Government sells assets to a 501©(3) organization that sponsors ERISA covered defined contribution plans. All employees of the governmental entity transfer to the 501©(3) with the sale. Clearly, the buyer can not assume sponsorship of the government's plans. However, can the plan assets be transferred in a trustee-to-trustee transfer?

I am wondering if it is possible to write a plan document in which those employed by a specific date can be eligible to immediately enter a plan, even if that specific date is before the Effective Date of the new plan? In other words, If a plan is effective 1/1/11, can all those employed as of 1/1/10 be immediately eligible to enter without meeting the service requirement? Then any other employees hired after 1/1/10 would be subject to the age and service requirements of the plan...?

An advisor that I work with has provided an email listing the date and amount of contributions for a client. He's not the investment advisor, but more of a business advisor. I asked him for either a signed confirmation from the client listing the dates and amounts, or a copy of the checks or bank statements. He is arguing that what he has provided should be good enough to certify the SB.

Is there something that I can point him to that states what documentation an actuary should require in order to certify an SB and AFTAP (it's a 1/31 year end so AFTAP isn't late yet)?

Thanks.

A participant has an outstanding loan and because of a disability they have moved from full time employment to part time. Their part time compensation is not sufficient to make the loan repayments. What are the options? If she stops making payments and the loan is defaulted would she be eligible for the exception to the 10% early withdrawal penalty?

In 2008 Tom Poje wrote the following. Is this still current under the final regs?

Question 10 from the 2008 ASPPA Conference:

If matching or nonelective contributions to a §403(b) plan are used in the average benefits percentage test to satisfy the IRC §410(b) coverage requirements, are the §403(b) deferrals included in the average benefit percentage calculation as well?

You should exclude salary deferrals from ABT test. See Treas. Reg. §1.403(b)-5.

I recently read the new regulations and it appears that for prototype plans:

(1) You must now name the allocations groups in the plan document

(2) The restriction on the number of groups has been lifted.

Has anyone read this? Does anyone agree?

Can someone clarify the notice requirements for ACA and EACA plans (i.e., who gets the notices)? It's my understanding that annual notices must be provided correct? I thought the regs say to anyone covered by the ACA or EACA should receive the annual notice. I get that newly eligible employees have to be notified. But for ongoing participants, does "anyone covered by the ACA or EACA" mean all eligible participants in the plan or just those that were automatically enrolled? Either way it seems redundant and a little silly to continuously notify participants annually once they've already been enrolled (whether voluntarily or automatcially) and provided the information when they first entered the plan, no?? Maybe it's just me.

My understanding is that if a 5500ez filer is late the penalty is $15 per day up to maximum of $15,000.

I also believe this applies for each return.

So if ten returns were not filed then the total fine could be $150,000.

Are we in agreement?

Now how might the statute of limitations apply if at all? That is, if after a certain amount of time has passed and there has been no word from the IRS re: late filing, does that mean the fine cannot be assesseed?

thanks

we are trying to figure out the best way to get the SAR to the participants in the plans we work on. We offer a participant (and plan sponsor) website and offer an option of electronic only statements. Some opt for that, some don't. We send out quarterly participant statements (PPA with all vesting, disclosures, etc on them) to those wanting paper copies and post all on the websites so those opting for electronic only also can view. We have always mailed annual statements along with the SAR out to participants but it just confuses them to receive a 12/31 statement almost a year later when they have already received quarterly statements giving the same information. I would like to stop mailing the annual statements and just make them available on the participant website, but then how do I get the SAR out to the participants? Can I post that on the website as well and not mail anything out? How do we know for sure that everyone will 1) go online to view 2) have access to get online to view? Can we just assume yes at this point or do we really need to mail them out?

Along a similar line, we have a client that wants to force electronic only statements on their participants - they have sent a letter to each participant saying they will only be available online starting with the 9/30/11 quarter end, can they do that or do we have to send them out to those that have not actually opted for electronic only?

thanks!

I came across an EPCRS phone forum from 8/24/10, which was presented by Avaneesh Bhagat. During that forum he said that you can use forfeitures to "fund the QNCs required to replace the missed deferral opportunity of an excluded employee". I've never heard this before. Has anyone done this?

I was under the impression that you couldn't do this because QNECs had to be 100% vested when contributed to the plan and forfeitures clearly weren't 100% vested when they went into the plan. I can see using forfeitures to correct the match or nonelective contribution, but missed elective deferrals?

Doubt there are answers but let's try. Calendar year plan.

I've come across my first mandatory burn of FSCOB to bring AFTAP to 80%.

Question 1: Does mandatory burn eliminate need to certify? If you don't certify, then is AFTAP deemed to be <60% ?

Question 2: Suppose plan was not certified in 2010 and presumption of underfunding applies. Is it still necessary to burn FSCOB?

My guess is (1) if you don't certify, than AFTAP is deemed to be less than <60% even though FSCOB was burned to bring AFTAP to 80%.

My guess is (2), Yes, it is necessary to burn FSCOB.

Comments ???

Facts: As allowed under Reg. 1.401(a)-14(a), the DB plan at issue requires a participant to file a claim for benefits before payment of benefits will commence. NRA under the plan is 62. Plan is frozen and provides suspension of benefits notices to avoid an actuarial increase during the time of suspension. Assume that the plan document does not address these questions (even if it should), so I am looking for what the Code and/or ERISA may require in these circumstances.

