Here's a good one...

Small employer adopted a profit sharing plan (on profit sharing prototype document) over a decade ago. It has since been amended and restated on profit sharing prototype.

The problem is that from inception, the plan has been operated as a profit sharing AND 401(k) plan, with employee deferrals permitted. The 401(k) employee contributions (and related 401(k) requirements) are not addressed in the document.

I am going to be submitting this through VCP and am trying to weigh the options. Am considering whether this would be safer as a John Doe Submission initially. I am planning to seek approval for retroactive amendment of the proper plan type (and related subsequent amendments).

Anyone ever had to deal with this type of document failure before?

I heard that SunGard (thru a support person) will not be submitting the 8955-SSA on behalf of the TPA's ect that subscribe to the Government Forms software for this current year of filings. This has me wondering how hard it is to use the FIRE system, to obtain a TCC code ect.

I don't think this will be the end of the world but think our next best alternative is to submit these filings on behalf of our clients instead of mailing them to our clients for their signature where they would in turn have to mail them in.

Also, we use Relius Administration. Does anyone have a Report Writer Report that will pull out who should be on the 8955-SSA. I am not a fan of the reports (mainly that they can't be put out into Excel) or the export feature that Relius has built into the software (mainly because it overwrites the Plan inof Worksheet). I would like to get this information into Excel.

We have a participant who entered the plan in 2009 but never elected to defer. This participant decided in June 2011 to start deferring 1% of compensation, which should have been effective 7/1/11, however HR missed the election and did not start deductions. Since this is not a newly eligible participant that was not given the opportunity to defer, does the employer still have to contribute 50% of her deferrals to make her "whole"? I'm reading some past post and the EOB and everything seems to be implied to a newly eligible participant not one that made a deferral change 2 years after entering the plan.

Any thoughts?

Takeover Plan

(We are getting 10/1)

Contributions for weekly payroll still being deposited Monthly - usually by the end of the next month - way late.

How far back do they need to go to file VFCP?

They were under the understanding they were doing things correctly and are going to change to weekly deposits now.

Their prior TPA didn't keep up with regulations.

Plan also was not amended for EGTRRA etc.

Trying to get this small employer out of a big mess with not a lot of expense.

Suggestions appreciated.

Pat

Employer has a service based allocation schedule. They are considering allowing collectively bargained employees participate in the plan and add a separate allocation group for them. If those employees are now receiving employer contributions are they still excludable from non-discrimination testing including gateway?? Thanks.

Grandfathered status is clearly lost if a benefit option is eliminated and the employees are moved to another plan option. My question is whether grandfathered status is lost if a benefit option is eliminated only for new enrollees. For example, can an employer plan provide that new employees will only be eligible for a high deductible health plan option and will not be eligible for the standard PPO plan option?

Company A owns 51% of Company B... Company A has a Safe Harbor and Profit Sharing Plan while Company B has just 1 employee who had deferrals with no company match. The TPA for the plan agrees it is a controlled group with respects to it being a brother sister, but is stating that Company B Employee is not eligible due to the fact Company B never adopted the plan of Company A. I thought if it was deemed a controlled group that it would be eligible regardless of the TPA saying the plan was never adopted?[

Employee had rollover into 401K Plan in 2010, and did in-plan Roth conversion on entire amount. Since Plan issued 1099R so that participant paid taxes, is the amount reported on Form 5500?

I have a new case - a 403(b) plan that last filed a 5500 in 2001. I'm being retained to file 2002 - 2009 returns under the DFVC. With EFAST I must file all the forms on a 2010 form. I'm wondering if I am going to have EFAST problems/errors because 2002 - 2008 are information only returns so the participant counts are not completed. Anyone have any experience with this? Thank you.

We offer a fully insured non-ERISA global health plan that we are considering changing to an ERISA plan. The vendor has advised us that we must comply with the Health Care Reform act provisions including not charging copays for preventive screenings. We didn't think it would be necessary to make this change and have asked the question several times as to why but are not getting a good answer. Is this requirement simply due to the change in ERISA status? Thanks.

So after spending 3 hours trying to figure out how to report a $114 penalty for "missed" quarterly contributions, I am struck by another round of additional stupidity.

The client has an overfunded plan with a significant carryover balance. Because of the carryover balance, the plan has a funding shortfall and therefore quarterly contributions are due. He elected to use his carryover balance to satisfy the quarterly requirements after the due date of the quarterly payment. Note the plan has enough excess assets to cover the current year's requirements as well.

I am now wondering what type of language people are using, if any, to report this late quarterly payment to the participants. It just doesn't seem right to inform the participants that he missed a quarterly, when in reality, none was really required because he had the carryover balance available. Typically we would add language to the SAR/AFN that lists the quarterly due dates and the payment date, but it seems misleading in this case because he never failed to make a cash requirement. (I know the IRS would argue that cash was required because he hadn't signed the election.)

Just wondering how others are handling this. Do I need to disclose the "missed" contribution? (I think so.) What type of wording are others using to disclose them?

