If the db formula is based upon certain # of highest years of compensation, is it ok to count the years in which a participant had the highest base compensation, even though his actual take home pay was less because he was working part-time? Any potential issues in doing this?

If a db plan is amended to increase the accrual rates after a participant reaches normal retirement age, are we still limited by the 133 1/3% rule?

Does the 133 1/3% rule only apply with respect to accrual rates prior to normal retirement age?

I am looking for some input regarding a policy as it relates to the dropping of spousal and/or dependent medical coverage by an employee.

If an employee wishes to drop his/her spouse during open enrollment or any another qualifying event (other than divorce) - as an employer can I legally have a policy that requires proof that the dropped spouse/dependent(s) have coverage elsewhere or that the person being dropped authorizes the drop?

Additionally, if there is a request to drop someone from coverage based a qualifying event - can I have a policy that requires proof of the qualifying event....

My separated spouse just started a new job, so I wish to drop them from coverage.

What is a best practice policy to impose for these circumstances?

Thanks for the input.

Hello,

I'm hoping for some clarification on the following:

We have a medical fully insured plan.

ER pays 100% of EE premiums.

EE can elect family coverage, but must contribute towards the premiums; ER will also contribute a set amount per month.

The EE has to sign up for the coverage and list dependent info; e.g., name, dob, gender, etc.

The "election" to cover the dependents is valid until revoked by the EE.

The payroll system is configured with one deduction function that withholds the employee portion for each periodic payroll, as a pre-tax deduction.

The questions I have are:

Must we have a cafeteria plan for this?

If we do, must we demand from the employees an election each year to "defer" their co-pay, in view of the fact that the dependent insurance is in place forever until the employee decides to change it?

(Note: the fact is we do have a caf plan, but it seems a wasted expense for the above purpose).

Thank you in advance for your time and thoughts.

A tax client of our firm has an IRA that is all one piece of raw land. He is 75 years old and the RMD is about $9,800. How does he get cash in there to pay RMD and $3,200 pr property taxes?

Hi--I have a group of plans that are part of a controlled group. The formula is as follows:

The global profit sharing is the same program across all participating plans. The amount is determined each year by the board. The 2010 Plan Year amount of $1026.53 award was for a person who was employed the full year. If an employee is hired during the year or they die or retire during the year they get a pro-rated amount based on the number of months that they worked at least one day. For example, someone hired in December would get 1/12 of the full award.

Since not all employees received the full $1,026.53 would general testing be required?

HSA is established in Nov of 2011. Employee is single and has $15,000 in HSA eligible medical expenses in 2011.

Can the employee use receipts from 2011 to substantiate HSA withdrawals for 2012 and 2013?

Thanks.

An employer maintains two plans, one with a year-of-service requirement (the "main plan") and one without (the "alternate plan"). After initially meeting the year-of-service requirement and becoming a participant in the main plan, if an employee falls below 1000 hours in any plan year, the employee is taken out of the main plan and placed onto the alternate plan. Does this violate the minimum service requirement since the employee can lose eligibility for participation in the main plan even if he/she does not have a break in service, or can the plans be aggregated for purposes of evaluating the minimum service requirement so that as long as the employee can participate in one of the plans it's OK? Based on my reading of section 410, it does not appear that the plan aggregation rules apply for purposes of section 410(a)(1).

Hi,

We have a client who pays health coverage for a retiree and their domestic partner. The client has calculated the imputed income for the value of the domestic partner's coverage. There are no other wages paid to the retiree.

We know that the imputed income is taxable to the retiree and must be reported on Form W-2. Since there are no wages to withhold from, how do we handle the FICA and FUTA? Is it safe to report these numbers on the w-2 and have the employee pay their share when they file their income taxes?

Thank you!

We are a TPA administering a 401k plan for a mutli-employer union. This union offers a DB, an employer-funded DC and an employee-funded 401k. Contributions for all of these plans, plus their healthcare, come into our office. So, we started reviewing the census to determine who should be reported on the SSA-8955. We discovered something that hadn't occurred to us before. We have a participant that stopped contributing to the 401k two years ago - thus appearing to be eligible for the SSA report, however, he continues to have hours of work for the union - receiving contributions for the other two pension plans. So, does he get reported on the SSA8955 for the 401k Plan or are the "hours of work" he's still performing for the union (but not contributing to the 401k plan) mean he hasn't really "separated"? My gut tells me he would still get reported because for the 401k plan, he HAS separated. Playing the devil's advocate...we could imagine a scenario where we ONLY administered this plan and some other TPA administers the other pension plans and thus we would never have known about the continuing work hours.

Opinions?

