I’m new to the retirement plan world, so please bear with me… I thought I had a good understanding of key employees based on my study materials for certification I’m working on. Now that I’m actually doing testing, there are some different opinions between my coworkers over what constitutes someone being key or not. Particularly under the 1% owner or officer test where you need to look at comp. In the interest of my sanity, this is a plea for help in better understanding this concept.

Here is the scenario: Plan is not top heavy for 2011. Employee is a 4% owner and has always been. In 2010, his comp was only $130,000. In 2011, his comp is $169,000. When determining if the plan is top heavy for 2012, is his balance included as a “key” employee because he meets the key requirements for 2011? There is an example in the ERISA outline book almost exactly like this. My interpretation is that yes, he should be included as key because he meets the requirements for 2011 plan year- which is the determination period for this calculation.

But then the ERISA outline book identifies key employee as those who meet the key requirements for the for the prior plan year. So does this mean he is actually not a key for 2011 (and therefore don’t include his balance as of 12/31/11 as key) because he didn’t meet the key requirements as of 12/31/10? Want to make sure I get this right because it directly affects whether the plan is top heavy or not for 2012.

An employer will occasionally pay a salary advance to employees. I assume that this would be treated no different than any other regular pay. The employee will be able to defer from it - and it is included a plan compensation for 415 limits, ADP/ACP testing, etc.

Does anyone know of anything to watch out for in terms of salary advance pay and qualified 401(k) plans?

Even though a Cash Balance Plan has complied operationally with the meaningful benefit requirement and all participants received the proper allocation, the amendment to increase the NHCE by 1% was never done. Should have been adopted for the 2009 year going forward. Calendar year plan.

This is a very small plan. The increase for each year was probably less than $2000 spread among 6 NHCE. There is one HCE.

The EGTRRA restatement was submitted to the Service, Cycle E. Acknowledgment received but no contact from an agent. The demo submitted with the restatement reflects the correct percentage, but the plan document does not (off by just 1%).

Any suggestions on how to fix? All participants are whole.

Thanks for any suggestions.

A company is going out of business. It has a DB plan and owes 1M if terminated. The company has 500K in assets and does not mind giving the PBGC what it has. Because it will not formally file for bankruptcy, how do I get the PBGC to take over this plan? It does not meet the criteria for a distress termatation. However, the PBGC can take over a plan if it feels assets will be lost. Any help in how to get the PBGC to take over this plan is appreciated.

Does anyone have any experience with a qualified DB plan that allows employees to roll a 401(k) or other qualified plan distribution into the DB plan and immediately convert it to an annuity? Our plan contains that provision but no one has ever done it. Of course, we have not advertised it or pushed it either.

Does anyone have or know of a plan that allows this and where employees actually take advantage of it?

Thank you to those who respond.

I must say I'm a bit confused on this. I have seen various opinions on the subject of restatement, but without citations.

Is there anything official that says governmental plans don't need to be restated?

Assuming the answer is no, then there appear to be two possibilities. First, they are using a VS document, and have until April 30, 2012. Second, they are an IDP, and would have already gone long past the Cycle C deadline (or Cycle E if they so elected) to restate and submit for a determination letter.

What am I missing?

We administer a 401(k) plan with about 60 participants. The plan sponsor is a partnership that is owned by 5 corporations. Each of the corporations employs one physician. They are all related employers and considered an affiliated service group. Each of the corporations adopted the plan as participating employers. One of the corporations will now drop to a 3% interest in the partnership and the physician who is employed by that corporation (and the 100% shareholder) will only have salary of about $20k per year for the next 5 years. Will that physician still be considered an HCE going forward? In other words, is he considered an HCE because of his ownership in his corporation?

Thanks

Matching contribution is used to pay down ESOP loan. Also, a portion of S distribution on suspense shares is used to pay debt. Would Compensation expense for GAAP still reflect the full average value of shares released from both sources?

Can a multiemployer pension plan require contributing employers to increase plan contributions without having to re-open collective bargaining?

Is this purely a contractual issue, or is there controlling authority on point?

We have an employee who is a Canadian citizen, no US SSN, receives compensation in US dollars. Are they eligible for our 401k plan? If not, what are our options for this employee?

