Hi, all -

The draft of the 2011 Form 8955-SSA has been released by the IRS with a Feb 2, 2012 date. Does anyone have any information on when this will be finalized? Thanks!

What type of policy is an Accidental Death and Disability under ERISA? Does it classify as a life, disability, health or welfare benefit? Something else? Any help is appreciated. Thank you.

What benefit options to you believe are available to the following participant:

PVAB = $2,000

AFTAP is 60-80

Plan requires consent if PVAB is over $1,000

Plan only allows lump sums for benefits less than $5,000

Is the participant's only option to receive 1/2 of the PVAB?

The sole proprietor has a DB contribution but also wants to fund 6% of earned income to the profit sharing plan

As usual, we develop the net earnings from self employment and subtract 1/2 SE Tax.

My question is do we then take that number and compute the 6% amount or subtract the DB contribution and then compute the 6% amount with what is left.

Any insight is greatly appreciated.

Lori

I've be advised in a mutual fund company opinion that matching employer contributions in a 403(b)(9) plan will cause the plan to become subject to ERISA. I've found some artciles that speak to 403(b) plans (no mention of 403(b)(9)) that seem to indicate that ER matching contribtuions will cause the plan to be subject to the contribution anti-discrimination rules of ERISA. They don't say that the Plan is subject to ERISA, just that the pPan must comply with the anti-discrimination rules.

Spefically, does this cause the 403(b)(9) plan to be subject to ERISA ?

IRS did audit, plan corrected for failed non-discrim testing by making QNEC to NHCEs which was approved by IRS. Service Provider placed in wrong money-type (1 GAC, 2 ER-sponsored plans, QNEC was going to frozen plan but instead provider placed in active plan money type). I can't get this to "fit" into one of the qualification failures under EPCRS-anyone see something I am not? Please?

And I'll elaborate-not operational because I don't think the error arose solely from the failure to follow plan provisions (plan says what happens when fail ADP, and that is what sponsor did, made QNEC to NHCEs). Then of course, I dont see how it is a demographic, document or eligibility failure? In fact, because it was one GAC, there would be no financial difference....the only error I see is whether the correct folks received the $$$ given that I know there was overlap, but am confident the overlap was not 100%. Maybe late deposit under DOL???? But then I worry about the other plan...and folks who conceivably have taken that $$ that maybe were not entitled?

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?

Has anyone who filed their 2009 5500-SF Form through Relius Web Client and received the following acknowledgement

Current Status: Filing_Received

then had their client (former client) receive a letter stating that they never filed?

Any help that you can provide on this issue will be greatly appreciated.

Thanking you in advance to all of those who respond.

DPSRich

About Vanguard's package for a retirement plan under $20 million, Vanguard's website says:

"You can choose funds that use Vanguard Investor Shares or funds that use the lowest-cost Vanguard share class available. The plan receives credit for all Vanguard Investor Share assets, which can reduce and potentially eliminate out-of-pocket recordkeeping fees. Using funds with the lowest-cost share class can allocate expenses evenly across all participants if you decide to cover costs using a per-participant fee."

I'm not seeking particular price information, but rather wondering whether anyone has done some comparison (assuming a plan would qualify for the lower-cost share class) between choosing the "Investor" shares to get indirect compensation against the recordkeeper's fees and using lower-cost shares so that participants' accounts bear the recordkeeper's fees directly? (Assume that the employer doesn't pay the plan's administration expenses (or that the amount the employer is willing to pay is constant for all possible fee configurations).)

Within the range of plans that can qualify for lower-cost shares, is there ever a situation in which it would be to the plan's advantage to choose the deliberately more expensive shares?

I have two plans, a controlled group. One plan, a 401(k) Plan, has a 12/31 PYE. The other plan, a money purchase pension plan, has a 9/30 PYE. Since the plans have different plan year ends, I realize that I have to do the average benefits test to pass coverage. In 2011, the MPPP changed their plan year end to 12/31. After 2011, I should be able to do the 410b test to pass coverage. For 2011, I'll do one test for the 12/31/2011 PYE in the 401(k) and the 9/30/2011 PYE in the MPPP? But how would I test the 12/31/2011 short plan year for the MPPP?

One of my clients received a letter from the DOL regarding late funding of participant contributions for 2008, 2009 and 2010. The plan is currently inactive, as all balances were distributed in the fall of 2011, including the forfeiture account. At this point, I believe the only outstanding item was for them to file the final 5500, which the recordkeeper and trustee doesn't even prepare.

What should we (recordkeeper/trustee) tell the client on how this situtaion should be handled?

Is non-discrimination testing required for the final plan year when a plan is terminating? I'm not sure what value there would be in doing that since there are no assets to distribute excesses even if they failed.

401(k) plan document allows the plan administrator to limit HCE deferrals. It states "The Plan Administrator may limit the amount of future Elective Deferral Contributions of the Highly Compensated Employees." And that is it.

Has the IRS ever issued rules around administrative limits to HCEs? For instance - does it have to be uniform? Can the employer limit John HCE to 6% of pay and Susie HCE to 5% of pay?

And are there rules around communicating the limit? Does it have to be written? Can the employer just communicate a limit verbally at an office meeting? What if John HCE is out ill on the day of the office meeting and he's never made aware of the limit.

