company issued deferral refunds in 2011 on their SEP and shut the SEP down and started a 401. If a participant (under 50) deferred $5000 into the SEP, received a SEP refund of $5122, which includes yield on the deferrals, how much can he defer into the newly established 401(k) for 2011 that has a short plan year of 9/1/11-7/31/12?

Thank you kindly

Hi. I'm a volunteer at a small Lutheran church.

We want to set up a 403b for our incoming Pastor and set it up where he contributes and we match some of what he contributes. We have preliminarily looked at the Vanguard 403b7 plan because we want to have this pretty straightforward and invested in a few mutual funds. We are going to reimburse him for the cost of enrolling him in the plans.

1. From what I understand, because we are a church, we are not subject to Erisa so we don't technically need a plan document. Would someone please find the right quotation in the IRS law as a reference so I can show the church board of directors?

2. We have a church secretary and an organist. I think at least the secretary works somewhere around 15-20 hours a week. Are we OK excluding them from the 403b? (again, any citation from IRS law appreciated). If we need a plan document, what kind of language do you suggest we use to exclude them?

3. If we don't need a plan document, I assume we need some sort of document laying out the terms of what he can contribute, what we will match, etc. Do any of you have a template to either share or can you point me to one? Alot of the 403b sample plans I've found online by doing a google search simply refer to public schools, not churches.

Thanks, statcat

We are merging a traditional frozen DB plan into a Cash Balance plan this year. My question is whether there is a 'best date' to do the merger.

Is a short year better than a full year?

Is there a real difference between 12/31/11 and 1/1/12? I cannot see doing an SB and 5500 for a 1 day (1 millisecond?) plan year.

I am leaning toward the 12/31, but am having dizzy spells over completing the SB.

Special note - we will still run the plans separately (A+B valuations are not good) and sum the vals to do the future SBs.

We have a balance forward, pooled account plan; an employee took a hardship distribution in April 2010; she then terminated employment in November 2010, when her termination distribution was processed the processor who prepared the paperwork; indicated to cashout her entire account balance, she forgot to minus out the hardship distribution that took place earlier in the year so she was over paid by $2000(the amount of the hardship). 2008-50 states that the overpayment plus interest must be repaid to the plan. My question is that if the terminated employee does not have the means to repay, we can push back on the sponsor to pay back the $2000 plus interest which will go into an unallocated account. It's safe harbor so he can use the $2000 towards the 2011 safe harbor which will be made sometime mid 2012. This same participant is due a safe harbor contribution for 2010, which must be funded by 9/15 (on extension). In speaking with co-workers; one feels that if she cannot pay back the $2000 she should not receive the 2010 SH contribution. Or make the 2010 safe harbor to the plan, but not pay her out and forfeit that. I don't think this is an option, the contribution still must be made to her and she is entitled to the additional distribution ?

Thanks

This came up in the news section today. The article says it applies to plan related filings like the 8955-SSA and 5300. We've been sending most things certified from our office, so our receipt is not postmarked. I guess it's time to change our mailing procedures.

http://www.gpo.gov/fdsys/pkg/FR-2011-08-23.../2011-21416.pdf

301.7502-1(e)(2) Exceptions to actual delivery—(i)Registered and certified mail. In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender’s receipt was properly issued and that the envelope was properly addressed to the agency, officer, or

office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than

direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima

facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be

filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

(ii) Equivalents of registered and certified mail. Under section 7502(f)(3), the Secretary may extend the prima facie evidence of delivery rule of section 7502©(1)(A) to a service of a designated PDS, which is substantially equivalent

to United States registered or certified mail. Thus, the Commissioner may, in guidance published in the Internal

Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), prescribe procedures and additional rules to designate a service of a PDS for purposes of demonstrating prima facie evidence of delivery of a document pursuant to section 7502©.

