I have a plan that satisfies safe-harbor by employer nonelective contributions. Due to a reorganization of the employer next year it is looking like the plan will need to terminate during the year next year and not at the end of the year. It is clear that we could not qualify the mid-year termination as a substantial business hardship and it is very uncertain whether the transaction would fit under 410(b)(6)©. As I read the regs and the proposed regs, a safe-harbor nonelective contribution plan cannot terminate mid-year unless it is due to substantial business hardship or 410(b)(6)©. This is not the case if we satisfied safe-harbor via matching contributions. See 1.401(k)-3(g). This makes no sense but I don't read the regs any other way. Does anyone have any thoughts on my ability to do this or on alternative approaches? Thanks.

had an advisor call and ask whether splitting a plan on eligibility would then create 2 plans (hourly vs salaried) would lower count and avoid audit requirement. My thought is no does not void requirement. the "plan" would still be under audit requirement because ownership plan document etc, among other reasons. I could not find a direct comfirmation any help. Found answer ignore please

Hopefully someone can provide some input on this issue.... New Company is acquiring substantially all of the assets of Old Company in an asset deal. New Company will continue Old Company's business and will continue to employ substantially all of Old COmpany's employees. Old Company will cease to exist after the deal closes on Nov. 30. Old COmpany has a SIMPLE IRA for its employees that New Company intends to continue "as-is." Does New company need to set up a new SIMPLE plan with the same FI? Or can it just assume the old plan? any thoughts are greatly appreciated as I'm not finding much guidance and we're on a very tight timeframe.

Upon termination, can you roll a 457 into an IRA & defer taxes?

Thx

We inherited a 401(k) plan (had been a profit sharing plan for years) where only the company owner has whole life insurance as part of his account balance. Apparently none of the other 7 participants had ever been offered insurance. The agent now wants to offer policies to the 7 participants. However, he wants to offer term policies. Is this possible? Would this not be a discrimination issue since the owner has whole life and employees would have term?

Thanks.

Any opinions out there regarding Question 13 on the 5300 - the option to apply for a determination on coverage? Is there really a major benefit in getting this determination?

At an IRS phone forum in mid-September, they talked about discontinuing the optional determination for coverage/nondiscrimination anyway.

Curious how others handle this question.

Sole propr maintains a db and 401k plan. he wants to temrinae the db plan. due to some asset gains the amount of asssets in the db is higher than his 415 maximum lump sum. can he roll the difference into his 401k plan, which is not terminating, and take a distribution of the 415 max, without any penalty?

We have just determined that our company's health plan only covers employees who work "full time," defined as 30 hours or more. For the past several years, we have included several employees in the plan, who have worked 20-25 hours. These employees were not, in fact, eligible to participate.

We are entering open enrollment now. We will have to tell these employees that they are "losing" their health coverage. Any thoughts on how to deal with them? They have to be kicked off the plan (I assume). They are not eligible for COBRA (I think? There was no "qualifying event.") They will ask, "What do I do now to get health insurance."

Any general thoughts would be appreciated.

Has anyone had experience with whether share accounting vs unitized accounting is a best practice for leveraged-ESOPs?

Given: Owner elected to receive RMD as 50% J&S . Owner is still working. Owner decides to retire 3 years later at 74.

Question: Can owner, at the time of retirement, elect to receive remaining benefits as Lump Sum?

Thanks for all responses.

Can my plan limit access to the Target Date Fund option that matches my age? Or do the 401(a)(4) benefits, rights and features avaialbility testing rules basically require that I can pick any option within the target date series (e.g., a 55 year old investing in the 35 year old option?

Is it allowable for an ESOP participant at age 70 1/2 to rollover their full ESOP distribution or a ESOP RMD to their personal IRA account? Thanks.

We are an RIA firm that also owns part of a TPA firm. The question is dealing with the John Hancock Forum IA (Installation Allowance) program.

We hired a prominent ERISA attorney for an opinion about the IA payments a TPA receives from John Hancock. We were told the IA payments must be 100% offset to the quoted fees if not, any fees above those must be credited back or reimbursed to the client... otherwise it is a prohibitive transaction becuase we are a RIA.

Another TPA firm were told a way to collect these fees without reimbusement because they had the same questions.

