We have a service provider who does first-level appeals. This service provider asserts that they are not a fiduciary because the plan also has a second-level appeal. The service provider says there is caselaw out there supporting this position, but I have not found it.

Is anyone familiar with such caselaw?

Does anyone know whether a second-level appeal would relieve this provider of fiduciary status?

Since claims are required to be reviewed by the appropriate fiduciary, is it even possible to allow a service provider to review claims if the service provider refuses to be a fiduciary?

Given traditional DB plan with formula 5% of Average Comp x years of service.

Question1: Can averaging period = 1? (that is, no averaging)

Given fraction accrual rule. where accrued benefit = 5% x Average Comp (3 years) x min(25, total service) x (years of service / total service)

Question: in applying the formula, CAN you use "projected" average comp rather "current" average comp?

For example, given following comp: $100,000 $120,000 and $130,000.

Is "average comp" = $120,000 (average of current 3) or is it $130,000 (projected average 3)?

Thanks.

I have a 401(k) distribution request from a nephew of a deceased participant. He has provided the death certificate of his uncle, a State Letter of Administration of a Small Estate showing that he has authority to search for assets, a State Letter of Administration of a Small Estate showing that he is the personal representative of his uncle's estate, and "Affidavit of Estate" on plain paper stating that he is authorized to receive any monies owed to the deceased by the company the deceased worked for. The Affidavit is notarized but is on plain paper and does not really show an legality to it other than his signature is notarized. Can I distribute his uncle's funds to him based on this documentation? Or, do I need to get something more official showing that he has legal rights to the money. He says his going to deposit the funds into an estate account. I received a Plan form "Non-Spouse Beneficiary Distribution Election" form requesting a "lump-sum payment to be issued to him. Any thoughts from anyone out there???

I have an employee who elected $4200 effective 1/1/2012

Theer was a system error snd $175 has not been taken semi-monthly for 5 pay periods. Employee just noticed. How would we fix this? Can we double up next 5 pays to catch up for the $875 not deducted to date?

I have a new client that has taken the 401k assets that were part of a KSOP and established a new 401k plan with these assets. THe only money left in the KSOP are employer securities/cash that are Profit Sharing. Match or old Money Purchase Money.

They established a new 401k plan with a new plan number 002, but listed the effective date of the plan the orignal effective date of the KSOP? Does this seem correct? Is that how a spin-off is handled?

The new 401k plan will also accept any profit sharing/match/money purchase funds that an employee chooses to diversify (when eligible to do so). Are these rollovers to the 401k plan considered 'related rollovers'? Do they carry J&S if the funds are from the Money Purchase piece of the ESOP?

Thanks for any guidance you can provide.

Isn't there a Prohibited Transaction Class Exemption permitting an investment company to invest in its own mutual funds through a qualified plan that it sponsors? Is it PTE 77-3 (for open funds)? (PTE 79-13 for closed funds?)

What if the funds are invested in the employer securities of the investment company itself? Is there a different class exemption that applies?

Taxpayer converts a traditional IRA to a Roth during 2010 and elects to pay the taxes in 2011 and 2012. Taxpayer now wants to recharacterize the conversion back to a traditonal IRA. Is this allowable? Have not seen this one yet this year.

Thanks for any replies!

Is a non-electing church plan - defined benefit - required to restate for EGTRRA by the normal 4-30-2012 deadline? It seems to me that they are, although many "normal" document provisions need not apply.

If they are NOT subject to the restatement deadline, is there a citation? I've been looking through the Rev. Procs., and I don't see where non-electing church plans are exempt from the restatement date. Thanks!

Does a refinance for a principal residence qualify for more than 5 year amortization?

We have a plan that covers our control group. We spun off a division years ago and they are no longer part of our control group. Can we cancel the plan and accelerate payments just with respect to the spin-off? Or can we cancel the plan just with respect to the spin off and accelerate those payments?

My concern is I don't want to have to cancel other nonqualified plans of the control group as a result of accelerating payments for a spun off entity.

I am currently in a debate with a a well know administration firm. They are computing an integrated calculation for a self employed individual with two employees. Their allocation to the self employed individual is in excess of 20% of net self-employed income (Schedule C less 1/2 of self employment taxes and EE contribution). I'm suggesting to them that is not recommended as any contribution in excess of the 20% limit is subject to the excise tax for nondeductible contributions. They are refusing to budge indicating:"the limit is 25% of all compensation, and since the plan is integrated, the self-employed individual is entitled to a higher percentage above the 20%." Is anyone ever allowed a deduction in excess of 20% of net-self employment income? The net self-employement income for the individual is below the $245,000 limit. Can anyone tell me where I am going wrong? Am I all wet?

Are there any advantages to changing the plan year for a plan from a calendar year to a fiscal?

Participant in a qualified plan took an impermissible in-service withdrawal in 2010 and rolled it over to his IRA. The mistake is noticed in 2012. Participant wants to "undo" the transaction by taking the money out of the IRA and putting it back in the qualified plan. I know we can correct it under VCP, and ask the IRS to not impose the 6% penalty for excess contributions to the IRA or the 10% penalty on early distributions from the qualified plan. Question is, how does this affect the individual's taxes? Do we issue a revised 1099 for 2010 showing the distribution as taxable, which would require the participant to amend his return and include it in income, then deduct the amount repaid in 2012 as a repayment?

