The plan document (restated in 2002) provided for a match of catch up contributions (safe harbor match). They have never matched catch-up contributions. Any suggestions on how to correct are appreciated.

Can an employer deduct $5 per payroll from the participant for handling loan repayments to the retirement plan? I haven't ever had a client ask to do this and I am not finding much online. My gut says no...

I have a qslob -A and qslob -B plan in 2010, an hce made over 245k in qslob A in 2010 and was considered an hce for 2011 in qslob a and he made nothing in qslob b in 2010. During 2011 hce terminated from qslob a and was hired by qslob b. He only made 90k in qslob b for 2011 and 200k in qlsob a.

1. would hce from 2010 qslob a be an hce for qslob b in 2011?

2. would hce be considered an hce for 2012 in qslob b?

3. would he be able to take his money from qlsob a?

thanks

On 1/1/2010, mandatory burn of FSCOB and PFB occurred to increase AFTAP to 80%. 5500 was filed by 7/31/2011. Client has now determined that assets 1/1/2010 were misreported and were high enough so that no burn was required. (Problem was that well-known national bank misreported).

Clearly, much needs to be revised. Has anyone been down this road?

The concern is that if Schedule SB is revised to reflect "no burn," the IRS is going to come back and say "uh uh."

Let's assume an employer has a final average pay defined benefit plan. There is a one-year of service eligibility requirement. If the employer amends the plan to provide that participants initially hired after, say 12/31/2012, are no longer eligible, is a 204(h) notice required in that situation? Notice that the amendment would not apply to employees who have not yet completed the one-year of service requirement when the amendment becomes effective.

So this client rehired an employee who previously terminated in 2009. He was put on the 2010 8955-SSA and was rehired in March of 2011. So.....

Does he go on the 2011 SSA as a B with the new acct bal total? Left off enitrely, since he's not entitled to a distribution at this time? When he terminates again he'll go on as a B for that year.

We have a VEBA trust that is running out of money and can't continue in operation. How do we wrap up the VEBA trust? Is there a specific process for this?

If we cannot finish out the year or cover current costs (no money) are the trustees going to be on the hook? The employers?

I know there isn't any statutory answer for this question, so I guess it is more of a WWYD kind of question!

Plan says employer match is based on payroll periods. The match formula is 40% of salary deferral up to 10% of compensation. Plan has 3 partners who receive K-1 and 10 or so common law employees who receive W-2 wages throughout the year. Compensation for common law employee is W-2, compensation for self-employed is earned income.

The partners receive draws or guaranteed payments (not sure which...but I don't think that matters) throughout the year that is paid to them at the same time as the common law employees receive a paycheck. They defer throughout the year based on those draws/guaranteed payments and the client calculates and deposits match, using the amount of the draw/guaranteed payment as compensation.

Typically at year end we just take the preliminary K-1 and calculate what their match should have been for the year based on line 14A. And usually there are no adjustments that need to be made to the match the client calculated because they max out their match.

However, for 2011, the client did not start matching until mid-year. They matched 13 out of 27 payrolls.

If we calculate the match for the self-employed the way we typically would (based on their total deferral for the year and their prelim K-1), they owe $$$$ to the plan for the self-employed individuals. The client does not want to match them for the entire year since they didn't match the common law employees based on the full plan year. And this makes sense to me.....it does seem unfair.

So we are contemplating pro-rating the prelim K-1 number (taking it by 13/27) and only counting the deferral from the time they started matching the common law employees. They will still owe money to the plan for 2 of the partners, but not nearly as much. They are still going to be upset, because as it turns out, no one has ever explained to them (or had to explain to them) that compensation for the partners is earned income; that you just cannot use the draw/guaranteed payment amount to calculate the employer match.

Thoughts? Any concerns? Other solutions?

Thanks!

I have read through many of the othe other posts. My understanding is that generally, A VEBA will have to file Form 990, in addition to Form 5500.

My confusion lies with respect to the flow-through rules mentioned-if the revenues and expenses flow through the corporate entity sponsoring the VEBA, isn't it sufficient to report on the corporate 990, as opposed to a separate 990 for the VEBA's trust?

Suppose you have a small defined benefit plan with 6 participants that has existed for 5 years. The benefit formula is 5% of FAC x YOP. All participants have accrued a benefit of 25% of their average salary.

The 100% shareholder of the company (also a plan participant) wants to start a 401(k) plan for all employees and provide a mandatory employer contribution of at least 7.5% of salary every year.

If the defined benefit plan were amended to continue 5% for shareholders and .5% for all others, would the plan fail 401(a)(26) going forward if there were no new participants? Both plans together would easily pass 401(a)(4).

I know the safest way to go is a fresh start with each employees frozen accrued benefit + .5% going forward. This is the way we will go, but if the plan instead did not have an A+B formula, would it fail 401(a)(26)? No employee other than the owner would have a positive accrual going forward for quite some time. However, all employees would have accrued a benefit of at least .5% for each year of participation under the plan.

Just read that a former co-worker of mine died at age 100 on leap day, February 29, 2012. He was born on leap day, February 29, 1912. So, anyone care to estimate the odds against this incredible parlay?

Need a reality check.

A church-related nursing home wants to adopt an executive comp plan for a key employee.

Since the nursing home is not a 501©(3), I believe that 457(b) is not an option.

