This is actually, at this point, a theoretical question, that might become real depending upon what data we receive.

Suppose a plan, for allocation purposes, excludes overtime and bonuses or whatever, and the plan is general tested. Further suppose that for the year in question, the compensation for allocation purposes passes the nondiscriminatory testing percentages.

Now they decide what percentages to allocate to each group. And based upon those allocation percentages, they fail when testing based upon allocation compensation definition, but they would pass if using total compensation.

Are they allowed to elect to use total compensation for the testing purposes only, even though their allocation is based upon a different defintion?

Companies A & B sponsor a 401(k) plan. A & B are part of a controlled group. Unrelated Company C purchases B in a stock purchase. All employees of B will go on C's payroll immediately after the sale. C has its own 401(k). Have the employees of B had a severance from employment that would let them receive a distribution from the A & B 401(k) Plan?

Plan sponsor wires elective deferrals and loan payments to the trust within 7 days. The wire does not show up on the trust's statement until a day later. There was a footnote in the preamble to the old plan asset regulations that stated the Department was of the view that amounts were considered to be segregated from general assets on the day the check was mailed. It seems like the same would be true for amounts wired to the trustee, but the focus in the new regulations is on the date the amounts are "deposited".

Has anyone had to deal with this issue of remittance vs. deposit under the new regulations?

a large 401(k) had a Year of Service eligibility across the board. It is deferrals and SH Match only. They want to make the deferral eligibility a Month of Service and maintain the YOS for the SH Match. I can not think of anything that would prevent this aside from greater administration detail. Keeping up with those who are eligible for deferral only and those who are eligible for both.

The plan is made up of the owner, his son and an employee. the plan is a 401(k) with safe harbor non-elective. they have individual accounts at Valic, but we do only annual administration on this plan.

Owner was born on 6/23/42. This means that he turns 70 next month; it also means he turns 70 1/2 on 12/23/12.

So the question is should his Reuqired Beginning Date be 4/1/13? If I am going to caluclate his RMD, I need to use the 12/31/11 balance then? It just didn't sound right....

Thanks for your thoughts.

A participant terminated in 2001 with 100% vesting and was paid out of the plan. He returned to work for the company in 2011. Are all of his YOS included for vesting? Thanks.

Potential new DB plan. Client is a coach for a college team and earns $250K W-2 from the university. He also earns 3x that from an alumni foundation to make up his 1M annual salary. The $750K is paid to him on a 1099 and he files a Schedule C.

Can a DB plan be setup under his Schedule C using that compensation?

Thanks

I noticed there are several providers out there, Cigna for one, who are not providing participant counts for Schedule A. Their letters make reference to other reports. I know this might be nitpicky but is this reference sufficient for the final Schedule A question asking if the insurance company failed to provide information necessary for Schedule A? I'm thinking it is indeed sufficient, but it goes against the spirit of providing information consolidated for the benefit of the policy holder.

What is the statute of limitations for a claim of a 409A violation?

Assuming that a parent company has two subsidiaries, A and B and that A's stock is sold to an unrelated buyer and is exempt from withdrawal liability under 4218(l) and later on in the Pension Fund's same plan year the assets of B are sold to a different unrelated buyer under Section 4204, provided the transactions are otherwise properly treated as separate (and there was no principal purpose to evade or avoid liability), does the fact they occur in the same plan year give the Pension Fund an argument that they should be treated together so that a complete withdrawal somehow occurs.? To the extent they are truly separate and occur in separate plan years I feel pretty good about no liability (each transaction will have soley triggered the relevant liability but for the statutory exemption) but wondered if there is an additional problem if both transactions occur in the same plan year. I understand that it makes it harder to argue that the transactions are separate but in fact they are. Thanks.

Does anyone here have a handy reference guide for the current states that require state tax withholding on retirement plan distributions? I'm having a hard time confirming which states require it, and a harder time searching through state websites to find out if they require, and at what rate.

Thanks in advance!

Client needs a Fiduciary audit....Roland Criss is the only name I could find, but we need 4 names to submit to Board...any clues as to firms [not big 4] that do Fiduciary Audits [and are qualified].????

I see that late deferral deposits requires an EPCRS filing.

Is that true of late loan deposits also?

Is there any IRS guidance on whether the timing of distributions from an ESOP may be limited to twice yearly following the Plan's receipt of the valuation? What potential cutback issues could result under 411(d)(6)?

Can this type of plan be merged into a 401(k) plan?