Questions:

1. If participant is actively employed past normal retirement age (62)(assume suspension notice properly given), the participant terminates employment at age 63 and does not file a claim for benefits until age 66:

(a) Once the payments commence, is the participant entitled to an actuarial increase from date of termination until age 66?

(b) Or, is the participant entitled to back payments for the period of time from date of termination until age 66?

© If back payments are made, can they only be made if the plan allows "retroactive annuity starting dates" ("RASDs") and, accordingly, must be made in accordance with the RASD rules?

(d) Can the employer choose between an actuarial increase and back payments (assuming the plan allows RASDs, if required)?

2. Same questions as above, but with respect to a vested participant who terminates employment at age 60 and does not file a claim for benefits unitl age 66?

3. What is the annuity starting date for the foregoing participants in (1) and (2) for purposes of providing QJSA notices? Is it the date the participant finally elects to commence payment?

I would truly appreciate any comments on any of the foregoing questions.

I understand the time frame allowed for employee elective deferrals of unused leave (sich & vacation) pay of the 2 1/2 months or end to tax year. However, is there any set time for employer contributions? Could an employer make contributions a year after an employee separates, or more, due to cash flow issues?

The DOL has a "wet ink" signature requirement for the report. Is the signature required in an invidual's name or can the name of the firm just be signed? This is from the DOL's website:

Attachments

Q24: How do I attach the report of the independent qualified public accountant (IQPA report)?

The IQPA report needs to be documented on letterhead, signed, and then saved as a single Portable Document Format (PDF) file. That PDF file then needs to be attached to the Form 5500 annual return/report. When you submit the Form 5500 annual return/report, the attachments will be transmitted to EFAST2 along with the rest of the information in the annual return/report.

It doesn't seem clear how that signature should be done, so it seems that the name of the firm, would be sufficient?

Thanks.

An employer makes a contribution to its PSP of $40K and the Plan lends the Employer $40k the same day. Is this covered under the VCP Class Exemption? Is a filing required? The $40K represents less than 10% of plan assets. Only owners (100% owner and adult children through attribution) are participants.

I just received a question from the client, who is on our Volume Submitter Plan document, regarding the FICA max ($106,800) and the IRS Annual Compensation Limit ($245,000). They are currently an integrated plan. They want to know if it is possible to freeze those limits at what they are now, or do they have to let those limits continue to rise as the government raises their rates?

Is there a way to amend their current VS document to include this change, if it is possible?

Or would they need to create a custom plan document to accomodate a limit freeze? I

f it is possible, are their testing implications?

A not for profit employer established a 403 b plan with group annuity contracts for participants. Subsequently, the assets of the employer were purchased by another entity and the employer was liquidated. The new employer (a for profit company) is attempting to terminate the plan.

There are two groups of contracts, those established before 2009 and those established in 2008 and 2009 intended to recognize the change in rules. The insurance company will not allow the pre 2009 participants to be forced out of the plan. We would like to use the FAB relief to exclude those contracts from the plan, but due to a clerical error, one participant's 2009 and 2010 contributions were deposited to the pre-2009 contract rather than the new contract. This participant has since taken a full distribution, so there is no way to correct the error. The CPA auditing the plan says we are now required to include all of the participants covered by that contract, and show their balances as remaining in the plan.

Does anyone have any suggestions about how to resolve this issue? It seems unbelieveable that an employer that no longer exists can have ongoing responsibilities to prepare Form 5500 for an unlimited number of years into the future.

Participant hired contractor to remodel bathroom. Before the job was completed, the contractor left the country. The participant has been left with an unusable bathroom (non working sink/toilet, holes in floor and ceiling, etc.). Expected cost to finish the job is $3k.

Question: does this qualify under Section 165? The damage was not "sudden" but could be considered unintentional. My guess is that if the repair was not "needed" and was primarily for cosmetic reason as most remodels are, it would not qualify.

I am learning my way though the Form 5500 (trial by fire), so I apologize for what seems to be a simple question that maybe I am overthinking. I am working on a health plan that is self-funded. They allow an outside vendor to come in and offer voluntary supplementary insurance products to their employees, such as cancer, life, etc. The Plan allows payoll deductions for the premiums and remits the premiums when deducted to the vendor. The Plan does not file claims or pay any of the premium or any type of fees. The contract is between the individual employee and the vendor. This vendor has not been reported on previous filings. I assume there are some commissions somewhere, but they are not funded by the Plan.

Is this something that should be included on Schedule A? If it should be reported, how far back should I amend?

Thanks for any help.

Need to do an Annual Funding Notice for a large terminated plan that is beyond the year that it was last subject to minimum funding. Is there any guidance on what an appropriate format might be?

Facts: Termination effective 6/30/2010. Doing AFN for PYE 6/30/2011.

In the page one three year grid, is it appropriate to simply put "N/A" for all liability related items in the column for plan year beginning 7/1/2010?

And then "Plan's liabilities", under the "Fair Market Value of Assets" would be "N/A"?

Is there any informal (or formal) guidance in this situation? What have others done? This is a large plan, so it is important that this be "correct". Thanks for any help.