The rules on 415 compenstation only allow us to count compensation paid from employers part of the same Controlled Group or Affiliated Service Group for IRC High-3 Comp limit.

Are there similar rules for which Years of Service (YOS) you can count for IRC 415(b) purposes to be applied to the Compensation Limit under IRC 415(b) ?

For example, say a plan gives prior service credit for benefit accruals for employment worked in a total different company (maybe to attract top talent away from another company) could you use those prior unrelated employer YOS for the DB plan's current 415 limit ? even though they were not worked with the sponsoring employer or any related entity ?

Has anyone switched from Relius to the FT William administration software system? We are considering it and I was wondering if anyone that has already swichted has any problems/issues with the conversion process. And if you switched, are you happy with the FT William administration system?

Thanks

A client who has a PS plan and is the only participant has been investing in LPs for years. He has substantial value in his plan and most of the investments are LPs. He just recently was audited and the IRS agent has come down hard on how my client has valued the LPs over the years.

My understanding of valuing a LP is that it is not definitive. Each year the investment issues a K-1 which shows the "Limited Partner's" "Ending Capital Account" value. It is my understanding that at any time a LP can hit it big... can fail miserably... or just continue to be. Of course everyone wants their LP to hit it big and pay out huge dividends... "yea". But until that happens the limited partner crosses their fingers and hopes they dont lose everything.

For years I have been consistent with how these assets have been valued. I am looking for any help arguing my case that the way I have accounted for these assets is ok. Any help is greatly appreciated.

the plan uses the safe harbor definition of hardship. does construction of a principal residence equal purchase of a residence?

We recently became the TPA for a plan that has a Hartford Document. The document was restated for EGTRRA timely.

Client provided end year census data. Client has been making match contributions based upon a specific definition of compensation. We questioned the amount of match calculated based on the plan paramaters we entered into our system from the EGTRRA document.

We learned that the Client has been using the same definition of compensation that was in the GUST document and all prior documents. When the document was restated in 2009 by Hartford, a different definition of compensation was used in the EGTRRA restatement. As a result, the definition of compensation used in 2009 and 2010 and 2011 has been wrong.

(Not sure why the auditors did not pick this up as it is an audited plan??)

What recourse does the Client have? Is VCP the only option? How would you handle this situation? Can we restate the document with an effective date of 1/1/2009? Can you do a retroactive amendment?

Hello.

I have a 401(k) plan that was established in 2011. Salary deferral Only. There is a 2 month wait to enter plan.

Plan terminated 4/15/2012 as there was a merger of corporate assets and the company no longer exists.

Problem: Plan was not subject to audit in 2011. But 1/1/2012, due to the relaxed eligibility requirements, there were more than 120 active participants at the beginning of the plan year. Is the plan subject to audit? Is there any regulation that exempt the plan from audit?

Hello everyone!

Quick question. Let's say a small business with 10 total employees has a health plan. For 5 individuals (the owners, and their spouses), the company pays their costs in full for the health plan. For the others, they contribute towards the health plan. Is the money paid by the company taken into account when running the discrimination tests under Sec. 125?

Thanks so much for any thoughts.

For 404(a) and 408(b)(2) disclosures, do Individual annuities = brokerage accounts? How about an individual account at a mutual fund?

I have a plan with 4 participants where each person went where they wanted. 2 have a mutual fund family and 2 have individual variable annuities.

The plan permits in-service distributions at age 55 from all sources (sources here are elective and match) - are there limitations on what the participant is permitted to take from the elective source? Under age 59 1/2 is the participant only permitted to take the sum of the elective contributions (i.e. not the earnings on the elective)? Thanks!

ERISA 403(b) plan document adopted effective 7/1/97. Plan was never updated with GUST, EGTRRA, and PPA. ER now adopting a compliant document, effective 7/1/12. Are they consider a non-amender for the period prior to 7/1/12?

We have a multiple employer plan where the employees from a division of one of the adopting companies are excluded. The Plan just became Top Heavy as of 12/31/11. Is the excluded group entitled to a Top Heavy Contribution in 2012?

Thanks in advance for your help.

I'm not sure if we understand QDROs all that well. It's my understanding that if the QDRO doesn't specifically state that the AP is to take out their share of the money right away then the AP must follow the terms of the plan and can only take it out. 1. when the ex-spouse (the participant) is terminated or otherwise eligible to receive a distribution or (2) upon AP attainment of age 59 1/2 or NRA. This is what our document states about QDRO's:

All rights and benefits, including elections, provided to a Participant in this Plan shall be subject to the rights afforded to any alternate payee under a qualified domestic relations order. Furthermore, a distribution to an alternate payee shall be permitted if such distribution is authorized by a qualified domestic relations order, even if the affected Participant has not separated from service and has not reached the earliest retirement age. For the purposes of this Section, the terms "alternate payee," "qualified domestic relations order" and "earliest retirement age" shall have the meaning set forth under Code Section 414(p).

They way i understand the paragraph above is if the QDRO doesn't say that the AP can take the money out right away - the AP must follow the terms of the plan. That being said my questions are:

1. Are we correct in assuming this?

2. If this is the case is an AP eligible to take a Hardship distribution?

Employer has a service based allocation schedule that satisfies the smoothly increasing gateway. A NHCE's allocation was made based on servcie without regard to a break in service so the participant recieved too much of an allocation. This is for a 2010 calendar year allocation. My questions are: when performing the avergage benefits test should the actual allocation be used or the correct allocation be used (the allocation has not yet been corrected)?? Also, does the incorrect allcoation impact the smoothly increasing status?? Thanks.

When a plan is converting from a bundled product where they have adopted a national prototype document to an unbundled solution with a Volume Submitter document, what should the effective date of the VS doc be? Can there be an overlap or must the effective date be the same date as the termination of the bundled contract? Ie…the expected termination date of the bundled contract will be 4/25. Does the VS need to be effective 4/25 or can we write with an effective date of 1/1/12. Does the adoption/signature date need to be prior to 4/25, etc… Thanks in advance for your help.

I have a question concerning the allocation of plan forfeitures. The plan in question reallocates plan forfeitures back to participants:

1. The reallocation is only to participants who have made a 401(k) contribution for the plan year. Based on this, I would understand that the forfeiture reallocation would be considered a match due to receiving an allocation is conditioned on the participant making a 401(k) contribution. Therefore, the reallocated forfeitures should be tested in ACP.

2. The allocation formula of the forfeiture is based on the ratio of compensation the participant has in relation to the total compensation of the other eligible participants.

I don’t think that I have come across a match allocated on a comp to comp basis before. I’m thinking that since it is not based on the deferral amount, I may have a coverage/ rate group-testing situation here.

Am I reading too much in this situation, seeing problems where they might not exist? Any comments to clear up my thinking would be most welcome.

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.