An individual is employed by two companies.

One company has a SEP and the other has a 401k plan.

She participates in both plans.

My impression is that the total deferral is still 16,500 for 2011 and thus if she defers 8,000 in SEP she can defer up to 8,500 to 401k for a total of 16,500.

Is that correct? Real matter is can she defer to both plans? She earns enough compensation for such deferrals.

thanks

An ee was terminated at the end of April and offered COBRA. The father contacted the employer yesterday and said that after being hospitalized in the ICU for the past few weeks, the ee died yesterday. And in going through the paperwork at his son's house, the father has found the COBRA notice. Can the father elect COBRA on behalf of his son and make the necessary premium payments? It's still within the election period. Thoughts?

For an active plan, we all know that gains and losses in excess of the 10% corridor (if chosen) are amortized over the average future service of active participants expected to receive benefits.

For a plan covering all or substantially all inactives, life expectancy is used.

What about a (recently) hard frozen plan covering 15% active employees with frozen benefits and 85% Vts and retirees, where the actives have been told they will get no future benefit or compensation credit.? Are they active or inactive?

I googled this issue and found a couple of conference sessions that raised this question without an apparent (or at least written) answer. I also know that at least one actuary from a major firm changes the amortization period at the time of a hard freeze from average future service to life expectancy, and at least one accounting firm published a newsletter in support of such a change.

Would anyone comment on their view of this issue, whether hard frozen actives are inactives for purposes of the FAS amortization period?

We have a spousal beneficiary who would like to roll the pretax assets in the plan to her Roth IRA at an outside institution. Is this permissable and if so how is it accomplished? Is there any tax withholding?

A spouse beneficiary would like to roll the pretax assets in the plan to her Roth IRA at an outside institution. Is this permissable and if so how is it accomplished? Is there any tax withholding?

Hello,

I have a participant who is deceased. In Feb 2011 this participant took his RMD for the 2011 plan year. Since his beneficiary (spouse ) is also over 70 1/2 does the spouse also have to take an RMD from the deceased account by december 2011?

or does the distribution from feb 2011 qualify?

Thank you

Let's say there is a small company with only 2 employees. Both are HCE, over age 25, and are working full-time. They set up a DB plan.

Question 1:

Upon meeting plan eligibility - do they both have to participate and benefit? (I believe the answer is yes)

Question 2:

Now, assume both have met eligibility and have become active plan particpants. Everything is running smoothly for a few years.... and then....

Assume that the plan has a 1000 hour rule to accrue benefits and one of the employees ends up working part-time and works under 1000 hours and does not accrue a benefit in a specific plan year - is the plan now in violation of 401(a)(26)? Is the plan now REQUIRED to be amended to pass 401(a)(26)? For example, change away from the 1000 hour rule and amend the plan so that only 1 hour is needed to accrue benefits?

Twist:

Now, suppose there is only 1 employee - the owner (no spouse and no other employees)

What if the plan has a 1000 hour rule to benefit and the owner starts working part-time and works under 1000 hours and does not benefit - is the plan now in violation of 401(a)(26)? Should this plan be amended away from the 1000 hour rule also?

It seems to me that a small plan should incorporate the following plan provisions:

Plan eligibility = 21 & 1 (1 year of service for eligibility purposes should be based on 1000 hours and 12 months of employment)

Credited Service for benefit accruals = 1 hour

Thoughts/comments?

Thanks

Two employers of a controlled group. One participant is a partner in one entity and is an employee of the other. The partnership K1 is a large negative amount. The W2 from the other entity includes $22k in deferrals. When the two compensation amounts are combined, there is a negative number, so no plan compensation. Can some of the deferrals stay as a catch up contribution?

Takeover plan from a payroll company. Plan was originally designed to have 3 month elapsed time eligiblity. An employee enters the plan immediately after 3 months.

The plan also says that if you work 500 hours or less, you have a break in service.

What do you do with employees that are active and enter the plan after 3 months, but never work 500 hours?

A valuation software program determined that an employee's

AB as of 1/1/2011 was 1,200 per month (as computed from a prior year and preserved)

415 100% comp limit computed to be 1,100 (decreased because after two years of pay in the 3rd year pay was $0 and avg pay for 415 decreased).

The program proceeded to determne that the AB was preserved at 1,200 but the 415 lump sum was the PV of the benefit of 1,100.

That is, not the PV of 1,200.

Does concensus agree with above? Think that AB s/b limited to 1,100? Think lump sum s/b based on PV of 1,200? Or something else?

One more piece of info:

The employee received $0 comp for 2010 and worked less than 1000 hours and did not receive a year of svc for vesting or accrual purposes. The 415 100% comp limit did not add a year of service either, but just counted the $0 pay in the 3 yr avg.

thanks

My client is questioning their fiduciary responsibility as it relates to retaining "determination of benefits" data/records, such as in the case of termination request calculations?