Not sure were to tunr. We cannot be the only RIA firm that owns a TPA that might be facing this. Just curious if there is anyone else facing this and have found any resolution or how they are handling the fee disclosure.

Is there a way we can obtain a private letter ruling or somehting in the same realm to hang our hats on?

Any suggestions would be greatly appreciated.

Any thoughts on how many signatures are required on an 8955 (we are not filing electronically for our clients.) IRS instructions just say sign and file, but the form has sponsor and administrator sections. We could use the 5500 theory and say admin only needed, but wouldn't it be nice if that was stated somewhere? Maybe it is?

How does one apply a negative rate of return to a late deposit? The plan is daily valued and the record keeper uses the participants actual rate of return to determine lost interest on a late deposit. The total lost interest is a ($500). So in this scenario, a salary deferral of $10,000 is withheld from pay but not deposited to the trust. When discovered, the deferral is now worth $9,500. If the employer deposits only $9,500, don't they benefit from the difference between the amount withheld from pay and the actual deposit? Is this permissible?

I've received one opinion that states under VFCP, the correction is made by applying the greater of the corporate underpayment rates for taxes under Code §6621 and not actual plan earnings and losses, unless the plan earnings are higher.

Thank you for any guidance!

A particular client has a 401(k) plan investment committee and is convinced that, if the plan investment committee identifies a particular fund as poor-performing, they should "freeze" that fund, and not let any "new money" into it. However, they think that this is a *safer* fiduciary bet than *removing* a fund that they have identified as poor-performing.

I take the opposite view. If, by their own process and investment policy statement, they've i.d. a fund as poor, but they then allow participants to stay in it, that strikes me as increasing their risk for participant claims if the thing tanks. There is written proof that they knew it wasn't performing! (I've seen the use of a hold and review list as standard - and if the fund stays down for a long enough time, it is removed).

Not much success reasoning with them on this point so far. (They believe - and there's something to this - that if they document their freeze process, and follow it, then the investment results don't matter). They are convinced (and I strongly disagree here) that in removing a fund, they face much higher risk than in just freezing it.

Any thoughts, examples, or insights from those of you who follow the participant fiduciary cases?

Thanks.

No response requested in regards to this very sad story

You were 55 in 2008

In 2009 you made 20 gazillion so you were an HCE in 2010

In 2010, you made 20 cents so you were not an HCE in 2011

You quit in 2011 and were given an offer to take a lump sum in 2011 and even though you were told that you might not be able to receive a lump sum distribution in a later year, you declined.

In 2012 you come back and say give me my lump sum now. The Plan says no because the Plan is only 90% funded, you are a former HCE, and the Plan sponsor doesn't want to fund up to 110%.

I have a plan that provides an early retirement reduction at 4.8% per year from age 62 to age 55, with no reduction at any age with 30 years of service.

For General Test purposes, should I incorporate future service in determining the most valuable accrual rate for an employee that does not yet have 30 years of service, but would attain 30 years before age 62?

For example, I have a participant age 50 with 25 years of service. Should his most valuable accrual rate be based on an age 55 benefit with no reduction (since he would have 30 years of service at this age), or the plan's regular 4.8% per year reduction (since he does not have the required service eligibility for unreduced benefits as of the testing date)?

I'm very new to Relius, so apologies for foolish questions.

So, let's say you have a 401(k) that wants to use the "maybe" election in 29(e)(2) of the adoption agreement. Then, in a timely fashion of course, they decide they do want to amend the plan to provide for the 3% safe harbor contribution. My question is this: does the amendment wording provide for something to the effect that "this amendment to provide the 3% safe harbor non-elective contribution is effective for the plan year beginning 1/1/2012 and ending on 12/31/2012. For 2013 the plan will automatically rever to the the Discretionary ("maybe") election in Section 29(e)(2) of the adoption agreement, and will remain so unless and until changed by any further amendment" - or something to that general effect. In other words, 1.401(k)-3(f)(1) clearly pwermits such an amendment to be for one plan year only. But does the Relius document permit this? If not, then it is a real bore to have to amend in and back out of safe harbor status year by year, rather than only having to amend in.

Thanks - I appreciate any responses.

A defined benefit plan is terminating and one of the retirees who elected a joint and survivor option would like to receive a lump sum now. When calculating the lump sum do you have to take into account the prior annuity payments that were made. I'm getting conflicting instructions. Also, can the lump sum be rolled over?