I have a plan that wants to terminate. The plan does not offer lump sums... the plan sponsor wants to purchase deferred annuities for all participants. Am I correct in thinking that the annuities must include all rights and features as stated in the plan document?

Which extension is everyone checking? Automatic or nothing? At first I thoguht Automatic, but that seems to relate to piggy backing off a corporate tax extension. The 8955-SSA FAQ's indicate that the special box should not be used, except for disasters, etc.

To qualify for exclusion pursuant to 132(d) (working condition fringe benefit) for pay-related education, is it necessary that the employer pay the educational institution directly, or is it permissible to reimburse the employee (and satisfy any substantiation requirement)?

I did a search on the board and found a few topics that come close to what I'm trying to figure out, but not quite there. I'm not at all familiar with SEPs I've read the different FAQs and pub 560 etc. Any help or guidance is greatly appreciated!

Here's the situation:

The client has a SEP plan (IRS model 5305). Client has filed an extension on his tax return, so the final 2010 contribution will be funded in Oct.

This client also adopted a new 401k plan effective 7/1/2010, no contributions were deposited to the 401k plan for 2010.

The IRS FAQ's regarding SEP's stated that a SEP can't be established if they have a QP already. Can this client set up a 401k plan after they have set up the SEP plan? Is the contribution to the SEP valid or should the contributions be deposited to the 401k plan for 2010?

Next question: In 2011, the client rolls his SEP plan into the 401k plan - if the 401k document allows, would this be permitted. Would you need to terminate the SEP plan.

No other employees have met the eligibility for either plan.

A 401(k) Plan has an in-service distribution option at 59-1/2. HCE receives an in-service distribution during 2010 and is only age 57. Sources distributed are 401(k), Safe Harbor QNEC, and Profit Sharing (non elective contribution). The distribution was rolled over to an IRA and then converted to a Roth.

Any thoughts on how this can be corrected? I have looked at Rev Proc 2008-50 and do not see this situation.

Many thanks in advance for thoughts.

This is a typical missed contribution scenario with a twist. An employee had an election on file, but it wasn't honored by the employer for several months because the benefits department did not receive it. Employee noticed this and contacted the benefits department. Benefits department told employee they had no election on file.

Employee, with this knowledge, waits several months to inform the benefits department that she should have an election on file. At that point, the election is found and implemented.

I know that the employer will have to correct for the first period (50% deferral plus 100% match), but what about the period where employee had demonstratable, actual knowledge of the error and did nothing to correct? Is the correction the same for this period?

Thanks for all responses.

We have a participant who submitted, as part of her dependent daycare claim, the cost of a webcam that the daycare provider offers so that the parent can "see" the child during the work day.

Does anyone think this is part of the permitted dependent daycare expenses, or is it a very nice add on that cannot be pretaxed?

Thanks.

My client recently terminated a record keeper. We are concerned that the record keeper will use the confidential financial information it obtained from us to market investment products. Is anyone aware of ERISA litigation on this point or effect of Florida constitutional right of privacy as a means of limiting the use of this information

Would it be unusual to add a restriction to pension and other retirement plan documents and/or beneficiary designation forms regarding minor children (i.e., a provision prohibiting the designation of minor children as beneficiaries, and possibly requiring the designation of a legal guardian of the child's property (which may not necessarily be a parent or guardian of the child him/herself))?

Others in the forum have noted that they try to make sure that beneficiary designations are not done naming minor children (specifically addressing this in the beneficiary instructions), but it seems that this would be very difficult to monitor (even if it were possible to review hundreds or thousands of beneficiary designation forms on an individual basis).

Any thoughts on best practices or other approaches (e.g., plan provision stating that designation of minor beneficiary is automatically void) would be most appreciated.

General Scenario:

A US tax-qualified pension plan (FAE with early retirement subsidy and a lump sum optional form) is split as part of a corporate spin-off. Part of the plan (assets/liabilities) remains with the remaining company...part moves to the spin-off company. The plan design is mirrored with the spin-off company. The mirrored plan design of the spin-off company includes the provision that the lump sum optional form of benefit includes the early retirement subsidy if the participant is eligible for the subsidy based on plan provisions (tied to age and service with the company before terminiation).

Seemingly, law requires that participants in the spin-off company can grow into the early retirement subsidy with additional age and service recognition with the spin-off company. This would be true even if the spin-off company froze the plan to new accruals/new entrants. I believe that the lump sum form of a benefit does not have to include the subsidy if the plan explicitly indicates such (participants would see such in the SPD and in the relative value disclosure).

Questions...

For those participants who met early retirement eligibility in the spin-off company plan before it was frozen but who leave and commence the benefit after the plan was frozen, is the lump sum of the benefit, inclusive of the subsidy, protected by 411(d)(6) or is it only the normal form of benefit (inclusive of the subsidy) protected? In other words, the lump sum optional form would still be available but the question is whether it must include the subsidy.