This came up in the news section today. The article says it applies to plan related filings like the 8955-SSA and 5300. We've been sending most things certified from our office, so our receipt is not postmarked. I guess it's time to change our mailing procedures.

http://www.gpo.gov/fdsys/pkg/FR-2011-08-23.../2011-21416.pdf

301.7502-1(e)(2) Exceptions to actual delivery—(i)Registered and certified mail. In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender’s receipt was properly issued and that the envelope was properly addressed to the agency, officer, or

office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than

direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima

facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be

filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

(ii) Equivalents of registered and certified mail. Under section 7502(f)(3), the Secretary may extend the prima facie evidence of delivery rule of section 7502©(1)(A) to a service of a designated PDS, which is substantially equivalent

to United States registered or certified mail. Thus, the Commissioner may, in guidance published in the Internal

Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), prescribe procedures and additional rules to designate a service of a PDS for purposes of demonstrating prima facie evidence of delivery of a document pursuant to section 7502©.

We have a balance forward, pooled account plan; an employee took a hardship distribution in April 2010; she then terminated employment in November 2010, when her termination distribution was processed the processor who prepared the paperwork; indicated to cashout her entire account balance, she forgot to minus out the hardship distribution that took place earlier in the year so she was over paid by $2000(the amount of the hardship). 2008-50 states that the overpayment plus interest must be repaid to the plan. My question is that if the terminated employee does not have the means to repay, we can push back on the sponsor to pay back the $2000 plus interest which will go into an unallocated account. It's safe harbor so he can use the $2000 towards the 2011 safe harbor which will be made sometime mid 2012. This same participant is due a safe harbor contribution for 2010, which must be funded by 9/15 (on extension). In speaking with co-workers; one feels that if she cannot pay back the $2000 she should not receive the 2010 SH contribution. Or make the 2010 safe harbor to the plan, but not pay her out and forfeit that. I don't think this is an option, the contribution still must be made to her and she is entitled to the additional distribution ?

Thanks!

Can anyone verify that I have the basics down about a 401(h) in a db plan?

Assets held in DB plan

Assets can't be used in valuation in DB plan

Formula for amount set aside in 401(h) is in the document.

Amount for each participant per year reduces amount available for DC plan

Formula can't be discriminatory, but are they able to be tested in a 401(a)(4) basis.

That's all i know now. What other main points am I missing?

Andrew

If an excess contribution was made to an IRA several years ago (e.g. 2007), and the excess contribution was quite large relative to the maximum allowable contribution (e.g. $50,000), and such excess contribution was not discovered until now, what would be the cheapest way to withdraw the excess contribution in the current year?

Also, if no deduction was ever taken on any portion of the excess contribution, could the excess contribution be treated as a nondeductible IRA contribution, and be withdrawn without including the amount in gross income, or subjecting the amount to the 10% early withdrawal penalty? Further, could the excess contribution be removed without removing any of the earnings on the excess contribution?

I know this is an unusual question, but I hope somebody may have some experience/knowledge regarding this type of situation.

I am hearing close to a year after filing for a letter on Termination for a DB. What have been your experiences?

I use IFILE with an XML feed from Relius. Generally, there has been no problem with EFAST2 accepting the feed. I just spent three hours locating an error. Hopefully, this discussion will spare others some pain.

Keep in mind that each time my uploads failed the only message EFAST2 produced was "The XML is not a valid file." This, of course, was not true as I even tested the XML for syntax with an XML tester.

(1) I reviewed the filing for suspected blanks and triple checked. Nope.

(2) I continued to edit XML file and dropped off the attachments and then the schedules one by one. Nope, until I got to Schedule C.

(3) I reviewed Schedule C but could not get EFAST2 to accept the XML no matter what I did to the Schedule C.

(4) I gave up and decided to upload the filing without the Schedule C. Worked fine.

(5) Then, I proceeded to enter the Schedule C manually on line and that worked fine until [drum roll] I entered an address. The address I attempted to enter was "7th & Washington." The entry field turned pink and it turns out EFAST2 didn't like the ampersand. So, when I changed "&" to "and," the XML uploaded just fine.

In short, EFAST2 gave no indication whatsoever what was unacceptable and through brute force I was able to determine the offending entry.

EFAST2 is very educational -- it teaches you how to cuss !!!

The attached court decision is about whether a child conveived after her biological father's death is his child.

Although that decision is about Social Security benefits, one wonders whether health plans face similar or related questions. If so, does a plan document provide a useful definition about who is or was a participant's child? If not (or if the definition is ambiguous or incomplete), what steps does a plan's administrator take in using its discretion to interpret the plan? If the plan provides its benefit through a health insurance contract, does the employer punt these questions to the insurer? If the plan is "self-insured", does the employer check whether the stop-loss insurer would agree with the administrator's interpretation?

