Does anyone have any practical experience in understanding the definition of Predecessor Employer in Regs. Section 1.415(f)-1©(2). I am particularly concerned/puzzled by the phrase “a continuation of all or a portion of the trade or business of the former entity”.

Two doctors operate a partnership which maintains a defined benefit plan. The doctors split and Doctor A assumes the sponsorship of the DB Plan. The employees who leave with Doctor B are paid their benefits under the DB Plan, except for Doctor B. Doctor B is apparently not paid because the plan is under-funded. His benefit is still held in the old DB Plan currently sponsored by Doctor A. Doctor B now wants to establish a cash balance plan for his business. Is the partnership considered a Predecessor Employer and, as a result, must Doctor B’s benefit under the old DB Plan be aggregated with his benefit under the cash balance plan in determining his Section 415 limitations?

Any thoughts with citations or references would be greatly appreciated. Thanks.

Solo plan had an eligible employee for 2010 and 2011 and that's it. Assets currently <250K.

1) I'm marking the s-f as a first return reprot. Anyone think I'll get a letter from the DOL asking where last year's 5500's are? Anythin I can do to prevent it?

2) When I lose the employee, I'll be over $250K, so still need to file the EZ. I think that's a good thing because when the DOL writes me looking for the 2011 filing, I can produce the EZ (I'm assuming the DOL will have no record of that).

Anyone have any other tips? I'm srt of resigned to the fact that I will be getting letters from the DOL/IRS on this...

I'm trying to figure out whether it's better for an employee to get a 403b excess deferral refund from (a) a Roth or (b) a traditional account where (1) the refund occurs after 4/15 of the year following the year the excess contribution was made, (2) the total contribution was split between both kinds of account, and (3) the excess contribution occurred with a single employer. If the refund is from the traditional account, the employee adds that amount to reportable income for the year in which the contribution was made, and must also report the amount as income in the year the distribution occurs. If the refund is from the Roth, the reportable income in the year in which the contribution was made already includes the excess contribution, and the employee must report the amount as income again in the year the distribution occurs. In both cases, the amount is taxed twice, but where the refund is from the traditional account, the total reportable income seems to be higher. Is that right? Is there a difference in what penalties might apply, or any other difference?

John Doe comp is $120,000. John works 3 months in 2010, and then has 9 month military leave.

During 3 months in 2010, earns $30,000 in comp, and defers $16,500.

Reemployed Jan 1, 2011.

Company match is 1:1 up to 10% of pay.

He already received $3,000 in match (10% of his $30,000 pay)

Is he due an additional $9,000 in match upon reemployment?

Or is he out of luck, because the match is contingent on him contributing, and he can no longer contribute?

What if it was the same scenario, but instead of deferrals of $16,500, he did $16,000. He then decides to "make-up" $500 for 2010. What company match is due then?

Is it just 1:1, so $500?

Should we look at the full year, and see that he would have been due $12,000 based on his comp, therefore he is now owed $9,000 in match?

Is it nothing, because these $500 are deferrals above the 10% income threshold that is used for all other employees to cap company contributions?

Generally speaking, when we calculate company match, we fund no more than 10% of pay per period, but we evaluate based on the full year, and we do a true-up contribution to make sure that for each year, employees receive the match based on their full year's comp, so if people fund quickly or late in the year, they receive the same match as people funding 10% evenly throughout.

Thanks for your thoughts.

Does anyone have recent information on the percentage of Maximum Payment Amount that IRS is using to determine the sanction amount under the Audit CAP? The plan document was not current upon audit but we have since obtained all amendments, etc. This is the only "problem" discovered by the agent. This plan has fewer than 10 participants, one HCE.

ESOP passes the 1/3 test. However, by the time forfeitures are reallocated to participant accounts on the last day of the plan year, the plan is no longer leveraged because the loan has been repaid by returning the shares to the employer (the plan is terminating). Can the forfeiture allocations be excluded from annual additions under section 415 (pursuant to Reg. 1.415©-1(f))? On one hand, the forfeitures (when they occurred) were forfeitures of employer securities that were acquired with the proceeds of the loan. On the other hand, by the time the forfeitures were reallocated to participants, the reallocated amounts were cash.

I have a plan that changed its vesting schedule in 2009 from a 6 year to a 4 year.

If a participant had left, say in 2006, and requested a distribution in 2010 or 2011, do we use the vesting percent that they had at the time of termination or does the new vesting schedule apply? The document does not give any clarification.

Can a retiree medical VEBA (assuming that such does not conflict with the collective bargaining agreement establishing the VEBA) implement a provision requiring retirees to enroll in other employer-provided medical coverage if they re-enter employment? This would be analogous to a spousal carve-out, but for the retiree (as compared to the retiree’s spouse). The intent would be to have the current employer’s health plan stand primary and the VEBA secondary for purpose of coverage.

In a broader sense, the question is: Can a retiree medical plan require a retiree who returns to work to enroll in employer-provided coverage?

We have a larger employer who has well over 500 employees and who sponsors a 403(b) Plan. However, about 80% of those employees have less than 1000 hours. Since 1000 hours is roughly the difference between being over/under 20 hours/week, is it safe to say that the employer could simply exclude all of these individuals from the plan, even the employee 403(b) contribution?

