Reporting question for a reclaimed pension distribution. For example, if distributions were made the final three months of 2011, only to find out in 2012 that the pensioner was deceased in September of 2011, thus not entitled to the last three distributions in 2011.

In turn the 2011 distribution was reclaimed on February 3, 2012.

Must I revise the 2011 945 and issue a corrected 1099R?

Looking at 404(a)(7)©(iii)(II) , i.e. "if such contributions exceed 6% of such compensation, this paragraph shall be applied by only taking into account such contributions to the extent of such excess".

to me this says that ,in the case where DC contributions exceed 6% of comp , the combined limit of 404(a)(7)(A) only applies to the total DB contribution plus the excess DC contributions rather than the entire DC contribution ; another view that I'm aware of considers the entire DC in applying the combined limit of 404(a)(7)(A).

I feel that the implication here is that the DC contributions <= 6% fall under the individual DC limit of 25% of comp & hence are deductible separately under that limitation.

thanks in advance to those who respond .

Just wanted to get a quick verifying vote on an internal discussion -

A surviving spouse is receiving an ongoing monthly benefit for the remainder of her life (J&S annuity) provided by a deceased participant.

Is, or is not, her 1099-R distribution code "4" for essentially the duration of her lifetime (i.e., there is no "triggering event" that would change the code associated with this benefit after X months/years/payments)?

Thanks!

Doing a 5500 SF and 100% of plan assets are invested in a singe mutual fund, which is a qulifying plan asset. But the SF does not ask if more than 20% of assets are in a single security.

Is this just an oversight in the form? I obviously prefer the SF route and I can't find any reason that I'm not eligible... I just read through the eligiblity again, and thre is no requirement that there be multiple qualifiying plan assets; only that there be ONLY qualifying plan assets.

We have a frozen 401k plan. The sponsor chose not to go the route of applying for a final Determination letter since the Plan had recently been the victim of an IRS audit (prompting the freeze since it was so ridden with tainted assets, it was wiser to just forget it existed after it did all necessary corrections). It was voted to terminate the plan, effective 1/15/2011. As of 1/15/12, all assets were liquidated from the Plan....until, the Plan's service provider realized they made a mistake and in the prior year, placed QNEC monies in another qualified plan maintained by the sponsor, as opposed to the 401k Plan that it was intended for. This mistake, of course, came to light within the week.

So now, we are beyond the 12 month period due to an error made by the service provider. I read a similar post in another forum-looks as if we have to re-terminate the plan, and ensure the doc is up to par in terms of being in compliance for amendments, etc. Because the PYE is 6/30, the final 5500 has yet to be filed. I wouldn't think that we would have to do any sort of correction under EPCRS given that we are looking at 12 months + roughly 2 more months, and to my knowledge, we wouldn't be amending late on anything...thoughts are greatly appreciated.

The participant was deferring at 3% for the year. In December, the payroll company's system caused a change in his deferral from 3% to $3.00. This continued into January and also affected his match. Am I correct that for 2011, the company needs to make a QNEC of 50% of the missed deferral amount, plus earnings, plus applicable match and earnings? But for 2012, they can choose to do nothing since the participant can still recapture this missed deferral over the course of the remaining 11 months? Is the client limited to a QNEC of 50% for 2011 or can the QNEC equal the total amount missed? Thanks.

What withholding rules, if any, apply to distributions from designated Roth 401(k) and 403(b) accounts if the distribution is an eligible rollover distribution but is not a qualified Roth distribution?

Our firm was approached by a company who had not been filing their 5500's. They did not file plan years: 2000, 2002, 2003, 2004, 2005, 2006, 2007, or 2008. We had them correct via DFVC. For most of the years (not all), there were SSA also completed. It is our guess that these SSA's were never sent. What is the correction for old non-filed SSA? In addition what is the penalty?

We took over a plan midyear (2011) and at that time did a plan restatement that made it so that interns could not participate in the plan. The question is; are interns who contributed for part of the year eligible for the annual match? Match eligibility reads that it is allocated for anyone who had compensation during the year and is employed on 12/31/2011. It does not specifically exclude anyone (except anyone who is not there on 12/31). Since they became ineligible in the middle of the year are they still eligible for the match?

I have stock options from a previous employer that will expire on 3/31/12. I was not an officer, VP, or other high ranking employee. I clearly have no inside information on the compny, yet I am being required to have a phone conversation with the company attorney to get approval of my excercise? The attorney is in switzerland and I will have to wait for him to get back to have my call?

My fear is that during my wait, the stock will pull back and I will lose out (it is risen quite a bit over the last few days). What are the comapny's obligations in this situation? How long can they make me wait? I understand the need to make sure there is no action based on inside info, but in my case it's a bit silly. Additionally, they are looking for an exact date in which I will excercise....I don't know, Im probably going to put in a limit order.

Thanks in advance for the info.

I'm new to working with Cafeteria plans -

My understanding of a POP (Premium only plan, premium payment plan) is that it is a plan that offers only group insurance coverages.

Is a plan still a POP if it offers, in addition to group health insurance coverage, individual polices such as AFLAC products, individual supplemental insurance policies, where the employer is deducting premiums and forwarding them to the provider (though it may not make a difference)? My concern is regarding nondiscrimination testing, whether the inclusion of individual policies means a plan is not a POP, and therefore not eligible for the safe harbor eligibility test available only to POP's.

