When a client overfunds a wire (contributions to much money to the Recordkeeper and Trustee) or participants are taken out of the payroll file and money is left over, is the client permitted to ask the Recordkeeper/Trustee to move the money to the forfeiture account? or must the Recordkeeper/Trustee return the money to the client?

Question - Is moving the money to the forfeiture account a violation of the exclusive benefit rule? Should the overfunded amounts be returned to the client? Please state the Code/Regulation? Please note, the excess money was never placed into the participants' accounts and is truly the client's money.

I have plan that I took over in 2010. The Schedule H was prepared on a cash basis. I typically prepare these schedules on an accrued basis to coincide with the IQPA schedules.

I don't see anything in the instructions that would would prevent me from continuining to use this method, even thought it's not my preferred way of doing things.

Can the form be switched from Cash to Accrued, of am I stuck on cash for eterniity with this plan?

Are people providing special tax notices for hardship distributions? I get that it's not an eligbile rollover distribution, but it seems like there should be some documentation warning them about the 10% penalty tax. Truth be told, we've been sending the same Special Tax Notice that we've been sending for termination distributions just to make sure they knew about the penalty taxes.

A plan I am working on has a service based match. 0-5 years 33 1/3% up to 6%, 5-10 75% up to 6%, 10+ years 116.67%.

The plan spun out of a much larger plan effective 1/1/11. Their projected ACP test is HCEs 6.11% vs 2.26%. So a pretty large ACP failure. Since it is a service based match, BRF is also going to be required. They will not pass the 70% ratio, but will pass using the "safe harbor ratios"...which I believe you then need to look at effective availability and facts and circumstances. I realize this portion is not mathematically....but any guidance on what would be reasonable? Does the fact that the ACP test fails need to be considered or when its corrected no longer a factor? The HCE population has 162 employees, all but 7 receive the top 2 tiers. In fact 137 receive the top tier. If they use the safe harbor ratios, can they still rely on testing every 3 years? It just seems to favor the HCEs.

Any thoughts/concerns would be greatly appreciated!

Does anyone know if the IRS will acccept a faxed/photocopied version of a 5500-EZ? Client is out of town, and I want him to be able to just sign and fax back to me.

A 50,000 participant DB plan has a 12/1-11/30 plan year. The plan year will change to the calendar year effective 1/1/2012 so that there will be a one-month short plan year 12/1/2011-12/31/2011. The Plan had a funding short-fall as of 12/1/2010 so quarterlies are due for the short plan year and the 2008 proposed regulations say use 1/12 of the 2010-11 MRC to determine the short plan year minimum quarterly contribution safe-harbor.

It is now 4/15/2012. We don't yet have the data and can only estimate if there is a funding short-fall 12/1/2011 and thus, do not know if quarterlies apply for the 2012 Plan Year. Worse, the 2008 proposed regulations stipulate that in the plan year following a short plan year, the minimum quarterly contribution is simply 90% of the current year MRC and the 100% last year safe-harbor does not apply.

Apart from just estimating a high contribution for the 4/15/2012 first quarterly installment for the 2012 plan year, does anyone know of any guidance to cover this situation?

At our company, employees become benefits eligible on the first of the month after hire and then have 30 days to make elections. To illustrate, an employee who started 9/25, would be eligible for benefits on 10/1 and have until 10/31 to make elections.

My question is regarding benefit start date....If an employee were to wait until 10/15 to make benefit elections, I believe that it is permissible to have the medical, dental, vision and even life insurance policies start retroactively on 10/1. However in regards to HSA and FSA, am I correct in saying that those policies by law cannot go into effect retroactively and only qualified expenses incurred after the employee made the election are eligible?

Thanks.

Is the employer penalized for incorrectly granting a hardship withdrawal to an employee? If so, what is the penalty? How can this be remedied?

Have a Sole Prop. who wants to make a 401(k) deferral of 22k for 2010 and fund it now. His taxes are on extension until 10/15. Can it be done or did it need to be deposited by April 15th?

