We know that under document terms, prevailing wage contributions can act as a QNEC for passing ADP testing even though the prevailing wage is not a QNEC and is not subject to the QNEC withdrawal restrictions.

The question is in a 3% non-elective Safe Harbor plan, can the prevailing wage be used as the 3% SHNEC? I am not seeing the stretch although the concept is attractive.

Any thoughts on how this might be accomplished?

THanks for any and all ideas.

Instructions clearly say that if Plan sponsor and Plan Administrator are the same person, only the Plan Administrator needs to sign 8955SSA. We have a case where the client only signed as Plan Sponsor. Anyone know if IRS will reject this? We are considering amending just to be safe.

I would like to know how the issue of 1099's for PS 58 costs are being handled or by whom. Who generally handles it, insurance company or the tpa firm?

EE is married but spouse lives apart due to work circumstances. No divorce/separation involved. Child is 14 and lives with spouse. Spouse is biological parent, EE is not. EE and spouse file separate returns.

Ordinarily, it would seem that the EE cannot make claims for the child. But what about the new legislation for children under the age of 27 that allows children to qualify even if they do not meet the other tests? Can the EE claim for child in this case?

What are others using as the individual statement that needs to be furnished to all those reported on the new SSA form? Is there a sample format available that anyone knows of?

thanks!

Treas. Reg. Section 1.415©-2(e)(3)(ii) includes certain items of post-severance "regular" pay in 415 compensation, but does not provide any comprehensive definition of "regular." In the case of a plan using W-2 compensation as its definition, I'm assuming "regular" post-severance items would not include such things as includible income from stock options that are exercised after severance (but within the 2-1/2 month/end of limitation year period), expense reimbursements from a non-accountable plan, non-deductible moving expenses, etc., even though they arguably relate to pre-severance service and would have been paid had the employee not terminated. My assumption is based on the view that these are not "regular" items of compensation, but I was wondering if anyone had a different view.

Thanks.

well, I see they released the draft for the EZ, I don't see any changes from last year. someday maybe the DOL will release the form 5500 for next year!

http://www.irs.gov/app/picklist/list/draftTaxForms.html

a few months ago, according to Janice Wegesin

the DOL expects to make the form 5500 available on I-File on or about December 20

I have been asked to isolate exactly where in the federal laws it says that elective deferrals in a qualified 401k plan are deductible. So far, I have cross-referenced IRC sections 401(k)(2)(A) and (B), 402(g)(3)(A), 402(g)(a)(8), and 415©(1) and (2). Although I did not expect the references to be very direct, I was hoping for something a little more useful. Are there any other areas in the laws that more clearly describe how deferrals are technically considered employer contributions and, therefore, deductible?

Plan Sponsor with both a 403(b) Plan with employer contributions and a Defined Benefit Plan. The DB Plan was frozen to new entrants a few years ago and new hires are given a 4% contribution in the 403(b) Plan instead. However, in testing the DB Plan for Coverage and Nondiscrimination, the 4% Employer Contribution can't be considered and both tests fail, absent correction. One solution would be to replace the 403(b) Plan with a 401(k) Plan, which would allow the employer contribution to be used and the PLan to satisfy both Coverage and Nondiscrimination. Another fix would be to remove all HCEs from the DB Plan, but this would accelerate the eventual failure of the Minimum Participation requirements of IRC Sec. 401(a)(26) from about 10 years down to 3 years, which is an undesirable result.

What other solutions are Plan Sponsors using in this situation?

Also, this has occurred for the 3 prior plan years (we were not involved with this until this year), so a retroactive fix for those year is needed. What have others done here?

If you need more background information to reply, please post and we will happily provide it.

Thanks in advance for any help or comments.

Can anyone refer me to some guidance or best practices regarding the limitations on frequency for trading employer stock in a plan with participant directed investments? The 404© regulations require (for purposes of 404© protection) that participants/beneficiaries be permitted to give investment instructions with a "frequency which is appropriate in light of the investment alternative's reasonably expected market volatility." What is appropriate with respect to an employer stock fund, which is generally considerably more volatile than a mutual fund? One month? Two months too long?

I am aware of the regulations under under the statutory diversification rules of Code 401(a)(35), but have not considered how relevant they are to my question.

Any thoughts are welcome!

Have a non-owner who is still working for the Co. (continuous employee since 1980). He took an RMD in 2010 but doesn't want to take one in 2011. Can a participant do that - stop and start? OR Once you start do you have to continue? Tried looking it up and couldn't find anything

Thanks in advance!

