I have an underfunded PBGC plan where the owner has just passed away. The sons are taking over the business and would like to terminate the plan. The widow would like to waive her benefit to the extent needed to terminate the plan and pay out all others. Although I understand why the family would like to take this approach I'm not sure that it would be allowed. She was never employed by the plan sponsor and will not be an owner in the new situation. Even if they made her a 51% owner, can a beneficiary waive as opposed to an actual participant? On their behalf I will probably write to the PBGC but I wondered if anyone had any thoughts or had encountered this situation.

thank you.

I am bidding on doing TPA work for a new client. The document says that automatic deferral is 3% with no escalation. I have read and heard a lot about the safe harbor programs. But with no escalation, I don't think this can be a safe harbor Plan. (There is no SHNEC or SHMAC). What notice requirements would they have? Do they still get to distribute within 90 days?

We currently offer 2 health plans; one is a high deductible health plan and one is not. We offer an HSA and make an employer contribution to it for employees that is equal to half of the annual deductible. The monthly premiums for the health plans are $50 for the HDHP and $150 for the regular plan.

From what I understand, if an employee enrolls in Medicare, he is not eligible for the HSA. But this same employee could elect the HDHP. Is it okay that we are making the contribution to the HSA, but the Medicare person can't get that contribution (because the Medicare makes them ineligible for the HSA) even though they are in the HDHP? Our HSA administrator is recommending that we offer that same HSA contribution amount to employees that elect the HDHP but aren't eligible for the HSA.

Plan is changing Vendors.

They have not yet issued Black out Notice

Want to start sending new contributions to new vendor 6/1.

Rest of Assets to transfer 7/1

Since the Assets will now be at two vendors that makes it almost impossible to do loans or distributions from the plans.

Do they need to wait until 30 days after the black out notice is issued to start the contributions to the new vendor?

Thanks

Pat

We have differing of opinions on something and I cannot find a clear answer.

Plan currently has entry dates as of first of month after age 18 and 90 days of service.

If they change to age 21/one year of service/two times a year, how would it affect current employees. Example below:

Employee age 18, date of hire 9/5/10, so they are eligible 1/1/11.

If plan is amended effective 7/1/11 to age 21, 1 year of service, etc. Does this employee get grandfathered in as eligible or does their eligibility date change to keep them out until age 21, etc?

I thought they could not be made ineligible after they had become eligible, but I have been wrong about things before.

Hi. I was speaking with an employer the other day. They had the practice of offering, to their Medicare-age employees, to move them off of the employer-sponsored health plan and to a Medicare product. In exchange for doing this, the employer was paying the premium for the Medicare product.

I informed the employer that this was impermissible and violated the Medicare Secondary Payer rules. Medicare-eligible employees cannot be provided a financial incentive to forego employer-sponsored health coverage (42 CFR 411.103(a)).

What I am not certain about now is whether the employer needs to re-categorize the premium payments made. In other words, should that premium payment be included in taxable income for the employee?

Would a qualified 401(k) plan utilizing the Simple plan rules to satisfy deisrimination testing (IRC 401(k)(11) be permitted to adopt a designated Roth contribution program for eletive contributions?

Any cites (absent regulations and other quidance that never metions the possibility--that I could find). Thanks for any research leads or dead ends. The why this would be done is not the issue (it probably shouldn't).

Co. A as a regular part of its business serves an investment rep. Can Co. A serve as an investment rep. for its own plan if it will receive compensation? I'm being told that isn't a problem, but it seems to me that irrespective of any PTE that there is a self-dealing issue. Am I missing something?

Thanks in advance for any guidance.

Plan participant died in 2010 and designated beneficiaries were paid out. Executrix of the estate is inquiring about accounts and balances held by decedent as of the date of death. Is there any obligation to provide information to the executrix (other than the information that there were named beneficiaries for the 401K account)? Since there were named beneficiaries is the account includable in the estate assets?

We administer a plan whereby the client did not provide us the information timely. Upon completing the valuation we see the two owner participants defaulted on their loans last year.

Has anyone had experience with trying to correct this through VCP?

The only part that worries me about VCP is to have the client pay the fee and our fees only to have the IRS reject the request because they did not feel correction was warranted. For example they feel the participants should have made payments and the missed payments were not the result of employer error.

Thanks.

A participant (a non-US citizen) in a 457(b) plan sponsored by a non-profit took a leave of absence and returned to his home country. His LOA later expired and his employment was terminated. This triggered a letter informing him of his distribution options under the 457 plan, including the notice that distribution would automatically occur if he did not respond in a timely manner.

