Okay - I just found out one of our ER's was purchased by another company.

It's a Safe-Harbor nonelective

Top Heavy

What options do they have?

Thanks

Pat

Does a plan that is being involuntary terminated by PBGC (PBGC is in the process of terminating) have to provide the 2010 annual funding notice? Assume that it is a calendar year plan and that the PBGC is imposing a retroactive termination date of February, 2011.

Hello everyone!

I've posted this same message in another section, but maybe it's appropriate here as well. We have a client that merged with another entity. It used the wrong valuation date when valuing that entity's plan assets, and the plan itself took losses. Certain excess distributions were made to some employees but not others as a result. The DOL told us that for purposes of calculating the reduction in plan assets attributable to the excess distribution and earnings reduction, the DOL interest rate had to be used.

The plan intends to distribute to each participant their share of the earnings in the form of a supplemental distribution, IN THE SAME MANNER AS THEIR INITIAL DISTRIBUTION. So, if they took a lump sum before, the supplemental would also be lump sum, a rollover would also be a rollover, etc.

I'm just looking to see if this is ok to do. Does anything in the Regulations prohibit it? Thanks so much for the help

Hello everyone!

I've posted this same message in the Mergers section, but maybe it's appropriate here as well. We have a client that merged with another entity. It used the wrong valuation date when valuing that entity's plan assets, and the plan itself took losses. Certain excess distributions were made to some employees but not others as a result. The DOL told us that for purposes of calculating the reduction in plan assets attributable to the excess distribution and earnings reduction, the DOL interest rate had to be used.

The plan intends to distribute to each participant their share of the earnings in the form of a supplemental distribution, IN THE SAME MANNER AS THEIR INITIAL DISTRIBUTION. So, if they took a lump sum before, the supplemental would also be lump sum, a rollover would also be a rollover, etc.

I'm just looking to see if this is ok. Does anything in the Regulations prohibit it? Thanks so much for the help!

After being top heavy for over a decade, we're back to non top-heavy status.

Does the benefit accrued through the end of the top heavy period serve as a minimum benefit against all benefit accruals (a la' extended wearaway- - them's fightin words) or is it the A+B approach?

The plan document and SPD are silent.

Please copy actuarylaw@yahoo.com on your response to the bulletin board. thanks!

Gary

Are there any issues with being more restrictive regarding status changes and/or annual enrollment for a particular category or class of participants in a group health plan (self-funded with stop loss)?

Health plan has a variety of participants -- active employees, retired employees, COBRA participants, etc. Say that active employees and COBRA participants are permitted to make annual enrollment changes and to add new dependents based on qualified status changes/events (birth, marriage, etc.).

Are there any issues with being more restrictive with respect to the retired employees (e.g., providing retiree medical coverage to the retired employee and any eligible dependents (determined as of the date of retirement), but excluding coverage for a new spouse or other person who becomes a dependent after retirement)?

What if the employer provides certain former employees with an extension of medical coverage prior to COBRA (e.g., one year of continued coverage for every year of service). Can the employer provide that those "extended coverage" participants are not permitted to make status changes or annual enrollment changes, until they eventually start their COBRA coverage (at which point they would be permitted to add new dependents, make annual enrollment changes, etc.)?

Thanks in advance for any thoughts.

I am working on a 401(k) plan in which the only ER contribution is a discretionary match. The match formula is the same for all participants and there are no requirements to get the match. The plan requires a 414(s) test due to the exclusion of bonuses. When I run the 414(s) test in Relius, it generates two reports: Report #1: 414(s) compensation for 410(b)-5 average benefit percentage test. Report #2: 414(s) compensation for nondiscrimination test under 401(a)(4). The only difference between the two is report #2 excludes terminees with less than 500 hours. Do I need report #2 since I don't have a profit sharing contribution?

Trustees of 2 separate plans, each of which the trustee is also the only participant.

They want to buy real estate and flip it. They want to do these as a joint venture of the 2 plans.

Can they set up an entity where each plan owns 50% of the entity and each plan invests in that entity and shares the profits? None of the purchases would be debt financed

Facts

- Plans can be amended to permit HCE's to contribute $0 deferral. Anything over that would be immediately re-classified as catchup (for those over 50). ADP test would be zero.

- If a HCE does not contribute to a 401k plan (or contribute $0), they could potentially contribute to an IRA (assuming other requirements met)

- If a HCE does contribute to a 401k plan (or contributes greater than $0) they cannot contribute to an IRA

- If a plan has poor NHCE participation and low NHCE adp %, HCE's may be better off contributing to an IRA

Question

- In a plan where HCE's are limited to $0 (anything over is catchup up to 5500), can a HCE contribute 5,500 and also to an IRA? The 5,500 is classified as catchup and therefore not really counted towards ADP, 415limit, etc. If they can do both you would be looking at a 11k plus contribute (IRA plus catchup)...even more if spouse can do an IRA...