The 2006 regulations regarding "disproportionate contributions" (applicable to "targeted" or "bottom-up" or fixed-dollar QNECs) can be separately applied to excludable and non-excludable employees (considered separate "plans" under the regs), can't they? It seems they could be, but I haven't been able to find any direct reference to it. I understand that the plan document would have to allow for this. Otherwise, fixed percentage allocations would also be subject to the restrictions, and allocations would be made to NHCEs not included in the failing test.

Can the employer and pension fund agree to extend the deadline for the employer to commence arbitration? I recall that PBGC Regulation 4221.36(b) used to allow for this provided that the fund had already made the assessment. Thanks.

I'll probably be embarrassed when I learn how obvious it is, but I always end up finding this out third hand and late. When and where can I find out what the mileage reimbursement rates (Medical FSA) are for 2012?

Facts:

- Plan allows for two loans outstanding at a time (for any reason)

- Participant has $100,000 balance

- Participant takes $20,000 loan for 5 years (payments have not started)

- bi-weekly payment is $170

Participant wants to pay a lump sum payment (outside payroll) of $15,000, leaving a balance of $5,000. He would like to re-finance the loan based on the $5,000 balance. This would result in a much lower payroll deduction (down to approx $40 a pay). can this be done? Would the new loan still be taken for 5 years. Again no payments have started.

He also wanted to know if he could transfer $15-$20k from an IRA to the 401k plan and count that as a lump sum payment. I assumed that answer to be no.

For ASO plans, how do you know if you need a Schedule A or a Schedule C?

Last year, the carrier sent us information for a Schedule A and this year they are saying we only have to prepare a Schedule C. From what I can tell, the plan design hasn't changed. They are saying the requirements have changed.

Thank you for your help.

Spousal consent is required when money is leaving the ABC Plan (MMP), but the plan's installment form did not have a section for spousal consent. Being new to the relationship I inquired with the client if there was a reason why there was not a spousal consent section on the plan's installment form.

As a result the client told me that they do have participants provide a spousal consent wen a termination is requested which is generally when an installment would be elected. The client has asked if it was necessary to have a spousal consent provided again if a change is being made to the setup of installments which is usually why a participant would be sent/complete an installment form.

Question: Do we need to get spousal consent again if any kind of change is being made to an installment payment setup? Any guidance would be helpful?

A Participant terminated from the ABC Plan on 2/28/2011 and rolled their money out of the ABC Plan into an IRA ($25,384.49). The non-vested money was then forfeited. The participant realized that they had an excess deferral in the amount of $786.02 and asked for the excess deferral to be distributed out of the ABC Plan but the plan does not provide for the distribution of excess deferrals. The participant took a distribution of $786.02 from the IRA as an excess deferral.

The participant has subsequently been rehired in the ABC Plan and would like to have forfeiture reinstated. Typically, the entire amount withdrawn needs to be restored, even if the part has to make up that amount out-of pocket. Two questions arise:

Question: Should the $786.02 be included in what is paid back to the ABC Plan in order to have the nonvested money reinstated?

Hi,

We have a small money purchase pension. Two participants were missed for a number of plan years. We are going to correct under VCP. I have read EPCRS and want to make sure I handle this correctly.

We will be depositing missed employer contributions and missed earnings. Regarding the missed earnings, we have plan records and will be allocating the rate of return earned by the Plan for all years. In years that there is a loss, we will be allocating a loss. I don't see anything in EPCRS that prevents us from allocating loss earnings.

Regarding allocating a loss on the missed contributions - does everyone agree that this is allowable? Just want to make sure that I haven't missed anything which would prevent me from doing this.

Thanks so much.

Employer sponsors a profit sharing plan that has a PYE of 6/30. In February 2011 the owner took $100,000 (he's a participant) as an in-service distribution. The plan is valued annually and we saw the disbursement (which we finally rec'd confirmation of today) when we worked on the asset recon in early September. Owner was age 63 at the time of disbursement. Plan doc states that in-service W/D is allowed at NRA, which is 65.

I am going with the assumption that he can't pay it back (the question from the broker this morning was "what if he can't pay it back?" so.....). The plan year has closed, so we can't amend to change the age for in-service w/d for the PY in which the distribuiton was done.

So, what happens for the PYE 6/30/11 with this prohibited transaction? When reconcilng, log as a payable, even though it might not get paid back?

If we amend the plan in the current year, does that help (since it "stops" the prohibited part of the transaction in the current year)?

Ugh what a mess! Your thoughts are appreciated!