Participants made investment elections from a panel of funds. However, when their contributions were deposited to the plan, they were invested in a "default" investment instead.

The plan sponsor and trustees recently discovered that this has been occurring for several years and are willing to make up any losses incurred. If a participant's had a gain, it will remain in the participant's account. This is a small plan with about 30% of the participants incurring a loss.

Since they are willing to "self-correction" and let the participants know what has happened and how it is being corrected, is this an issue that should be or could be reported under the DOL's Voluntary Fiduciary Correction Program or the IRS's VCP?

Standalone non-TH cross-tested PSP requires 1000 hrs and last day for allocation purposes. Ratio percent is at 60%. Can the plan test for coverage under ABT or will they fail the reasonable classification test because 1000 hrs and last day are not objective business criteria?

Thanks for any insight!

I'm an active employee covered by a Defined Benefit plan comprised of a fixed and variable portion. I've tracked my total accrued benefit (including Fixed + Variable pieces) for the past 15 years by using the data the Company sends me in a Personal Statement of Benefits. The total accrued benefit declined for the first time in 2008 due to the value of the variable piece dropping significantly.

On the Department of Labor website it says, "Defined Benefit plans cannot reduce the amount of benefits you have already accumulated." I've tried to obtain information from our CFO but have had no success to date. My questions for the forum are first, can accrued benefits decline year-over-year? Second, if so, how do you quantify the risk of a definitley determinable benefit that declines? Lastly, aren't plan fiduciaries required to provide plan participants information if so requested? Any comments/feedback would be greatly appreciated.

Got a plan that has a lot of terminated participants. Plan has never paid any fees before. LEt's say our fees are $1,000 and there are 50 people in the plan, so per capita, the fees are $20 per person, and the sponsor wants that $20 to come from the terminated particpant accounts only (not the actives).

Now, I know that this is a workable scenario under that FAB thingamabobber. My concern is that participants have never been told specifcially about this fee. The SPD says administrative expenses could be paid by the plan, but no one was ever told that there was a $20 annual fee.

The more I think about it, the more comfortable I am with it, but I just wanted to see what people thought. P.S., the plan is NOT participant directed.

This plan is tested using the prior year method. It passes the ADP test without disaggregating. We have always disaggregated in the past. Can I disaggregate even though it passes without dissagregation? It would result in better results if I disaggregate.

On 12/1/09, a group of employees spun out of a larger plan. It was an asset sale and the plan was NOT considered a successor plan. The new plan has immediate eligibility, immediate entry, 100% vesting.

For 2009, No HCEs. For 2010 No HCEs.

Now for 2011, we have HCEs. (Prior Year Testing). When applying the "otherwise excludable" option, do we use 12/1/09 as the DOH for all ees that came over as the date to apply the 'otherwise' excludable option? This would mean everyone would be considered "otherwise" excludable. Or can we use the original DOH from the previous employer?

The document has the following language: The Plan Administrator will determine the appropriate manner in which the ADP test is to be applied In the enventof a merger, spin-off, or asset transer involving the Plan, based upon such authority (if any) as may be issued by the IRS.

My gut tells me that they should use the 12/1/09 date since they decided not to consider compensation for HCE purposes.

Any thoughts.

This topic is strictly to determine which employees if any are excludable for testing (coverage and non discrimination)

A doctor starts his business 6/1/2011.

Calendar plan and fiscal year.

On december 30 2011 he adopts a pension plan effective 6/1/2011.

The plan provides 21&1 elig, but those employed on 6/1/2011 enter plan on that date.

The doctor and 4 employees have hire dates of 6/1/2011.

1000 hours is required for an accrual.

However, since it is a 7 month plan year that amount is reduced to 583 for 2011 (just thought of this now).

2 of the four employees terminated in 2011 after completing 583 hours (less than 1000).

So, in effect each employee would have completed a plan year of service for accrual purposes.

They terminated prior to the adoption date of plan of 12/30/2011.

So must the terminated employees be counted for testing?

If they never become participants, then clearly it would be "no".

However, since they were employed at 6/1/2011 and if they were considered participants then it seems they should be included in the testing counts.

Re: otherwise excludable employees:

Can we deem the employees with 1000 hours in 2011 as non excludable (even though they completed 1000 hours in only 7 months) and the terminated employees who worked less than 1000 hours as otherwise excludable?

(Also just thought of this) And lastly, if we give the owner and all four employees the same accrual rate for 2011, then there is no issue re: coverage and non discrimination and then the terminated employees would have non vested terminations and $0 distributions.

Ideally there would be a cite that provides that if an preson is terminated at time of adoption they do not have to be included. I'm thinking that with less than 5 years past service provided they could be excluded.

Thanks

Does anyone have experience terminating a cash balance plan?

