I have a question regarding New Comparability Plans when testing under 410b and 401a4 as to which employees are part of the testing.

Example#1

Law firm – partners, associates and staff

PS New Comparability – all EES are Eligible - PS contributions only to Partners and Staff – zero for Associates

410b Test – passes (Associates are HCE)

410a4 Cross testing – Rate group based on all employees including Associates

Example#2

Law firm – partners, associates and staff

PS New Comparability – All Employees are eligible except for Associates who are excluded

410b Test – passes (Associates are HCE)

410a4 Cross testing – Are Rate groups based on all employees including the Associates or are Associates excluded from the denominator of the rate group percentage since they are not eligible employees and the plan passes 410b without them?

If any of the rate groups are less than 70%, then an ABT is required. Are the Associates included in the ABT?

Example#3

Law firm – partners, associates and staff

PS New Comparability – Only includes Employees of company #1 – only have Partners and staff (there are no Associates in company#1).

Company#2 only has Associates and are not eligible for company#1’s PS Plan

Company#1 and Company#2 are part of the same controlled group.

410b Test – passes (Associates are HCE)

410a4 Cross testing – Are Rate group based on employees of company#1 and not company#2 (Associates)

ie. Company #2 are excluded from the rate group percentage denominator since Company#2 employees are not eligible employees and the plan passes 410b without them?

If any of the rate groups are less than 70%, then an ABT is required. Are company#2 employee (Associates ) included in the ABT?

Can I include company#2 employees in my Rate Group testing even though the plan passes 410b and excludes them? Does Permissive Aggregation come into play?

We terminated our Erisa 403b Plan and our final 5500 was filed in 2010. I have just been informed that there were two distribution checks from 2008 that were never cashed and the funds were returned to the "closed" 403b account on 6/15/2012. I am in contact with the two participants and distribution paperwork is being completed to remove the assets (again). What are our reporting requirements in this situation?

Background: DB PLan SPD correctly states that any retiring participant, single or married, may elect an alternate beneficiary for joint and survivor options, with instructions that if married, must provide the election notarized. No other clear instructions or form. When employee retires, this option is not communicated on retirement paperwork.

Question: Plan intends to move forward and communicate this information for new retirees, however, does the plan need to go back in time and offer this to all existing retirees?

A company is considering a DC plan design with a 401(k) feature...100% match on up to 5% of compensation (414(s)). Autoenroll at 3% with 1% per year autoescalation up to 10%. Immediate vesting on the match in cash which will be put in the person's account after each pay period and follow the participant's investment direction. In addition, there would be a discretionary profit-sharing non-elective (I guess) employer contribution. It would be paid 2x per year based loosely on company performance for each associated 6 month performance measurement period. The range would be 0-6% of compensation with a target of 2%. This employer contribution, too, would be immediately vested. One condition being considered for the profit-sharing contribution is that an eligible participant would have to defer some pay (only allowed to defer in 1% increments) for all pay periods in the 6 month measurement period to get that associated allocation. If he/she elected not to defer for one pay period, he/she would not get the profit-sharing allocation for that period (true for HCEs and NHCEs). For those hiring in the 6 month period or terminating/retiring in the 6 month period, as long as they deferred for all pay periods during when they were employed, they'd get the profit-sharing allocation. Some believe the profit-sharing allocation can't be tied to this requirement. I've spent a fair number of hours researching and can't find any guidance/opinions that are spot-on for this.

Thoughts? If you think this is definitely allowed or definitely not allowed and can provide the citation or reference, it would be appreciated. Thanks.

A local benefits attorney is telling me that the in-service withdrawal option for a profit sharing account is not available if the plan uses an integrated formula for the profit sharing. Is anyone familiar with this rule? I don't know what he is referring to.

Thanks!

Does any have a format to share, or directions to, the current FAS 87 (I know, it has been renumbered somewhere by the AICPA) report for defined contribution plans? Apparently the CPA for a client no longer will do it, or they changed CPAs or something.

Thank you.

I know previously there was a waiting period between when the notice was given to participants about removing the J & S provision from the plan and when the removal of the J & S provision actually went into effect, but I thought that had changed. I can't seem to find documentation - can anybody help?

Thanks a bunch!

I want to understand the new $2500.00 FSA limit. I take it to mean that any of our plans started before 2013 are not affected by the limit, is this correct?

How are people handling the DOL's blatantly incorrect interpretation that these disclosures go to everyone eligible, without regard to whether or not they have a balance in the Plan? Is anyone going to say "although contrary to the DOL's interpretation, one reasonable interpreation of the rule is that individuals without an account balance have no right to make investment elections."