For those participants who met early retirement eligibility in the spin-off company plan after it was frozen and who leave and commence the benefit after the plan was frozen, is the lump sum of the benefit, inclusive of the subsidy, protected by 411(d)(6) or is it only the normal form of benefit (inclusive of the subsidy) protected? In other words, the lump sum optional form would still be available but the question is whether it must include the subsidy.

If the spin-off company amended the mirrored plan after spin-off to remove the provision that the lump sum optional form would not include the subsidy (if that, in and of itself, would not be an impermissible cutback) would that change your responses to the two questions above?

Are these scenarios explicitly covered in any of the relevant regulations? If so, please provide the reference/cite. If not covered in law/regulations...have court cases been decided dealing with these scenarios?

Thanks for your hoped-for help in a complex matter.

For those of you using the FIRE system to batch file (FT Williams, etc), are you having the client signing the SSA, or just sending thenm a copy. FGT Williams is sayiong that this is a "best practice" but if it's not a requirement, I would like to know that as well.

Is it a valid hardship distribution if the request is to repay a loan taken out to help with the payment of tuition? What if the request is to repay a loan taken for medical expenses? (masteff?)

I have an endorsement split dollar agreement where the only benefit is the death benefit (there's no element of deferred compensation, the employee is unable to access any cash, receive a loan etc...)

I believe it is an ERISA welfare plan. Although it's technically a welfare plan, I thought this NQDC board was the best place to post the question since split dollar arrangements are typically established for executives.

I'm trying to figure out how to deal with the ERISA claims procedures that need to go in place. I haven't seen the insurance policy, but I can't imagine claims reivew process of the insurer will be consistent with ERISA. Maybe I'm wrong about that. Does anyone have any experience with this or thoughts on how to deal with inconsistencies between ERISA claims procedures and those of an insurance policy? Do insurers typically agree to follow ERISA claims procedures? Any insight would be greatly appreciated. Thank you.

Participant should have entered plan 4/1/10, but actually was notified on 10/1/10, began Roth deferral contributions of 15% at that point. The Plan is a safe harbor non-elective 3%, which was calculated correctly for 2010. In reading the correction for the missed deferrals the employer will have to make up a QNEC for the 4/1/10 thru 10/1/10 of 50% of the compensation for that period.

My question is regarding what contribution percentage to use in calculating the QNEC since it is a safe harbor plan. Would I use his elected 15%, the plans ADP percentage or 3% since it is a safe harbor non-elective plan? Also, I didn't see anything extra that I needed to do since his deferrals were Roth, or did I miss reading it?

Thanks all,

A plan participant requested a rollover distribution to his then-current employer's plan. The rollover check was never deposited into the plan. Five years later the plan administrator sends a list of uncleared checks to the plan sponsor. The PS immediately recognizes the payee -- he has been rehired and is a current employee.

The PA says the check must be reissued as a rollover. Payee attempted to establish an IRA to receive but the IRA custodian said no -- the 60-day rollover deadline has passed.

What are the corrections possible?

We acquired a client last year that had a terminated DC plan #001 and a 401(k) Profit sharing plan which was effective 1/1/99.

There were two documents and 2 form 5500's were filed; however, both 5500's reported #001 since 1999. The client was aware both forms filed #001; however, the prior TPA never amended the forms.

How far back do we need to amend the 401(k) profit sharing 5500's?

Company A has two plans. Plan one is for union employees. Plan two is for non-union employees.

During the year people move from union status to non-union status. The company’s record keeper is moving the account balance for these people from plan one to plan two.

Can they do this, or are they kicking people out of a plan against the rules? (Assume there are people with a balance >$5,000) Also, note both plans still exist so this isn’t a plan merger.

What about a former union employee who has terminated and for reasons unknown is moved from plan one to plan two. This seems less like to be ok.

Not sure at this point if the plans are the same in terms of provisions. But for now assume they keep track of the BRF like vesting on the moved amounts. (It is a firm audit client and the audit group is wondering about this.)

Does anyone have a hard cite for one way or the other?

Can a safe harbor match plan with an ACP-free additional discretionary match apply a 1-year of service eligibility requirement for the regular safe harbor match and apply a 2-years of service eligibility requirment for the ACP-free additional discretionary match?

We currently sponsor a Corbel prototype document. We are cponsidiering a VS doucment instead of the prototype with the next restatement. Any reason not to sponsor the VS instead?

Thanks for any input.

Let me explain, I am working on a large filer plan that has a few life insurance policies for a plan participant as part of the plan's assets. This is in addition to the mutual funds the rest of the accounts are invested in. The policies are registered to the plan FBO the participant, as the plan offers Life Insurance as an alternative investment. When reconciling the plan's assets, I would normally include the Cash Value of the policies on my Balance Sheet and ultimately the Form 5500 Schedule H (as well as Schedule A if necessary). I am receiving conflicting information that this is not correct. That the Life Insurance policies do not need to be reported as part of the plan's assets in the financials and therefore the Form 5500.