A husband and wife (owners) have a one participant DB plan for several years.

They hire an employee who is scheduled to commence plan participation on 7/1/11.

They freeze the plan on 6/30/11 after they received an accrual for 2011.

Should employee receive an accrual for 2011?

The issue being: should employee receive an accrual to pass non discrimination for 2011, thus resutling in a corrective plan amendment?

thanks

Is there any guidance in regard to how often the applicable interest rate is compounded? Plan uses applicable interest rate for determining actuarial equivalence, so we compounded interest on an overpayment annually, but I'm not finding anything specific that says how often 417 rate is to be compunded. thoughts?

Under 1.409A-3(j)(4)(ix)©(5), after terminating a plan, the employer may not adopt a new plan "that would be aggregated" with the terminated plan "if the same [employee]" participated in both plans, at any time w/in 3 years following termination.

My question is how this language is interpreted. I have seen some practictioners say that you use a "hypothetical employee" standard, such that even if an employee that did not participate in the terminated plan now participates in the new (similar) plan w/in the 3 year prohibited period, the plan termination is not effective and is deemed a prohibited acceleration for all participants under 409A.

This interpretation seems like a huge stretch to me, and I dont see the basis for it. Does anyone know of any guidance on this issue, or have an opinion as to how this language should be interpreted?

Thanks very much in advance.

Which resource do you value more in discussing plan / parity restoration alternatives for your HCE class employees?

1. Qualified plan administrator.

2. Qualified plan advisor.

3. CPA – IQPA auditor.

4. HCE plan TPA.

5. HCE class product issuer.

6. Executive benefits advisor / compensation consultant.

7. Executive benefits TPA.

8. Other – please specify.

Appreciate your opinions.

I am working with a client (a non-profit client) on correcting issues in their SEP, and we have found the following issues:

- Underpayments to employee in 1997-1999, totaling $20,000, so plus interest on the VFCP calculator the total they owe is $35,000. I know that we need to contribute that and how to handle this portion under the IRS' VCP.

- Overpayments totaling $9,000 to current employees (ranging from 2004-2009). The way I understand Rev. Proc. 2008-50 is that we remove these excesses from the plan plus earnings. Do we need to file amended returns for these previous years to remove the deduction, or since this is a non-profit do we just let those pass and not deduct future contributions until they reach the $9,000 they get back?

- Overpayments to FORMER employees of $24,000 before earnings (ranging from 2004-2009). This is where I am scratching my head. There is no possible way we will recover the money from former employees, so is this amount, plus the earnings subject to the 10% penalty since it is staying in the plan? What collection efforts do we need to undertake to get the money from the former employees?

As I said, they have some major issues, and since they are so old, I don't believe we can self correct under SCP (even though that is what a representative at the DOL told our client).

Any insight or instruction would be appreciated, as I can't find guidance on how to handle excess contributions to terminated employees.

Thank you,

Daniel

I was laid off on June 1. I received my 60-day WARN payment on June 6 and was rehired that same day. Am I required to repay these funds?

hurray. according to ASPPA looks like we might not need a signature on these extensions!

On June 11, 2012, several members of GAC met with individuals from the Treasury Department and the IRS. At the meeting, ASPPA was notified that regulations will be issued that will allow the Form 5558 to be filed to extend the due date for filing Form 8955‐SSA without a signature. ASPPA was also informed that regulations are expected to be issued before the end of July 2012.

We're taking over the 401(k) for a non-profit organization that also has a frozen DB plan. I last worked on DB plans prior to PPA, so I know there are a number of changes that I am not familiar with. The plan is currently underfunded, so they have been told that there are restrictions on lump sum payments.

The client believes their actuary told them that freezing the plan freezes the PVAB, not just the monthly benefit. We had a lengthy call today between us, the new record keeper for both plans and the client. I was quite surprised to learn that the PVAB has appeared on participant statements along with the monthly accrued benefit. (Is that a new requirement?) Apparently the majority of the participants are expecting that to be the new permanent "balance" in their accounts in the DB plan as soon as the funding increases enough to remove the lump sum restrictions.

Anyone have a one or two sentence way to explain why the lump sum amounts will continue to change?

Small traditional Defined Benefit plan will terminate in about 4 months.

The plan document contains an alternate form of benefit choice of "Single sum distribution of a portion of the vested accrued benefit". This is not further described in the document.