It is not an ineligible Code 457(f) plan. It is set up as an Account Balance plan.

i hope I picked the right forum to post this crazy question. Db plan (which i don't work on, I just do DC stuff) had a plan term date of 12/1/11. The trustees had intended to move the assets over to a MPP set up with a 0% formula to take the assets but the assets were not transferred prior to 12/31/11 (they went sometime earlier this year). So MPP had $0 at Fidelity and DB plan had lots on 12/31/11. DB plan also has a mortgage that reads:

[blah, blah, blah] and {insert name}LLC Defined Benefit Plan with trustees {insert name} and-or {insert name}, herein called "Mortgagee," which term includes Mortgagee's heirs, executors, administrators, trustees, successors, legal representatives and assigns, and shall denote the singular and/or plural and the masculine and/or feminine and natural and/or artificial persons whenever and wherever the context so requires or admits, and whose address is.....

I think the trustees are looking at this are the DB plan is the Mortgagee and that this automatically transfers the mortgage to the successor plan, the MPP. Your thoughts?

I had originally posted this in the DB forum and was asked addtional questions:

Yes, the DB plan has been properly terminated, no it is not covered under PBGC. The plan covered the owner and his wife, she retired earlier in the year and got her distribuiton already. he was the only one left on plan term date of 12/1/11. Liquid assets were not moved prior to 12/31/11 as thought. They were moved sometime earlier this year (I do not have financial statements for either plan at this time). I think the plan sponsor thinks that the wording quoted above is sufficent to inidcate that the mortgage is now as asset of the MPP because the DB plan is terminated. I disagree and think they need some kind of document (but what?) to transfer the "ownerhip" of the mortgage from the Db plan to the MPP.

thoughts?

I've seen someone using the PPA funding 3-segment rates for FASB accounting purposes. Is this appropriate? I thought FASB rates are supposed to be spot rates, but if the PPA funding rates are a 24-month average are they then inappropriate for FASB purposes?

I am a small business owner with only 2 employees (out of 5), other than myself, that participate in the 401K plan. It was established with a 'financial planner' company, and the fees are heavy, as they put us in a 401K, and now Safe Harbor for 2012.

I want to change to a SIMPLE with Vanguard.

1) Do I have to open the account before Oct 1, even if we aren't able to contribute until 2013?

2) If I open an account, but don't contribute anything until 2013, is that allowed? as we will still be with the 401L plan for 2012 as we are currently funding it with Match.

3) If I terminate the 401K plan on 'december 31, 2012", can I leave the assets where they are , or do I have to transfer them to the new SIMPLE? Do I have other options for the funds in the 401K.

Thanks for the help. Being such a small business, i have been steered in the wrong direction by the financial company into 401K that have high fees, and of course he doens't want me to leave, but I it is not work the costs.

a husband and wife plan.

They employed their daughter from 2006 through 2009.

they want to amend plan such that a year of service requires only 50 hours instead of 1000.

and this amendment is effective 1/1/2008 (adopted in restated egtrra plan).

the intent of the amendment is to have daughter enter plan 1/1/08, receive accruals from 2008 and reflect in 2011 valuation.

i am thinking that the amendment (or actually plan provision in restatde plan) should specify that the provision also applies to former employees, otherwise I am not sure if it would apply to a former employee who previously left without entering the plan.

thoughts?

thanks

I have a QACA plan that employs a match of 100% of the first 3% and 50% of the next 7%. (No A-T contributions.) I know that this match formula does not meet the ACP safe harbor requirements. I want to confirm what match figure I should be testing. My thought is that I should be testing any match that exceed 3.5% of compensation. A couple of my colleagues state that the basic QACA match formula should be applied and that the match calculated by this formula should be subtracted from the match calculated using the formula calculated in the document and that should be tested in the ACP test.

Example 1: A participant has a deferral percentage of 5%. Based on the formula in the plan document, the participant receives a match of 4%. My opinion is that we should be testing an ACP for this participant of .50% (4% - 3.5%). My colleagues believe that we should be testing an ACP of 1% (4% - 3%). The 3% is calculated based on applying the basic QACA matching formula (100% of the first 1% and 50% of the next 5%) to the participant's deferral rate. (My colleagues calc is, since his deferral rate is 5%, he should be calculated at 100% of the first 1% and 50% of the next 4%, giving him a calculation of 3%.)

Example 2: A participant has a deferral percentage of 2%. Based on the formula in the plan document, the participant receives a match of 4%. My opinion is that we should be testing an ACP for this participant of 0.0% (2% - 2%). My colleagues believe that we should be testing an ACP of .5% (2% - 1.5%). The .5% is calculated based on applying the basic QACA matching formula (100% of the first 1% and 50% of the next 5%) to the participant's deferral rate. (My colleagues calc is, since his deferral rate is 2%, he should be calculated at 100% of the first 1% and 50% of the next 1%, giving him a calcualtion of 1.5%.)

Any help and citations are greatly appreciated.

FYI - ACP run on all match contributions is failing. ACP run using my methodology is failing. ACP run using my colleagues methodology is passing.