We are starting to get ready for the new participant disclosure regulations. What kind of issues are others having with this process?

I have a client we helped self correct an operational failure -- enrolled participants on a quarterly instead of monthly basis - plan was amended and did not get picked up operationally. We put money into the plan in accordance with the IRS correction methodology. The amount was de minimus in comparison to total plan assets but it did affect quite a few participants for a number of years. Now in an audit situation, the examining agent is saying that we did everything right in his view and that the self-correction was appropriate but his manager believes that the failure was not "insignificant." Has anyone had any experience with the IRS challenging the issue of whether the failure was "insignificant"? If so, what was the ultimate outcome? Thanks in advance for any input.

Is it possible for a 403(b) plan sponsor to not make matching contributions for employees in a particular job classification? In a qualified plan, I think this can be done by defining compensation for purposes of matching contributions as excluding amounts earned in an ineligible job category, provided that it satisfies the nondiscrimination testing. Is the same possible for 403(b) plans?

I am posting this here because many life insurance agents work with these plans.

Does anyone know how or where I can get a copy of the MDRT information retrieval system?

I'm pretty familiar with how and when plan level forfeiture accounts need to be used. My question is regarding participant level forfeitures. Are forfeitures after a 5 year break required to be completed within a certain amount of time? I know when they CAN be completed but is there any guidance about WHEN they MUST be completed?

Thank you.

I guess Friday is suppose to be something special.

oh yeh, it's payday.

Plan is terminated, but the business no longer exists. One participant remained to be paid and distribution forms received recently. How should the 20% federal income tax withholding be submitted using EFTPS? Should a business account be set up using the Trust ID for the plan?

Just want to double check...

I have a plan that has a 10% contribution that goes to all employees-meets all the Safe Harbor requirements. They want to make an additional contribution to 2 HCEs (replacing a db arrangement). So, I know I need to perform the general test/new comparibility test. The question is: can the plan make this 10% contribution a Safe Harbor contribution and still use that amount to satisfy the general & gateway test?

I admit that I have not kept up very well with the attribution rules when it comes to LLC, Partnerships, S-Corps and Sole Proprietors.

Are the attribution rules still the same under Code Section 318?

LLC members, greater than 2% Shareholders of an S-Corp and Sole Proprietors still cannot participate in a Cafeteria plan, correct?

Are the spouse, children, grandchildren and parents also unable to participate in the Cafeteria plan as well?

From the information that I have researched, it appears that they are all excluded from participation.

Can someone please confirm this for me?

Thank You

Here's the situation: I have a new client which currently offers a 401k Plan with an Employer Match equal to 100% of the first 9% deferred. The match is immediately 100% vested. I am wondering if I should make this a Safe Harbor plan to give me an automatic pass on the ADP test. I understand the match formula will not provide a pass for ACP testing. I have a couple of questions:

Is it OK to offer Safe Harbor Match of 100% on the first 4% of deferrals made and regular Employer Match of 100% on the next 5% deferred? I have not been able to find an example of this type of formula in the various examples cited in IRS examples and trade articles. Why not offer a Safe Harbor Match of 100% of the first 9% deferred? That would be easy, but right now the employer monies are available for hardship withdrawals. Making all 9% match ineligible for hardship withdrawals might make the decision to go Safe Harbor more difficult for the sponsor. I thought if only 4% were made Safe Harbor they may be more apt to adopt the Safe Harbor provisions.

Has anyone seen this type of formula used in a Plan?

The owners of Company A sponsor a 401k Plan, which excludes leased employees, and also own 100% of Company B. Company B has approximately 10 employees who are leased through a management company (i.e. not employed directly by Company B). Company B terminates its relationship with the management company and hires the 10 employees directly on 10/1/2011. Do these 10 employees now become eligible for the plan sponsored by Company A? If so, are they considered hired on 10/1/2011 and must meet the eligiblity requirements, or does their service as a leased employee count for eligibility?

Dr. A turned 70 1/2 in 2003. He is a greater than 5% owner. He completed a 242b notice back in the 80's so he wouldn't have to take an RMD. He is retiring this year. In preparation of retirement he met with his broker in regards what to do with the money that is still in the retirement plan. The broker had asked if Dr. A had been taking RMD's from the retirement plan. Dr. A who has other investments outside of the retirement plan had taken RMD's required for those accounts, but not the qualified plan (due to 242b notice). The broker was unaware of the 242b notice that prevents RMD's for qualified plans. Still this caused a scare in DR.A. To make himself feel better, he requested from his lawyer a copy of the 242b notice, just to make sure everything was fine. When the lawyer went to retrieve the 242b notice, he could not locate it. Both the doctor and the lawyer remember the 242b notice being filed.