Any suggestions (and support for the suggestion) would be greatly appreciated!! (I'm sure this is an obvious answer that I should have found by now, but, I haven't found a whole lot of info on what to do with participants who agree to repay the full amount to the plan)

When calculating the Incidental Limit on Universal Life Insuarance for a Money Purchase Plan, do you use the full amount of the premium paid or only the cost of the actual insurance?

I have been calculating the limit on the full premium for my plans. I recently recieved a Money Purchase plan that lowered their contribution amount and now the premiums exceeded the 25%. I submitted a question to a technical answer group and they are stating that the Incidental Limit should be calculated on the cost of the insurance and we should not include the portion of the premium that goes toward the investmnet component of the policy.

We don't deal with many cash balance plans most of our plans are defined benefit plans. We use the Corbel Pre-Approved Volume Submitter plans and know that our DB plans must be restated by 4/30/2012. However we were under the impression that the Cash Balance plans fell under the same window and that the CB plans could rely on the pre-approved VS documents as well. I guess we were under a rock this whole time. We now know that Cash Balance plans are considered to be Individually Designed Plans and should be on the 5 year cycle - not the 6 year cycle like the DB and DC plans.

We have 3 Cash Balance Plans

1st plan's EIN# ends in "0" - plan effective date 1/1/2006

2nd plan's EIN# ends in "0" - plan effective date 1/1/2007

3rd plan's EIN# ends in "5" - plan effective date 1/1/2009

Based on what i am reading these all fall under Cycle E of the 5 year cycle, this means all 3 of these plans should have been submitted for a determination letter on 1/31/2011 is this correct?

Does anyone know how we go about correcting this now? Are these plans doomed at this point or can we go through the correction program? If so can anyone point me to a link? I've searched the IRS website and they have a submission kit for a missed EGTRRA restatement but it pertains to the 4/30/2010 DC plans restatement.

Also how does the effective date of the plan play in to when the document must be submitted on the 5 year cycle - i know you have to look at the last digit of the EIN but i was reading that you have to look at when the tax returns are due as well...maybe i am making this up? For example the 3rd plan above was effective 1/1/2009 i thought this would fall in to the next 5 year cycle but after researching a bit further the returns for the 2009 plan were due in 2010 but this still falls before the 1/31/2011 due date for the Cycle E so it would be due the same time as the othe two. Am I correct?

This is just a rough idea.

Are there other tpa’s that have gone out on their own in the past couple years, are up and running, and that are interested in setting up some kind of confidential group to exchange ideas on how to increase business and run an efficient practice? Ideally this would be just a handful of participants, strictly from different locations so we don’t compete, and still new to running a business. I’d be interested in sharing experiences, initiatives, and learning from each other so that we can all succeed. This would not be an anonymous group and I am fully open to ideas on what this could or should be. While I believe there are oldtimers who have quite a lot to offer, or who are looking to turn around their business in a changing economy, I am specifically interested in recent newcomers. I will disclose upfront that, one year into this, I am currently at a place professionally where I have more to learn than to offer in terms of growing business. Feel free to send me a message directly if interested, along with your location.

(This has been cross posted to Small Businesses (issues unique to) since there was recent discussion about tpa practices.

Can someone clarify the requirement for a plan audit? 401(k) plan started 9/1/2010 with immediate eligibility and no wait. There were 400+ eligible employees in 2010, but only 70 that had an account balance at the end of the year. Are they required to have their plan audited in 2011? Same deal for YE 12/31/11. 400+ eligibles & even less with an account balance (62). Thanks

This is just a rough idea.

Are there other tpa’s that have gone out on their own in the past couple years, are up and running, and that are interested in setting up some kind of confidential group to exchange ideas on how to increase business and run an efficient practice? Ideally this would be just a handful of participants, strictly from different locations so we don’t compete, and still new to running a business. I’d be interested in sharing experiences, initiatives, and learning from each other so that we can all succeed. This would not be an anonymous group and I am fully open to ideas on what this could or should be. While I believe there are oldtimers who have quite a lot to offer, or who are looking to turn around their business in a changing economy, I am specifically interested in recent newcomers. I will disclose upfront that, one year into this, I am currently at a place professionally where I have more to learn than to offer in terms of growing business. Feel free to send me a message directly if interested, along with your location.

(This has been cross posted to Operating a Consulting or TPA Firm.)

I know that a plan could have a 5 year break-in-service rule but can they have a 10 year break in service rule?

Have a plan that excludes HCE's from the plan due to coverage. The plan also excludes hourly nhces. There are 21 HCE's and about 30k total nhces. About 1,500 nhces are salary and eligible. All 21 HCE's could not contribute due to coverage only covering 1500 out of 30k nhces.

One HCE had 401k contributions deducted from Oct '11 - Dec'11. The first nine months he had nothing, so we are unsure why 401k deductions starting showing on the payroll. Due to him being excluded, what is the correction? Is it as simple as just refunding the entire 401k plus earnings just like we would an ADP test failure? He is a HCE for 2012 as well and is not contributing 401k.

On a side note, if the plan covered 1 out of 21 HCE's, the plan would technically pass coverage with 1,500 eligible nhce's. 1/21 =4.76% times .7 = 3.33%. 30,000 nhces times 3.33% = 1,000 nhces to be covered.