What about the inclusion of PRA's (Premium Reimbursement Accounts) offering reimbursement of individual major medical health insurance premiums upon receipt of proof of payment? I realize there is debate whether this type of benefit should even be included in a cafe plan, but my question is in regard to the POP definition. Does including a PRA make a POP plan no longer a POP?

Thank you for your assistance.

Corporation A buys the assets and goodwill of Company B. Company B still exists, but Company A controls it, so a parent/subsidiary controlled group now exists. Company B has a deferral only plan that I think should be terminated. Since a controlled group was created, Company B should be an adopting ER under Company A's Safe Harbor 401(k) plan (by when should they do that?). I understand that there is a transition period for coverage testing, but I'm confusing myself with all the other things that are involved and my brain is going circles. Maybe I'm making it more complicated than it needs to be. For example, when a company's assets are purchased, the EEs of that company can be considered as brand new EEs and not be included in the purchaser's plan until they meet eligibility. So, company B becomes an adopting ER of Company A's plan, but Company B's EEs will not receive a benefit for X number of months (unless Company A decides to be generous and include them immediately). Am I on the right track?

Can someone point me in the direction of where I may find commentary regarding a participant (HCE) that has service, but no compensation in 2011.

I feel as though I should not include that participant in the ADP/ACP test, but I can't remember where I read or heard that.

Thanks !

I have a SH plan that allocates a 3% QNEC and a fixed matching contribution of 100% of the first 6% deferred. The plan year is calendar. The plan wants to eliminate the fixed match, but will continue to contribute the 3% SH QNEC.

My question is will the plan still be SH with regard to the ADP test due to the fact the 3% SH QNEC will continue to be contributed. Or will the plan be subject to both the ADP/ACP test because the the plan was amended mid-year?

I haven't had this happen to me since the late 90's, and I can't remember if this is allowable, and the 401(k) answer book didn't address the issue:

Informed client that their 401(k) Plan become top-heavy for 2011 and that no deferrals should be made in order to avoid the 3% required non-key employer contribution. Received the payroll files yesterday and all of the owners deferred $16,500 during 2011 (plan passes ADP testing, so this is not an issue). Owner does not have the cash to make the 3% top-heavy contribution. In addition, the plan was amended 1/1/2011 to allow collectively bargained employees to participate in the plan.

Two questions: (1) May the owners remove the deferrals from the plan (as a mistake of fact) to avoid the top-heavy minimum? And (2) must the collectively bargained employees share in the top-heavy allocation, if the owners decide to fund the minimum?

Thanks for any replies!

Assume an employer enters into an employment agreement with an executive that is adopted January 1 of Year One. It promises the executive an annual base salary of $200,000 for each of Year One, Two, Three and Four. It does not mention the employer's right to pay less, or to reduce the salary, in its discretion (although it retains the right to terminate him without cause).

1.) Does that promise constitute, as of January 1 of Year One, a "legally binding right" to $200,000 annually with respect to Years Two - Four? The regulations provide that a right is not legally binding if the employer can unilaterally reduce the related compensation after the employee has performed the required services - - - that does not seem to apply here (i.e., the employer could not reduce the compensation once the employee had performed the services in Years One - Four).

2.) If it constitutes a legally binding right, does that mean the employer cannot decide, for example, to pay the executive only $100,000 in Year Two, while shifting the resulting $100,000 shortfall to Year Three (i.e., paying $300,000 in Year Three)? Would that constitute an impermissible re-deferral?

Thanks.

Ok almost everyone is familiar with The Retirement Equity Act of 1984. Its intent as stated in writing was, "to ensure a stream of income to surviving spouses of plan participants who die before reaching retirement age". Plug it into a search engine, you will get a lot of hits back. But REA included the Earliest Retirement Age provision, which was later added to ERISA. So a survivng spouse has to wait until the participant would have reached the plans earliest retirement age. Legal? Absolutely! Inequitable? Absolutely! Heck even the US Senate agreed that a survivng spouse of a plan particpant should not have to wait until the deceased participant would have reached retirement age. Yes I know REA established protections that were not in place before. So my question to all of you out there is, Has this Earliest Retirement Age provision ever been defeated?

A company with an existing PSP wants to start a SEP so that it can contribute to one specific employee who's not eligible for the PSP yet. Would all employees be eligible to participate in the SEP or can you just specify a class of employees to be eligible (e.g., owners' spouses)? All other employees would get a comparable allocation in the PSP. The PSP has a 1 year eligibility requirement while the SEP would have a 6 month requirement. There would only be 2 employees who would qualifiy for the SEP but not for the PSP. If most employees cannot be excluded from the SEP, would it be possible to 1) have those two employees waive participation from the SEP, and 2) not contribute to the other employees in the SEP since they would be getting comparable allocations in the PSP? I imagine you would have to combine both plans to do the crosstesting (since the PSP is a new comparability plan). All help is greatly appreciated.

Employee is going on unpaid FMLA leave. Employee wants to keep coverage for himself while on leave but wants to drop coverage for his spouse.

Is this permitted under the cafeteria plan rules (or required under the FMLA)? Or is it not consistent with and on account of the change in status?

Thanks.

http://en.wikipedia.org/wiki/Federal_Insur...butions_Act_tax

I found the attached site and the information under "self-employed people" pretty good - mwyatt & masteff were probably saying the same thing in my related post and I thank them for their time and input .