Before paying a small cashout ($1,000), do you or your clients require proof of age (to confirm age for present value, etc.)?

To avoid a prohibited transaction, is there any official (or semi-official) guidance on the amount of time that must pass between the sale of an asset to a third party (B) from an individual (A) and then the sale of that asset to the individual (A)'s retirement plan?

We have a large client who would like to name their recordkeeper as directed trustee of their 401(k) plan. The adoption agreement is an FT William prototype. The recordkeeper is saying that they will only agree to be trustee if the employer uses a separate trust agreement, but they don't want to use the FT William separate trust agreement. They have their own that does not appear to be anything generated on the Relius document software that we know they use for their bundled clients. The question has been raised as to whether the client would be able to rely on the FT William IRS approval letter if they are using an unrelated separate trust agreement. The recordkeeper will only say that they can't give legal advice, but that is the only way they will agree to do it and other clients have had no problems with it.

Is this really an issue, or is someone making mountains out of mole hills?

To make a long story short, we administered a DB plan and 401(k) plan for a client for about 7 years.

They left us for 2 years but the new administrator completely dropped the ball and did nothing during those two years.

They came back to us.

We noticed that incorrect distributions were made to a terminee back two years ago. It looks like the plan sponsor just took the PVAB from our 2007 report that was not based on 417(e). In any event, we recalculated her benefit and will have the plan distribute the additional $10,000 to her.

In addition to the DB benefit underpayment, they overpaid the same participant $5,000 from the 401(k) plan.

Can the DB plan reduce her benefit by the $5,000?

Thanks.

A plan sponsor of a small esop is considering acquiring a small company. The plan sponsor wants to use prior years of service with the predecessor potentially acquired employer for vesting(6 year graded)/eligibility purposes(1YOS/Age18). The document touches on affiliated employers as well as Participating employers but I don't see why prior service with the acquired employer can NOT be used for plan purposes when those participants are acquired. The benefits, rights and features of the current participants are not reduced. Am I missing something?

Thanks

Do the pending 408(b)(2) and 404(a)(5) disclosures rules pertain Govermental plans that are exempt from ERISA?

When making a TH determination, are 401(k) employee deferrals deposited after the close of a plan year accounted for in the year that they were deferred or the year that they were actually deposited?

I.e., A 2012 TH determination is based upon the 12/31/2011 account balances (calendar year plan). Does a 2011 401(k) deferral accrued on 12/31/2011 but deposited in 2012 get added back to the 12/31/2011 account balances?

I’ve read several prior threads and Sal’s EOB. Has the IRS addressed this issue since 2002?

I have a situation with a partnership where several partner’s made an election to defer prior to 12/31/2011, but didn’t actually make their deposits until March 2012. If I account for the deferrals on an accrual basis, the plan is TH for 2012 and if I account for the deferrals on a cash basis than the plan is not TH for 2012. The partners do not want to make any employer contribution for 2012 but of course want to defer.

Any input is appreciated.

Hello everyone!

A new Form 5500 question. An employee severance plan is covered by ERISA. It has more than 100 participants, but fewer than 100 received any compensation from it. It's unfunded, no trust, general assets only.

My question is, does it matter that fewer than 100 participants received money? Under DOL Reg. 2520.104-20 and 2510.3-3, it appears that as soon as someone is eligible to participate in the plan, they are covered by it. The instructions to Form 5500 suggest the same thing, namely that we have to file. However, the client company is pushing back saying that the participants aren't "vested" in the plan and fewer than 100 got paid.

The language in 2510.3-3(d)(i)(B) states that the participant can also become eligible under the plan for a benefit subject only to the occurrence of the contingency for which the benefit is provided. Could this possibly mean that someone becomes a participant only when they're terminated? I guess that could justify the client position.

Does any of this make sense to you? What would you do?

Thank you for any thoughts.

Hello everyone!

A new Form 5500 question. An employee severance plan is covered by ERISA. It has more than 100 participants, but fewer than 100 received any compensation from it. It's unfunded, no trust, general assets only.

