The ERISA 408(b)(2) rule says that if a service provider has failed to furnish the required information, despite the responsibile plan fiduciary's follow-up efforts, and the missing information relates to future services, "the responsible plan fiduciary SHALL terminate the contract or arrangement as expeditiously as possible, consistent with [the fiduciary's] duty of prudence."

A service provider that can't or won't in more than four months' time answer this information request shows by its conduct at least that it doesn't care about following relevant law, and perhaps that it lacks competence or capability for the service that it's supposed to perform. In what circumstances would it somehow not be prudent for the plan fiduciary to get rid of such a weak service provider?

I have a client who is 100% owner in Company A and sponsors a 401(k) Plan on a calendar year. The plan struggles to pass the ADP test each year, and refunds are a possibility each year.

The same person has 50% ownership in Company B, with his partner. There are no employees in Company B.

There is no control group, nor affiliated service group with Company A & B. Neither company has union employees.

In 2012, the owners has made deferral contributions in Company A plan already. The owner and his partner would like to start a SEP IRA in 2012 for them. Can the owner in Company A & B, participate in both the 401(k) plan with Company A, and the SEP IRA with Company B.

I do not think he is permitted to do so, but cannot site sources that confirm. The accountants are not agreeing with my answer, and I need to "show" them that participation in a 401(k) and SEP IRA in the same plan year are not permitted.

Thanks in advance for any help!

Plan was established 1/1/2009 and written as using prior year testing. Originally, the only employees were the 2 owners (husband & wife) and they have each been making max 401(k) deferrals each year. In 2011, they had their first eligible NHCE employees, none of whom deferred anything in 2011. For 2011 testing (the prior year being 2010 w/ no NHCE's), how much can the owners defer in 2011, if anything at all?

We know that under 162(m) performance-based compensation is not subject to the $1 million deductibility limit. Two questions regarding the compensation formula.

The regs are clear that the comp committee may not retain discretion to determine the fraction each employee may receive from a bonus pool. (§ 1.162-27(e)(2)(vii)(Example 7)). However, the regs also provide that the performance goal can be established in the first 90 days of the performance period. Can a plan allow the comp committee to determine the percent each employee may receive, on a year-to-year basis, so long as the comp committee establishes the percentage inthe first 90 days of the performance period? (I think this is yes.)

Second, assuming the first answer is yes, will the plan need to be reapproved every 5 years? The regulations provide that if the comp committee has authority to change targets under the performance goal after shareholder approval, the plan must be reapproved in the 5th year following approval. Is authority to change allocation of the bonus pool the same as authoirty to change "targets"? (assume the comp committee has not discretion to change the performance goal, only the allocation of the pool).

Any help is greatly appreciated.

Can there be more than 1 Privacy Officer for an employer's health plan?

Employee A works as an employee of Company X and participates in the Company X 401(k) Plan.

Employee A also works as an independent contractor (receiving a Form 1099) for specific contract work performed for Company X.

The 401(k) plan uses the simplified 415 definition of compensation with no additional exclusions. Should the pay received as an independent contractor be included as 415 compensation under the 401(k) plan?

Company has 40 employees during the determination year. There are two 5% Owners that are also officers and 4 other employees that have comp over $160,000 that are officers. There are no exclusions that I can use in the determination of Key Employees that would reduce the 10% number of includible officers.

Are there 4 or 6 Key Employees in this example? Thanks.

Has anyone used phantom stock as an employer matching contribution?

If so, any restrictions.

Advantages? Disadvantages

Thanks

Alexa

I am working with a financial advisor who sells insurance for one company. He is classified as a "statutory employee". He also sells other products but I think insurance and annuities are his principal business activity. (Code Sec. 401©(1))

He receives payment through both a W2 and a 1099. Because of the 1099 he files a Schedule C and pays SE Tax. He is under the assumption (he is going to get back to me) that only his W2 compensation is eligible for the insurance company's retirement plan.

Here is my question: Can he open up a DB plan for his 1099 income if this income is not eligible for the other plan?

If he got this 1099 income for any other profession than a full-time insurance salesman (at least I think he qualifies as such) this wouldn't be so confusing. Has anyone seen this situation before? I would really appreciate any help I can get. I have researched and researched but haven't found anything too concrete. I was told by an accountant that he thinks it's okay but his confidence, or lack their of, didn't make me feel better about it.

Of course, so I can stay ahead of Mr. Rigby, I will be following up anything I tell the client with "but you'll want to check with an ERISA attorney on that".

