that once they file the 5500 they have to drop down the "form set"

to 8955-SSA and file that next (if applicable).

A lot of our clients are getting confused as to why they have to file the 8955 form separatly .... i know we can explain that the SSA goes to the IRS and 5500 to the DOL. But i wanted to see what other people were doing. Maybe our directions aren't clear

Another option we were thinking about is sending the clients an email (password protected) with a copy of the SSA to review and then efiling ourselves since it has our TCC code anyway.

Any feedback would be great!

Is anyone mentioning email delivery of notices in the letter to the employer with the 404a notices?

If yes, what are you saying about it?

I am thinking of a paragraph that goes something like this.

Email may be used to deliver a copy of this disclosure to anyone who uses a computer as a normal part of their job everyday. Paper copies of this disclosure should be distributed to everyone else as soon as convenient but no later than August 30th.

(By the way, is August 30th the right date? Right now I am not sure of anything!)