Plan elects top paid group HCE definition.

20% equals exactly 8 HCEs. So, rounding up or down is not an option.

Employees 8 and 9 have the exact same compensation ($125,000).

So how do I choose between employee 8 or 9 as to which is HCE and

which is NHCE? Would it be possible to have both employee 8 and 9 in

the HCE group, even though the top paid group is only 8 employees?

Where does a partnership deduct non-partner 401(k) contributions? Is it possible that we would need to deduct it to calculate earned income for general partners?

Hey all,

Have a 401k plan with compensation defined as 3401a. Now, said plan has lots of US citizen/resident alien employees all over the place, about half here in the US and the other half abroad. When these overseas employees are paid, they get paid by the local agency, be it euros or rubals or whatever. Plan does not specifically exclude employees working overseas or overseas compensation, just has 3401a comp. So basically my question is, can these employees use this compensation towards the 401k? I know there's a million treaties and exceptions etc., but as a general rule, can you defer/get allocation for this foreign comp? I know for 415 gross up comp you include this comp, so I assume its a yes for top heavy calculations, but what about regular match/deferrals/roth/PS? And would the foreign comp used be the gross comp paid out (converted for average currency rate for the year) or the gross taxable US comp portion? Cause i know there's even more exclusions for time overseas and taxes already paid overseas.

Any help greatly appreciated. Thanks.

Can't get this straight - when is the first annual notice due for a plan that would start effective 8/20/12? And is that different than having the plan start on 9/1/12?

Thanks!

We are a large company with several mutual fund vendors who offer financial advice to participants in our plan. The intent is to comply with the final regs under 408(g). Does anyone have any thoughts about whether investment advice, if available, must be communicated to all participants, or whether it can be limited to active participants or those who meet certain account balance thresholds?

Can an employer's 401(k) plan accept rollovers of Roth contributions if the plan doesn't also permit Roth elective deferrals? For example, an employer maintains a 401(k) plan that does not permit Roth elective deferrals. The employer wants to amend the plan to permit and separately account for Roth rollovers (but not new Roth elective deferrals) so that new hires can transfer Roth balances in from other 401(k) plans. The regulation can be interpreted to say that Roth transfers cannot be acepted if the receiving plan doesn't also allow Roth elective deferrals. However, I haven't found any explicit statement to that effect in any primary or secondary source. Any thoughts would be appreciated! Thank you!

Is it possible to have two different cashout limits under a plan? For example, a $5,000 cashout limit applicable to benefits accrued before 1/1/2012, and a $1,000 cashout limit applicable to benefits accrued after 12/31/2011? Is it permissible to bifurcate a participant's accrued benefit in this manner for this purpose? If so, how would this be applied in practice? Suppose a participant has an accrued benefit of $6,999, $6,000 of which was accrued before 1/1/2012 and $999 of which was accrued after 12/31/2011. Can the $999 attributable to the benefits accrued after 12/31/2011 be cashed out, even though the participant's total accrued benefit of $6,999 exceeds the cashout limit?

Our plan has been able to stand alone for years by first passing the 70% test on its own, and the controlled group of which it is a part passes using the average benefits test. This year our plan will not pass the 70% test.

QUESTION: Assuming we have an acceptable business criteria for excluding a classification of employees, is there any prohibition against using the average benefits test for our stand alone plan and also using the average benefits test for the controlled group?

Is there some obscure multiple use rule?

Thanks in advance.

When we set up our HDHP several years ago, we stated that in order to enroll in our HDHP, you must be eligible for an HSA. This linkage was done I believe due to our decision to make an employer contribution. Does anyone have any benchmarking info as to whether this is a standard practice? We've asked our health plan vendor for their BOB info and wanted to gather other external info.

Thanks.

We TPA a plan that has part of its assets some old annuity contracts. The provider is refusing to provide the investment chart under 401(a)5.

What recourse does the sponsor (more specifically, the Trustee) have? Is it similar tot he 408 notice where they can (and must) squeal tot he DoL?

The employer last updated their 5305-SEP in 2002 (revision date 3-2002), which is considered to be updated for EGTRRA. Now that we are doing a VCP submission due to contribution errors, I'm wondering if the IRS will say they should have updated onto the 5305-SEP with a December 2004 revision date, or is the 2002 version okay to submit with the filing? If they do have to adopt the 2004 version, does that increase the filing fee since we would be adding on a non-amender problem along with the contribution errors?

Have a plan that has a SEP, note they also have a non-ERISA 403(b)

SEP was originally established with a 5305 years ago. Also, looks like a doc was put together in 89 of some sort nire looks like an spd. It has an integrated formula for the contribution. At some point the TPA firm realized that doc had old language in it and amended for law changes. I don't really think it ever had an approval letter or anything like that.

I am now trying to make sure they are compliant and am not sure what direction to go, ie just complete a 5305 current and it's requirements as per the instructions or are they ineligible for this form and must use a prototype plan. I'm unclear based on the instructions on the 5305 if they are ineligible for this. They have the 403(b) but not sure if that is considered another qualified plan which would knock them off the 5305 and it's integrated so it's not a uniform percentage of comp. Just not sure.

Can anyone offer assistance and if we have to amend onto a prototype, looks like it has to be submitted to VCP?

