There were 2 Partnerships A and B that each had their own Plan. The Firms Merged in 2009 to Form Partnership C and Partnership B's Plan was amended and restated to Partnership C's Plan crediting all service with Partnerships A and B. The Partners of A and B as of 2009 are teh Partners of C. A's Plan was terminated and payouts were made although many chose to roll their account baalnce to Plan C. One of A's majority Partners (his name was part of the firm's name) semi retired and sold his ownership in 2000. He was a Former Key in A's Plan. He chose to roll over his money to C's Plan (it is 9 year's since he had any ownership). He does not have any ownership in C. HE is high paid but not an officer or owner. Is he a Non-Key in C's Plan or does his Former Key status carry over to the Plan due to the Partnership Merger. The Plans were NOT merged.

Can I aggregate 401(k) and 403(b) Plans for coverage and nondiscrimination testing?

Are SARs required to be provided to participants in health and welfare plans? This is my first year working closely with them and I wanted to verify.

I have an unusual request from a client.

The client funded a New Comp. PS on Aug. 8th.

There are 2 groups: HCEs & NHCEs.

Two participants in the HCE group. The owner an the CEO making > 110k.

The owner asked me now if he can pull $12k from the 2 HCEs accounts & distribute that to the NHCEs.

They want to pull $6k from each of the 2 HCEs.

The problem is, they do not make the same pay, so pulling $6k each would make an uneven distribution from the group they are in.

Can we amend the HCE Group to make them each in their own group to make this happen?

I know you cannot amend after the 1st of the year, but not sure if you cannot if the $ is going to increase the NHCE group's benefit.

I've run into several confusing issues regarding termination and distributions. Back in January, Firm 1 sold out to Firm 2. Now, we are working on preparing the 5310 for Firm 1's 401(k) and Profit Sharing Plan ("Plan"). The Plan retains the old same-desk rule, as well as the language regarding the sale of substantially all assets from the pre-EGTRRA language in 410(k)(10).

Many current participants of the Plan are requesting distributions. We would like to hold the money until we receive a determination letter from the IRS. Can we do this? From what I can tell, Rev. Rul. 2000-27 softened the same-desk rule prior to EGTRRA and/or in anticipation of EGTRRA. So, even if the Plan retains the old same-desk rule, the same-desk rule as applied will be the same-desk rule as modified by Rev. Rul. 2000-27. Under that Rev. Rul., I believe that the Plan participants have experienced a separation from service. I also think that we may have satisfied the Plan language regarding the sale of substantially all assets.

In short, if we have satisfied two distribution events in the Plan, or the same-desk rule/separation from service AND the sale of substantially all assets, may the Plan Sponsor postpone requested distributions until we file the 5310 and receive a determination letter from the IRS?

A company has a 2-tiered medical plan. The first (and best) offers 100% coverage in-network, and 80% out-of-network. The second tier offers 50% coverage for both in- and out-of- network. (Adding in the usual and customary rule means tier 2 participants may pay far beyond their 50% after satisfying the deductible). The two coverage plans (tier 1 and 2) are offered to all employees; compensation is not a factor. Deductibles are $0/$0 (tier 1) and $1000/unlimited (tier 2). The difference in premium between the two is not that much (20-25%).

The company also has a wellness plan. The wellness plan requires an annual physical, and, based upon age/gender, colonoscopy and mammogram. The wellness plan is advertized as voluntary, and participation will lower the employee's contribution/premium (per the company's benefits leaflet).

In reality, employees who decline the wellness program are not permitted to enroll in tier 1 coverage, and are only given the option of tier 2 coverage. Thus their 'monetary rewards' if applied not to their premium but to their out-of-pocket, will probably exceed ERISA's 20% rule.

The plan document is silent with regard to the reason behind the different plans, and clearly lays out the coverage for each tier, while the wellness plan states the employee will receive "enhanced medical benefits at a lower cost" upon election. Enhanced medical benefits in this case mean the difference between 50% and 100% coverage....major surgery anyone?

Clearly the company wants to steer employees to the wellness plan, which, while clearly identified as 'voluntary', is the only route to accessing the better coverage.

Is this compliant with ERISA law? Can an employee elect tier one and decline the wellness program? Can a wellness plan with such requirements be tied to medical coverage? I have been researching this all week and would appreciate any responses from anyone with experience in this area. Thanks.

For the record, almost all employees elect the Wellness Program for obvious reasons.

Will the exclusive benefit rule under Code Section 401(a) be violated if the sponsorship of a long-frozen defined benefit pension plan is transferred from current sponsor A to new sponsor B where:

1. A and B (and other corporations) are in a controlled group at the time of transfer.

2. A will be sold in a stock sale soon after the transfer.

3. B, although an active trade or business, has no current or former employees who are participants in the plan.

Note: This set of fact is -- very roughly speaking -- an imperfect mirror image of the fact pattern in Revenue Ruling 2008-45, where the IRS found that the exclusive benefit rule would be violated where:

1. A creates subsidiary B.

2. B is a shell company and not an actual trade or business.

3. A & B are in a controlled group.

4. A transfers its pension plan to B, plus additional assets to more than fully fund the plan.

5. A then sells B to unrelated purchaser C.

Thanks.