Good afternoon. We are sorting out some random issues and one question came up: is it possible to apply a vesting schedule to post retiree medical benefits funded by a VEBA? Assuming the establishment of separate acounts within the VEBA.

On a semi-related note, if a client wants to set up notional accounts with the VEBA as the "funding vehicle" for the post retiree medical benefits, can the notional accounts be subjected to a vesting schedule? We are well aware that we are over our heads and want to get some issues streamlined before we present them to an attorney. Thanks in advance.

This question involves a private medical practice with a small number of practitioners, all of which are stockholders. As is common, the docs have stock repurchase agreemetns so that when they retire, the corporation buys their stock back. The stock price is based on book value minus debts, which I think is ok. But there's a "floor" on that formula so that the doc gets at least $100,000. I know of no reasonable valuation method that would put the stock price at anywhere close to that (it's currently in the range of $20,000-$30,000).

This situation seems to clearly implicate the basic 409A provisions. My question is whether there is an exception that might apply or, if not, how to make this sort of arrangement 409A compliant.

I'm not sure if this matters, but the docs all bought their stock for $100,000. The purchase price was paid for by salary deductions over 3 years.

I'm new to this, so....speak....slowly.....

Thanks in advance for any help or insight anyone can offer.

The instructions for VCP (11.01 of EPCRS) says the request "consists of a letter from the Plan Sponsor...that contains..." descriptions of the failure(s) and correction(s), etc.

It later states that Appendix D can be used as a format.

Do I have to do a letter and then attach Appendix D, too? (We cannot use the streamlined submission under Appendix F in this case)

Can an individual with a SEP, aggregate net income from a Schedule F (farm) and an unrelated Schedule C (directors fees) in order to calculate the maximum SEP contribution that can be made for the year?

I just received a call from an Investment adviser that suggested using Voluntary after tax contributions.... distributed in service to an IRA... then convert the IRA to Roth.

I have not worked with voluntary after tax contributions in years.

Please confirm my memory regarding voluntary after tax contributions:

1. Are they subject to 415? I think yes

2. Are they subject to 402(g)? I think no

3. This plan has an enhanced Safe Harbor Match? Am I still free of the ACP test?

4. If the owner is the only one to do this, do I have any coverage or discrimination problems or tests to run? How about benefits, rights or features?

5. Any other amendments needed other than allowing voluntary after tax and in service withdrawals?

6. Other?

Hello all - I can't find any guidance on this issue so I am hoping there is someone out there familiar with it. It is clear that in a straight money purchase pension plan, you cannot adopt the in-plan Roth conversion feature. What is not so clear to me is that if your existing profit sharing/401(k) plan contains assets that were merged from a prior money purchase pension plan that was maintained by the employer, and you have the in-plan Roth conversion feature in your K plan, whether the conversion could include the merged MPP assets.

All I could find on this topic was some mention of the fact that spousal consent is not required for the conversion, but I could not verify whether those merged MPP assets could even be included in the conversion.

Thank you so much for any assistance you can provide.

I am trying to determine what type of testing would have to be performed for a plan that lets one group of employees in after 90 days of service, and the other group in after 30 days of service.

It seems like I need to do some sort of coverage or current availability testing. Would I use a safe harbor percentage? Would the otherwise excludable employees group come into play? I am having trouble thinking this through as I have never seen it.

Can any one point me in the direction of a discussion of how to "correct" a 409A operational violation that is outside of the formal correction program.

An employee (insider) was awarded restricted stock units that vested and should have been paid no later than March 15, 2009, but were not paid until 2012. How does he pay the penalty/interest? Does he need to amend his 2009 tax return or does he just include the income/penalty/interest in his 2012 tax return?

Thanks.

The excise tax for late deposit is less than $100.

The VFCP Program states if the amount is de minimis ( less than $100), the excise tax is deposited to the Trust and allocated to the impacted participants.

Question:

If the Plan Sponsor is NOT filing under VFCP, does the di minimis rule still apply?

If so, what happens to the filng of Form 5330? Since the tax was deposited to the plan, does the Plan Sponsor just maintain the form for future reference in the evnet of an audit, or doed the form still get filed with no payment?

Can we change employer contribution matches based on hours worked?

For example, employees with 20-30 hours per week get no match

30-35 get a 3% match

36+ get a 3% employer contribution and a 3% match

Hello. I have a client who inititated a 401k plan effective 1/1/12. The client sponsored a DB plan, which they intend to terminate sometime in 2012. If there are rollovers from the Defined Benefit Plan to the 401k plan, are the rollovers considered 'related rollovers'?