Thanks

We have a client who purchased a company earlier in 2011. The company they purchased maintains a non-safe harbor plan. They want to merge plans. We advised them to hold off on merging until 12/31/11 so that the Safe Harbor Status of the receiving plan isn't jeopardized in any way. The employees of the purchased company began participating in the Safe Harbor plan in June so nothing is actually going on in the other plan currently just waiting to be merged. Today the broker contacted us & told us the advisors for the purchased plan do not believe they can accomodate the transfer until April 2012.... How should we proceed? Can we do the merger resolution for 12/31/11 make sure the investment company for the purchased plan changes the name to the receiving plan and let the assets remain their until April??- I just want to make sure we are not jeopardizing the Safe Harbor status of the receiving plan in anyway but I'm thinking we would be okay doing that since everyone is already participating in the receiving plan & will get the 2012 Safe Harbor notice by 12/1. Thoughts? Any knowledge or experience shared is greatly appreciated. Thank you,

Hi there,

I recently started a job as a benefits administrator with an organization that has approximately 800 employees. We're self-funded for medical and dental. We're unhappy with our benefits software vendor and are planning to send out an RFP within the next week. Does anyone have any suggestions/tips for going through this process? Does anyone work with a vendor who they would recommend given the admittedly limited information I've provided?

Thanks in advance for your help.

A 401(k) plan participant took a plan loan in 2005 and another in 2008. Later in 2008 he terminated employment. The plan's TPA did not advise sponsor to deem either loan. Very recently, in course of the plan's annual audit (first audit of the plan by firm), the loans were found and now need to be dealt with. Can the sponsor apply for a VCP under EPCRS to 1) deem the older loan so that it is taxable in 2011 instead of 2008, and 2) permit the participant to pay back the newer loan with accrued interest (it's still within its five-year window). I believe that such relief is ordinarily available (assuming that IRS consents to it, based on facts and circumstances), but a few have told that it isn't available in this case because the participant is terminated. I haven't found any mention of termination being a fatcor, but want to be sure.

Thanks for any help or insight you can provide.

Can someone clarify for me the deposit deadline for employer contributions for tax exempt employers and their ERISA 403(b) Plan? Additionally, if you can provide the IRS citation it would be much appreciated.

An employer violates the MSP rules by "taking into account" active employees' Medicare status (and not offering those entitled to Medicare coverage under the active plan).

I understand the penalties and taxes for this violation.

What now, though? Does the employer have an affirmative obligation to report the violation to CMS and/or the IRS? If so, what is the mechanism for doing so?

I just want to get others thoughts/processes on what you do when a client never submits employee census data for a plan year. Do you just send out a non-compliance letter, file the 5500 based on the information you have, and leave it at that? Do you continue to request the data until it's received (even if that is years down the road)? Do you take the drastic step of terminating the business relationship with that client to CYA?

I would like to know if anyone has purchased/used Sungard Corbel's "prototype" wrap document for multiple welfare benefit plans. I have a self-drafted wrap template but am looking for ways to save time/money for clients and am wondering if the Sungard Corbel product has accomplished those goals for anyone. Thanks.

A group offers a self-funded life benefit and would like to offer advance pay-outs to those with a terminal illness. There are differences in the way the Internal Revenue Code treats self-funded versus insured life insurance policies. I am not sure, however on the following two issues:

1. whether it's possible for a self-funded plan to offer advance payments for those with a terminal illness; and

2. the tax implications of offering an advance payment.

I did look around in our fringe benefits tax guide but was not able to find any helpful information. Anyone have experience with this or able to point me in the right direction? I would appreciate it.

We're terminaitn a plan. For those who do not respond despite our dilligent efforts, we are forcing them into IRA's. Do we need to amend the plan in some way to allow for this? Or is it just understood somehow... If we do need to amend, does anyone know if Corbel has come out with anything?

We're doing this even if its more than $5,000, based on the DOL's FAB from a couple/few years ago.

Thank you Detroit Tigers for taking care of business!

Corporation sponsors defined benefit and defined contribution plans that cover employees of wholly owned subsidiary. Wholly owned subsidiary is spun off to shareholders of parent or sold to a third party buyer. Assets and liabilities of the parent's defined contributino plans attributable to the employees of the spun-off (or sold) subsidiary are transferred to a new plan sponsored by the subsidiary. No assets are transferred from defined benefit plan(s).

Does the sale of the subsidiary stock make this an asset sale transaction (think so), or is it a stock deal?

For the 401(k), can the spun-off (or transferred) employees take distributions on account of the fact they are no longer considered employees of the parent?