Let's get the observations of the message board's readers and writers so that we can learn from one another.

Beeler8thCir.pdf

I feel as though this is a fairly straight forward question, but one for which I have found conflicting answers.

If an over 70.5 Active Participant (non-owner) takes an in-service distribution as a LS, should this LS amount contain a "non-rolloverable" portion due to the RMD rules. I realize that this person is not terminated, and therefore an RMD is not required until they terminate the plan, but it would seem that if they receive all or a portion of their benefit after the age 70.5 year, a portion of that benefit should be attributed to the RMD.

Thanks in advance for your help.

We have a new client with a two step Integration formula up to 100% of the Taxable Wage Base. As the client was describing their contribution formula to me, it was clear that they were calculating it wrong. They have been allocating 6% to everyone, with an additional 6.2% on amounts above the taxable wage base. Their bundled service provider apparently never checked the calculations or provided any guidance on how it was supposed to be done.

Looking at their allocations, I can verify that it has been done wrong for at least 3 years, so it's no longer eligible for SCP.

I don't see anything in EPCRS that addresses how to fix an allocation that does not follow the terms of the document, or that exceeds the maximum allowable Integration percentage. Do they get to choose whether to take away the excess, or deposit more for those below the Integration level? Is there some other option that I'm not thinking of?

We have a client that called yesterday. Their document uses the elapsed time method and a participant is eligible after working 6 months. They are a small client and have just realized that they missed two employees when determining elibility.

They have a signed form from one of the employees stating that the employee understands that they are not elibile for any benefits from the Employer. The form was not a form that was drafted with the plan document. This was a form that was drafted by the client and went with their company's employee handbook.

My question is - does this form have any bearing on the retirement plan? The form does not specifically menion the Plan. It simply states that as a part-time employee, the employee understands that as a term of employment they are not eligible for any of the employer's benefits. This employee works 1 day per week.

Thank you!

I haven't been able to find any reliable guidance on this question. If a plan uses prior year testing, and adopts a top paid group election in 2011 you end up with 3 groups of employees: HCEs in both 2010 and 2011, NHCEs in both years and those who were HCEs in 2010 but are not in 2011 due to the election. When the 2011 testing is done, you compare the 2011 HCE deferral rates to the 2010 NHCE deferral rates. Are the people who were HCEs in 2010, but now are not in 2011 ignored for the 2011 test because they were not in either group at the appropriate time? Or are the 2010 deferrals of those individuals added to the 2010 NHCE group?

Since most of them are deferring at a high rate, I'd like to be able to add them to the NHCE group, but I wasn't sure if that was too aggressive.

A government entity has three plans, a DB, 401(a) DC pick up, and 457(b). My understanding is the contributions "picked up" in the 401(a) DC plan must be tested under 415(b). Would the employer contributions in the DB and 401(a) DC plan be aggregated for for 415 testing? I believe the plans would be combined for this purpose, but I cannot locate any resources that specifically state this is the case.

On takeover we have a plan that was amended for TRA 86 using a prototype document for which an opinion letter is available, but the base document and FDL (client believes they applied for it, but are unable to retrieve a copy) are not available.

My question is: does the lack of a FDL open the door for the IRS to request documents prior to the TRA 86 document restatement?

Also I believe an application for FDL is not required with the VCP submission since we are restating to GUST and EGTRRA volume submitter documents. Is that correct? In case we decide to apply for a FDL should we apply for FDL only for the EGTRRA document?

Thanks for any help!

When can a contribution be deducted under EPCRS? Correction is to make up missed deferralks due to not implementing an employee's election. Ideally, we could deduct in 2010, because a) the missed deferrals relate to 2010, and b) they will be funded by the due date of the employer's return.

Any help appreciated.

Can an ERISA 401k plan that is not subject to QJSA requirements require spousal consent on normal distributions when a married participant terminates employment? I have seen spousal consent for plan loans and hardships, but do not see how it can work for distributions on termination of employment. Essentially the spouse could prohibit any distribution until RMD's become payable.

Thanks!