I decided to give the IRS letter forwarding program for lost participants a shot; I had a plan with 5 such participants and wasn't making any progress. Mailed the letter on May 24, 2011...just received confirmation, dated December 16, that they were forwarding the letters.

So don't be holding your breath if you try this.

This question was posed to me but this is not my area of work:

Participant submitted request for $1,000 for 2012 flexible spending. HR told her it wouldn't round out correctly at 24 payrolls (41.67 * 24 = $1,000.08). HR told her she needs to submit a round number and made her fill out $40.00 for total of $960.00. Is there an issue here?

The same HR btw did not inform those ee's who did not participate in 2011 of their option to participate in 2012. Any issue here?

There has been plenty of discussion on these boards regarding reporting of distributions of nonqualified deferred compensation to beneficiaries after death of the participant.

In short, if any of the deferrals vest in the year of death, FICA is reported on the employee's final W-2 and a Form 1099-Misc is issued to the beneficiary. If FICA has already been paid, you just need the Form 1099-Misc.

The question I have is what tax rate do we use? Do we use the employee's tax rate, or the beneficiaries tax rate? What if it is paid in installments beginning in the year of death--employee's rate for the installment that year and beneficiaries rate for payments in subsequent years?

I would appreciate any advice and any citations you have available!

If employer elects to use the Full Yield Curve (FYC) as the Interest Rate Basis for a plan year, how is the present value of prior years amortization amounts calculated? More to the point, the rates of the FYC are provided on the half year basis (every six months). Is it specified anywhere that the yearly rates should be used to PV the prior years amortization amounts or is it acceptable to use the half year rates (six month rate, 18 month rate, 30 month rate, etc.)?? Any cite reference would be appreciated. Thanks.

can anyone other than a former spouse receive an award pursuant to a COAP? It appears to me that the Attorney Handbook on this subject provides only for a former spouse to receive a benefit unlike the QDRO regime in which an Alternate Payee may be a spouse, former spouse, child or other dependent.

I think it has something to do with cats - or at least MEWAs (Multiple Employer Welfare Arrangements)

a few snippets of info from:

http://www.gpo.gov/fdsys/pkg/FR-2011-12-06.../2011-30919.htm

Section 2520.104-20 and the instructions for the Form 5500 and Form

5500-SF provide for exemption from certain reporting and disclosure

requirements under Title I of ERISA, including the requirement to file

Form 5500 Annual Return/Report, for unfunded, fully insured, or

combination unfunded/fully insured welfare plans that cover fewer than

100 participants. Under the proposed amendments to Sec. 2520.103-

1©(2) and Sec. 2520.104-20, and revisions to the instructions for

Form 5500 and Form 5500-SF, all plan MEWAs subject to the Form M-1

requirements would be required to file Form 5500 Annual Return/Report,

regardless of the plan size. The limited exemption under Sec.

2520.104-20 would be removed for plan MEWAs subject to the Form M-1

requirements. In addition, such plan MEWAs would not be eligible to

file the Form 5500-SF.

The Form 5500-SF does not include specific Schedule A

insurance information, and the Department believes that plan MEWAs

subject to this proposal that claim to provide insured benefits

should be required to complete the Schedule A so that enforcement

officials and the public have information about the insurance policy

and insurance company through which the MEWA is providing insurance

coverage.

Under the Notice of Proposed Rulemaking, content of the annual

report under Sec. 2520.103-1 would be amended to require a plan MEWA

subject to the Form M-1 requirements to include a proof of compliance

with Sec. 2520.101-2 (filing the Form M-1) as part of the Form 5500

Annual Return/Report. Accordingly, the Department is proposing to add a

new Part III to the Form 5500, which would ask for information

regarding whether an employee welfare benefit plan is a MEWA subject to

the Form M-1 requirements, and if so, whether the plan is currently in

compliance with the Form M-1 requirements under Sec. 2520.101-2. Plan

administrators that indicate the plan is a MEWA subject to the Form M-1

requirements will also be required to enter a Receipt Confirmation Code

for the most recent Form M-1 filed with the Department. Failure to

answer the Form M-1 compliance questions will result in rejection of

the Form 5500 Annual Return/Report as incomplete and civil penalties

may be assessed pursuant to ERISA section 502©(2).

We picked up a new client a couple of years back that made a mess of their plan. Over several years, one of the Trustees withdrew almost all of the plan assets and used the money to help fund company expenses. The prior TPA prepared valuations and 5500's showing a portion of some commercial real estate owned by the business owners as belonging to the plan. Nothing was done to transfer ownership of the real estate. The 5500's did not report any PT's. A participant complaint lead to a DOL investigation. At that point, their corporate attorney sent them to us for help.

We went back through their records, identified all of the withdrawals, calculated lost income and presented a proposed correction to the DOL for them to repay everything, including the lost income. The DOL approved our proposed correction. The DOL investigator said that since they were cooperating and restoring all of the plan's losses, the case would be handled informally. That meant no closing letter and no DOL penalties. The corrective deposits were made early this year. After providing documentation of the deposits, the DOL investigator told me their investigation was closed. We prepared 5330's for each year showing the PT's for the improper use of the funds and they paid all the excise taxes. The 5500's we prepared for 2009 and 2010 properly reported the PT's.

The Trustee just received a letter advising him he is the target of a federal grand jury investigation and inviting him to testify. It also mentions possible criminal indictment. He is contacting his attorney today.

Now for the question. Has anyone heard of a plan related case where criminal charges were filed against someone who cooperated and repaid the full amount of the losses? The only DOL criminal cases I recall seeing are those where the target(s) did not cooperate.

Directed 401k plan is under audit and is missing a signed and dated copy of the Final 401k / 401m amendment. The plan was using a prototype and the prototype sponsor supplied a copy of the amendment but did not have any signed copies.

