According to a DOL auditor, a plan's SPD is deficient if it does not name the investment provider for the plan.

For example, a company officer is the plan's discretionary trustee and that discretionary trustee had chosen an investment platform (example: Principal, Hancock, Nationwide, etc.) as the investment vehicle for the participants to direct the investment of their deferrals and to direct the investment of any employer contributions. The participants receive enrollment kits to direct their investments. The discretionary Trustee choses a fund lineup, but has the authority to change that and to change the investment platform, if they deem it to be necessary/prudent to do so. Assume the plan does not have a corporate trustee nor does it use a separate trust agreement.

The DOL auditor says the SPD must satisfy 29 CFR 2520.102-3(q): "The identity of any funding medium used for the accumulation of assets through which benefits are provided. The summary plan description shall identify any insurance company, trust fund, or any other institution, organization, or entity which maintains a fund on behalf of the plan or through which the plan is funded or benefits are provided."

The DOL auditor then says that if the SPD does not identify where the plans assets are invested, the SPD is deficient. They say:

An example of the language that we would look for is, 'The trust assets are being held in a Trust Account at:

Mutual Fund Company Name

123 Main St.

City, State 12345

(XXX-XXX-XXXX)' "

They then say that any SPD without the above language would need to be amended.

Most SPDs have only the trustee name and address and phone number, nothing about the investment platform.

Are the SPD's for the participant-directed 401(k) plans in this country out of compliance if they do not name the place where the assets are invested? I wouldn't think so.

Comments? Suggestions on a response?

April 18, 2012 is

National Wear Your Pajamas To Work Day

Today is National Wear Your Pajamas to Work Day! How many times have you just wanted to roll out of bed and head into work in your cozy, comfortable pajamas? Well, today you can!

National Wear Your Pajamas to Work Day is exactly what it sounds like—a day dedicated to wearing your pajamas to work. This holiday always falls on the weekday after taxes are due because an ultra-casual day is the perfect way to recover. Just make sure to check your schedule to make sure you don’t have any big meetings planned!

We got a call from our insurance company today for us to come by & review our coverage or something, so we were in town so we stopped by & she went over our coverage & everything then she asked about our house & life insurance. We dont have underpinnin on our trailor, plus its not in our name lol, so we couldnt do a quote for that so she quoted us for life insurance. so she did it for dh me & the kids for us 50,000 each & 10,000 for each of the kids & it was $40 a month for 5 years. idk anything about life insurance does this sound bad or is it good? lol if you have life insurance how much are u paying a month? & who are you with?

Synopsis:

I opened a Roth IRA for my wife and I in 2011 through Bank of America Merrill Lynch. The account was opened late Sept 2011. i contributed $2700 to my wife's account and $3000 my account by the end of 2011. In Nov 2011, I won a small law suit which was added as income when I filed my 2011 taxes this year.

Normally, my wife's and I combined income averages $164,000 yearly. Due to the money won in the lawsuit, my income for 2011 became $186,400. (the lawsuit was settled at the last minute unexpectedly)

I just now realized that my income in 2011 exceeded the Roth IRA yearly salary rules. If I knew I was going to win the extra money, thus exceeding the salary limits or a Roth, I would have waited to open the Roth this year instead.

What are my options.

FYI: my yearly income for this year(2012) should not exceed $160,000, (i dont play the lottery nor expect to win any more lawsuits) so I know I can start to contribute again this year, but what do I do about the 2011 contributions? The 2011 contributions are tied up in stocks and mutual funds within the Roth IRA.

I searched the forum for this topic but did not ind anything.

Happy Birthday, J. P. Morgan.

A nice, round 175 years since his birth on April 17, 1837.

We have several US Citizens that work in foreign countries and receive only non-US source income. I know they are not excluded from coverage testing as nonresident aliens because they are US Citizens. Is there any way to exclude them from coverage testing?

I notice in Sal's book that he provides that a US citizen in Puerto Rico or in one of the US possessions must be included in coverage testing. This implies to me that if they are not in Puerto Rico or a US possession, that they may be excluded. Under what theory can I exclude them?

I'm also exploring the theory that they have no compensation since it is all non-US Source income so I can treat them as benefitting under the plan based on Treas. Reg. § 1.410(b)-3(a)(2)(ii)© that provide if an allocation is not made because of §415 limits, the employee is deemed to benefit for coverage purposes. I think this might fall apart since foreign income counts under 415.

Could I treat them as non-employees? Do I have a basis for that?

I'm pretty sure the answer to my question is, "No, you're not missing anything", but this situation is odd and making me wonder if I missed the boat.

Two brothers each own 50% of Company A. There are no other owners. Company A has a safe harbor match 401k. The owners participate in the plan. There are 4 HCEs (including the 2 owners) and around 5 other eligible NHCEs.

The same two brothers also each own 50% of Company B. There are no other owners. Company B has a seperate 401k that is NOT safe harbor. The owners do not participate in this plan. There are no HCE's and around 50 eligible NHCEs.

(The two businesses are also in the same industry and frequently operate together on various projects.)

The plans have always been operated completely independently of each other, as if the other plan/company didn't exist.

But they are a obviously a controlled group. The plans can't be aggregated for testing because one is safe harbor and one is not. Company A's plan is completely blowing it's nondiscrim testing every year (for at least the last 5 years).

Did their prior TPA screw up, or am I missing something? Any thoughts?

Participant went on leave of absence in 2009 after working 1000+ hours. Person never went back to work and was formally terminated in June 2010. Break in service is defined as Plan Year with less than 500 hours. Is 2010 treated as a break in service even though person was not on books for full plan year?