Is a 457(f) plan an option for this type of employer?

And if so, are deferral elections possible? I have concerns that under IRS Notice 2007-62, these would be taxable at the time of deferral.

Would employee-only elections still work?

I realize this is an unsettled area, but am hoping someone can help me to be at least a tiny bit less confused than I currently am.

Thanks.

We have a PS plan. A person terminated was paid out fully a few years ago and was forf. They have been rehired and everyone agrees he could repay his distribution and get the amounts forf back when he was paid out restored.

We use the Relius document.

As I read the base document it looks like the restore should be funded in this order:

1) current forf

2) current plan earnings (this is a pooled asset plan)

3) current contributions

Can you really use the earnings from a pooled plan? There aren't enough current forf. I always thought the employer just had to kick in more money to the plan if the current forf were not large enough. I am having a hard time wrapping my mind around the idea I can take earnings from the other people which is going to include people who did not benefit fromt he orginal forf.

Is it permissible to have a single plan document covering different groups or classes of employees and then give each group or class an spd that only includes their benefits?

Example: Plan Document contains 4 benefits schedules for five classes of employees as well as other different benefits.

Can the different classes get an spd that does not include anything but their benefits?

Class 1 has best benefits down to Class 4 which has least benefits.

We know what the IRS' correction methodologies are for failures to implement salary deferral elections. However, has anyone seen any literature on how one would measure someone's damages because the employer did not implement a salary deferral election (i.e., the loss of tax-deferred investing over a period of years)? If so, please share. Let's ignore for the sake of argument whether there is a cause of action against the employer or the fact which I recognize that any measure of damages has to be based on speculative assumptions, but I am trying to find out if any courts have laid out some standards.

I could really use some support on several questions I am receiving from a non-profit that sponsors a 403(b) plan. The answers seem obvious but to the individuals involved, they are taking a very basic look at things and are questioning everything. The plan is as follows:

An ERISA calendary year 403(b) plan

fiscal year = calendary year

21 & 1 with eligibility for ER contribution with monthly entry

1000 hours needed to share in the ER profit sharing contribution, but no last day requirement

no match contribution

individual accounts for all participants

The questions center on:

(1) What is the deadline for depositing the ER contribution? That is, for 2011 plan year, what is the latest that the organization has to deposit the ER contribution? Because this is a non-profit, the normal 3/15 deadline does not apply, correct?

(2) Several individuals are asking why the ER contribution is not deposited on a more frequent basis, at times hinting that it gives the appearance of something not being legit in that the organization is holding onto the ER contribution for so long. Obviously the EE contributions go in immediately, but what support can I point to so as to demonstrate the ER contributions are treated differently from EE contributions and do not have the same deposit deadlines.

The 1000 hour requirement is an obvious reason that they should not deposit quarterly since if they deposit for someone who doesn't reach 1000 hours, they have to end up removing those dollars.

But their biggest concerns involve the ER deposit. The HR person deposits annually within 3 months after year-end. That seems perfectly fine, but others do not agree.

Thanks for any comments

Where can I get Long Term Life Insurance? Please suggest me some good and reputed companies so that I can get easily in an affordable rate.

Testing is getting to the better of me, and I can sure use a little help with this Controlled Group Determination. For this example, assume that the non-involvement exception does not apply between the Wife (of Grand Dad) and Grand Dad for purposes of stock attribution. I hope I've provided enough facts and the family references are not confusing. I appreciate the assistance.

Company A Company B Company C

Company A 60 0 N/A

Son (of Grand Dad) 40 50 22.97

Wife (of Grand Dad) 0 50 0

Grand Dad 0 0 41.84

Daugther (of Grand Dad) 0 0 15.87

Daugther (of Son) 0 0 4.83

Son (of Son) 0 0 4.83

Grand Child (of Grand Dad)0 0 4.83

Grand Child (of Grand Dad)0 0 4.83

Edit - after posting this, I can see that this is not lining up in a grid as I composed this. How do I get this lined up to make it easier to read? HELP !

A participant in the 401(k) Plan at the Company where I work has contacted the Plan record keeper regarding a distribution of his non-Roth after-tax contributions.

He indicated to the operator that the portion attributable to earnings would be rolled over to a Traditional IRA while the contributions would be used to pay for some expenses. The operator told him that the 10% tax on early withdrawals would apply to the contributions. I've seen this reaffirmed by many sources. However, here is the specific language from the IRS website:

"Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income."

So according the IRS website, I don't think what the operator is indicating is correct because...the after-tax portion was included in the participant's income in the various years in which he made such contributions. Therefore, it would not be included in his income this year.....

P.S. I won't be sharing this information with the participant, obviously, as a Plan Fiduciary it could be construed as giving financial advice. Just wanted to clarify.

401(k) (1/1 plan year) covers division A and B. Division B spins off and starts their own plan on 10/7/2011. They are running a short year ADP test. What is the general rule in regards to compensation?

Should the 10/7/2011 to 12/31/2011 include compensation for just that short period? Or does it need to include compensation for the entire 12 month period?

And what about HCE status? I assume you need to look at compensation in the "lookback" year - meaning compenation from 10/7/2010 to 10/6/2011?

I'm sure each situation is different - but I'm curious if there are any general rules in regards to testing spin-off plans. Thanks!