Plan was created for employees to require payment only upon involuntary separation from service. The company decided to include a director in the plan and just slotted him in under same terms as employees. It was not intended to limit payment for director to only involuntary sepration from service as that term would not seem to apply to a Director in the same way as an employee. I would like to change the payment term from involuntary to any separation from service, but it does not appear as though I can do that under the regulations without running afoul of accelleration/re-deferral rules. One potential argument is that this was a scrivener's error or that the term "involuntary separation" is ambiguous and subject to interpretation as applied to a director. Any thoughts?

Can a plan sponsor amend out of a safe harbor match? They currently have a dollar-for-dollar up to 4% plus 50% on next two percent match formula. PYE is 9/30. For the 10/1/2012 plan year, can they either lower this to only the basic s/h match or possibly amend the s/h out of the plan entirely?

Thanks

During the period of 04/2011 through 09/2011, the plan was using the self certify method for hardship withdrawals. As the participant is processing the request via the web or participant services, it is communicated that upon request, the plan can request the backup documentation for the hardship taken at any time. There is a participant in question that cannot produce the necessary backup, so the client is requesting that the participant pay back the hardship amount. Our question is: For what amount is the participant responsible for paying back, the gross or net amount of the distribution? Also, if this amount is paid back to Vanguard, into what source should this be accepted into?

I've read that you don't actually have to fail non discrimination testing to do an 11(g) amendment. Does anyone have a reference or site to support this?

Hello,

I was wondering if anyone knows where I can get a sample SBC for a stand alone HRA that provides medical expense reimbursement. The templates on EBSA's website are not really on point for an HRA.

Thanks!

Adviser suggested a DB plan but that seems too archaic and costly for one participant. He is 58, has nothing in retirement, makes $240K a year and has about $72K to play with annually. I suggested a SEP or Uni-K and/or 412(i) plan. Agree? Disagree?

Plan had a bunch of people who became eligible in 2007-2009 but were not informed of their ability to make 401(k) contributions. They all terminated in 2009 or '10.

In preparation of the 2010 analysis, in 2011, this was realized. Company made the requisite contributions and attendant matches and paid the people out (all were less than $100).

So, when are these people considered having account balances, and thus, participants again? When the deposit is made to the accounts (mid 2011)?

Do they get "retroactive" account balances back to 2007-2010?

This is extremely salient to my open participant count for 2011 form 5500.

A Plan Administrator and actuary take the position that the actuary will not certify the AFTAP unless requested by the PA. Thus, the AFTAP is deemed to be less than 60% and other than de minimis lump sums cannot be distributed even though if the AFTAP were certified it would exceed 80%.

MAP-21 rates apply for funding and AFTAP in 2012 unless the plan sponsor (not the PA) elects otherwise. So, the plan sponsor does not elect to defer MAP-21 for funding and AFTAP determination. The PA still does not request the EA to certify the AFTAP.

Position would be that AFTAP remains under 60%.

Any comments?

P.s. As of 4/9/2013, IRS is still uncomfortable with this consequence but has not publicized that it will be addressed.

I have a plan with a definition of spouse as follows:

“Spouse” means an individual to whom a Participant or Beneficiary is married under the law of the state in which the Participant or Beneficiary is domiciled.

As you can see, the definition doesn't include a reference to DOMA. Some of the plans I work with do include a reference to DOMA or federal law in their definitions of Spouse, but certainly not all, and not the plan at issue.

The IRS, as part of its determination filing review, is asking the plan to amend the definition of Spouse to comply with DOMA. Have you seen this before? This is the first time I've had an agent make such a request, and given the several recent court decisions on DOMA (among other reasons), I'd prefer not to amend the definition.

If you've seen this from an IRS agent, I'd appreciate hearing about it and what your response to the IRS was. Thanks.

For a traditional annuity plans that pays lump sums under 417(3), the regs had indicated that the lump sum conversion basis in your valuation should equal the funding segment rates. So for a 1/1/2012 valuation using a September lookback, the lump sum conversion basis and the funding segment rates are both set to be equal to 2.06% 5.25% 6.32%.

Does that still apply under MAP 21. So for a 1/1/2012 valuation for a sponsor that elects to take advantage of MAP 21, would the lump sum conversion basis be 5.54% 6.85% 7.52% (same as the 2012 funding segement rates)? If not, then MAP 21 would not have a significant impact for a plan that pays 100% lump sums at decrement.

Obviously none of this would impact the actual amount of benefits paid since those would still be determined under 417(e).

Thanks

To utilize a Hardship for Funeral Expenses of a deceased parent, is that parent required to be a biological parent, or is the option also available for a "step" parent?

Quick question that I think (hope?) I know the answer to but just want to confirm: I'm aggregating a Partner DB/DC plan arrangement with a Staff DC-only plan. In the Staff DC plan all participants receive an allocation of 7.5% of pay. This provision was put in to specifically avoid any minimum gateway issues. However, the plan's eligibility is 1st of the month after 1 year of service. Therefore, an employee hired 6/30/2011 would not enter the plan until 7/1/2012, and his allocation would be based on 7.5% of pay earned after DOP (i.e., roughly 3.75% of total year pay).