I have a mom & pop plan that came in yesterday to tell us they are going to retire and close the business. "Pop" started receiving RMD in 2010. "Mom" will turn 70 1/2 next month. I do not anticipate having the plan terminated by 1/17/12 when she turns 70 1/2, so I am running with the assumption that she will need to take an RMD out of the 12/31/11 balance of her prortion of the assets and then the rest can be rolled over (or whatever she decides). Already planning on doing an RMD for "pop."

If they had come to us a month ago and I had been able to terminate the plan and liquidate the assets before she turned 70 1/2, could she have avoided the RMD for 2012 (her first year)?

they will complain about the 4 distributions and I wanted to make sure that terminating the plan was not a way she could avoid an RMD.

Thanks for your thoughts!

Hi all -

(Apologies if this is a stupid question - I'm relatively new to the field).

Plan sponsor handles some plan administrative functions in-house, and seeks reimbursement for administrative expenses accrued during a given year shortly after the end of the year.

Please let me know whether my thinking below is correct:

First part of the analysis would be whether the expenses are properly reimbursable from plan assets under ERISA 404(a)(1)(A) (reasonable, non-settlor, expenses, whose payment is permitted under plan terms). Additionally, because services are provided by the plan sponsor, the amount paid by the plan may not exceed the sponsor’s “direct expenses” (using the but-for test).

Assuming the expenses are properly reimbursable from plan assets, the question is whether reimbursement is timely - to the extent that reimbursement is sought for expenses "fronted" by the plan sponsor (by paying salaries of admin personnel and other reimbursable costs using employer money) 60 or more days prior, this must be done pursuant to a loan agreement compliant with PTE 80-26. To the extent that the expenses have not been pre-paid by the plan sponsor, there is no issue with their reimbursement by the plan.

Is my analysis above correct? Is there anything else I am missing?

Thanks in advance!

Can anyone point me in the right direction reagarding PTIN requirements. It is my understanding that a PTIN can sign a Form 5330. Must they be supervised by an ERPA, CPA, or attorney? What are their CE or testing requirements. Is having a PTIN the best choice among those who can sign the 5330? I'll be honest in that I am looking for the most efficient process regarding signature of Form 5330.

A client wants to use their 409a plan as collateral for a personal loan. This would create a taxable distribution, correct?

Thanks for any help.

I know that the 2010 filings happening now are supposed to be on the 2010 forms. A bundled provider with whom we have some business is sending out their forms today on the 2009 form. If the clients follow their instructions and file them on the wrong form, what are the likely consequences?

So, if I put $1,000 of my own in my FSA account and only need $800 this year, the remaining $200 gets forfeited.

That's some racket, huh?

Who gets the forfeited money? My company? The general account where all the money is held?

[disclaimer: I knew full well going into this what happens with the account; the use-it-or-lose-it system. And, I'll probably use my entire account, but I'll have to do some creative purchases.]

A one person plan had a $50,000 loan from his 401k Plan. Less than 6 months later his TPA inexplicably amended his DB Plan to allow him to take a $50,000 loan from his DB plan also, apparently not knowing that all plans are aggregated for the loan limit. The DB plan loan occurred in mid-2011 and he has been making loan repayments monthly. What is the correct way of fixing this? Should he pay the money back immediately? Does he need to go through one of the correction programs?

my wife's visiting nurse agency has been acquired by another - she's been told that, instead of her 403(b) account being moved to the plan of the acquiring agency , it will remain with her current provider - only new monies will go into the plan of the acquiring agency.

question : how typical is this situation , i.e. common , very rare, etc. ?? and also what would be a possible rationale for keeping the account balance with her currrent provider rather than moving it to the new plan ?

I'm asking these questions because she's not getting help from her HR department.

The 2009 Instructions for the 8955-SSA indicate that a box should be checked for each participant whose information is based on incomplete records. The instructions state that “Information for a participant may be based on incomplete records where more than one employer contributes to the plan and the records at the end of the plan year are incomplete regarding the participant’s service.”

1. If we are missing other information, such as the pay, social security numbers, or full names, should we check this box to indicate the information is incomplete?

2. If we have incomplete information, should we delay reporting of the participant on the 8955-SSA until we have time to gather complete data, or should we provide an estimate so that the reporting is timely (additions “code A” reported no later than the plan year following the plan year in which they separated”?

3. If we know a person terminated, but have no benefit calculated, then is it best to report them with a blank benefit? Or an estimated benefit?

Thank you for all of your help in advance!

Construction Co - non-owner participant over 70 1/2 still working and contributing to his 401(k) account; has not begun RMDs per plan provisions.

He may be temporarily layed off for one or two months this winter. It's anticipated he will return by Feb of 2012.

If the participant was layed off December 1st, for example, is the plan required to pay out an RMD for 2011?