Unfortunately, the letter was sent to his US address, as was the distribution check and W-2 form produced when he did not respond. The check was never cashed and was returned as undeliverable, but per legal advice his account balance was never restored and the W-2 never canceled.

Now it is more than 4 years later and the employee has returned to the US and has been rehired by the employer maintaining the 457. Now the question is, what happened to his 457 balance? Does the check get reissued and the participant advised to amend (or file) his tax return for the year in question? (It is not clear whether the participant had any US income for that year that would otherwise require him to file a US return.) This appears to be the legal solution but not necessarily the one the participant would like to hear. Are there any loopholes that would allow the employer to treat the situation as though a timely election to defer had been made? Is anyone surprised that the IRS has not already questioned the situation considering that there is a W-2 out there without an associated tax return? Has anyone ever experienced anything similar?

All thoughts appreciated.

Assume an employer, X. maintains two tax qualified 401(K) plans, A and B, which both have calendar year Plan Years.

Both Plans use the "current year method" of performing the ADP test. X wants to merge A into B, effective July 1, 2011.

Question: In view of the fact that Regulation 1.401(k)-5 is still shown as "Reserved", how does X perform the ADP tests for A and B for 2011?

Should X do an ADP test for A's short year ending June 30, 2011 and a separate ADP test for B for ALL of 2011?

If so, does B need to take into account the deferrals by the former participants of A for its short 2011 Plan Year, as well as for the period July 1, 2011 - December 31, 2011, when performing the 2011 ADP test for B for 2011, or, alternatively, should B only take into account the deferrals by such former participants of A from July 1, 2011 - December 31, 2011?

Thanks.

A participant in a nongovernmental 457(b) plan passed away. In accordance with the plan document the beneficiary (the spouse) elected to receive the benefit in the form of a single lump sum distribution.

I'm hoping that I can get input on the following questions:

1. It is my understanding that the distribution must be reported on a 1099-MISC form. Does this get reported in Box 3 as "Other Income" or Box 7 as "Nonemployee Compensation"?

2. Is the distribution subject to SS and Medicare taxation? If so, does the employer pay their portion, or does the beneficiary need to pick up both the EE and ER portion under "self employment income" (1040-SE)?

Any help would be appreciated.

EBSA Auditor conducting investigation of union pension fund asked for social security numbers of people who received W2 forms from the Union's General Fund. We don't believe he has the authority to ask for this information and that we cannot just provide this information due to privacy issues.

Any guidance from anyone out there? Any opinions with or without support are appreciated!!!

Hi, everyone,

Just need to make sure I'm not missing something here.

I know that under 1.401(k)-1(d)(3)(iv)(E)(2), a 401(k) participant who takes a hardship distribution must suspend deferral contributions for six months.

I can't find any corollary deferral suspension requirement in connection with a non-hardship distribution after age 59 1/2 under a plan that allows in-service distributions.

Can anyone confirm that this is correct? (i.e. that no deferral suspension applies to a non-hardship in-service distribution)

Thank you!!!

Has anyone gotten their EA renewal response from the Joint Board? If yes, when did you get it?

Has anyone not gotten the response?

Thanks.

A retirement plan holds a key-man life insurance policy. The plan is the owner and employer is the beneficiary. The question I was just asked is can someone else be named as the beneficiary of the difference between the current value of the policy and the death benefit amount? I've never had a good grip on the nuances of life insurance in a plan. From my perspective, the plan is the owner and beneficiary -- period. When the participant dies the proceeds go into the plan and are paid out in accordance with the beneficiary form on file. I haven't been able to find information on how key-man insurance is handled in a plan. Thanks for any insights you can offer.

Has anyone given any thought or seen any guidance related to the definition of "retire" for purposes of delaying required minimum distributions? We've just discovered an individual who is only working a handful of hours per year, but has never been formally terminated under the payroll system, so has not yet started RMDs.

I believe I am over complicating this, but I need assistance on how other cafeteria plans calculate imputed income for the children of domestic partners.

Example - Employee is covering his/her "152" qualified children on the plan today and adds their domestic partner and domestic partner children. I can easily figure out the pre and post tax cost of adding the domestic partner and the imputed income for the domestic partner. I am having trouble trying to figure out the pre and post tax cost along with the imputed income for the domestic partners children.

This is the first time our plan is offering this and any assistance or examples would help.

Thank you.

Hi All, I'm curious if anyone knows whether a 457(f) SERP (maintained by a tax-exempt entity) will impact other qualified plans held by the same employer. Specifically, if this 457(f) defined benefit plan will disqualify or have any negative effect on a 401(a) qualified defined benefit plan held for the same employees. Any guidance/suggestions are greatly appreciated!!