My head is quite fuzzy right now trying to be sure that the determination of controlled group status is properly applied. I do have the determination the Accountants have made but want to double check.

Here are the facts:

10 different owners. 6 are immediate family. all over age 18.

I'll number the owners 1 through 11 and code the family relationships with letters (F = father, M = mother, D = daughter and S = son). Employees 7, 8, 9 & 10 have no family relationship.

There are 5 different companies; A - E.

Company A: 1(F) = 40% 2(D) = 15% 3(S) = 15% 4(S) = 15% 5(S) = 15%

Company B: 2(D) = 15% 3(S) = 15% 4(S) = 15% 5(S) = 15% 6(M) = 39% 7 = 1%

Company C: 1(F) = 20% 2(D) = 12% 3(S) = 24% 4(S) = 12% 5(S) = 12% 6(M) = 20%

Company D: 2(D) = 21.25% 3(S) = 21.25% 4(S) = 21.25% 5(S) = 21.25% 8 = 15%

Company E: 1(F) = 24% 6(M) = 24% 9 = 26% 10 = 26%

thanks in advance!

Question: When completing the Form 5330 for Excess Contributions due to an ADP failure...Is the amount that gets recharacterized as catchup contributions subject to the 10% excise...If it is not subject, do you have a regulation reference?

So you know how plan dopcuments have the area where the TPA can sign, authorizing uyse of the prototype? What does it mean if everyone but the TPA signed where they were supposed to. This was an occurence of the adoption agreement being emailed.

Is it a problem? It says write in the language that we have that "Such acknowledgment is for administerial purposes only".

Certainly it's not a compliance issue, correct?

A one participant plan owner is age 65 and has been at 415 dollar limit.

NRA is 62 and plan allows for in service dist.

plan allows for Retroactive ASD.

If plan were to terminate now does it seem reasonable to have RASD at age 62 where the distribution is essentially

= missed payments (with interest) for three years plus pv of future benefits at age 65?

The above of course is much more than simply pvab of future payments, since at 415 limit.

If plan did not provide for in service dist and/or RASD then I dont think that amending the plan now to provide those things would work. That is, I believe it had to be in the plan provisions at the time he reached age 62 or whatever the RASD is.

thanks

We have a small plan that terminated and is now being audited by the PBGC. The plan terminated in late 2010. A valuation was run 1/1/11 to get the current interest rates. The valuation system uses age near. The document defines Age as age near but there is no reference to Age for LS calculations. PVAB is defined in the doc as "the AE LS amt. of a Participant's AB at date of valuation". In practice, when a participant terminates we calculate the PV of the AB at the age near retirement age and discount that to the current age using yrs. and mos. There is no pre-ret mortality. We indicated on the PBGC checklist that the age for LS calcs was "Near". There was a large excess in the plan which was allocated to the participants based on the PVABs from the 1/1/11 valuation. The distributions were made beginning 4/1/11 - most were made in May 2011 and the last piece of the owner's benefit was paid in August 2011. The auditor wants us to recalcuate the PVAB as of the date of distribution since some particpipants age near would have changed which would have in turn changed the basis for allocating the excess. We feel that this is unreasonable given that everyone received more than the value of their benefit. If we follow his guidance, everyone would have to be paid twice. The first time for just the PVAB of the AB at the date of THEIR distribution and and a second time for their share of the excess. That would be an administrative nightmare. I've searched this forum, but have not found anything helpful. I would appreciate any comments or guidance as the auditor is wanting to submit the case for review - whatever that means.

I know I have read that as long you have individual groups in a Xtested plan that you can use integration.

I have a Plan that is a SH Match with one terminated employee and Top Heavy. We are trying to run a 80% +$1 and 5.4% PS integration formula. When I run the testing, allocation, it all fails. Do I really need to do the testing since it is a deemed Safe Harbor formula. Coverage for the Plan is 80% so I know coverage passes.

Any help would be great.

Ok, I am confused. If a small plan has a 3% Safe Harbor, do I have to ACP test the discretionary match??

Thanks.

We prepared a beginning of year valuation (as of 1/1/2011) for a sole proprietor DB plan. The client had a one time Schedule C income of about 1 million. Is it possible to revise the valuation to reflect the one time Schedule C income to develop a large 2011 contribution? If so, how?

Is there any reason that a sole proprietor can't use an evergreen deferral election? In other words indicate "I elect to make 401(k) contributions equal to the max allowed (including catch-ups) every single year until I change my election."

I've just never did it that way because it generally comes up on a one-off basis. But now I'm in a position to use more of an evergreen election.

When standard tpa admin fees are charged directly to participant accounts, I have seen them charged based on account balacne. A long timer participant gets charged much more on a dollar basis than a new participant. So is there such a thing as dividing the fee by number of participants and withdrawing a flat amount from each? I recognize that doing so, however, would charge a much higher %age to newer participants with much lower balances. All that being said, for a plan that insists on passing through such eligible expenses, is there a solution that seems more equitable, particularly in the case that tpa fees are charged to begin with based on participant size, rather than asset size.

Employer maintains both a 401(a) profit sharing plan and 403(b) plan. When testing the 401(a) profit sharing plan for top heavy status, must the two plans be aggregated? Thanks.

just got a projection the likes of which I have never seen. There are two allocaiton classes for the employees - those earning more than $65,000 and those earning less than $65,000. I know we're not bound by reasonable classification for anything, but it just seems so "obnoxious?" (probably synonomous with very very clever!) that I just had to ask...