If the accrued benefit is equal to the hypothetical account balance, how do you handle the disparity between the total actuarial value of plan assets and the total hypothetical account balances of all psrticipants?

I have been out of the 409A loop for a couple of years so I am a little rusty. I have a question that is not specifically related to 409A but touches on deferred compensation so 409A may be implicated.

Can receipt of restricted stock (NOT restricted stock units) be deferred?

Example: I am awarded a restricted stock award that vests in three years. Can I be given the opportunity to defer receipt of the shares until I, for example, retire?

I don't think so because under Section 83, the shares are transferred to me at grant and when the restrictions lapse I can sell, etc. them. That's when they are taxable.

Anyone have thoughts?

This has been asked before in previous posts, but I'd like to ask again.

As applied to professors and adjuncts, is there any justification for using something other than actual hours, an equivalency or elapsed time to calculate hours of service for eligibility purposes? I don't think there is, but welcome thoughts on this. (I'm referring to a plan that applies a year of service/1,000 hour requirement for employer contributions.)

In Reg 1.403(b)-4(e), there is guidance regarding how to calculate a "year of service" for purposes of the special catch-up contribution. I don't think that applies to 410(a) year of service determinations, but again welcome comments.

I believe that a payment made in the event of a "change in control" (not a 409A-compliant definition of change on control but a strict definition) can still constitute a "substantial risk of forfeiture" for purposes of using the short-term deferral exception. However, I can't find this anywhere in black and white. I have been charged with finding some authority that says this. Can anyone help out? Thanks in advance.

The plan participant requests a hardship for the purchase of a principal residence. He signs all the paperwork, needs the check for the closing so the Plan Sponsor has the check cut from the plan with the understanding they would get the HUD statement as backup once the deal closed etc.. Participant gets to closing and the deal falls through! Now the participant wants to put the money back into the plan to avoid paying taxes and the 10% early withdrawal penalty, and wants to start contributing to the 401(k) again. Do you know of any "mistake in fact" allowances (or something) that would allow the reversal of this "hardship" withdrawal that should never have been approved? We can't find any guidance on this anywhere.

409A has a broad reach - - - one IRS official stated that the definition of deferred compensation is "frighteningly broad and deceptively simple" since it covers things like tax gross-ups, taxable medical care, etc.

Can the same be said (at least until 457(f) guidance comes out) about 457(f)? My impression is that 457(f) only covers true elective and non-elective deferrals of cash, and was never applied to things like the value of taxable medical care, reimbursements, etc.

Thanks.

EE hired 1/14/11, plan has a age 21 and 1 year elig, so he will get in 7/1/12 (semi-annual entry dates). Plan is cross tested P/S and the er does give allocations of P/S each year.

I assume that the guy didn't want to give his age in fear of discrimination (I have seen a photo), but I can't see how we can get around NOT having his DOB or at least year of birth.

Anyone know of anything out there that can protect the ER/Plan Sponsor so they can ask for this info for the plan?

I hope this is a simple question for someone -

Cafeteria plan document requires that in order to be an eligible dependent, the child must have been adopted or placed for adoption prior to attaining age 18.

Is this requirement that the adoption have occurred prior to the child's attainment of age 18 prescribed by US tax code, or is it just a plan provision?

A participant recieves a lump sum payment from a qualified plan and rolls it over to an IRA. Participant is advised that he received too much money. Attorney for the plan notifies the IRA provider of the overpayment and requests its return. Is the IRA provider obligated to return it? Does the provider need the participant's approval to return the overpayment?

I have always asked my clients to sign the "Application for Extension of Time to File". Is a signature really necessary? Is there an automatic extension if the "tax filing" has been extended? If so, do we still need to file a Form 5558.

Simple questions I'm sure, but I have never had a client not want to sign

Does any one have any experience with a spin-off of about half the participants to a second plan?

Let me be clearer. Plan ABC has 150 participants and attaches CPA-audited financial statements to its Form 5500. In mid-2012, about 75 of the participants and their account balances are spun off to new Plan XYZ. For 2012, Plan XYZ would not have to attach CPA-audited financial statements to its Form 5500 although Plan ABC would. For 2013, neither plan would have 100 participants and thus no audit.

Does it matter why the spin-off occurred?

Could it be only to avoid any audit requirement for 2013?

Are there regs or court cases on point?

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Question regarding if EAP should be listed as a separate line of coverage for election of continuation coverage under COBRA:

EAP (which includes clinical visits) is offered to all active employees. Cost is combined with medical premium-equivalent rates, and employee pays a portion of the cost. (Employees who opt out of medical also have access to the EAP - the Employer just absorbs the cost.)

In practice, if a terminated employee elects COBRA continuation of medical coverage, EAP eligibility continues also.

Should we instead be permitting a separate election for EAP, such that a continuant may elect EAP without electing medical coverage?