I'm below retirement age, currently with employer A, and participating in their 401k plan, all funds 100% vested. I'm considering starting my own company, company B, with just myself as the sole employee (sub-S corp.), and leaving A. Company B will have a Solo 401k plan.

If and when I do this, I'd be moving my 401k funds (all cash) from A to B, through a direct trustee to trustee /FBO transfer.

The question, is this considered a transfer or a rollover? What's the difference?

Are there any IRS reporting requirements (1099-R, Form 5498?) on behalf of the trustee of company A? In the Transfers section of the IRS 1099-R instructions it appears to say that direct trustee to trustee transfers not involving payments or distributions of funds to the participant don't have to be reported. But further down in the instructions, under the Guide to Distribution Codes chart, it appears that employer A would have to report on a 1099-R using code G, Direct Rollover and Rollover Contribution. (I'm hesitant on asking our plan administrator, because it would tip them off that I MIGHT be leaving the company).

Also, are there any reporting requirements of company B once they've received the funds?

I guess what's confusing as a layman are how the terms transfer, rollover, and distribution are used and defined in the eyes of the IRS.

CarlC

The plan is a 401(k) plan. The employee was first hired in 1995, term'd in 1997 and was then rehired in 2008. He met the eligibility requirements when he term's in '97, but was 0% vested. I don't have a lot of first hand information other than e-mails passed along to me by the investment advisor (with permission). The employer says the TPA wants them to put $15,000 into the employee's account to restore his balance. They are not happy about that. I'm guessing that $15,000 was forfeited due to a deemed distribution following the termination. I have a copy of the adoption agreement, but not the basic plan document. The employee has met the one-year/1000 hours requirement since his rehire and has re-enterd the plan. Whether or not the plan uses the one-year hold out rule or the rule of parity, wouldn't the 5-year break-in-service rule wipe the slate clean?

A money purchase plan is being audited by the IRS. I want to be able to present them with a cheat sheet of sorts showing them the issues the IRS is likely to examine. The goal is to let them get any issues cleaned up before the IRS finds a problem. Does anyone have any information on this or know of any "cheat sheets" out there on this type of audit? I would appreciate any help.

If a participant reaches normal retirement age and retires, takes a lump sum distribution, then decides to work part time (approx 10k annual in this case) would the employer be required to provide this employee with a top heavy minimum benefit for the part time work?

Does it matter if this person was a HCE when employed full time?

I am dealing with a situation where a NQDC plan is going to be terminated pursuant to §1.409A-3(j)(4)(ix). My question is, where the plan (and all other plans aggregated under §1.409A-1©(2)) is terminated prior to the end of the year, how are employee deferral elections for the year of termination treated after the date of plan termination? The following language from the preamble to the final regulations suggests that the termination should be treated as a cancellation of an employee’s deferral election effective as of the date of the plan’s termination: “The termination and liquidation of a nonqualified deferred compensation plan involves both the amendment of the plan to cease deferrals under the plan and provide for payment of all benefits accrued under the plan, and the accelerated payment of benefits accrued under the plan.” See §VIII(B) (first paragraph) of the preamble. Is anyone aware of any other guidance on this issue? Will the answer vary depending on whether the plan termination is under the general rule (§1.409A-3(j)(4)(ix)©) or following a change in control under 1.409A-3(j)(4)(ix)(B)?

Any feedback would be greatly appreciated.

Here's the hypothetical situation that a plan fiduciary faces:

Her predecessor obviously breached his duties to the retirement plan, and it is clear that the breach caused a loss of at least $1 million. The fiduciary found that the predecessor has sufficient assets so that he could pay a judgment up to about $5 million. The small plan lacks money that it could use to pay lawyers to pursue the plan's fiduciary-breach claim. The fiduciary asked a few law firms if they would take the case with no current fee payments but the right to court-awarded fees. Each of the law firms said "no dice; the case is too small for us to take any risk." The fiduciary also talked about this situation with the Labor department, and it too said that the Department lacks the resources to litigate this fiduciary-breach claim.

Any bright ideas about what the fiduciary can or should do?

Plan Year begins on 10/01/2011.

Safe Harbor Notice given timely (30 days before plan year begins). Can the Plan's definition of compensation, for safe harbor allocation purposes, be amended prior to PYB 10/01/2011? A supplemental notice would be provided.

An employee (non-owner) turned 70 1/2 this year. Since he is still working, he does not have to take an RMD. However, he has a 410(k) account at a former employer. If he transfers his former employer 401(k) to his current employer 401(k) account can he avoid a RMD from the former employer 401(k) account this year? Next year?

Thank you!

Its always a takeover! Plan sponsor put in a new plan effective 1/1/2011. THey were give and signed a GUST non-standardized prototype document with all of the trimmings except PPA and HEART/WRERA.

We think they had to be put onto an EGTRRA document. The question is - can we do this before the end of this year by using a Remedial Amendment Period (if one exists) for a new plan?

Otherwise, we think this can be corrected under EPCRS. What else can the client do?