We have a multiemployer plan that used to only cover employees in the union and employees of the union. Treasury regulations provide that these types of plans need not contain Top-Heavy provisions. A couple years back, we opened the plan to others but never added Top-Heavy provisions. Can we retroactively add the Top-Heavy provisions if we're still in the remedial amendment period?

A VEBA which has been funded to the maximum extent permitted under Code Sections 419 and 419A has its taxes paid by the employer. Would the treatment of this from the perspective of the VEBA be treated as a contribution to the VEBA by the employer followed by the payment by the VEBA of the taxes? Does it matter whether the employer pays the taxes directly or the trust pays the taxes and is reimbursed (or advanced) the amount of the taxes by the employer? If the trust is already fully funded under 419 and 419A, the concern is that the employer is making a nondeductable contribution to the trust. Or does the trust's immediate payment of the taxes effect a wash? Alternatively, is the "contribution" treated as not exceeding the VEBA's "qualified direct cost" in that the amount contributed does not exceed the benefits provided during the taxable year?

401k prospect wants no financial adviser involved with the plan "to save money."

We could establish a brokerage account for each participant.

Any other ideas or investment companies that might be a good fit?

I have a participant who terminated employment in November 2011. She had an outstanding loan at the time of termination. She has not made any payments on the loan since November. Now she wants to roll the loan over to her new employer's 401(k). I know that a loan that has been deemed defaulted cannot be rolled over. However, John Hancok never defaulted the loan. Even though the loan should technically been defaulted, can it be rolled over if the default was never processed?

Thanks!

I have a calendar year Plan that processed a hardship distribution for a participant in 2011. While undergoing an audit for 2011 it was found it did not qualify. The plan uses safe harbor hardship definitions, one of which is 'payment of tuition, related educational fees, and room and board expenses, for up to the next 12 months of post-secondary education for the Participant, and the Participant's spouse, children, or dependents (as defined in Code §152, and without regard to Code §152(b)(1), (b)(2) and (d)(1)(B));'. While Sponsor approved the hardship request to be processed the auditor found that the hardship was used to payoff outstanding school loans. He is asking what corrective steps need to be taken. Has anyone had experience with a similar occurence? The IRS Fix-It Guide states that 'have participant return hardship distribution amount plus earnings' but this leaves unanswered questions:

1) How to detemine the 'earnings'

2) How to handle tax reporting for 2011 distribution. Amend 1099-R(?)

3) Can it be self-corrected in another manner (reclassifiy as a loan possibly?)

Any comments or insights on handling this situation would be appreciated! Thank you!

I feel pretty silly asking this question, but my old brain isn't functioning as well as it used to. Does the ER have a 25% of compensation contribution limit to a 403(b), similar to a profit sharing plan?

To what lengths should a sponsor go to obtain an address of a "lost" participant in order to supply the 401(a)5 notice?

Are amendments required for plan documents that have limited employee contributions to $2,500 or less in previous years?

Quick question - want to see if I'm off base. Say you have a change to the fee information that can be charged directly to participant - adding or increasing loan fees, distribution fees, etc. So you generally have a minimum 30 day notice period before the change can be implemented. Fine. Question: is the SMM an acceptable method of notification? It seems to me that it is - 2550.404a-5(e)(1) allows incorporation into other documents under ERISA 102. Any other thoughts?

Is there ANY possibility of making a tardy election for 2011 plan year funding relief under PRA 2010?

The deadline for the defined benefit plan in question was December 31, 2011. The plan's actuaries prepared the election package, e.g., (i) election letter, (ii) draft notice to participants, and (iii) cover letter explaining how to elect, when to elect, how to provide notice to PBGC and to participant.

But, there was some confusion as to whether the plan's sponsor received the election package.

After reading through IRS Notice 2011-3, and the parallel Code section 430 and ERISA section 303 provisions, it sure looks like there is no possibility of making a tardy election.

Is this worth a call to the IRS and/or PBGC? Or is the answer a clear "too late"?

Thanks.

We have a client that used W-2 Wages (excluding Safe Harbor Fringe Benefits) as contribution compensation. In 2011 and 6 months of 2012, cell phone reimbursement was inadvertently included in compensation in applying employer matching contributions. This is an operational error and would the correction be that the affected participant accounts must be reduced by the overage, adjusted for earnings, and then reallocate or place in an unallocated account (suspense account, I.e., forfeiture account) and use to reduce future employer contributions. NOTE: No further employer contributions can be made to the plan until the suspense account is liquidated)?

A participant who is a More than 5% Owner at any time during the plan year ending with or within the calendar year in which such participant attains age 70 1/2 must get an RMD, even if employed, and must continue to receive RMDs even if they cease to be a 5% owner.

I just want to make sure I didn't miss something else - if a partner sells out at age 65, but continues to work as an employee, then they don't have to take an RMD as long as they are working, right?

Employer has a non-ERISA profit sharing plan. In the past, all profit sharing amounts were deposited into employees' 401k accounts. Under a new CBA employees have an election to take the profit sharing amount in cash or have it paid into their 401k account.

If paid into a 401k account, against which limit is that amount charged? Is it treated like a salary deferral and charged against the $17,000 deferral limit or is it treated as an employer contribution and counted only against the aggregate $49,000 annual addition limit?

Are there any other issue raised by the introduction of the employee election about how to treat the profit sharing payment?

Thanks!