If a company pays a non-404(k) dividend to an ESOP (so it is NOT deductible under IRC 404(k)), is it automatically a nondeductible contribution for 404(a) purposes?

Or is the non-404(k) dividend still a deductible contribution to the extent it does not exceed the limits under IRC 404(a)(3)?

Hello everyone! I have a question that I hope someone might be able to assist with.

We have a recently re-hired employee at our firm. Through no fault of our plan advisor (Schwab), he was not auto-enrolled in the 401(k) plan, which he should have been enrolled in since his re-hire date in June of 2010 through the present. Schwab recently sent him auto-enroll forms, and the employee will be auto enrolled by the next few paychecks.

What steps should we take to fix this issue, specifically vis a vis the IRS? Is this something that requires correction under EPCRS Rev. Proc. 2008-50, or is it a simpler fix?

Any assistance with this matter would be greatly appreciated. Thanks so much!

say a plan uses a 12/31 val date.

so for 2011 the val date is 12/31/2011.

the 2011 pbgc premium filing is due 4/30/2012

it is often difficult (if not imposible) to obtain data in advance of the deadline to do the val.

anyone experience this? any suggestions? thanks

An election for Healthcare FSA for the 2011 plan year was made. In January, that amount was met and employee received total amount elected, but funding is spread over whole year.

Employee will have a change in status (birth) and wanted to change election to cover the amounts of additional Healthcare expenses between January and the birth. This is a considerable change. Employee will receive 3-4 pay checks after the birth before going on unpaid leave which could mean the Employee doesn't return to work until 2012 (new plan year).

Employer has advised that Employee can change election of the Healthcare FSA, the increase will have to be limited to amount that Employee could pay to the plan during those 3-4 paychecks before going on unpaid leave (that is currently an unknown calculation). Employee expected to increase election by the amounts of Healthcare expenses that have already incurred (e.g. would be eligible for reimbursement today if higher election made in beginning) or those that will incur while still receiving some pay (e.g. deductible to be paid for baby to the hospital).

Please tell me your thoughts. I have done a lot of research on this and have come to no clear answer. I do know that Employer Plan suspends the FSA when there isn't sufficient pay to meet the contribution/deduction and only vaguely mentions making arrangements to pay contributions while on leave (presumably post-tax).

We would like to amend our defined benefit pension plan to encourage older employees to stay. One idea is to increase the annual accruals upon the attainment of a specified age/service. For example, benefits would accrue at 1% annually, but will accrue 1.25% after age 55 + 30 years service.

Is this allowed?

Is it permissable for a 412(e)3 plan to use one insurance company to provide benefits under a frozen formula (effective 12/31/09) and to have another insurance company provide benefits provided under a new formula (effective 1/1/10)?

We sponsor the Corbel Volume Submitter 401(k), PS and MP documents. With the PPA restatement coming up I was wondering if we should go ahead and drop the Money Purchase Plan? We only have a few MPP’s left on the books and those are all 0% of pay plans we set up for clients years ago (typically retiring doctors) who wanted to maintain the plan for various reasons but were no longer going to make any contributions to it. Can we switch these clients under the 0% MPP over to a PSP document or will we run into an issue with the PSP not having substantial and recurring contributions? Do other practitioners still use the 0% of pay MPP?

Thank you for any feedback.

Can anyone recommend an actuary or other professional that is very experienced and comfortable with the morass that is the regime of welfare plan nondiscrimination tests (self-insured medical plan, cafeteria plan, DCAP, etc.) for a possible engagement to perform these tests for a foreign headquartered employer with numerous U.S. entities within a common control group?

Or is this a facetious question?

Thanks.

the July CPI-U figure was released today = 225.922

the plan limits are based on the figures for the 3 month period july-aug-sept.

based on the current value the deferral limit would be 17,000 for 2012.

comp limit of 250,000 and 415 limit of 50,000. They'd have to change the regs to prevent that from happening. well, we've been stuck for 3 years, maybe its about time things increased.

should the average for the 3 month period jump to 226.666 then the regs would have the comp limit at 255,000 at the 415 limit at 51,000. (assuming my calcs are correct)

some of those folks in Washington have to love that with the budget and everything else.

if an employee dies and they find the form in the employees desk is it valid. the plan says it needs to be filed with the plan administrator.

i know you can't forfeit vested accounts due to fraud or theft but what if the employee used a fake social security number?? does that give the employer a way to prevent the employee from getting the money?