My question is, does it matter that fewer than 100 participants received money? Under DOL Reg. 2520.104-20 and 2510.3-3, it appears that as soon as someone is eligible to participate in the plan, they are covered by it. The instructions to Form 5500 suggest the same thing, namely that we have to file. However, the client company is pushing back saying that the participants aren't "vested" in the plan and fewer than 100 got paid.

The language in 2510.3-3(d)(i)(B) states that the participant can also become eligible under the plan for a benefit subject only to the occurrence of the contingency for which the benefit is provided. Could this possibly mean that someone becomes a participant only when they're terminated? I guess that could justify the client position.

Does any of this make sense to you? What would you do?

Thank you for any thoughts.

For those of you pondering older pension software that only runs on older versions of Windows (98, XP, DOS etc.) or are struggling with programs that balk at 64 bit versions of Windows 7, there is a solution that doesn't entail physically maintaining some old hardware. Download Oracle VirtualBox (free) and install your older operating systems inside as Virtual Machines. Only recommendation would be to load up on memory, but a heckuva lot easier than trying to coax some older boxes through the next few years. Seems to have done the trick for some older self-written Fortran benefit programs that were balking on Windows 7 (and wouldn't even run on 64 bit versions, even in emulation mode).

That plus you will find that these old OSes run significantly faster on your new hardware.

A couple of questions came up in talking to a client that I thought someone on this forum would know:

1) Does having retirement assets reduce eligibility for social security benefits?

2) Does receiving an income stream (such as annuity payments) from retirement assets reduce eligibility for social security benefits?

Appreciate your insight into one or both questions.

A participant wants to pay cash for a primary residence that he will live in. He has executed a purchase agreement. For other personal / financial reasons, he wants to not have any mortgage payment. He has enough personal non - 401k plan funds that he can fund the minimum required down payment required by the lender. In order to not have a mortgage payment at all however, he needs to borrow from his 401k account to purchase the home. The plan document requires that loans be made only if they otherwise meet the safe harbor hardship rules. My thinking is that because he has personal funds that exceed the minimum down payment required by the lender, that under the terms of the plan, the loan cannot be approved. Or can it be taken into account that this person has valid reasons that he does not want to have any mortgage payment obligation. Thanks for any thoughts.

Plan has written loan procedures as a supplement to the plan document. The SPD says the administrator "may adopt any administrative rules or procedures that it deems necessary or appropriate with respect to the granting and administering of loans."

So, what are the requirements for furnishing the written procedures?

1. Give it to everyone with the SPD?

2. Give it to anyone requesting a loan?

3. Give it to anyone who asks for it?

A DB plan is terminating and the particpants are being offered either a Lump Sum (which can be paid in cash or rolled over) or an annuity.

If the participant elects a Lump Sum, he gets a 1099-R with either a code 1, 2, 7 or G.

But what if he elects an annuity? My inclination is that he should get a 1099-R with a G, but the I don't see the words "annuity contract" in the code G description.

I've had another agent tell me that you can take 72T SEPP distributions from a 403(b) while the participant is still under age 59 1/2 and still in service. I haven't been able to get a carrier or TPA to verify and I can't see how I can get a TPA to approve the distribution. This other agent is claiming to have a client going through the process right now but I haven't seen any paperwork (We work in different states).

The date of plan termination was established for a small qualified plan in May of 2011 and all benefits were officially paid out in July of 2011. It's a DB plan on a prototype but not subject to PBGC coverage. The plan was effective in 1999.

The plan sponsor comes back now and says, I know I told you in writing that I don't want to spend the money to submit to the IRS, but could we go ahead and submit now anyway?

Would the IRS actually accept a 5310 more than 12 months after the official DOPT?

I am looking at a prototype plan adoption agreement that states for ADP/ACP purposes that all wages will be included, however matching calculations have several exclusions. Is it permissible to have a different definition of wages for testing purposes? If yes, is there something I can cite as a reference.

Specifically, the company does 401k matching only on regular earnings....however for testing purposes they have included Bonus, Commissions, and (this is the one that really throws me for a loop) stock related income (ESPP & Stock Option) that is reported on the w-2. Doesn't make sense.....Bonus & Comm I get, but why would you include stock related income (I know it's w-2 income, but it isnt possible to defer from this income)>

Thanks for the feedback Im certain to get.

