An employee is set receive benefits under a NQDC plan adopted long ago with no option of changing payout at this point. Employee is fine with getting in-service distributions (no choice), but wants to continue working, and employer wants to continue the NQDC plan.

Any objection to starting a new, separate plan for the employee? The existing plan will be in payout mode, with no further deferrals being made. The new, separate plan will accrue some benefits and vest in a few years to provide more benefits when the employee actually does want to retire.

I don't think they'll aggregate because only one is accepting deferrals. It will be a standalone plan that will be enforced by the employer.

Any issues?

Any thoughts on how to adjust the existing plan without creating a new one?

If I have a PS Keogh and wish to terminate the Keogh plan effective September 30, 2012, may I do so and on following day, October 1, establish an IRS Model SEP-IRA for use for the same calendar year 2012 as long as the 415 limits are not exceeded on an aggregate basis? If no contribution was ever made to the Keogh for 2012, can the SEP take into account compensation earned while the other plan was in operation?

As long as my termination date is prior to the effective date of the SEP-IRA (would this be the date the SEP form is signed?), it seems that I should be able to establish a SEP-IRA even if it applies to the same calendar year, as long as I establish the SEP-IRA after the official termination date of the Keogh plan.

Question 2. How do I establish the termination date for the Keogh for an unincorporated business - letter to the file, etc?

If there are any Reg citations available to support feedback, please share them. Thanks!!

U.S. individual has decided to provide a payment of $10,000 per year to a former housekeeper who is now a nonresident alien. Do these annual payments constitute pension income that should be reported on 1099-R?

Article from BL Newsletter today (headliner, actually):

http://www.businessofbenefits.com/2012/08/...+of+Benefits%29

But the preamble to regs, found here, seems to directly contradict Toth's conclusion. Does anyone disagree? Don't get me wrong, I think he is reading the REGS correctly (I made the same case a month or so ago), but it's just not consistent with what the DOL has said in the preamble.

http://www.thefederalregister.com/d.p/2010-10-20-2010-25725

Several commenters suggested that the Department clarify, and in some cases modify, the scope of the proposal as to the specific participants and beneficiaries of covered plans to which the rule applies. The proposed rule required disclosures to each participant and beneficiary of the plan that ``pursuant to the terms of the plan, has the right to direct the investment of assets held in, or contributed to his or her individual account.'' The question presented by the commenters was whether disclosures must be furnished to all eligible employees or only those who actually participate in the plan. Consistent with the definition of ``participant'' under section 3(7) of ERISA, disclosures must be made to all employees that are eligible to participate under the terms of the plan, without regard to whether the participant has actually become enrolled in the plan. One commenter recommended that the proposal be modified to require initial disclosures to all eligible employees, but limit annual disclosures only to those that actually enroll, make contributions, and direct their investments. The Department has not adopted this recommendation. The Department believes that, with regard to employees that have not enrolled in their plan, the annual notice will serve as an important reminder of their eligibility to participate in the plan. With regard to notification of beneficiaries, however, the obligation to disclose extends only to those beneficiaries that, in accordance with the terms of the plan, have the right to direct the investment of assets held in, or contributed to, their accounts. Such rights might arise as a result of the death of a participant or pursuant to a qualified domestic relations order.

(edited font size and added federal register link)

This may be more a MEWA question but the arrangement involves a VEBA too and I'm as worried about the VEBA rules as anything so thought I'd post here.

MEWA has been set up by local professional association to provide group health coverage and is viewed / treated as a single plan sponsored by an association for ERISA purposes--the plan is sponsored by an association of industry-specific employers in a particular city and generally exerts strict control and management over the plan / arrangement so please assume for arguments sake here that the group generally constitutes a bona fide group for purposes of establishing a single ERISA employee welfare benefit plan. The arrangement is funded through a VEBA. Individual employers sign up for the plan and sign participation agreements, etc. to participate in the plan. Some groups for 2013 wish to exclude coverage for dependents under age 26 with other health coverage from participating in the plan. (Plan is grandfathered so could presumably do this until 2014.) Other employer groups do not want to do this. Association doesn't really care--wants to provide flexibility to make each participating employer happy--so long as permissible. Question is whether it is possible to give each participating employer the ability to set specific eligibility / coverage terms under this single plan so that some can cover all dependents without restriction and others can elect to cover only those dependents without other group health coverage for 2013? Would having different eligibility / coverage rules for different employers potentially cause nondiscrimination concerns for VEBA and 105(h) purposes, destroy the ability to treat the arrangement as a single plan for ERISA purposes or otherwise cause other problems?

Client has a profit sharing plan that allows self directed brokerage accounts. Within a couple of those the participants have purchased annuities. The particular product that is currently in the account is no longer being offered by the insurance company. For purposes of the disclosure should the fees reflect what the existing participants are paying, or what a participant wishing to buy a new annuity would be charged?

If a spouse waives his or her beneficiary right to a participant's account, does he or she need to provide spousal consent to any loan, in-service or hardship withdrawal? Can a spouse waive his or her beneficiary right permanently?

Do IRA's have the same creditor protection as a qualified plan? If so, how about EZ filers?

I have a 401k with pooled assets with 6 investment options which are included on their enrollment forms (such as international, mid cap, small cap, fixed & money market) An account with Morgan Stanley is set-up for each investment and the broker or money manager buys and sells stocks and bonds in each account according to the type of investment. The Money Market is strictly in a MS money market. The brokers is unable to provide comparative chart. Would this type of investment be considered a brokerage window?