This seems to indicate the plan could offer an alternate form of benefit that would allow a distribution of a portion of a benefit paid in the form of a lump sum and the remaining portion paid in the form of an annuity.

We have never had a plan sponsor want to offer this.

Is this possible?

Thanks.

This year, they added an additional item 38b to the 2011 Schedule SB.

What would 38b) be here?

34) Minimum required contribution , before reflecting PFB = $277,000

35) Prefunding Balance = $2,000

36) Additional cash requirement = 34) minus 35) = $275,000

37) Contributions discounted to valuation date = $280,000

38a) Excess of 37 over 36 = $5,000

38b) = portion of 38a attributable to use of PFB= ??

If the PFB was not used, the excess in 38a) would have been $3,000. So is 38b) just then the PFB of $2,000?

Thanks

I am legal counsel to a 401(k) plan and have a client who received a letter from DOL informing them that their 401(k) Plan is being investigated. This client is very conscientious and does everything right. Anyway, the client asked me if they should notify their insurance carrier. At this point all that has happened is the receipt of the letter. We haven't supplied the documents, met with the agent yet or had any follow up questions. I think notifying the insurance carrier is premature at this point but was curious as to what others think/ have done.

By the way, I have read the insurance policy and it seems to say that the insured must notify the insurer when the insured becomes aware of facts that could give rise to a claim. At this point, we aren't aware of any such facts. Assuming anything the agent uncovers is even covered by the policy, it seems to me the time to notify the insurer is when we have a better idea as to what the agent is focused on or if we uncover something in reviewing the paperwork before sending it to the agent.

Any thoughts are much appreciated.

Given: PLLC -- DB Plan with employees.

There is not enough corpoarte income to make the minimum contribution.

Owner/ shareholder want to terminate the plan.

Question: can the owner make a personal loan to the PLLC to make the minimum contribution?

(Once the asset is distributed, the owner will then get back his loan).

Is there any problem here?

Thanks.

There are 2 participants in a 401k plan, the owner and an nhce, and no other employees. Although the nhce has said he'll never elect to defer, it seems that the owner will still have to obtain a fidelity bond since it's technically an ERISA plan. Would the bond still be required if the nhce signed an irrevocable waiver of participation?

Didn't the IRS publish a model special tax notice in Spanish? I'm having a devil of a time finding it if anyone can give me a hand.

Thanks.

A participant wants to take a withdrawal from her account. She is over 59 1/2. The plan does not have in service distribution. Only loans and hardships. Since a hardship is not an eligible rollover distribution, she is only electing 10% FIT with held. However, the custodian of the account is stating that funds must have the 20% mandatory with holding since she is over 59 1/2. Is this accurate?

An employer has a policy whereby it offers employees $250 to have their working spouse "opt out" of employer sponsored medical coverage. Does this policy need to be included in the Cafeteria Plan Document?

I understand the function of the interest rate is to provide an assumed level of return on assets over an assumed period of time to produce the annuity payments over that same period.

For example, disregarding the 417(e) minimum assumptions, if a plan provides for a 7% interest rate and specifies a mortality table for calculating actuarial equivalency, is it accurate to say that a participant is "earning" 7% per year on his benefit, disregarding any actuarial adjustments for early/late commencement ? This does not seem accurate, but I'm not familiar enough with the mechanics to understand the reason.

All of a sudden, a client has orphan participants receiving notices of their possible benefit entitlement from SSA. The Plan valuation records don't report these participants nor are Company payroll records from the 1970s and 1980s readily available if available at all. The Company wants to ensure all participants get their benefits.

Is anyone aware of a process whereby a Plan Administrator may request the SSA to identify all participants listed on SSA for their plan?

Best Regards,

andy

In March, 2012 it was published that there was some funding relief with respect to interest rates used in actuarial valuations starting in 2012.

"For 2012 the interest rates must be within 10% of the average of benchmark bond rates for the 25-year-preceding period, according to news reports"

Are there any published interest rates somewhere to conform with these new guidelines?

We have just been using the regular published rates that we used for 2011. What are other people doing?

Are plan assets allowed to invest with a margin account? Assuming the answer is yes, what happens if there is a margin call and there are no other assets to cover it nor permissible additional contributions?

Side issue - can plan assets be pledged for collateral for a loan (note: not a loan from plan assets)