The employer's definition of compensation excludes bonuses, so a 414(s) test is required. The only employer contribution is a discretionary match. The ADP/ACP tests are on the prior year testing method. The compensation ratio test is satisfied when I compare the current year HCE's to current year NHCE's. Do I also need to run a compensation ratio test to compare the current year HCE's with the prior year NHCE's to be consistent with the prior year testing method?

if a company restates their db plan for egtrra and it is a pre approved volume submitter plan with favorable opinion letter (of course) and essentially makes no changes to pre approved document provisions is there much reason to apply for det letter?

I'm working with a 12/31/2010 plan yr-end with a SH Matching contribution that is quite large. The ER is asking what the latest date is they can fund the contribution (without penalties/interest/fines, etc).

I know for deductiblity purposes, it has to be funded by the 404(6) extended due date 9/15/2011 - however, I believe they have until 12/31/2011 (12 months after) to make the contribution for 2010. They would deduct it in 2011 but what is the consequence if they don't actually make it by 12/31/2011 . Obviously I've explained to them the mandatory/required nature of a SH contribution but they are really strapped for the cash at this point - VCP may be an option but that would just cause a bigger cash flow issue with further fees/penalities and lost earnings to make up.

I think the latest date is 12/31/2011 but I'm wanting someone to weigh in on that date.

"The Filing Information Returns Electronically (FIRE) system will be down December 16, 2011 through January 2, 2012, for programming updates. It is not operational during this time for submissions."

just two weeks before the extended deadline... Bravo, IRS. Bravo. Can't wait one more month to do your updates? You can wait 2years to release a form DUE A YEAR AGO, but can';t wait one more month for this currently operational system to be updated. Classic...

From the IRS new article, with updated FAQ's on 8955-SSA's

http://www.irs.gov/pub/irs-tege/epn_2011_6.pdf

How are employee options considered when making a controlled group determination?

Does it matter if the option has been exercised?

The following is a link to an article on point by S. Derrin Watson.

http://benefitslink.com/modperl/qa.cgi?db=...loyer&id=55

Curious if there are any other opinions or thoughts on the issue.

This error was just discovered (in 2011). A participant terminated in 2010 and was distributed his account balance (less loan amount) and he did receive a 1099-R for that amount. He walked away from the loan, so there was a default, but the default didn't get reported on the 1099-R. Rev. Proc. 2008-50 doesn't seem applicable where the participant has terminated - the correcting options don't make sense. So, is VCP really the answer? Or, is this just a matter of correcting the 1099R?

If the 1099R is "corrected," I guess the employer could pay the withholding or leave the withholding alone (even thought the latter doesn't seem correct).

Part of my confusion is that, from what I'm reading, the default should be an actual distribution as opposed to a deemed distribution.

Calendar year safe harbor 401(k) plan has a profit sharing provision. No hours or last day requirement. Plan sponsor wants to exlcude a handful of HCE's from a profit sharing alloction. I don't see that they can do that in the current plan for 2011. Is there anything that prevents them from adopting a separate profit plan for 2011 with the proviisons that thye want and then merging the two plans at together a later date?

I don't see anythat anything prevents this, but want to cover all bases since essentially the new plan plan is only being adopted because the current one can't safely be amended.

Thanks for any guidance.

During a recent audit, it was discovered that the ER failed to make a match for some participants over the past two years, totaling approximately $900 in each year. What is the SCP for this? Do tests have to be re-run? Do the 5500s have to be amended? Thanks for your help.

Trying to get benchmark information about companies who allow Paid Time Off accrual while employees are on STD. Thanks.

Service provider received direct comp of $500 and indirect comp > $5000. All indirect comp = eligible indirect comp. Would this service provider then be required to fill out line 2, and in so doing fill in $500 of direct comp and $0 of total indirect excluding eligible indirect? It just looks funny to be listing them with only $500. As an alternative can this service provider be listed only in line 1?

Hello

Day 1 - I exercise my NQSOs. I now own 50% of the company.

Day 2 - We sell the company for $20m, $2 M being held back.

My W-2 income reflects the $9m SP as the FMV of my NQSO (less exercise price).

Year 2 - escrow is released. I think this is W-2 income. But the company's been acquired.

Is this W-2 income? If so, can you provide authority?

Who issues the W-2? The accquiring company doesn't want to.