I've taken over a SIMPLE (k) Plan and the deferrals for two participants have exceeded the maximum including catch-up contributions for the 2008, 2009 and 2010 plan years.

When the excess deferrals get removed from the plan, are these amounts only subject to taxation in 2011 (if distributed this year)? In other words, is there any other penalty for late removal of the excess deferrals? Thanks.

Hello,

I need some help with interpolating joint and survivor annuity factors manually (In Excel) for fractional ages of both participant and spouse. I have factors for Participant Whole Age/Spouse Whole Age, Participant Whole Age+1/Spouse Age, Participant Whole Age/Spouse Age+1, and Participant Whole Age+1/Spouse Whole Age+1. My problem is, how would the interpolation work simultaneously for the spouse, while I am interpolating the factors for the Participant's Age and Age+1?

I have attempted it, but, I am off from the annuity calculator that I am using, even though I am starting with the same results at whole ages to do my interpolation. I am off by .0007 at the most among the various J&Ss. I do not think it is necessarily a rounding issue. It looks like some special interpolation might be occuring.

Can you provide some insight on how some of you interpolate to derive results at fractional ages for both participant and spouse?

Your help would be greatly appreciated.

Thanks.

A self-insured health plan covers routine physical exams, including the cost of the office visit, and any associated labs, x-rays, immunizations, etc..., but subject to an annual dollar limit of $500. Anyone have any thoughts on whether the annual limit absolutely must be removed under PPACA? This type of service could obviously qualify as a preventive/wellness type service, which is one category of Essential Health Benefits, but I'm curious whether others know of any reasonable argument that the limit would not apply to this type of benefit. (I understand there are no regs yet, and that all of this is subject to reasonable, good faith, consistent interpretation until then).

I am of the opinion you can roll over assets from a terminating psp into a SEP-IRA. If I am right, does the SEP have to have any sort of rollover language incorporated in it? Thank you kindly

I have a Plan Sponsor that set-up a new 401(k) plan (Plan B), effective November 1, 2009, and ceased participation in the old 401(k) plan (Plan A) October 31, 2009. After a DOL review, it was determined they did not properly remit approximately $40k of prevailng wage amounts to Plan A. The sponsor's intent is to merge the plans; however, this hasn't happened yet. The $40k was remitted to Plan B in 2010.

Additionally, there were late deposits on elective deferrals and the 5330 has not been filed. The sponsor intends to deposit the lost earnings from Plan A into Plan B as well.

I have received confflicting information on whether this is proper/allowed. Any insight would be appreciated.

Audit fun........

We have a plan right not that got flagged for audit. It is a cash balance plan that is cross tested with a profit sharing plan that has 5 employees. 2 of the employees are the owners and the other 3 are NHCE staff. The cash balance plan was written to exclude the 3 staff members. The plan passes 401(a) and 410(b) based on it being aggregated with the profit sharing plan.

The auditor and legal analyst is saying that it does not pass 401(a)(26) because "the facts and circumstances in this case show that the plan exists primarily to perserve accrued benefits for a small group of employees for the employer. The groups referred to above are the shareholders, since that is the only group that is allowed to participant/accrue a benefit under the cash balance plan."

He specifically cites a line from 1.401(a)(26)-3(2) which states "A plan does not satisfy this paragraph © if it exists primarily to preserve accrued benefits for a small group of employees and thereby functions more as an individual plan for the small group of employees of for the employer." I think it all comes down to the qualatative word 'small'.

In the past we have used this structure before and been granted d letters upon submission. We still believe because 40% employees recieve a meaningful benefit, the plan passes 401(a)(26). I have been asking local actuaries from my area and they all share this belief and I have seen several posts on benefits link that agree as well.

Has anyone seen this response from an auditor before? What happened? Can we ask for a second opinion?

One more twist, we filed for a d letter pending for this same plan and, coincidently or not, the same legal analyst is performing that review. He stated in a letter to the auditor that because it was too late to correct in accordance with the regulation that our client will have to be dealt with through the auditors closing. Isn't the whole reason for filing for a d letter to allow us to correct these types of infractions?

Any help or opinions would be greatly appreciated.

Is a spouse of ">5% owner" in a QP deemed to also be a ">5% owner" for required minimum distribution purposes - or can she wait until her actual retirement to commence her RMDs a la "non-5% owners"?

Thanks!

A plan allocates discretionary profit sharing contributions on a per pay basis, with no true-up. Let's say the employer has been funding 5%, but wants to switch to 2% prospectively in the middle of a plan year. Does the fact that contributions are calculated and allocated per pay, with no true-up, allow the employer to change the contribution amount at any time? For purposes of 401(a)(4), does this satisfy a design based safe harbor since each contribution amount on its own would satisfy the safe harbor?

