I have an employer who is contemplating converting its non-safe harbor 401(k) plan to a QACA. This employer has always had a higher match rate for eligible employees whose annual comp is below a specfic dollar amount (let's say $30,000) than those making more. The current match rates for either group exceed the minimum rates required for a QACA and appear to me to be otherwise compliant with the enhanced match requirements. The only unique aspect of their formulas is that the match rate for the very lowest paid NHCEs is better than the match rate for the higher paid NHCEs and all HCEs. Anyone see a problem with maintaining these differing match rates under a QACA?

Employer has less than 30 employees, 5 of which are key ee's, therefore for TH purposes only top paid 3 are considered. So if 2012 is its first year for being TH, do the 2 excluded Key employees get the TH minimum? My thinking is no, but wanted verification.

Thanks

I read the COBRA time frames... 60 days to elect, then 45 days after the election to submit premiums during the initial COBRA start.

So what happens if an employee takes 55 days to elect (about 2 months), then doesn't pay the premiums, but they have submitted claims to insurance, and the insurance refuses to refund the premiums back because of those claims? As an administrator, when must I re-enroll the COBRA participant? Upon receiving the first premium check, or upon receiving the election? If it is upon receiving the election, we could be left with paying premiums for a deadbeat COBRA participant!

I feel like the answer is obvious, but thought I'd ask anyway... For purposes of providing a 2011 PS allocation to a larger group of employees, is it too late to amend the 2011 entry dates for Employer Non-Elective contributions? How about more lenient eligibility requirements for the same? Thanks.

I'm new to this plan so I would appreciate your experience with this.

I have a new severance pay plan, effective 1/1/2012, for a large company. The assets of the severance pay plan will remain a part of the general assets of the company, NO Trust.

What do I file with the Form 5500?

There are no insurance contracts, so no Schedule A.

There is no Trust, so no Schedule H.

Do I file Form 5500 without any attachments?

How do you count participants?

All officers and non-officers working more than 14 hours are eligible.

This would put them over the 100 threshold by counting eligible employees.

In a welfare benefit plan, you count actual participants on the first day of the plan year.

How/what do you count in a severance pay plan?

Thanking you for any help and guidance.

Hello, has anyone taken the ERPA (both I and II) this exam period (1/6/12 to to 2/17/12)? Interested in knowing how similiar to the 2009 and 2010 practice exams provided by AIRE? Any big surprises?

THanks

The plan has a QDIA that was timely distributed.

But the r/k system was not updated to reflect the correct QDIA. And participants were defaulted to incorrect funds.

How do we correct?

How do we correct the situation where the plan sent out QDIA notices, but people were not defaulted to the QDIA. The QDIA changed , and was properly noted in the notice, but the R/k system was not changed for the new funds. Therefore people were defaulted to the old funds.

What do we have to do to correct this?

Hello

I have a 401k plan and there is also a prevailing wage plan (which we do not administer). The participants particpate in both plans.

my question is can I combine these two plans for 401k adp and acp discrimination testing?

Thank you

sue

Company AB was owned 50% by A and 50% by B.

A and B recently sold the company. As part of the sale, both will receive consulting income of $200k for 5 years (or less if A or B terminates the consulting agreement).

A and B each set up an LLC to receive the consulting income. A would like to set up a DB plan and defer as much as possible. If the LLC is considered a successor to the Company AB then all the consulting can be deferred as there is a wage established.

If not a successor, then there needs to be wages (or earned income).

Is A's LLC considered a successor corp to Company AB?

Company AB was owned 50% by A and 50% by B.

A and B recently sold the company. As part of the sale, both will receive consulting income of $200k for 5 years (or less if A or B terminates the consulting agreement).

A and B each set up an LLC to receive the consulting income. A would like to set up a DB plan and defer as much as possible. If the LLC is considered a successor to the Company AB then all the consulting can be deferred as there is a wage established.

If not a successor, then there needs to be wages (or earned income).

Is A's LLC considered a successor corp to Company AB?

Does anyone know whether you can use compensation under an executive bonus plan to purchase an annuity, rather than whole or universal life?

Let's say a client sends their fee disclosures to everyone with account balances (despite our advice that everyone needs to receive it). Do they blow their 404© for the entire plan? Sungard mentioend that one of the implications of not complying was a loss of 404c protection. I'm just curious if not sending it to this one group would blow 404c, if they otherwise complied.

