I thought I remembered seeing a good discussion somewhere (I think on BenefitsLink) that went over the issue of Participant loan payments being made with after tax money, and then the interest being paid back into the plan is taxed again when the funds are distributed at retirement. So in essence, the participant pays taxes on the funds twice.

Maybe it was an article in the newsletter instead of a posting on the message board.

Anyone recall that, or anything like that?

Thanks!

Dennis

We are preparing a Form 5500-SF for a Plan that has its assets at Principal Investments. Principal has provided us with their version of Schedule A, C, D, and H. From this I was going to pull information for entering information Line 8f (Administrative Service Providers (salaries, fees, commissions) and Line 10e (Were any fees or commissions paid to any brokers......by an insurance carrier.......)

The only disclosure involving fees on the information supplied by Principal above was the commissions and referral fee paid the broker on Schedule A. Schedule C has no fees disclosed and Schedule H has no fees broken out in the expense section.

Assuming Principal provides some disclosure to the Plan Sponsor which may explain why Schedule C blank, I guess.

But why wouldn't the Plan be required to answer on Schedule H the fees paid to Principal and the broker?

Many thanks.

Does the permissible withdrawal feature that applies to EACA's also apply to QACA's? I've been reading the Regs and Sal Tripodi's info but don't think it is is an option.

A few weeks ago we had a woman in her mid 80's call us to take over the administration of her defined benefit plan. Upon reviewing the plan, we found it to have assets that far exceeded the value of benefits (benefits at 100% of FAC). She has been the only participant, retired 15 years ago and has not worked since. It appears all filings, RMD's etc have been done.

It looks like the administrator just kept the plan going without suggesting terminating the plan back 15 years ago when it was slightly over-funded. Of course you never know the real story as the prior administrator does not want to talk about this. At a minimum, they should have considered an in-service distribution.

It looks like she could not have a qualified replacement plan as she has not worked and has had no earned income for 15 years.

Has anyone run into anything like this? Are there any potential solutions to avoid 50% excise tax and income tax on the reversion?

Thanks

Suppose you have a small calendar year DB.

1. Can you change from BOY to EOY for 2009 and then change back to BOY for the 2010 year without approval? 1.430(g)-1(f)(3) seems to allow this.

2. If yes, must the employer make a formal election to do so?

Does anyone know if an employee who is working abroad for a US employer and who qualifies for the foreign earned income exclusion because of income earned abroad can also participate in the employer's ERISA 403(b) plan with her contributions going into the Roth 403(b) option? In this situation my understanding is that she'll just pay FICA on her foreign earned income but I'm not sure if the foreign earned income also ends up on a W2 and if the IRS allows her to contribute some of her excluded income into her employer's Roth 403(b). Thank you.

As a result of a determination letter application, the IRS is questioning a client about the timing of the adoption of its 401(k) plan. The client set up the plan effective 6/1/06 and allowed elective deferrals immediately at that time. They formally adopted the plan 12/1/06, under advice that the plan would be compliant if it was adopted before the end of the year.

I understand that under 1.401(k)-1(a)(3)(iii) of the regulations, elective deferrals are not permitted until the plan is adopted. This seems very clear, but, first question, is there any exception to this that we may be able to use? My research hasn't come up with anything remotely helpful.

Second, the employer may have other plans with the same problem that the IRS has not yet asked about. Are we able to bring those plans under VCP to avoid Audit CAP? I am assuming it would be considered an "operational failure".

Third, does anyone have any idea what kind of penalties are assessed for this type of qualification failure under CAP? I've never been through CAP before.

Thank you so much for any help!

I am brand new to this business & wonder if the following is a practice thru-out the industry. The company I work for has clients sign the document pages for egtra but has not completed the document or provided it to the client including the summary. It is my understanding documents were to be completed by 04-30-10 - so they were signed by the due date but a final document hasn't been completed or provided to the client. Is this an industry wide practice to help manage the influx of document work? Surprised people signed without knowing what the document contained. . .thoughts?

If all of the assets of a 403(b) plan are eligible for the transition 5500 reporting relief under FAB 2009-02 (in other words, the assets are not treated as plan assets for reporting purposes)

AND

all of the participants in that 403(b) plan qualify under Q&A-5 of FAB 2010-01 (in other words, none of the participants are counted for reporting purposes)

THEN

the 403(b) plan essentially has zero reportable assets and zero reportable participants.