An employee elected years ago not to be a participant in the plan. However, he has since terminated and has now been rehired. Can he now become a participant in the plan or does the company have to rely on his prior irrevocable election not to be a participant?

If he can become a participant, would he now need to satisfy the eligiblity rules as if he had never been employed at the employer?

The prototype plan does not permit elections not to participate, but the person had made this election prior to the adoption of the current plan. Thus, his election remained in effect while he was an employee at the company.

Thanks for your input. I just couldn't find anything about this in the ERISA outline book.

A company established a profit sharing plan effective 1/1/2005 with a graded vesting schedule.

The same company establishes a defined benefit plan effective 1/1/2010. Is it permissible for the defined benefit plan to exclude service before the effective date for purposes of vesting?

Note that the profit sharing plan is still active (has not terminated).

Client completed a volume submitter 401(k) profit sharing plan adoption agreement in 2008 and mistakenly checked "no" in response to whether it was part of an ASG. Client also checked a box that no other employers could adopt the plan as participating employers. Another entity's employees have been participating in client's plan since 2008, and I have determined that client and the other entity whose employees have been participating in the client's plan are indeed an ASG.

Thus, it would seem the other entity's employees should have been eligible to participate (as they have since 2008) in client's plan, but the document does not provide for their participation due to the erroneous adoption agreement. Is it possible for client to avail itself of SCP and simply adopt a resolution amending the original adoption agreement to conform the plan document to the plan's operation since 2008, or would a VCP filing be necessary?

I have used VCP for correcting unrelated employer/adopting employer issues, but I've not dealt with this fact pattern in the past.

If a plan allows for Roth Contributions and Roth Rollovers, Can a participant rollover pre-tax deferrals from another qualified plan into the Roth rollover source in the Plan, effectively converting the contributions to Roth? Is this allowed?

I have a question about M&A. I know that in a stock acquisition, the acquirer steps into the shoes of the acquired. Every instance I have found relates to cases where the acquirer acquires the entire target company (resulting in the target's ability/necessity to maintain a 401(k) plan null). This seems a little different.

Here are the facts:

1) Target’s parent sponsors a 401(k) plan in which Target employees participate

2) Buyer sponsors a 401(k) plan

3) Target becomes Buyer’s subsidiary at purchase

4) Target’s parent’s plan is ongoing after transaction

5) Buyer and Target are not related in any way prior to the purchase

Q1) Can Target’s parent’s plan pay out the employees who cease to work for a member of the controlled group as a result of the transaction?

Q2) Does Buyer have any obligation to Target's employees after sale date?

I have a plan sponsor that has amended their plan to reduce eligibility requirement from 1yr/1000hrs to 6mo/500 hours. They are a calendar year plan with quarterly entry. The effective date of the amendment was 5/1/11.

The question is: Do the employees hire prior to the effective date of the amendment who weren't eligible yet still have to wait 1yr/1000hrs? I don't see anything referencing grandfathering of these employees. It just seems odd as someone hired 6/1/11 would be eligible for the plan before someone hired 3/1/11?

Was thinking I had seen this issue covered before but cannot find a discussion of it now.

Situation involves recordkeeper error in transferring funds to the wrong investment option. Error is discovered and funds are transferred to correct fund in fairly short order. While invested in the wrong fund, participants accounts earned more than if they had been invested in the correct fund. Is there anything to be done about this? Does it matter how much is involved or whether any of the participants are HCEs? In this case all the amounts that went in were correct, the excess amounts simply came from earnings so not the case that anybody else's account was harmed or that testing should be impacted, etc.

alleged details.

adult children own a company 50/50. they were minor children within past 5 yrs.

parents are employees and only participants of pension plan.

As I present it:

since they were minors within past 5 yrs then parents would have had constructive ownership (under 1563(e)) within past 5 yrs and have been substantial owners under erisa 4021(b) and excluded from pbgc coverage at this point.

Now back to constructive ownership.

Children: Child A and Child B

Parents: Parent 1 and Parent 2

So parent 1 can own what child a owns and parent 2 can own what child b owns so they each can own 50% and be substantial owners.

That is, parents 1 and 2 cannot own the 50% child a owns due to fact that ownership cannot be passed to parent 1 and then again to parent 2 as double attribution.

If each child owns 50% then each parent can constructively own 50%. That is, each parent owns what o

Make sense?

thanks

Employer sends notice to an insurance agency that an employee is terminating and requests the agency notify the carrier to have the employee removed from the group plan.

1. May the insurance agency mail the former employee a brochure/business card to provide information about individual coverage options?

2. May the former employer mail the former employee the insurance agency's brochure/business cards?

3. If an employer is sending a COBRA notice to a former employee, may the employer also include the insurance agency's brochure/business cards to provide the former employee with alternatives to COBRA?