The client could not find where the prototype sponsor sent them the amendment, it appears to have been never rec'd.

The IRS auditor has indicated that if no signed correspondence / cover letter regarding the amendment or the signed and dated amendment itself can be found, the plan will go to audit CAP. The auditor indicated that plans of this size (5 participants, under $500k investments) see $3000 - $4000 fines for having a missing restatement. That said, does anyone out there have experience with the fine for a missing amendment for this size plan?

Thanks!

Under certain corrections under 2008-113, an employee is required to repay amounts erroneously paid to the employee, including interest.

The correction procedure specifically says the employee should have a legally binding right to the amount that had been erroneously paid, but doesn't say what happens to the interest. Does the employer just get to keep this amount? I realize that the penalties under 409A fall on the employee, but I fail to see why the employer should benefit from the failure.

We have a client with a 401(k) plan that is a law firm. They have several individuals they call "of counsel" employees who were former partners of the law firm.

Most years these "of counsel" employees receive a K-1 reflecting self-employment income on line 14, code A when they receive payment for prior services or when they perform current services for the law firm.

The client says that their former TPA told them they didn't have to report these individuals, because they are not employees. But I question this.

I know that "of counsel" relationships can be structured to be an employment relationship or an independent contractor relationship. But my thought is that since they are reporting the income on the K-1 (all as guaranteed payment), and the payment is for personal services rendered to the employer, that the individuals are indeed self-employed individuals, which makes them employees of the law firm.

If it was an independent contractor relationship they should issue them a 1099 instead of a K-1, right?

Any thoughts? Am I missing anything?

We have a client with a 401(k) plan that is a law firm. They have several individuals they call "of counsel" employees who were former partners of the law firm.

Most years these "of counsel" employees receive a K-1 reflecting self-employment income on line 14, code A when they receive payment for prior services or when they perform current services for the law firm.

The client says that their former TPA told them they didn't have to report these individuals, because they are not employees. But I question this.

I know that "of counsel" relationships can be structured to be an employment relationship or an independent contractor relationship. But my thought is that since they are reporting the income on the K-1 (all as guaranteed payment), and the payment is for personal services rendered to the employer, that the individuals are indeed self-employed individuals, which makes them employees of the law firm.

If it was an independent contractor relationship they should issue them a 1099 instead of a K-1, right?

Any thoughts? Am I missing anything?

Does anyone know why 409A requries participants to make an election in their first year of eligiblity, as opposed to waiting until there is a distributable event?

Facts:

- Plan is a small law firm with 6 key ee (five are actual owners)

- The sixth key is the wife of one of the owners (family attribution)

- Plan is top heavy

- Wife contributes 401k as a key

- The husband of the spouse became a judge and terminated employement with the law firm in 2011

Question - What is status of husband and spouse ownership in 2012?

Both will be key's in 2011. Husband will be counted as key in 2012 due to look back year. What about the spouse? If she is still working in 2012, will she be a key in 2012? Does look back apply towards family attribution?

A participant died in 1999, his son is his sole designated beneficiary. I am doing an EPCRS calculation back to 2000. When I do the 2001 RMD what life expectancy factor do I use since this was during the re-proposed RMD regulation transition rule period. The beneficairy was born in 1960.

For 2001:

Do I use the new Single Life Table looking at his age in 2000 minus 1 (i.e., 43.6 - 1 = 42.6 for 2001 LE)

Do I use the new Single Life Table looking at his age in 2001? (i.e., 42.7)

This has downstream impacts as I reduce 1 for subsequent life expectancy factors.

Thank You!!

Husband and wife corporations.

Wife owns 100% of dental practice 1

Wife owns 79% of dental practice 2

Husband owns 100% of consulting firm 1

Husband owns 79% of consulting firm 2

Wife and Husband satisfy 1563(e) with no child under 21.

Question: does each of the 4 plans have separate 415 limit?

Thanks for all responses.

Hello.

I have an employee who took a 403b loan last year and now is considering defaulting on the loan.

He is having trouble making payments .

I do know that his wife is in Grad school- could he change the loan

Into a hardship distribution for her tuition?

Thank you for any answers I can give him.

Law firm has two classes: Lawyers and secretaries. Eligibility for both is currently 1 year. Company wanted to change eligibility for lawyers to immediate and keep secretaries 1 year. There were four people hired in 2011: two of each class. Of the lawyers, one is the son of the owner (what a coincidence) while the other is not. The son would enter as an HCE right away and the other lawyer would be a NHCE the first year.

Anyone see any issues with this? We are not bringing in the son by name. We are making a change for a class. It looks like coverage would still pass, so no issue there.

I have a client. Client works for his father's company (a merchandising company). This particular client needs to accumulate retirement assets, so I advised him to begin contributing to the company's 401(k) plan (he told me they have one).

Upon our next meeting, the client tells me he is excluded from contributing to the plan. I can only find one particular reason he would be excluded: he is working there under some form of contract that prohibits him from contributing because he is the son of the owner of the company.

Has anyone had any experience with a situation like this? Am I missing an obvious rule/regulation?

Edit: I should add, he satisfies all other service requirements.

Has anyone used 401kExchange for appointment setting? I was considering trying out their program then I found that they have been kicked out of their Better Business Bureau BBB here: http://www.bbb.org/south-east-florida/busi...ach-fl-30004469

Does anyone here have any experience with these guys because they talk a good game.

Was an employer required to implement the 2009 RMD relief or was it optional? The sample amendments imply that an employer could have disregarded the relief and administered as usual. I suppose a participant could still take advantage of the relief by making an indirect rollover.

What was the most common way employers handled this?