Does that mean it simply does not have to file a Form 5500 at all?

When completing a Form 5558 for a calendar year end plan, are you using 10/17 as the due date since 10/15 falls on a weekend? Relius has is reporting that the IRS is rejecting these requests for extension because the extension period is 2 days longer than the 2 1/2 months permitted.

http://www.relius.net/Support/rgfproductnews.aspx?ID=264

I've been doing 5500 for a long time and I don't remember having this issue n the past although I think it's been a while since the extended due date was on a weekend. I'd like to hear back on what date others are using. Thanks.

PAL

A building trades union is contemplating a diversion of future contributions from the money purchase plan to their defined benefit plan. The diversion would last 1-2 years and is designed to help support a rehabilitation plan. This would leave the money purchase plan with no contributions (other than reciprocity) for that period of time.

I seem to recall that this can create a problem for the MPP and that the IRS may view such action as effectively freezing/terminating the plan.

Before I spend the time researching this issue, I thought it may be worthwhile to solicit opinions here.

Thanks in advance.

Loan defaulted 6/30/10 to an active participant. appx balance was $2100. 1099 was not issued. 15 participant plan only allows for 1 loan at a time. In Oct 2010, participant completed paperwork to issue another loan for $2000 and stated on paperwork that she had no outstanding loan. She is current on this loan. I understand a defaulted loan restricts the possibility of future loans. The plan sponsor is of the opinion that he will just send in the loan payments on the defaulted loan to get it current. Inexplicably, Paychex just quit with holding loan payments on the participants loan, so therefore I doubt the participant could just "make up" the missing loan payments even if that was an option. Should the plan sponsor submit a VCP filing and perhaps request a 2011 1099-R issued for the defaulted loan and request that the plan be amended retroactively to allow for 2 loans?

Oh and the sponsor did not file their 2009 calendar year 5500 electronically. Hello DFVC

Does anyone have any experience with a union providing medical expenditure reimbursement payments for a limited period of time (several months) for employees who are terminated and do not buy COBRA? Such a scheme seems to be covered by ERISA under the literal reading of section 3(1) even though it would be nothing more than a resolution of the union executive board to pay out of the union's general treasury which is constituted of nothing kmmore than union dues and bank interest. Any experience would be appreciated.

What 409A issues, if any, may arise if a loan regime split dollar plan is terminated?

- policies will be surrendered with proceeds paid to particpants

- loans will be forgiven giving rise to tax on forgiveness of debt for each participant?

- does waiving loan and interest trigger the exception that pulls loan regime into 409A? If so do the penalties and interest provisions apply?

- plan sponsor will then establish a 457f plan with initial contributions equal to the difference between the loan balance and cash surrender value to "make participants whole". and will also make ongoing annual contributions to the new 457 plan

Thanks

Client would like to exclude commissions from plan comp. At least in the first year, all of the newly hired employees who earn commissions are NHCEs. So we're using 100% of the HCE compensation and the NHCE compensation can not be lower by more than a "de minimus" amount.

The client seems to think that a 5% difference is acceptable. That seems high to me. Since I understand that the regs don't address this, does anyone have any experience with what auditors have accepted?

Can anyone point me to guidance on the ability of an employer/TPA to pass on certain fees to COBRA participants which exceed the 102% limitation? Specifically, fees for bounced checks and fees for refund processing when individuals pay the wrong premium amount.

Thanks in advance!

The valuation date can be automatically changed from the last day of the plan year to the first day of plan year (i.e. end of year 12/31/2010 to beginning of year 1/1/2011) without approval, correct?

Forgert about the merits of this plan design which has been discussed ad nauseum in the past. If I did use this desgn, can apply the $1 limit only to HCE's who happen to be over the age of 50? Or is that age discrimination?

I am concerned that my LTD will be terminated if and when my current employer goes bankrupt. Are insurance companies required to continue coverage if the subscribing company goes out of business or there is a change of control?

LEt's say, hypothetically, the client is out of town. Is there anything "illegal" about sumbitting a filing with no credentials? The filing will come back Processign Stopped which is considered filed. And I haven't "forged" anyone's name.

I have heard stories of people sending in unsigned 5500's in the past in similar situations.