The plan doesn't have any entitlement requirements for the profit sharing contribution. So, the issue of what benefit has been accrued by participants should be raised. This technically isn't a change of contribution/allocation formula, only the discretionary contribution amount. Isn't each participant only entitled to a discretionary amount determined and allocated each pay period?

Plan sponsor was not able to make payroll for May, but was concerned about 401(k), so she made the 401(k) deposits but they were paid in July, and actual payroll has not yet been paid. So is the 401(k) late and needing lost earnings?

Could a plan, such as a defined benefit plan or a defined contribution plan other than a participant directed account plan, permit a participant to take an in-service distribution of their entire account balance, including the participant's outstanding loan balance (which is treated as an investment)? The participant would continue to pay that loan off through payroll deductions.

Assume all loan limitations were satisfied at the time the loan was made.

I have a client who owns 100% of two companies:

Question: For 2010 am I required to file Form 5500-SF or may I file Form 5500-EZ for Company B’s plan?

I'm a TPA working with a self Trusteed Money Purchase Pension Plan plan that made a "donation" to a church from plan assets. The plan is currently a one-man plan.

Does this violate the Exclusive Benefit Rule? Is it a Prohibited Transaction reportable on Form 5330?

Any help is appreciated.

Resolved

A DB plan covers 40% of eligible participants (per 401(a)(26).

The plan is combined with a DC plan for nondiscrimination testing purposes.

However, the DB plan document does not reflect the fact not every one is benefiting (i.e., only 40% are accruing).

This problem occurs for current and prior plan years.

Question: To amend the plan, does the plan sponsor have to go through VCP? Or can sponsor amendment without IRS submission?

Thanks for all responses.

Plan has partial Plan Termination in 12/2010. All affected participants become 100% vested. Question I had was whether or not a participant that was terminated in 2006 but still has an account balance needs to be become 100% vested?

Thanks

Here's the issue:

The plan excludes HCE's. The owner decides to marry his secretary in the middle of the year. She's now an HCE since he owns more than 5% of the company.

Her deferrals before she married - excluded or included?

My personal opinion: HCE is for the entire year; she knew she was getting married and shouldn't have deferred; hence ineligible deferrals to the plan.

Thankfully this doesn't happen too often in my plans but I guess I should learn to expect the unexpected....

Thanks for your opinions!

Vicki

Seller is selling its assets to Purchaser. Seller maintains a insured medical plan with a high deductible and copayments, which plan will terminate upon the closing of the transaction. Purchaser will be a "successor employer" under COBRA.

Purchaser maintains a self-insured medical plan for similarly situated employees with three different plan design options. None of the options are similar to Seller's plan, although one of them has a higher deductible than the others.

Can Purchaser require QBs who continue coverage to enroll in the plan with a higher deductible?

Alternatively, can Purchaser set up a new self-insured plan option that has the same deductible and copayments, etc. as the Seller's plan for just the QBs?

We prepare the Form 5500 for a DB plan that deposits their contribution on October 14th each year.

The minimum required contribution for the plan year is $0 so we do not have an issue for the contribution being deposited after September 15th. My question is should this contribution be included on the Form 5500-EZ? We do not list the contribution on the Schedule SB until the following year.

The Plan Sponsor will make a deposit on October 14, 2011 of $100k and deduct the contribution for 2010. Should we include the contribution on the 2010 Form 5500-EZ?

401(k) plan - 1/1 plan anniversary - immediate entry. The plan imposes semi-annual change restrictions (1/1 and 7/1) to elective deferral changes. The employer also pay bi-weekly.

A participant is hired today, 8/1/2011 and is immediately eligible for the plan. Are there any rules in terms of how long this participant has for their election to begin right away?

For instance - suppose they make a 5% election on 9/15/2011, 45 days after they have become eligible. Is the employer required to start deducting on the next paycheck? Or can they wait until the next change date of 1/1/2012 to begin deducting the 5%?

The plan just states that elective deferral contributions shall be effective as soon as administratively feasible after a participant's entry date.

I don't see the purpose of making the participant wait until 1/1/2012 - but if the employer wanted to impose a 30 day window - or something similar - are they able to?

I assume this is a document issue? Or are there rules regarding this?

It is my understanding that dental and vision benefits are considered part of 'employer-provided accident and health insurance' under the Special Safe Harbor Test for POP. My question is that if the employer also offers Life, LTD, STD & ADD, but pays 100% of the premium, will that disqualify the plan from utilizing the Special Safe Harbor for testing? Thanks for any feedback