We have been looking for DC Administrators for our full service, non-producing TPA practice (which includes Balance Forward Plans). We have had a very hard time finding candidates with experience in this type of firm. We get lots of applications from people who've worked in very big firms such as Vanguard, ExpertPlan, etc. But very few from small, full service, firms. We've advertised repeatedly on BenefitsLink and Monster. We're considering using head-hunters, but their fees are very high for a small TPA.

Do you have any insights into how to find Administrators? We used to be able to hire well-educated administrators straight out of the Philadelphia Institute for Paralegal Training; they had a certificate program in retirement plans. Where do they grow administrators now - and how can they be found?

We are located in the Philadelphia suburb of Bucks County. If you, or anyone you know is a potential candidate, please check our ad - Law Offices of R. David Danziger. As mentioned in the ad, we are offering a referral fee.

Thanks.

Dave

I just found out that our payroll company has treated our pre-tax employee HSA contributions as post-tax and our employees are not sure if they filed their returns as pre or post. Would they have had to have filed as post-tax since that is how their W-2 treated it?

Now, how do we fix it? Is my understanding that really all they lost out on was FICA, since they were able to deduct their contributions when they filed their taxes? What a mess. Any suggestions would be appreciated.

Kathy, the bookkeeper

This question is related to Hardship Withdrawals (purchase of a principal residence).

The client has a participant who currently owns a home with his ex-wife. The existing mortage is in both of their names. The participant is still living in this residence, and he would like to buy his wife out of the house. An agreement of sale and other necessary legal documentation would be provided. The question is though, since he is technically purchasing the house (I believe a new mortgage will be done in just his name) and he will continue to live in it, would that be considered the purchase of a primary residence, or since he already owns a portion of the house, is it not considered a new purchase?

Third Party is requesting duplicate statements in accordance with the Insider & Trading Securities Fraud Enforcement Act of 1988. The participant this is in reference to is terminated deferred and letter states he is a trader or associated with a broker dealer registered with the CBOE.

Please advise if this request is something the Recordkeeper/Trustee should adhere to in terms of distributing statements to other parties or if Plan Sponsor should be notified and involved?

A participant recently took a hardship distribution. A portion of the withdrawal was taken from his Salary Deferral benefit, and as such he is not allowed to make salary deferral contributions to his self directed account for 6 months following the date of the withdrawal.

Employer went ahead and deducted the contribution from his paycheck anyway. Do we let it slide or reimburse the participant?

Note: Sal-Def Contribution amount is approximately $75.00

During an IRS audit the agent discovered that the employer deducted an amount greater than the 404 limit. The accountant clearly dropped the ball on this one. In addition to the tax deficiency, the IRS is imposing excise tax under 4972. The employer is going to pay the tax deficiency, but it does not want to pay the excise tax since it reasonably relied on its tax professional. Is there any such exception to the 4972 excise tax? Is the IRS open to waiving excise tax in unique situations, or should the employer just pay it and attempt to collect from the accountant?

Third Party is requesting duplicate statements in accordance with the Insider & Trading Securities Fraud Enforcement Act of 1988. The participant this is in reference to is terminated deferred and the letter states he is a trader or associated with a broker dealer registered with the CBOE. Please advise if this request is something the Recordkeeper/Trustee should adhere to in terms of distributing statements to other parties or if the Plan Sponsor should be notified and involved.

401k plan has immediate eligibility. Owners wife is hired late in the year and contributes. She is the only eligible employee that is a statutory exlcusion and is obviosuly an hce. The excludable employee group includes only her and thus the ADP test passes for the excludable employees. The question is does the statutory exlcusion group pass coverage as all of the nhces are in the non-excludable group? Any input appreciated.

For HRAs that carryover unused employer contributions, does this impact nondiscrimination testing (i.e., $1000 per employee every year is contributed to the HRA, and unused amounts can be used in the following years).

Do actual reimbursements need to be considered for testing, or can contributions be used somehow?

DB Plan that has 150 active and term vest participants and 150 retirees provides that participant eligible for retirement may elect lump sum if lump sum >$5,000 but does not exceed $10,000. There are no active and term vest participants to whom this voluntary cash-out might apply during 2012. As of 1/1/2012 the AFTAP is less than 80%.

Has anyone seen any guidance that reliees providing the 101(j) notice to all 300 participants in a similar situation?