I assume that when these individuals are hired, a determination has to be made (and applied consistently) as to whether the individual will be over/under 20 hours/week in order to determine if they are in the plan. Is this how it is handled?

Thanks

ok, so doing a takeover case. went out to the DOL website to pull last year's 5500 (there are 2 plans)

but wait, there are 3 out there from 2009, one with a completely different name.

looked that name up on FreeErisa, and its there for 2008 and 2009, but also there in 2004 under a different EIN (beginning 54- instead of 59-)

ooops. someone has filed under the wrong number.

oh, look at the 2009 filing. I see it wasn't signed until 1/21/2011 so that was late.

oh, and it has late deferrals listed.

the things you stumble across.

Good evening folks!

I still want to set up that Vanguard 403b7 for the minister BUT I've heard rumblings (nothing substantiated as of yet) that ministers can only have that benefit of taking their distribution at retirement as housing allowance under 403b9.

Is this right?

I really want to set up as a 403b7 for a number of reasons. He wants mutual funds as his investments, not annuities. The only issue is the distribution at retirement. Obviously we'll have to set it up as a 403b9 if it's the only way to get that benefit of distribution as housing allowance at retirement.

Any out of the box ideas? Letter from church board, for example?

A participant has requested a hardship withdrawal for the purchase of a primary residence. However, he included in the documentation for the sale of his current residence as well. He is asking for the hardship withdrawal to cover his closing costs on the sale of his current home (the sale price is near the current loan balance, so he must bring money to the closing to cover all costs). He is also asking for the closing costs on the new primary residence. The purchase of the new residence appears to be dependent on the sale of the current residence.

Question - Would the closing costs on the current residence that is being sold be allowable under the safe harbor hardship rules?

A participant in a 403(b) plan passed away some time ago. We obtained the death certificate and the spouse is listed (Mrs. A). However, we have a copy of the enrollment form from when the individual first enrolled in the plan (many years ago) and a different individual is listed as beneficiary (we're not sure but it appears to be his first wife, we'll call her Mrs. B).

Is this as clear cut as I think it is? Unless Mrs. A signed a waiver of beneficiary form, she is the rightful beneficiary, no questions asked, correct? Mrs. B may be listed as the beneficiary and may have been his spouse at one time. But that automatically goes away when he married Mrs. A? Do you see any reason why we should not pay out Mrs. A?

Thanks

We processed an RMD for a trust for the ABC Plan. The deceased died after RBD. In determining the factor for the RMD do we use the decedents age or the age of the oldest bene? The deceased was born in 1924 and one of the bene's in the trust was born 1917.

Facts:

Hired 4/17/89

Terminated 8/31/96

Years of service at termination: Approximately 8

Rehired 8/8/11

Breaks in Service - approximately 15

Service requirement for new employees: 90 days

Wording from plan doc:

(b) Reemployed after five (5) consecutive 1-Year Breaks in Service ("rule of parity" provisions). If any Employee becomes a Former Employee due to severance from employment with the Employer and is reemployed after a 5-Year Break in Service has occurred, Years of Service shall include Years of Service prior to the 5-year break in service subject to the following rules:

© Vesting after five (5) consecutive 1-Year Breaks in Service. After a Participant who has severed employment with the Employer incurs five (5) consecutive 1-Year Breaks in Service, the Vested portion of said Participant's Account attributable to pre-break service shall not be increased as a result of post-break service. In such case, separate accounts will be maintained as follows:

Question - When does the employe re enter the plan and what is their vesting? My thoughts is that the employee re-enters the plan right away with 100% vesting. He was 100% vested when he terminated. Even though he was gone longer than he was there, I do not think that matters. I do not think Rule of parity would apply here either.

An RMD was processed for a trust for the ABC Plan. The deceased died after RBD. In determining the factor for the RMD do we use the decedents age or the age of the oldest bene? The deceased was born in 1924 and one of the bene's in the trust was born 1917

Client is seeking to lower their in-service withdrawal to age 40 with 2-yrs of service in order for a participant to make a Roth In-Plan conversion.

Question - Is the lowering of the age to 40 plus years of service requirement a possibility?

Client email: What we are looking for, is a Roth conversion-only for the profit sharing balances. We are thinking something like at age 40 with 2 years participation one can convert to “Roth profit-sharing conversion”. If you have something like this, I would like to see what the amendment looks like.

A participant has requested a hardship withdrawal for the purchase of a primary residence. However, he included in the documentation for the sale of his current residence as well. He is asking for the hardship withdrawal to cover his closing costs on the sale of his current home (the sale price is near the current loan balance, so he must bring money to the closing to cover all costs). He is also asking for the closing costs on the new primary residence. The purchase of the new residence appears to be dependent on the sale of the current residence.

Question - Would the closing costs on the current residence that is being sold be allowable under the safe harbor hardship rules?

Does anyone have any thoughts on what the effect of PPACA's external review procedures have on the ERISA concept of claims fiduciary?

I'm not sure anything changes but if a participant can have a review from an independent third party that overrides the decision of the plan administrator or third party administrator, can a case be made that the respective administrator is not a fiduciary with respect to claims determinations?

Need to calculate highest performing fund from 1/1/10 through 8/31/11. Any have a formula for doing this? I have monthly performance for each fund, but not prices as the majority of the time period (through 6/30/11) the plan was at a different recordkeeper.