I believe this allocation is okay and would still satisfy the minimum gateway requirements, based on comments I've read in the Coverage and Nondiscrimination Answer Book, specifically the following paragraph:

"The definition of compensation set forth in Code Section 415©(3) is to be used for purposes of determining applicable limits on benefit accruals (the 100 percent of average compensation/$160,000 (as indexed) limit) and allocations (the 100 percent of compensation/$40,000 (as indexed) limit). It is important to note, however, that the definition is also used for certain other purposes, including determining key employees, determining top-heavy benefits or allocations, establishing which employees are to be considered HCEs, and the minimum gateway allocation (through date of participation only)."

However, I do not see anything in the Code or the Regs that state this. Can someone please confirm if the Staff plan in my example is okay with regards to the minimum allocation gateway?

What are the rules pertaining to terminated participants over the age of 65 with account balances greater than $5,000? Can they be forced out of the plan and required to take their account balances?

Right now I have a whole life with Colonial and I've been hearing that term is better to get. I've for whatever reason thought whole was better. Is whole life kinda like a savings account? I've been putting into it for about 3 years. Is it possible to just pull the money I have in it out and open up a term policy? FWIW I"m 30. Which do ya'll think is better, whole or term? I really can't afford to have both policies since I'm maxing out a 457b and my wife's Roth IRA. We have another baby on way, and I was thinking I could pull the money in my whole insurance policy out.

If I am reading the Treasury regulation right, the cure period that a plan may provide seems to apply only where a participant has missed one or more of their loan repayments. So, basically, the cure period is for curing loans that do not satisfy the level amortization requirement in operation due to the missed repayments. Do I have that right??? If so, then does the cure period not apply to extend the time to repay where a participant has passed their 5 year maximum loan repayment date, since the maximum repayment period is a separate requirement from the level amortization?

On that note, for a 5 year loan, from which date is the 5 year period counted? From the date the loan is issued from the plan? Or the date of the first scheduled loan repayment? (I thought it was the date the loan was issued from the plan, but it seems not everyone is in agreement on this point....)

Assuming that a 5 year loan is amortized from the loan distribution date so that it is scheduled to be repaid before the fifth anniversary of the loan issue date, what result where the participant has missed loan repayment(s) and has not made up the missing payment(s) by the end of the 5 year period? (Assume no leaves of absence.) Is the outstanding amount plus interest deemed distributed? Or is the entire original amount of the loan deemed distributed because it was not repaid within 5 years, even though it was scheduled to be repaid within 5 years?

Hurricane Irene Relief

Does anyone know if the 2010 company tax filing deadline was extended and as a result the time in which a company could make a contribution for 2010?

Everything about this seems wrong to me, but the "trust company" says they do it all the time...

S-corporation sponsors a leveraged ESOP. When the last batch of stock was sold to the ESOP, there was a "price protection" agreement put into place (outside of the ESOP plan document) that said for any participant who terminated employment and received a distribution within 3 years of the sale, that the distribution would be based upon the higher of current FMV at the time of the distribution/liquidation of the shares by the ESOP, or the price per share as of the date the stock was first sold to the ESOP. The purpose, apparently, was to protect retirees in the short term if the stock dropped.

Is this a common thing?

Beyond that, the PLAN DOCUMENT makes no provision for this higher "price protection" distribution. The trust company is asserting that:

1. The Employer can dump into the plan the difference between the current FMV. This will NOT be treated as an "employer contribution" and hence not allocated to all participants. Whether the Employer intends to deduct it or not I couldn't say.

2. The ESOP can then distribute the full "price protection" amount and it will ALL be an "eligible rollover distribution."

They further assert that they have worked with "many top ERISA experts" and have "never had a comment against it."

I'm completely baffled as to how they arrive at their conclusions. But since I'll be the first to admit I'm no ESOP expert, I thought I'd check to see if in fact these are common and accepted practices, and if so, what citation or citations might support it?

When preparing the 404a-5 notice, do I have to list the exact amount of fees that can be charged to the plan? My client is currently paying all the fees outside of the plan so when I list the fees can I just say "The plan may incur certain administrative and operating expenses each year. These expenses are for the following services:

Legal

Accounting

Recordkeeping

or does it have to be

Legal - $5,000

Accounting - $3,000

Recordkeeping - $2,500

Thanks

Partner 1 of a partnership wants to sponsor a plan but Partner 2 does not want to contribute at this time (they own the company 50/50). There are no other employees. Having Partner 2 sign a waiver of participation may not be the best option, as Partner 2 may want to start contributing somewhere down the line and such waivers I believe are irrevocable. Would it be acceptable for the plan doc to just use the name of Partner 1 as the definition of 'Eligible Employee', and then amend the definition once Partner 2 is ready? Thanks.

We have a client that adopted a Non-ERISA 403(b) plan in 2011. Employer has now advised us that their intent was to establish plan subject to ERISA. Understanding that there is a document failure in the absence of provisions relating to ERISA, as well as a failure to perform non-discrimination testing and 5500 reporting, can the plan be amended retroactive to 2011 to address the ERISA omission?