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

For our DB plan, how long can I wait until I must provide a vested terminated employee with a letter informing him of his vested pension amount (and all the other stuff)? I've been doing it pretty much immediately up to now but I suspect I don't have to be that nice.

I've been in the habit of sending a letter to vested terminated employees, very soon after they leave, informing them of their vested pension amount, etc etc. So I'm certain I haven't been late on any of them.

Question is: How is late defined? Can I 'batch' these and do them all once per year and not be late? What are, or where can I find, the rules?

Thanks

An employer wants to contribute a sum certain to a 125 plan for each employee. The contribution may be used only for medical insurance but, if the employee has other coverage or meets certain other criteria for declining medical insurance coverage, may also be contributed to the company's 401(k) plan. The contribution is not otherwise available to employees. In other words, an employee may not take the contribution as additional wages.

Where an employee contributes the sum to the 401(k) plan, are the contributions treated as elective deferrals or as nonelective contributions? In the latter case, may a 401(k) plan provide for alternative allocation rules for nonelective deferrals, namely, in proportion to compensation for "regular" profit sharing contributions but as flat amounts in the case of employer monies coming through the 125 plan?

On the other hand, if the contributions to the 401(k) would be treated as elective deferrals notwithstanding their source, would an employee have constructive income if the employee failed to make any election?

Thank you in advance.

Has anyone else had this circumstance: 5500 filed last Friday, plan sponsor logged in shows it has been received, but searching online at efast2 does not show the filing?

I have a PS plan that had a MPPP merged into several years ago. Plan made a hardship dist to a participant in excess of PS source which means part of the MPPP source was paid out under hardship dist. Participant is only 52 years old. I need help on corrective measure since MPPP attrib source is not eligible for hardship dist at this age...Thanks.

Last week, the Financial Accounting Standards Board announced FASB's approval of a new accounting standard (not quite finished) for a little disclosure that might help a careful reader begin its own analysis about the business' exposure to liabilities that relate to a multiemployer defined-benefit pension plan's weak funding.

Nowadays, many observers of accounting compare a U.S. standard to an international standard to consider how similar or different they are.

What does international accounting standards call for to explain a business' exposure to liabilities that would result if an employer withdrew from a pension plan?

A defined contribution plan can, of course, require that a participant be employed on the last day of the plan year in order to share in the employer's profit-sharing contribution. Can a plan also require that a participant be employed on the first day of the plan year? Requiring employment on both first day and the last day of the plan year would mean that a rehired participant would not be eligible to receive an allocation of the profit-sharing contribution.

Treas. Reg. section 1.410(a)-4(b) requires participation immediately upon re-employment. It seems like "participation" must mean being entitled to receive an allocation of a profit-sharing contribution. Is there any legitimate way to say that the reemployed participant resumes participation but is not eligible to receive an allocation of the profit-sharing contribution because he was not employed on the first day of the plan year?

Thanks much!