Is the employer penalized for incorrectly granting a hardship withdrawal to an employee? If so, what is the penalty? How can this be remedied?

Have a Sole Prop. who wants to make a 401(k) deferral of 22k for 2010 and fund it now. His taxes are on extension until 10/15. Can it be done or did it need to be deposited by April 15th?

Thanks

We have a client who purchased a company earlier in 2011. The company they purchased maintains a non-safe harbor plan. They want to merge plans. We advised them to hold off on merging until 12/31/11 so that the Safe Harbor Status of the receiving plan isn't jeopardized in any way. The employees of the purchased company began participating in the Safe Harbor plan in June so nothing is actually going on in the other plan currently just waiting to be merged. Today the broker contacted us & told us the advisors for the purchased plan do not believe they can accomodate the transfer until April 2012.... How should we proceed? Can we do the merger resolution for 12/31/11 make sure the investment company for the purchased plan changes the name to the receiving plan and let the assets remain their until April??- I just want to make sure we are not jeopardizing the Safe Harbor status of the receiving plan in anyway but I'm thinking we would be okay doing that since everyone is already participating in the receiving plan & will get the 2012 Safe Harbor notice by 12/1. Thoughts? Any knowledge or experience shared is greatly appreciated. Thank you,

Hi there,

I recently started a job as a benefits administrator with an organization that has approximately 800 employees. We're self-funded for medical and dental. We're unhappy with our benefits software vendor and are planning to send out an RFP within the next week. Does anyone have any suggestions/tips for going through this process? Does anyone work with a vendor who they would recommend given the admittedly limited information I've provided?

Thanks in advance for your help.

A 401(k) plan participant took a plan loan in 2005 and another in 2008. Later in 2008 he terminated employment. The plan's TPA did not advise sponsor to deem either loan. Very recently, in course of the plan's annual audit (first audit of the plan by firm), the loans were found and now need to be dealt with. Can the sponsor apply for a VCP under EPCRS to 1) deem the older loan so that it is taxable in 2011 instead of 2008, and 2) permit the participant to pay back the newer loan with accrued interest (it's still within its five-year window). I believe that such relief is ordinarily available (assuming that IRS consents to it, based on facts and circumstances), but a few have told that it isn't available in this case because the participant is terminated. I haven't found any mention of termination being a fatcor, but want to be sure.

Thanks for any help or insight you can provide.

Can someone clarify for me the deposit deadline for employer contributions for tax exempt employers and their ERISA 403(b) Plan? Additionally, if you can provide the IRS citation it would be much appreciated.

An employer violates the MSP rules by "taking into account" active employees' Medicare status (and not offering those entitled to Medicare coverage under the active plan).

I understand the penalties and taxes for this violation.

What now, though? Does the employer have an affirmative obligation to report the violation to CMS and/or the IRS? If so, what is the mechanism for doing so?

I just want to get others thoughts/processes on what you do when a client never submits employee census data for a plan year. Do you just send out a non-compliance letter, file the 5500 based on the information you have, and leave it at that? Do you continue to request the data until it's received (even if that is years down the road)? Do you take the drastic step of terminating the business relationship with that client to CYA?

I would like to know if anyone has purchased/used Sungard Corbel's "prototype" wrap document for multiple welfare benefit plans. I have a self-drafted wrap template but am looking for ways to save time/money for clients and am wondering if the Sungard Corbel product has accomplished those goals for anyone. Thanks.

A group offers a self-funded life benefit and would like to offer advance pay-outs to those with a terminal illness. There are differences in the way the Internal Revenue Code treats self-funded versus insured life insurance policies. I am not sure, however on the following two issues:

1. whether it's possible for a self-funded plan to offer advance payments for those with a terminal illness; and

2. the tax implications of offering an advance payment.

I did look around in our fringe benefits tax guide but was not able to find any helpful information. Anyone have experience with this or able to point me in the right direction? I would appreciate it.

We're terminaitn a plan. For those who do not respond despite our dilligent efforts, we are forcing them into IRA's. Do we need to amend the plan in some way to allow for this? Or is it just understood somehow... If we do need to amend, does anyone know if Corbel has come out with anything?

We're doing this even if its more than $5,000, based on the DOL's FAB from a couple/few years ago.

Thank you Detroit Tigers for taking care of business!

Corporation sponsors defined benefit and defined contribution plans that cover employees of wholly owned subsidiary. Wholly owned subsidiary is spun off to shareholders of parent or sold to a third party buyer. Assets and liabilities of the parent's defined contributino plans attributable to the employees of the spun-off (or sold) subsidiary are transferred to a new plan sponsored by the subsidiary. No assets are transferred from defined benefit plan(s).

Does the sale of the subsidiary stock make this an asset sale transaction (think so), or is it a stock deal?

For the 401(k), can the spun-off (or transferred) employees take distributions on account of the fact they are no longer considered employees of the parent?

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.