This "administrative limit" has a direct impact on the ADP test. Assume John HCE makes $100,000 and is limited to 5% of pay. He can defer $5,000 - and then an additional $5,500 in catch-up contributions. The ADP will only reflect the $5,000 in deferrals.

In the last couple of days, we've started to have clients call us telling us that they got a late 2010 Form 5500 filing notice. We filed the Form 5558 with the IRS befor the 7-month deadline. It appears that for these clients that have called, they don't recall receiving the IRS acknowledgement letter that the 5558 was received by the IRS. So the next step I guess is a certified mail receipt. Other than that, I'm not sure what else can be done.

As far as we know, these IRS acknowledgement letters may not have been consistently sent to plan sponsors. For us, either the client calls and asks what to do with the notice, or sends us a copy of the notice, or never tells us they got the notice, or may not have even gotten the notice. We haven't tracked this. So it appears that if the IRS acknowledgement letter was not sent/received, and filing was after the 7-month deadline, a late filing notice will be coming.

In the most recent example, an April 30, 2011 plan year end 2010 Form 5500 was filed on February 15, 2012 (on the extended deadline) and the client got the IRS late filing notice the same day in the mail.

So far, this is all for the 2010 Form 5500. Has anyone else heard about this? The IRS has GOT to get their act together...

Is a form 5500 required based on the following:

Premium Conversion Plan - 99% of the employees and their dependents’ medical premiums are covered 100% by the employer; however, there are between 1 and 10 employees that do not have dependent coverage as part of their group medical insurance, they pay with pre-tax dollars for their dependent coverage. All full-time employees are covered 100 percent by the employer as an employee benefit.

What are the requirements for communicating a change in an FSA plan year. An employer wants to switch from 12 month calendar year Jan-Dec to a short 6 month year in order to align with other benefits.

Does anyone know if a good process for checking to make sure retirees are still alive? Social Security Index has a ebsite you can search on, but for plans with lots of retirees that can be cumbersome. Is there a regulation on this, on what is required to be done by the plan sponsor? Just trying to make sure the plan sponsor does their fiduciary liability by doing a periodic check...

Is an in-service withdrawal for 1st time homebuyer allowed- I know its allowed up to 10,000 for an IRA - is this true with an esop?

Have an odd situation where there was an error and only some of the required ADP refunds were processed for the 2010 plan year during 2011. Refunds had been calculated for 6 HCEs but when the plan transferred to a new service provider it was discovered that 3 of the refunds had been missed. The original testing method excluded the OEE group and the total refunds were $11,000.00; of which $5,600.00 plus earnings were properly distributed in November 2011.

Using the less costly one-to-one correction method, the plan cannot be treated as two separate plans and must be re-tested to include the OEE group which increases the refunds due for all 6 HCEs.

Question #1: Assuming the total refunds now equal $13,000.00; must the 3 HCEs who originally received their refunds before 12/31/11 receive an additional refund based on the revised test results? If the answer here is yes, the correction procedure also calls for earnings to be calculated from the end of the plan year of the failure (12/31/10) through the date of correction. For these 3 HCEs, would their earnings be calculated based on the full revised refund amount or just the additional the portion that is due?

Question #2: The QNEC under the one-to-one method must be equal to the amount distributed. If the amount distributed is $7,400.00 (adjusted for earnings) based on the revised refunds less the amounts previously refunded would the QNEC need to be for the full $13,000.00 or the lesser adjusted amount?

Client to decide which NHCEs to allocate the QNEC to:

1. anyone who was an NHCE in the year of the error;

2. anyone who was an NHCE in the year of the error and who continues to be an NHCE in the year of the correction;

3. anyone who was an NHCE in the year of the error and who continues to be an employee of the plan sponsor on a date specified by the sponsor during the year of correction; or

4. anyone who was an NHCE in the year of the error and who continues to be an active NHCE in the year of the correction on a date specified by the sponsor during the year of correction.

Lastly, prepare Form 5330 for the total revised refunds equal to $13,000.00.

One of my clients has been approached by Benesmart, in which the insured employee makes a salary reduction election through a cafeteteria plan with the funds flowing onto a self-insured 105 plan. These same funds, or some resemblance thereof, enhanced by the tax savings come back to the employee as an actuarial equivalent defined benefit monthly advanced health expense. At the end of the year the employee reconciles their actual medical expenses to the advances, with any excess advances being declared at that point in time. I've been assured many times that it is only the excess amount is income. The employer is excited by the payroll tax savings and the employee by the additional cash flow. In addition, there is no cash flow or checks for these transactions, only notional accounts.

I say that the advancement of medical benefit creates taxable income at that point in time, regardless of any year end reconciliation. Any medical expenses incurred would then become an itemized deduction on Sch. A, subject to the 7.5% limitation. Going back to Rev. Rul. 61-146 and the employer reimbursement of individual health policies, under method 3 and the joint check, the income exclusion applied since the employee could not divert the payments to any other use. Likewise in Let. Rul. 9513027, where the employee had the discretion to direct employer contributions into a profit sharing account or health account, the IRS determined under the assignment of income doctrine such contributions to the health account were not excludable income. I fail to see a difference between the proposed plan and other IRS determinations, that the advanced benefit is not income when received.

Thoughts?