How is that not a reasonable interpretation?? I'm thinking of one plan with 200 eliglbes and 40 with account balances, adn wondering how I tell them with a straight face that by law they are required to send this to the 160 non-contributors?

Hi all,

I am new to the 403(b) world. I have a newly created Non Profit Agency that is the result of two different groups merging as of 7/1. Both groups have their own plans that will run thru the end of the year. Each plan counts service under both for eligiblity and vesting (matching contributions). Each plan has a differnt match formula. I have employees transferring from the entity with the more generous match to the entity with the less generous match. Is it possible to have two match formulas in the plan, one that mirrors more generous match for employees transferring from that agency and keep the existing match for employees who haven't moved. There are no HCEs among the transferring employees. Are there any implications I have to worry about?

Thanks for any help, I hope my question is clear.

Single employee (owner) profit sharing plan. Does he need an ERISA bond?

A client is concerned that the total of the plan assets (all in Guaranteed Annuity Contracts) exceeds the 100K insured maximum. Is this a genuine concern for a qualified plan?

Does anybody know what the third bold requirement means within the context of whether an active participant reduction might require the filing of Form 10 for a plan that is 80% funded? I have asked this here and elsewhere before and have never found an answer.

Funding-based waivers: For the event year:

- No variable rate premium (see Part IV.B);

- Less than $1 million in unfunded vested benefits (see Part IV.C); or

- No facility closing event/80% funded: The plan is at least 80% funded for vested benefits (see Part IV.D) and the active participant reduction would not be reportable if only those participant reductions resulting from cessation of operations at one or more facilities were taken into account.

Imputed disparity in a DC plan tested on an allocations basis seems relatively straightforward. But it seems rather more complicated if it is cross-tested. I want to see if I'm getting the basic idea right.

Let's say it is just a PS plan, no 401(k), no other DB plan, never has been a DB plan, never has been any integrated formula. Plain vanilla.

You have obtained the EBAR's for all employees. Now you are going to adjust those EBAR's for imputed disparity.

When calculating the "permitted disparity factor" - it is apparently the sum of the annual disparity factors for each year included in the measurement period for determining the accrual rates, divided by the participant's rtesting service in that period.

When doing this for a DC plan, can you use a "measurement period" of the current plan year only, as well as the current plan year only for "testing service?" In other words, if the average annual compensation is less than or equal to covered compensation (and good luck obtaining that data) and the unadjusted accrual rate is 1%, can you simply use the lesser of (2 x 1%) = 2%, or (1% + .75%) = 1.75%, therefore 1.75%? Or is it more complex than that and you have to go back and add up the sum of the disparity factors for all prior years, etc., and perform various voodoo and sorcery?

If you have been a participant for more than 35 years in such plan, is imputed disparity not allowed (probably dependent upon answer to above?)

Thanks.

Hello everyone

A quick question. Employer sponsors a 403(b) plan that failed to cash out participants with vested balances less than $1,000, and failed to roll over participants with balances between $1,000 and $5,000 when they didn't make an election otherwise. Does this require a VCP application? It doesn't look like this is the kind of operational failure that is correctable yet under EPCRS.

What if the same failure happened in a defined contribution plan? That has to be VCPed, correct?

Thanks so much!

Hello everyone

A quick question. Employer sponsors a 403(b) plan that failed to cash out participants with vested balances less than $1,000, and failed to roll over participants with balances between $1,000 and $5,000 when they didn't make an election otherwise. Does this require a VCP application? It doesn't look like this is the kind of operational failure that is correctable yet under EPCRS.

What if the same failure happened in a defined contribution plan? That has to be VCPed, correct?

Thanks so much!

Is there any guidance available for how to treat a bequest to an ESOP that is not a qualified gratuitous transfer under IRC 664(g) and 2055(a)(5)?

Thanks!

A loan for a terminated participant should have been defaulted back in 2010, it was not. What is the process for getting this corrected? The custodian is generating the 1099 current date. Is there a penalty?

If a plan is being amended to eliminate its loan provision, is there a minimum number of days that must elapse between its adoption and effective dates? Also, is it acceptable to notify the participants no later than the amendment's adoption date? My understanding of protected benefits under 411(d) is that a participant loan provision is not considered to be an optional benefit and can be removed from a plan, as opposed to, e.g., an inservice distribution provision. All help is greatly appreciated.

Section 415(b) limitations on benefits are applicable to non-electing church plans but are the mortality tables under 417(e)(3) required to be used in a church plan for determining actuarial adjustment to straight life annuity? If not, where can I find the exception.

Thanks.