A top-hat plan was set-up several years ago. The plan appears in form to be drafted in compliance with 409A and only for a select group of management or highly compensated employees. Notification was filed with the DOL on this plan. In operation, there are some participants who are management, but there are other participants in the plan whose ($50,000) is barely above the average of all employees. The employer said he selects the employees he wants to include not on whether or not the are management or a highly paid employee, but on whether or not they might leave. The employees elect whether or not the want to participate in the plan prior to the beginning of the year in which the contribution is made. I know there would be negative tax consequences to ineligible participants, but was 409A also violated for these participants, and if so, on what basis?

Thank you so much for any guidance you can provide.

We are the TPA for a (takeover) 401(k) plan where a participant terminated employment several years ago (>5 years). She has a very small account balance left in the plan <$100. We notified the employer that they could distribute to her in a lump sum without her consent. It has now come to our attention that this participant is deceased. They can't locate a copy of her beneficiary designation form (and she was not married). What do we do with the money???

an employer sponsors a DC plan and a DB plan.

The DC plan includes the top paid group election and the DB plan does not elect top paid group.

Plans are to be combined for testing in 2011.

My understanding is that (in absence of plan amendment) if both plans do not elect to use top paid group then the top paid group election does not apply.

I believe this is based on the consistency requirement found in notice 97-45.

any similar or differing views? thanks

I'm trying to determine whether a participant with an outstanding loan can, as part of the distribution process, waive the cure period. A participant requesting a distribution before the cure period ends certainly seems to be automatically waiving, and I would like to state that on the distribution form. It seems logical that they can waive, but I have found nothing specific in the forums or Code on the topic. The plan's loan rules are silent on this. Thoughts especially those including citations, are appreciated.

Does anyone know if it is possible to receive a report from the SSA or other agency showing who has been reported on Form SSA as being entitled to a future benefit? Like many employers, we conscientiously reported people who were due a benefit but were much less careful about reporting those who were subsequently paid out. Of course now we receive calls from those participants when they are notified that they may have a benefit due, resulting in significant research to document the fact that distribution was made. I would love to be able to request a report showing everyone still showing up as Code A in any of our several plans. The alternative, going through years of paper filings, is rather daunting. Has anyone ever done this? Any assistance is appreciated.

FACTS

(1) Plan is restricted from distributing benefits in a lump sum because AFTAP<60%.

(2) Participant eligible for early retirement elects immediate monthly payment with full disclosure that lump sum distributions may be available at a later date if participant defers start date and that election to start immediate monthly pension, including distribution form, is irrevocable once first payment is made.

(3) Plan does not provide for opportunity to elect a lump sum of remaining payments once restrictions are lifted.

(4) In three years, AFTAP>80%

Conclusion

Monthly payment continue under distribution form originally elected.

Anyone see any problems???

Facts:

- 401k plan hired a new manager who is not a US citizen. She is working here under a permanent resident card

- She lives in the US

- Her primary source of income, if not her only source of income, is US income

- Taxes are withheld and paid on her us income

- I believe she has a SSN

Question: Can she contribute to the 401k plan?

Note: I looked in the plan document and did not see anything regarding exclusion of resident or non-resident aliens. This plan does exclude hourly employees and that is clearly listed under eligible employee (as excluded)

Facts: A contribution becomes a catchup in one of three ways:

Contribution in excess of 402 g limit

Contribution in excess of plan limit.

Failure of adp test and reclass as catch up

Issue: I have a client where an hce contributes 16500 and the owner does 5000. The owner is 50. Since the 5000 is not in excess of 402g and the plan has no limit, the 5000 is in the adp test. The non owner hce gets a refund.

Goal: I would like to count the 5000 as catch-up, and have the owner in the adp test as a zero.

Question 1: Which "wording" below can I use?

Question 2: Would the owner still be in the adp test as a zero or be removed from the test completely?

Example 1: "for any hce age 50 or over, the first 5500 of 401k will be treated as catch up"

Example 2: "salary deferrals for owners are limited to 0%" (with the thought being an owner over 50 contributes 5,000 and it is immediately reclassified as catchup)

If a defined benefit plan is late in paying a benefit to a participant, what interest rate should be applied to the late payment, assuming that the lost time value is not captured by actuarially increasing the benefit?