What happens if the 242b notice is misplaced? Since it was required to be filed so many years ago, I would have to imagine that the chance of this happening is quite high. What are the ramifications? I assume for starters he would need to "catch up" on all missed RMD's (years 2003-2011, not counting 2009). What is the likelyhood of the excise tax being waived? His account balance is currently $700k, so the RMD's (and corresponding tax) would be quite high. It does not sound like anyone is planning on using this as an "excuse". It may have actually been misplaced.

If a plan changes its QDIA fund mid-year, and a notice of the change, information about the new fund and mapping plans is sent to all participants, is a new QDIA notice also required?

A client of ours does a lot of work of on prevailing wage jobs. They have a 401k/PS plan and contribute the prevaling wage contributions to the plan. They are also known to make untimely 401k deposits and possibly prevailing wage contributions. I've been doing some reading on prevailing wage and maybe I'm thinking too much into it but am a little confused as to the timing of the deposits. The most common answer that I've seen is that the prevaling wage contribution submitted to a qualifed retirement plan must be made at least quarterly.

My question is that if you have a paydate in January which contains prevaling wage I understand that the prevailing wage contributions must be made to the plan no later than March 31st but what if your pay period is the middle of March. Do those prevaling wage contributions from March also have be submitted to the plan by March 31st? Must all prevailing wage contributions within a quarter regardless of the paydate be submitted by the end of that quarter?

DB Plan Sponsor (medical practice - 10 participants) wants to invest a portion of the plan assets in Real Estate Development group. Although not a controlled group he is 40% shareholder. PT or not?

Plan is prior year tested. Owners started company a few years ago. They start a plan during 2010. First year they elect to use the current year test method. All non-HCEs are eligible and newly hired during 2010. None have met the statutory minimum requirement for 2010.

For 2010, I test the HCEs (owners) against the statutory NHCEs. Since there are no 2010 statutory NHCEs, the ADP test is deemed to pass for 2010. No real issue there.

The total 2010 NHCE group averaged 5.14%, but non have met the statutory minimum requirement.

{During 2011, only one of those 2010 NHCEs met the statutory minimum requirement on 7/1/11.}

My question is for 2011 testing, when I am now using the prior year test method.

Can I say that since there are no statutory EEs during 2010, then the test is deemed to pass for 2011? Or, do I have to use the 5.14% rate? Or did i miss the boat entirely?

Thanks for any assistance and citations on this. I'm up against an ERISA attorney.

A participant in a 401k has passed away. Her spouse, the bene, rolls her 401k into a brand new IRA. Upon advice from his broker, he now wants to transfer her 401k money (which is now in his IRA) to his 401k. His 401k allows for rollovers. The question is, since he is older than 70 1/2, does he have to take his 2011 RMD from the IRA he created with her 401k money? Or can he transfer 100% of her 401k money to his 401k without having to take the RMD for 2011?

Thanks.

May an otherwise eligible full-time employee elect out or opt out of retirement benefits in exchange for receiving a higher salary?

I know this has been done before, but I think it's good to keep talking about it

Safe Harbor Plan has no profit sharing option. Am I barred from adding a profit sharing feature? I know the IRS has taken a hard-line interpreting the 401k regs regarding amending SH Plans, but is there anything beyond public statements from IRS officials supporting that strict of an interpretation?

I'm aware of the notice that was released regarding the permissibility of adding hardships and Roth, but that notice left the door open for other changes as well.

Under the 409A regulations, an employer can change the employer's contribution until the later of 1) the employee obtains a legally binding right to the amount or, 2) the latest date the employee could make an election to defer.

The employer wants to give a match, but wants to be able to change the match % on a payperiod-by-payperiod basis. I think the employer can do this so long as the change is prospective only (i.e. it only relates to compensation earned after the change). This is because the employee does not have a legally binding right to the compensation deferred, to which the match applies, until the employee actually earns it. Does anyone see a problem with this? (please also let me know if you agree).