Q30 of the FAB (below) seems to blow away the "don't worry about the chart" mentality that I had with regard to brokerage windows "and similar arrangements" -

that's my question; does anyone think a brokerage account arrangement (where there's no "platform", just accounts for each participant and they can do whatever they want) is not a "similar arrangement? They do use the word "platform" but I think it's a stretch to think that just because accounts aren't linked under (what I call) a platform they're not caught in this.

(Kinda stinks that they would essentially re-write the regs in this way, late in the game.)

Q30: A plan offers an investment platform consisting of a large number of registered mutual funds of multiple fund families into which participants and beneficiaries may direct the investment of assets held in or contributed to their individual accounts. Although the plan fiduciary selected the platform provider, the fiduciary did not designate any of the funds on the platform as "designated investment alternatives" under the plan. Is this platform itself a designated investment alternative for purposes of the regulation?

A30: Paragraph (h)(4) of the regulation specifies that a brokerage window or similar arrangement is not a "designated investment alternative." A platform consisting of multiple investment alternatives would not itself be a designated investment alternative. Whether the individual investment alternatives are designated investment alternatives depends on whether they are specifically identified as available under the plan. As the Department explained in the preamble to the final regulation (75 FR 64910), when a plan assigns investment responsibilities to the plan's participants and beneficiaries, it is the view of the Department that plan fiduciaries must take steps to ensure that participants and beneficiaries are made aware of their rights and responsibilities with respect to managing their individual plan accounts and are provided sufficient information regarding the plan, including its fees and expenses and designated investment alternatives, to make informed decisions about the management of their individual accounts. Although the regulation does not specifically require that a plan have a particular number of designated investment alternatives, the failure to designate a manageable number of investment alternatives raises questions as to whether the plan fiduciary has satisfied its obligations under section 404 of ERISA. See generally Hecker v. Deere, 569 F.3d 708, 711 (7th. Cir. 2009). Unless participants and beneficiaries are financially sophisticated, many of them may need guidance when choosing their own investments from among a large number of alternatives. Designating specific investment alternatives also enables participants and beneficiaries, who often lack sufficient resources to screen investment alternatives, to compare the cost and return information for the designated investment alternatives when they are selecting and evaluating alternatives for their accounts.

Further, plan fiduciaries have a general duty of prudence to monitor a plan's investment menu. See Pfeil v. State Street Bank, 671 F.3d 585, 598 (6th Cir. 2012). If, through a brokerage window or similar arrangement, non-designated investment alternatives available under a plan are selected by significant numbers of participants and beneficiaries, an affirmative obligation arises on the part of the plan fiduciary to examine these alternatives and determine whether one or more such alternatives should be treated as designated for purposes of the regulation.

Pending further guidance in this area, when a platform holds more than 25 investment alternatives, the Department, as a matter of enforcement policy, will not require that all of the investment alternatives be treated, for purposes of this regulation, as designated investment alternatives if the plan administrator—

makes the required disclosures for at least three of the investment alternatives on the platform that collectively meet the "broad range" requirements in the ERISA 404© regulation, 29 CFR § 2550.404c-1(b)(3)(i)(B); and

makes the required disclosures with respect to all other investment alternatives on the platform in which at least five participants and beneficiaries, or, in the case of a plan with more than 500 participants and beneficiaries, at least one percent of all participants and beneficiaries, are invested on a date that is not more than 90 days preceding each annual disclosure.

Like many I am sure, I have been reading and listening to a lot about the new fee disclosure rules. As we approach July 1st, I find myself looking for a good suumary of requirements as applicable to a TPA Firm like ours.

Almost all of our revenue is from fees billed to the client, who directly pays these bills. We do, however, have some revenue which is paid directly from trust funds.

First, services related to benefit distribution fees are paid from that person's account. Second, we do receive some "revenue sharing". Finally, we do have a few clients that have our service fees paid using monies of the trust fund.

As always, any comments are greatly appreciated. Above that, does anyone recommend one of the many recorded seminars on this topic? Thanks!

We have a client who is changing their payroll period from weekly to bi-monthly.

The plan has loans. I would think that the loan has to be re-amortized to allow for bi-montly instead of weekly payments. What are our obligations? Does this require new paperwork for the particpants? A new promissory note?