Calendar year plan with current year testing. Recharacterization of refund as catch-up gets us a pass on the ADP test but requires a $0.05 match forfeiture for 2 HCEs. Do these forfeitures really need to be done or can we consider it de minimus since the ACP test passes with them included?

Hello there. Long time lurker, these boards are a wonderful resource for seeing varying opinions.

Scenario

EOY VAL cash balance plan

Plan terminated in 2012

AFTAP is 95%

No Credit Balance

A contribution of the accruals funds the plan 100% on a termination basis

However, with the SF + TNC, the MRC is 30k more than the accruals.

I've scouted several resources looking for an alternative to forcing the client to overfund.

I know occasionally some of our rules have unintended consequences, but was hoping maybe someone has come across the same issue.

Thank you!

If an employer contributes to a multiemployer welfare fund on behalf of employees, will the employer avoid the PPACA penalties under the employer mandate provisions? Does a multiemployer welfare plan to which an employer contributes constitute an "eligible employer sponsored plan"? I have been unable to find any guidance with respect to interaction between the employer mandate and multiemployer welfare plans, and am concerned that an employer who contributes to such a plan by labor agreement might also find itself liable for the PPACA employer mandate penalties.

Thank you in advance for any insight.

Ongoing 401(k) plan has moved to a new provider and will incur a new advisor set up fee of $500. Advisor fees have been disclosed, but because this is an initiated employer fee, can it be charged to the plan along with the advisor management fee or must it be paid by the employer?

DB plan with a participant (NHCE) age 75 getting RMD. (There are other HCE participants).

Question:

Can the plan participant who is also a trustee choose to use part of the plan assets to purchase a life insurance policy on her own life? There is no other NHCE in the plan.

I have an employee who elected the medical FSA and cancelled supplemental life coverage during open enrollment. The employee says the cancellation of supplemental life was a mistake and he has always enrolled in supplemental life and did not intend to drop coverage. The electronic enrollment transaction logs lists 2 election changes with the employee's user id. So based on that, the employee elected the medical FSA and dropped supplemental life, and made no other affirmative elections during open enrollment. All other elections rolled over to the new plan year. Based on the clear and convincing evidence standard, I do not think his past enrollment in the plan and he cancelled in error meet the standard. Am I following the section 125 regs too strictly or do I have enough to allow the election for the 01/01 plan year?

I have an underfunded DB plan for an S-Corp. Can the plan accept company stock as a contribution if held and validated by an independent trustee?

Would computer programming (some of which is custom for individual clients) be considered a service? I think it would since capital is not a material income producing factor...

Is there any code reference for this "rule" besides break in service and rule of parity? For example, if a participant is eligible for a plan and later becomes part of excludable class – can the participant be forced to stop deferrals?

Thanks in advance.

Is an ESOP that does not provide for participant-direction, other than the diversification required under IRC 401(a)(28), subject to the DOL's new regulation on participant fee disclosure?

Plan allows hardships, but not in-service distributions. Can a participant age 62 take safe harbor money in the event of a hardship?

In your standard non-producing TPA firm where Administrators perform all annual administration and such work is then reviewed by a member or management, could you classify those administrators as Exempt employees, or do most TPAs classify their administrators as non-exempt for purposes of overtime?

Plan fails the ADP test. Money needs to be returned to HCE.

HCE is deceased. (Died late 2011)

Who does the excess get paid to? (I.e. what SS# should the 1099 be for?)

Thanks

Pat

Is it possible to have only one separate line of business that qualifies as as a "QSLOB?" For example, if a company has 100 employees in a QSLOB and the remaining 40 employees are allocated to a different LOB that can't qualify as a QSLOB because it has fewer than 50 employees, can the election be made for the QSLOB?

Now that we are required to submit the withholding deposits electronically, how are you handling the small plans with one or two of these a year? Are you requiring a separate checking account for the Trust? I realize that is probably the most "correct" route. Some administrators in our office are still having the employer take the withholding and deposit it for remittance and I am saying "no", you can't let the Plan money go back to the employer that way. Is there some exception for this withholding issue?

Thank you

Employer missed an employee's deferral election for bonus paid January 2011. Error was just discovered in Feb 2012.

The employer has asked if it can permit the employee to make up the remaining 50% (after employer makes the QNEC for the missed deferral opportunity) Tripodi mentions permitting the employee to make an after-tax contribution in this scenario. Has anyone ever done this?

Plan had a system problem with their loans where they had a biweekly pay cycle of 26 payrolls but the loans were only included in 24. The new PA wants to know if she can extend the loans beyond the allowable 5 year period because it is not the fault of the participants. Several are coming into their 5th year this year and they are 8 to 10 payments behind. They system problem was corrected a year or so ago, so the problem doesn’t continue to exist but does still effect participants with loans issued prior to the fix.

It is my understanding that the participants could reamortize payments, but cannot extend payments beyond the 5 year term. The employter has not defaulted on the affected loans and wishes to extend loan payments past the 5 year term.

What are the plan sponsor's options?

We just took over two plans that are sponsored by a law firm, and I am trying to convince myself that I am testing the plans properly. The original plan design was to keep them disaggregated for testing since the client doesn’t want to give TH minimums to associates.

The first plan (Partner/Staff Plan) covers partners and staff and has a 1-year of service eligibility requirement. The Partner/Staff Plan has both 401(k) deferrals and employer nondiscretionary.

The second plan (the Associate Plan) covers associates and staff with less than 1-year of service and has no eligibility requirements. The Associate Plan is only 401(k) deferrals. Note that all Associates are HCEs (in there second year) and there are no keys that participate in the Associate Plan.

For simplicity assume:

20 Partners (all HCE / key)

40 Staff (all NHCE) with more than 1-year of service

10 Associates (all HCE) with more than 1-year of service

15 Staff (all NHCE) with less than 1-year of service

Question 1 - Coverage: Does the Associate Plan pass coverage under 410(b)? Am I correct that the calculations would be:

[ ( 0 / 40) / ( 10 / 30) ] = 0% if statutory exclusions are applied, and

[ ( 15 / 55) / ( 10 / 30) ] = 82% if statutory exclusions are not applied.

Does coverage pass with statutory exclusions since no NHCEs are eligible to benefit?

Question 2 – ADP Test: If I cannot apply statutory exclusions to pass coverage, can I apply them with the ADP Test?

Question 3 – Average Benefits Test: The Partner/Staff Plan employer nondiscretionary uses a new-comp allocation. Assuming the Associate Plan passes coverage separately; can I ignore the Associate Plan in my ABT for the Partner/Staff Plan?

Any input is appreciated.

I may have my first Val where for the 2011 plan year the employer may want to use the 2+7 extended amortization period pursuant to the IRS Notice 2011-3 guidance that explains IRC 430©(2)(D).

It appears this amortization extension can still be used for 2011 (the last year available) if I'm reading it correctly.

I see that this is a PBGC reportable event. Is this reported on the PBGC Form 10 or is there an abbreviated method that is used for this PBGC reporting purpose. Thanks for any input.

A plan sponsor would like to charge the TPA per participant fee only to those terminated and will not take money out of the plan and cannot be forced becuase they are over $5k.

The document I use has a section for plan admnistrator elections and how fees are applied. If this is changed and the new SPD is sent out to the Term ee's. Am I running up against anything?

Thoughts? Concerns?