Good evening folks!

I still want to set up that Vanguard 403b7 for the minister BUT I've heard rumblings (nothing substantiated as of yet) that ministers can only have that benefit of taking their distribution at retirement as housing allowance under 403b9.

Is this right?

I really want to set up as a 403b7 for a number of reasons. He wants mutual funds as his investments, not annuities. The only issue is the distribution at retirement. Obviously we'll have to set it up as a 403b9 if it's the only way to get that benefit of distribution as housing allowance at retirement.

Any out of the box ideas? Letter from church board, for example?

A participant has requested a hardship withdrawal for the purchase of a primary residence. However, he included in the documentation for the sale of his current residence as well. He is asking for the hardship withdrawal to cover his closing costs on the sale of his current home (the sale price is near the current loan balance, so he must bring money to the closing to cover all costs). He is also asking for the closing costs on the new primary residence. The purchase of the new residence appears to be dependent on the sale of the current residence.

Question - Would the closing costs on the current residence that is being sold be allowable under the safe harbor hardship rules?

A participant in a 403(b) plan passed away some time ago. We obtained the death certificate and the spouse is listed (Mrs. A). However, we have a copy of the enrollment form from when the individual first enrolled in the plan (many years ago) and a different individual is listed as beneficiary (we're not sure but it appears to be his first wife, we'll call her Mrs. B).

Is this as clear cut as I think it is? Unless Mrs. A signed a waiver of beneficiary form, she is the rightful beneficiary, no questions asked, correct? Mrs. B may be listed as the beneficiary and may have been his spouse at one time. But that automatically goes away when he married Mrs. A? Do you see any reason why we should not pay out Mrs. A?

Thanks

We processed an RMD for a trust for the ABC Plan. The deceased died after RBD. In determining the factor for the RMD do we use the decedents age or the age of the oldest bene? The deceased was born in 1924 and one of the bene's in the trust was born 1917.

Facts:

Hired 4/17/89

Terminated 8/31/96

Years of service at termination: Approximately 8

Rehired 8/8/11

Breaks in Service - approximately 15

Service requirement for new employees: 90 days

Wording from plan doc:

(b) Reemployed after five (5) consecutive 1-Year Breaks in Service ("rule of parity" provisions). If any Employee becomes a Former Employee due to severance from employment with the Employer and is reemployed after a 5-Year Break in Service has occurred, Years of Service shall include Years of Service prior to the 5-year break in service subject to the following rules:

© Vesting after five (5) consecutive 1-Year Breaks in Service. After a Participant who has severed employment with the Employer incurs five (5) consecutive 1-Year Breaks in Service, the Vested portion of said Participant's Account attributable to pre-break service shall not be increased as a result of post-break service. In such case, separate accounts will be maintained as follows:

Question - When does the employe re enter the plan and what is their vesting? My thoughts is that the employee re-enters the plan right away with 100% vesting. He was 100% vested when he terminated. Even though he was gone longer than he was there, I do not think that matters. I do not think Rule of parity would apply here either.

An RMD was processed for a trust for the ABC Plan. The deceased died after RBD. In determining the factor for the RMD do we use the decedents age or the age of the oldest bene? The deceased was born in 1924 and one of the bene's in the trust was born 1917

Client is seeking to lower their in-service withdrawal to age 40 with 2-yrs of service in order for a participant to make a Roth In-Plan conversion.

Question - Is the lowering of the age to 40 plus years of service requirement a possibility?

Client email: What we are looking for, is a Roth conversion-only for the profit sharing balances. We are thinking something like at age 40 with 2 years participation one can convert to “Roth profit-sharing conversion”. If you have something like this, I would like to see what the amendment looks like.

A participant has requested a hardship withdrawal for the purchase of a primary residence. However, he included in the documentation for the sale of his current residence as well. He is asking for the hardship withdrawal to cover his closing costs on the sale of his current home (the sale price is near the current loan balance, so he must bring money to the closing to cover all costs). He is also asking for the closing costs on the new primary residence. The purchase of the new residence appears to be dependent on the sale of the current residence.

Question - Would the closing costs on the current residence that is being sold be allowable under the safe harbor hardship rules?

Does anyone have any thoughts on what the effect of PPACA's external review procedures have on the ERISA concept of claims fiduciary?

I'm not sure anything changes but if a participant can have a review from an independent third party that overrides the decision of the plan administrator or third party administrator, can a case be made that the respective administrator is not a fiduciary with respect to claims determinations?

Need to calculate highest performing fund from 1/1/10 through 8/31/11. Any have a formula for doing this? I have monthly performance for each fund, but not prices as the majority of the time period (through 6/30/11) the plan was at a different recordkeeper.

Question! Participant in profit sharing plan designates his daughter and brother as co-beneficiaries. Participant later marries and does not update his beneficiary form to include his new spouse as primary beneficiary.

Participant dies pre-retirement while still employed.

Spouse wants to waive 40% of her death benefit to the daughter who is still listed as beneficiary.

Can she do this? If not what other options are available?