There is another plan with the same broker that has this same type of arrangement but some of the funds have stocks and mutual funds. Does the fact that they have some mutual funds change anything?

Employer has a self-insured medical plan wherein all retired employees are eligible to remain in the plan until age 65. The entire contribution for retirees is paid by the retiree, no employer subsidy. A select group of executives have a separate plan which reimburses them for the entire cost of the contribution. All of the executives were HCI's. At present, no tax is withheld on the reimbursement. If the retired executives are taxed on the reimbursements, will this remove the application of Code Section 105(h) non-discrimination?

Most of Company A was sold to X with all employees except 40 going to purchaser. The 40 remaining 401(k) participants were subsequently merged (or transferred) to another plan (ADP). The problem is that on the date of merger Company A had a significant forfeiture balance along with other accumulated funds in what was called Mr. Administration account. By agreement, a portion of earnings went into this account to pay plan expenses. The combined non-participant balance exceeded $240,000 at date of merger. In research I've seen it both ways ... that all merger transfers must be in participant accounts ... or that the non-participant accounts can be transferred. Theoretically these balances should have been allocated to participants at each year end but Company A elected to accumulate in anticipation of future plan costs.

Business owner has a solo 401(k) that has a Roth sub-account which contains employee deferrals made under the Roth provision. Because of investments choices, owner wishes to transfer assets to another 401(k) provider (Fidelity) that has no Roth option. Business is active, so terminating plan and rolling assets into IRAs and/or starting new 401(k) and the like are not an option (correct me if there's any way to do this). Is there any conceivable way to "split" the account and transfer the non-Roth portion only to the new provider? Plan documents are prototype documents and don't allow for multiple 401(k) accounts if I'm not mistaken. Any idea to accomplish the goal would be helpful. Or is business owner "stuck" with providers offering Roth for the entire account assets once any Roth contribution has been made. thanks.

When would you do a loan offset for someone who went on a leave of absence one year ago and did not start payments after the year was up.

Would you do the offset on the 1 year anniversary of the start of the leave of absence?

Or is the first payment due on the 1 year anniversary of the start of the leave of absence. Thus the default / offset will not occur until the end of the cure period. With the cure period being the end of the calendar quarter following the calendar quarter of the missed payment.

Under 1.401(a)(4)-8(b)(2)(ii)(A), the account balance includes an adjustment for amounts that were previously distributed.

I understand this to include any prior distributions, including any hardship or in-service withdrawals, but what about "refunds" due to ADP/ACP testing failures in prior years? Would those be added back as well?

Also, I assume the balance would/should exclude any unrelated rollovers that might have come into the plan although I don't see anything that explicitly says that. Agree?

The client wants to get money ASAP to invst in a solar system that will be installed on his personal farm property. The solar panels will NOT provide any electricty that is used by him personally. The electricity is only sold back tot he power company. Anyone do this? Is it an ok investment or are there PT issues?

I have so little contact with Governmental Plans that I'm unsure of what I think I know.

I have very little information to go on here, other than a brief conversation. The new director of a governmental entity, which has a 457 plan and a 401(a) profit sharing plan, wants to make elective deferrals to the profit sharing plan. He said his prior governmental employer allowed him to do this. That's the sum of the information I have at this point. His prior plan may possibly have been a grandfathered 401(k) plan.

Let's assume that the current 401(a) plan is post-TRA 86 and is not a "grandfathered" 401(k) plan.

I think the current plan could allow employee voluntary after-tax contributions, and that these would count against the 415 limit.

I think the current plan canot allow "deferrals" in the normal sense.

I think a governmental plan may provide for mandatory employee contributions, and "pick up" the mandatory contribution under 414(h).

Agree/disagree? Is there any basis for allowing "deferrals to a governmental 401(a) plan, including a money purchase plan, other than as I mentioned above?

Thanks.

The loan policy requires the reason to be the statutory hardship provisions. A participant took a loan using a foreclosure notice. The same participant would like to refinance her loan and sent a statement showing overdue payments but not an actual foreclosure notice. The reasoning is to be preemptive because a foreclosure notice will be forthcoming next month.

In my opinion I think she would have to wait until she receives the next official notice but wanted to check on other opinions.

Is anyone still doing anything on this?

I remember back when PPA first came out (you know, when we thought we'd actually get real guidance within 12 months), many TPAs took the position that as a good faith statement, we'd provide the asset listing of a pooled account (or a copy of the account statement), and my firm did, too. Now it's five years later, and we're still attaching asset lists, and clients are starting to question it (because they have short memories).

A quick survey of TPAs today revealed that almost none were still doing this. In fact, one mentioned that it was brought up at a recent conference, and Steve Forbes thought it was unnecessary. Thoughts?

H&W plans are not my area of expertise, but I have been asked to complete the 5500 for a client using our software.

They have over 1,000 participants in their medical benefits plan, which included employer funded Dental & Vision benefits for which they have filed 5500s for many years.

They recently changed the Dental & Vision benefits to be 100% employee funded. They deduct the premiums and forward them to the insurance company. They were under the assumption that those two benefits no longer needed to be included in the 5500 reporting. I have been unable to find anything that would support that view. In my ingorance, I assume that since they are choosing the provider, deducating and transmitting the premiums, that it is part of their Health plan and should be reported.

I don't know if the D & V premiums are deducted pre-tax or not, if that makes a difference.

A participant over 70 1/2 refuses to take RMD (for whatever reason).

Is the TPA required to issue a Form 1099-R?

If not -- how will the IRS know that there is a violation of the RMD requirement?

Thanks.