first year working on this plan

The plan sponsor contributed an excess contribution for 2010 as of 100k as of 12/31/10 val date.

no credit bal or pre fund bal prior to 2010

no election is made by 9/15/11 to establish a pre fund balance.

as a result it seems to me that it is too late to establish a pre fund bal for excess 2010 contribution and thus no available pre fund bal to offset 2011 min funding.

Am I missing something?

it pays to plan ahead or just establish a pre fund bal all the time.

thanks

Question has come up on the compensation limit for a short initial plan year.

Facts:

Plan year 10/1 – 9/30

Limitation year is the plan year

Plan effective 1/1/2012

Should the comp be limited to:

$183,750 (245,000 * 9/12), or

$187,500 (250,000 * 9/12)

Thanks in advance.

I have a client with a weekly payroll. The deposited almost every payroll a week late for 3 years. The auditor wants me to calculate the lost earnings. The lost earnings for each week comes to less then $3.00. Do I have to go through each payroll and breakdown the lost earning by participant if it is such a low amount or can I spread it in another way.

Thanks!

I'm trying to determine if an owner has the ability to relinquish his stock at this point to avoid RMD's when he attains age 70 1/2. Here are the facts: DOB = 1/2/43, Attains 70 1/2 on 7/2/13. However, the plan year is 1/31. As of today, he owns +5%. The current plan year is 2/1/12 - 1/31/13. This is where I'm getting tripped up.

According to Sal's Book, Chapter 6, Section VII, Part B.1.d, "the 5% owner rules applies to a participant who is a 5% owner for the plan year ending in the calendar year in which the employee attains age 70 1/2.

So in my example, my owner turns 70 1/2 in the calendar year 2013. The plan year ending in 2013 is 1/31/13 which is the current year.

Is it too late to relinquish the stock? If so, what date would he have had to relinquish the stock to avoid RMD's going forward? Is changing the plan year to 12/31/12 at this date a viable option?

Earlier this year Company A purchased a 90+ person business from Company B (who has other businesses with thousands of employees.) Employees of Company A had their employment terminated by Company A on Day 1 and were subsequently hired by Company B on Day 2 – the following day. Anyone who had an FSA account with under Company A's plan was unable to make claims with its then current FSA administrator for anything after Day 1.

Q1) In doing so, can company A automatically transfer the FSA balances from the employees enrolled in FSA accounts into Company B’s FSA accounts?

Q2) If company A transfers the FSA balances and accounts, is Company B obligated to offer the same healthcare plan which the employees previously participated in (as employees' FSA contributions are based on costs from healthcare plans with a specific rate schedule and given that these balances cannot roll-over year to year as they do in HSA plans?) It just so happens that Company B’s healthcare plan has 50% higher monthly costs and nearly 300% higher out of pocket maximums.

Q3) If Company A transfers the accounts and balances, can the new employees of Company B (who had their balances transferred) be offered the opportunity to change their FSA election amounts considering the significant cost increases in Company B’s healthcare plan?

Q4) If Company B offers its new employees the option of enrolling into a HSA plan, are the employees who had FSA accounts from Company A prohibited by law from participating in such a plan? (keep in mind, these employees were unable to receive benefit from their FSA accounts for any services after the termination date from Company A on Day 1.)

Q5) If an employee of Company B wishes to no longer partake in Company B’s HC plan, can that person opt-out of the healthcare plan during the enrollment period? And if so, what if anything happens to the FSA account and balance? Would they still be obligated to make deposits into the FSA account?

Thanks in advance.

After looking at Derrin's recent Q&A on MEPs and PEOs, I am curious about more details of how a 5500 would be filed now, if it was not filed a bunch as single employer plans in the past.

http://benefitslink.com/modperl/qa.cgi?db=...loyer&n=321

and

http://benefitslink.com/modperl/qa.cgi?db=...loyer&n=329

Suppose an employer is part of a defined contribution MEP PEO with ten or so completely unrelated other employers. Testing was always done on an employer-by-employer basis, but now the thinking is that the Form 5500 should also have been filed on an employer-by-employer basis as well (it was not filed that way in prior years).

Suppose each of the unrelated employers wants to now comply with the requirement to file their own 5500. Going back to the beginning of the plan to file 5500s from decades ago seems to be imprudent from a cost standpoint, so they are considering that they'll start with their 2011 Form 5500 filing.

However, what do they show for the starting assets on this 2011 Form 5500, which is now the first 5500 being filed for this employer? Would you suggest the starting assets are zero and also show a transfer in from the MEP? Plus, when the MEP files its 5500, it shows a transfer out of the same amount and identifies the plan it is transferring into? Thus, transfering out from what was misunderstood to be a single MEP into a now understood single employer plan? Since the one of the participating employers also sponsors the MEP, there will still be some participants and assets left on the 5500 for what once was considered as the main PEO.

The idea here is to do what can reasonably be accomplished yet still satisfy the DOL and IRS. Any other ideas for this?