Ron Harvey

If I have a person who I am reporting as a "D" they do not get counted in line 6? Those people that I am reporting as a "D" on the 2009 form terminated prior to 1/1/2008.

I have received a listing from a well-known custodian in order to prepare the Schedule H, line 4i "Schedule of Assets (Held at End of Year)." They have included accrued interest in reporting the value of the loans and have told me that this is a new requirement for 2010 5500 reporting. Could anyone point me to this guidance?

As a result of the minimum funding standard, a sole proprietor contributes more to her DB plan than 100% of her earned income. The sole proprietor is the only participant. Since the amount contributed in excess of 100% of her earned income is nondeductible, does the nondeductible portion of the contribution result in basis to the sole proprietor?

Okay - I have a potential takeover plan - trying to determine what needs to be done.

Had a Prototype Document - appears to be up to day prior to EGTRRA Restatement.

Did not do EGTRRA restatement or any amendments after that.

Since it's a prototype - if it's filed with VCP do we have to also file for a determination letter 0r are we good with just filing for the VCP. I am getting differing opinions on this.

Also I assume that the effective date on the documents needs to be the date that it needed to be and then the Client signs with a current date- date he actually signs.

Client is small and has eliminated the match due to the economy.

Thanks

Pat

Employer has 401(k) and 403(b) Plans. Same investment options in both. Per diem employees are excluded from participating in the (k) Plan. When an employee's status changed to per diem in the spring of this year, employer did not discontinue (k) contributions . Also didn't advise employee that they could continue deferrals but to the 403(b) now (same investments but no employer match).

Is it OK to fix this as follows ? :

Recordkeeper removes deferrals (say, $5000) and match from participant account in (k) Plan and puts in Forfeitures.

Employer has employee execute salary deferral election for 403(b) Plan

Employer corrects payroll records to reflect that deductions are for 403(b) not 401(k) so W2 will be correct

Employer sends $5000 to 403(b)Plan for deferrals

I think the alternative is for the recordkeeper to return the deferrals to the employee who then has increased taxable income and may not have enough earnings for the remainder of the year to be able to defer that $5000

Thanks !

Question 1

We are performing an audit for a large plan with loans. Participant with loan terminated employment in 2009, defaulted on loan in 2009, and was issued a 1099R for 2009. Participant did not receive a distribution of his remaining account balance so loan was not offset. Deemed distribution was not shown on the 2009 Form 5500. I know that the defaulted loan continues to be a plan asset as far as vesting, top heavy and qualification for future loans, but shouldn't it have been reflected on the 5500 for 2009?

Question 2

Participant was rehired in 2010. Still never took distribution. TPA is now showing deemed distribution on the 2010 Form 2010. Does it matter that the 1099R was for 2009 and the deemed distribution is being shown on the 2010 Form 5500? Also, still no distributable event so shouldn't the defaulted loan still be on the books for vesting, top heavy and qualification for future loans?

As always, thanks!

Is anyone aware of any guidance on whether an outside COBRA administrator is a fiduciary under ERISA?

For the 2011 plan year, I understand that plans will no longer receive automatic approval from the IRS for any changes in assumptions regarding yield curve and asset methodology. Can someone point me in the right direction as far as what is entailed in the request process to the IRS when asking for approval for an asset method change? Is there a specific form that must be filled out?

Any help that can be provided is appreciated.

Employee has a domestic partner who is covered by/enrolled in employer's health plan. Employee subsequently marries his domestic partner, and she becomes his wife. Employee fails to notify employer of the marriage within the plan's 30-day window for qualified status changes. Employee follows up ~45 days after the wedding to request that records be updated to reflect her new married name and to reflect that she is his spouse.

If such change were permitted, it would not result in any change in coverage -- the wife (former domestic partner) was previously covered under the plan. However, this would eliminate the employee's imputed income for coverage of a domestic partner.

This does not appear to be a qualified status change, because the employee missed the 30-day window. However, if the plan does not cover the new wife as a spouse, can it continue to cover her as a domestic partner? Although unclear, it does not appear that she is still considered to be a domestic partner for purposes of coverage under the plan.

In connection with domestic partner coverage, the plan requires certification of domestic partner status. The certification includes a statement that neither the employee nor the domestic partner is legally married to someone else at this time, nor has either one of them been married during the past six months. Although neither the employee nor his new wife has been legally married to "someone else," they would now arguably have been "married during the past six months."

The certification also states that domestic partners are subject to the same 30-day notice requirement for benefits changes that applies to all other employees. If there is any change in status as domestic partners that would make them no longer eligible for benefits, they must notify the employer within 30 days. The certification seems to focus on loss of domestic partner status that would cause loss of benefits eligibility. It does not appear to contemplate a scenario where loss of domestic partner status simultaneously results in benefits eligibility as a spouse.

Is the employee out of luck for making a mid-year change from domestic partner to spousal status? If so, is the employee further out of luck, because his new wife must now be dropped from the plan (not eligible for coverage as spouse, no longer eligible for coverage as domestic partner)?