Do the periodic (quarterly) statements have to break down the assets into sources of money? Assume same vesting schedule for ER money.

For example, can the statement have:

Deferral: $6,345.21

Employer: $49,837.90

Rollover: $19,048.67

Where in the employer bucket there's match & PS money. (Again, on same schedule)

Or does it have to be:

Deferral: $6,345.21

Profit Sharing: $45,824.89

Match: $4,013.04

Rollover: $19,048.67

(I know the latter is preferable to the participant, but does it HAVE to be broken out like that?)

A 403(b) plan failed to follow participant salary deferral agreements. Is this eligible for a VCP submission? I assume this would fall under the 5.02(2)(ii)(a)(xii) of 2008-50 as a "failure to satisfy the applicable requirements under 403(b)". Do you think I'm wrong about that? What about the corresponding matching contribution that should have been made? I'm concerned that the IRS won't rule on the matching contribution element since it doesn't appear as though the failure to make the full match in accordance with the plan's terms is eligible for VCP for a 403(b) plan. Would the IRS rule only on the "missed deferral opportunity" correction?

A non-electing church 403(b) plan defines compensation as W-2 Wages. Ministers , who receive housing allowance, contribute all or part of this type of compensation to the plan on a pre-tax basis. Minister defers salary, but only determine at end of year how much salary was used for housing allowance. I am not sure this is allowed. As an alternative, could the ministers contribute housing allowance to plan on an after-tax basis? Rationale is that includible compensation doesn't include housing allowance for purposes of caclulating 415 maximum limits to the plan - i.e., the lesser of 100% of compensation or maximum dollar amount permitted under the Code ($50,000 for 2012). Treasury Reg. § 1.415-2(d)(3)(iv) states that the term "compensation" does not include items such as "opther amounts which receive special tax benefits...". Therefore, housing allowance is not included in the annual limit, since it is an after-tax allowance. A minister could contribute the hosuing allowance on an after-tax basis if his pre-tax salary exceeds the 415 limit and his pre-tax plan contributions do not meet the $50,000 limit.

Also, when retired ministers take a distriubtion, the total distribution is subject to 20% Federal Income Tax Withholding and applicable State Income Tax Withholding, since it is not know what portion of the distribution is attributable to the tax free houswing allowance, Box 2b of Form 1099-R - Taxable Amount Not Determined is checked. This procedure allows the retirees, when filing taxes, to exclude from income distributions from the plan that are designated as housing alowances.

I am concered about participants deferring on the housing allowance and withholding 20% on the distribution. What do you think?

Here's a wierd one. For some complex reasons, a nonprofit client wants to implement an arrangement that will provide a former employee with monthly payments for the remainder of her life, but only after she reaches age 80. No death benefit. We are considering purchasing a deferred annuity, but the client would prefer to make payments directly, if we can structure the arrangment to satisfy 457(f). So here is the question:

Could a requirement to attain a certain age ever be a valid "substanial risk of forfeiture"?

My thoughts are, theoretically, yes. For example, if you wouldn't get a payment unless you attained age 120, I would say that the risk of forfeiture is nearly certain. Age 80 is clearly more troublesome, but could there be some reasonable methodologies to prove that the facts and circumstances support a SRF? When would it lapse?

I'm curious to see what creative thoughts you might have on this...

I work in behalf of a plan that uses the old PBGC interest rate basis. Last year the immediate rate was 2.25%; this year it is 1.00%. 1.00% appears to be about 200 basis points less than the interest rates inherent in insurance company annuity purchase rates.

Can anyone relate the process by which the PBGC determines the immediate (private sector) lump sum interest rate?

If an employee waives coverage under his/her employer's health plan, is the employer required to have the employee attest to having other coverage?

DB Plan (one person) was originally effective 1/1/2011, BOY valuation. Average compensation is being calculated at 1/1/2011 using K-1 compensation for a sole prop for the years 2008, 2009 and 2010. Normally the compensation for valuation purposes is adjusted for contributions made and 1/2 SE tax. Obviously in the years 2008 through 2010 there were no contributions because the plan did not exist. Does the compensation for those years need to be adjusted for 1/2 SE tax? Or can the Average Compensation for the 1/1/2011 valuation be calculated using the net income from Schedule K-1 with no adjustments because there was no plan for those years?

I searched the threads and don't believe I've seen this question asked. I also don't find an answer to my question on the IRS website.

Situation:

Company A sponsors a SIMPLE IRA

Company B sponsors a 401(k)

Effective 09/01/2012, Company A is merging into Company B and thus Company A will no longer exist as an entity onto itself.

The desire by the parties involved is that the SIMPLE IRA can terminate on 08/31/12 (the merger date) and that the former employees of Company A will then be eligible to immediately contribute to the 401(k) plan (the 401k provisions will be analyzed to be sure this can be accomplished from that end).

The problem/question - I can't find any guidance that addresses this situation. Every source indicates that without exception SIMPLE IRA plans must be maintained for the full year before terminating. It seems odd that the new entity would have to somehow administer/sponsor the SIMPLE IRA through the end of 2012.

The merger date is quickly approaching. Any advice or thoughts would be most appreciated!