Dr. Group A has 30 docs - they have 8 billing personnel and 9 nurses... Dr. Group A wants to split off it's billing personnel with a 100% owner who is not a doctor and has no ownership in the Dr. Group itself... if all services provided by the new billing company is for Dr. Group A - does an affiliated service group relationship exist? if yes, the billing group would still need to be considered in the retirement program in place, if not, the billing group could start its own plan entirely independent of that of Dr. Group A.

If the answer is yes and the billing group is an affiliated service relationship - how much revenue from different non-Dr. Group A sources must be generated by the new billing company for it to NOT be an affiliated service relationship? 50%?

Let's say a participant deferred the max into a 2011 calendar year plan prior to the end of the year. For example $16500 was deferred on 25K in comp through June 30, so the part should receive a basic SH match of $1000. Let's say that the P.S. only deposited $900. The $100 shortage was not discovered until after 3/31/12, is the P.S. still allowed to put in the $100?

Also, let's say the participant earned $50K for the year, the P.S. should deduct the $16500 throughout the year which would have afforded the participant a SH match of $2000 instead of $1000, correct?

This is how I am interpreting Treas Reg 1.401(k)-3©(5)(ii)

I've been working with CPS. Do you know of any other Head Hunter firms that specialize in the needs of TPAs? Thanks

Has anyone ever dealt with this? Basically, an employee was in the hospital during the open enrollment election period. Now that he has returned to work, he would like to change his benefits elections. The plan document is silent on the issue. Does anyone know of any authority that would allow him to make a new election? I can't find anything that would justify this.

I was under the impression that bundled providers were to provide separate, to some extent, fees that are related to basic TPA roles such as compliance testing and Form 5500. I am reading one such disclosure. For services it refers reader to an unattached, previously provided, document called 'Recordkeeping and Administrative Services Agreement'. It then says 'Consistent with this “packaged” structure, the compensation and fees we receive are not broken out into a fee for each specific service we provide.' I may be naive but it would seem that such providers would have different cost structures whether the plan is bundled or not which would make this easy to disclose. I also thought this was required by 408(b)(2). Is this disclosure really sufficient?

A owns LLC1, a mining type operation, there are no employees. A sponsors a plan for LLC1.

A has decided to start a coffee house on the side. A is starting this from nothing, not buying it from someone else. Does the transition period apply since this is not an acquisition?

On plan review we discovered client filed 2009 and 2010 Form 5500s late for PS plan (less than 100 participants). As far as we know they have not received letters from the IRS or DOL regarding the late filings. Client's accountant (who filed the returns late) told us he wrote a letter to the IRS asking to abate the penalty and they agreed. (At this point we don't know if the letter to the IRS was in response to a penalty letter from the IRS.) But what about the DOL penalty? I know the IRS has agreed to waive their penalty if the returns are filed late under DFVCP, but what about where the returns were not filed under DFVCP? EFAST shows that the box for DFVCP filing was not checked on the returns. What options do we have at this point? The returns were already filed (late), not under DFVCP. Should we file amended returns and check the DFVCP box and pay the reduced penalty? I don't think the IRS agreeing to abate the penalty binds the DOL in any way. Any thoughts?

The grant of a nondiscounted option on service recipient stock is not deferred compensation under 409A, so long as there is no additional deferral feature. However, is the promise to receive such an option at a specified time in the future subject to 409A?

As a TPA, are we allowed to (required to) provide retirement plan history data to an outside party that was delivered to us by subpoena? This subpoena was issued by a local child support enforcement agency.

I have an owner who defaulted on a loan a few years back. My recollection says that this is a PT--we cannot just do a regular default and have him taxed on the remaining balance.

Where does the code address loans to owners and the consequences of default?

Company is C Corp.

I filed a Complaint with the Department of Labor in their Philadelphia office after breifly sepaking with someone there who advised me to send in documentation. Their website says if you send them a complaint in writing you will get a written response from them.

I received a phone call from someone in Washington - nothing written. She indicated that the insurance company was correct.

I sent another letter to the original party asking for their assistance as I disagreed with what the person from Washington had told me.

Who can I contact now? I really would like somethng in writing.

Here's the setup - client has allowed it's participants to select any broker for their 401k account - in some instance, a participant even has multiple brokerage accounts... the only statements the participants are receiving are their brokerage statements - since part of the plan is on a 404a5 'ready' platform, those participants will receive the required info... it's all those other participants I'm concerned about... side note, the plan is 100% vested on all sources... any thoughts or ideas would be appreciated....

plan sponsor approaches me with a plan in which he has not filed 5500s since 2000 and has not done valuations.

plan has close to 400k.

he would like to terminate and rollover into IRA (of course).

he is approaching age 70.

my impression is to file anonymous VCP suggestinig that all prior years' vals and 5500s to be created.

any better suggestions?

thanks

We are preparing a determination letter filing for a group trust established under Revenue Ruling 81-100. I am wondering if anyone has recently received a group trust determination letter...and the length of time it took for the IRS to process the request.

Thanks!