I have a potential client which is a leasing company that currently cosponsors a 401(k) plan with their client organizations for worksite employees as a multiple employer plan. I believe that if the leasing company wants to also establish a single employer plan on behalf of their nonworksite employees that this is permissable. In fact, single employer plans sponsored by a PEO can only cover nonworksite employees. Is my interpretation correct? Should I be considering other issues?

A participant (under age 50) makes 401(k) contributions and receives matching contributions each payroll period during the 2011 plan year. The total 401(k) and matching contributions equals $33,000. In March, 2012, the company declares a profit sharing contribution for the 2011 plan year. Under the terms of the plan document, the participant would be entitled to a $20,000 profit sharing allocation for the 2011 plan year. Such profit sharing allocation would cause his 415© annual additions limit to be exceeded by $4,000.

Can the employer knowlingly allocate the $20,000 profit sharing contribution in March, 2012 (attributable to the 2011 plan year), and then use the correction methodology under the Final 415 Regulations (EPCRS) to issue a refund of $4,000 of 401(k) contributions? Or, must the 2011 profit sharing contribution be limited to $16,000 prior to it being funded to the participant's account?

I have been asked to help terminate a 401(k) plan that was adopted (signed by an officer of the employer) in December 200X. The plan and the 401(k) arrangement were "effective" several months earlier according to the plan documents. If the employer started accepting deferrals before the plan was approved and signed, arguably those deferrals are non-qualified deferrals. The 401(k) regulations provide that non-qualified deferrals will not automatically disqualify the plan. If the initial plan year is a closed year and the plan document is silent about the timing of the initial plan year deferrals, is there a plan disqualification issue? If so, what is the correction?

Does anyone know where I can get a sample document for employer, comparable contributions to HSAs? (Not just allowing under a cafeteria plan, but employer contributions with no choice for employees.)

the instructions for line 3 of the '10 SE are somewhat clear " you can reduce your net self-employment income by the amount of your self-employed health insurance deduction" which it goes on to say is found on line 29 of Form 1040;seems to me that line 3 is actually reducing Schedule C income.

Sec. 2042 of SBJA titled "Deduction for Health Insurance Costs in Computing Self-Employment Taxes in 2010" points to an amendment to Paragraph 4 of IRC Section 162(l) ; the amended wording is " the deduction allowable by reason of this subsection shall not be taken into account in determining an individual's net earnings from self-employment ( within the meaning of section 1402(a) ) for purposes of chapter 2 for taxable years beginning before January 1, 2010, or after December 31, 2010" ; implying that for 2010 it shall be taken into account.

practitioners would follow the line by line mechanics of Schedule SE ; but to me the words shall be taken into account are fuzzy .

I just think the wording in both the 2010 Schedule SE instructions and 162(l) are not precise enough - anyone agree ? disagree ?

I'd also be interested in knowing if there were unpublished discussions with IRS or other cites that clarified this ??

thanks , in advance, to those who respond .

Employer would like to pay cash awards to all employees upon termination of employment for reasons other than cause. Award is available after a set period of service (not very long) and is based on position and pay. Even if the plan were structured to fit within the definition of an ERISA welfare benefit plan (pays no more than 2 x salary within 2 years of termination) it arguably is not a severance plan because it pays benefits "when" termination of employment occurs rather than "because" of termination (PLR 199903032).

If not an ERISA welfare plan, must it meet ERISA pension plan requirements? Or does the short-term deferral exception under 409A create a "space" where the plan could exist; i.e., benefit is paid out by March 15 following the year of termination; therefore not "deferred compensation"; if not "deferred compensation" than no concern arising from the fact that the plan is not limited to a top-hat group.

What if the plan met another exception than the short-term deferral exception such as the limited amount exception (maximum benefit does not exceed 402(g) dollar limit for the applicable year). Still no "deferred compensation" and hence no need to limit to top-hat group?

What if the employer simply inserted the right to eliminate the plan at any time, such that there was no legally binding right to the payment? Would it still be a workable deferred compensation arrangement not limited to the top-hat group?

It just seems to me that, between PLR 199903032 and 409A's carve out for involuntary severance benefits, establishing a voluntary severance plans for rank and file employees is not possible save for the 409A exceptions, if in fact those are available.

a NP sponsors a 403(b) with an employee who makes in excess of the 401(a)17 limit. Sponsor makes a 12% contribution to the participant. In addition makes a 12% contribution of the excess to the plan and reports the excess contribution as comp, I believe, on the participants W-2. Does this sound kosher? Participant does not defer into the plan.