Trying to calculate the amount for distribution for a terminated employee age 71 in 2011. Plan has a 5-year payout schedule for terminees (1/5 per year).

Account balance at 12/31/10 is $25,000.

Plan formula (for year 1) yields a distribution amount of $5,000.

RMD amount would be approx $945.

I am unsure whether the individual should receive both amounts, or receive the $945 as ineligible for rollover then the remaining $4,055 as an eligible rollover distribution. I do not see language in the document that addresses items such as this. Thoughts?

Is it acceptable to charge an employees flex account for the issuing of a debit card against the account? My thought was that the employee nor the employer/administrator could use those funds for anything but an eligilble healthcare expense. I don't see how the cost charged for issuing a debit card is an eligible flex expense. Any thoughts?

The National Academy of Social Insurance writes, "The Social Security legislation of 1983 achieved the important goal of remedying a short-term financing crisis and keeping the program solvent. But for the long term, it scheduled far more in benefit cuts than in new revenues for the 21st century. Those benefit cuts are only beginning to be felt. People reaching age 65 in 2025 will get retirement benefits for the rest of their lives that are about 19 percent lower than they would have been without the 1983 reductions."

Whine, whine, whine. 42 years advance notice seems more than adequate. Moreover, the SSA each year mails to prospective recipients a history of earnings and projected benefits. Nothing has been swept under the table.

Had the designers of 8955 been responsible for negotiating the WWII peace settlement, we would still be at war. Am I missing something or does the draft of 8955 look remarkably similar to what used to be SSA? 8955 is possibly the most costly-to-design form of the 20th century. While I'm whining, I'm also tired of 3 page consulting and society newsletters on this pathetic ordeal. With about 1/2 as much effort, we could have wiped out pellagra and beri-beri.

I am looking at trying to compile information regarding retirement plans specific to the retirement industry. Items such as participation rates, eligibility requirements for 401(k) and employer matching contributions, vesting requirements for employer contributions, etc. We aren't having much luck finding this type of information related specifically to the retirement industry. Does anyone have any links or suggestions as far as where we might be able to find information relating to this industry?

29 CFR § 4.171(b)(2) states a contractor may request approval by the Administrator of an unfunded self-insured fringe benefit plan in order to allow credit for payments under the plan to meet the fringe benefit requirements of the Davis-Bacon Act.

Has anyone gone through this approval process? If so, what is the official procedure, and what is required to be submitted to the Administrator? And how long does the process take? I have been unable to find a detailed description of the process on the Department of Labor's Wage and Hour Division website.

Thanks!

Doing a 410(b) test using the Average Benefit Test.

1.410(b)-(5)(d)(7) says that under certain conditions (which do apply to my situation) the Most Valuable Accrual/Allocation Rate must be substituted for the Normal Accrual/Allocation rate if the average early retirement reduction during the last 5 years prior to NRA is less than 4%.

In this situation, the reduction in the last 5 years is less than 4% for employees who separate from service on or after age 55. It is more than 5% for employees who separate prior to age 55.

The average participant age is about 50.

Must the MVAR be substituted for the NAR?

Question 2: Should the MVAR reflect the subsidy for someone who has not attained age 50?

Plan covers 100% owners and the employees of her small office. There were 4 people eligible for 2010 and only the owner and another employee/participant made deferrals. My concern is regarding the deposit of owner's deferrals. I have a W-2 for her, so should I assume that she is paid with some regularity?

My real question is do the safe harbor deposit rules on deferral deposits apply to her? Regardless of whether she is paid with regularity or takes draws? My problem is that all of their deposits made to the pooled account for 2010 are listed as "EE Contributions" (plan has safe harbor match) and while there was a large deposit made in January 2010, it was not large enough to cover the deferral receivable from 2009. In fact, when I add up the deposits, it takes until May 2010 to cover that receivable. While I do not have a breakdown of the deposits, you can tell that the small deposits are for the employee, and the larger ones are for the owner, due to their annual deferral reported on the W-2.

So would owner's deferrals be considered late? Thanks for your help in this argument.

Does anyone know of any procedural guidance regarding plan terminations that occur while there is a Form 5300 pending? Can you substitute a From 5310 in its place?

I have a client whose plan is a fiscal year plan with a Sept 30 year end. He changed his business entity structure so that now his business is a single member LLC, which is a disregarded entity for tax purposes. He files his business return as a Schedule C on his 1040 on a calendar year basis.

For the first time since he changed his business entity structure, he has decided he wants to make a profit sharing contribution for his 2009 - 2010 plan year. His cpa has advised him that as long as he makes the deposit by the extended due date of his 2010 return (Oct 15, 2011), it will be deductible on his 2010 return. Everything I find says that when there is a mismatch in year ends, the deposit would be for the employer year ending with or within the plan year. To me, this means that for the 2009 - 2010 plan year, the contribution would be taken on the employer's 2009 tax return as long as he made the deposit by the extended due date of his 2009 tax return. As he did not make the deposit by then, the contribution would be a deduction in the year the deposit is actually made.

One of my problems with this is the regulations make no sense to me (yes, I know that they don't have to). The client would have had to make the deposit by October 15, 2010 (assuming his 2009 return was put on extension,) and his plan year would have just ended on Sept 30, 2010. In theory, if his plan year ended on October 31, then he would have had to make the deposit before his plan year even ended.

Can anyone offer any advice or help? We are amending the plan so that the plan year will be Dec 31 and we will not have this issue again. However, we have it now and the cpa wants our concurrence with how he is handling the contribution. Thanks.

Hi all,

I have a plan where the Sponsor wants to allow participants to invest in managed accounts, but only to those who have an account balance of $300,000 or more. Has anyone seen this in a plan? Does anyone know of any guidance on this issue?

Thanks in advance for any help.

An existing ESOP is entertaining the idea of a 401(k). I would think a standalone 401(k) would be less costly administratively than a KSOP. Any opinions on pros n cons?

Thanks

Question of a small employer in TN:

We pay SSI and Medicare tax on regular income. If we offer an optional 401a with up to a 3% match, do we have to pay empoyee SSI and/or medicare tax on the 3% match?

Is anyone aware of whether an entire mutliemployer plan would lose its grandfathered status under the Affordable Care Act if only one employer changed its contribution rates by more than what is permitted under the Act's regulations? Alternatively, could each employer be viewed as a separate "plan" or "benefit package" such that only the affected employer would lose grandfathered status and be required to comply with all of the Act's various provisions, but the employers that did not change their contribution rates could maintain their grandfathered status under the original plan?

I was divorced in Oregon in 1995. I am just now filing a QDRO. I am a resident of New Jersey (6years). My ex-husband is a resident of Montana and Florida (6 months of a year each). The plan administrator is in Florida. In which State do I file the QDRO?

I have a fund client whose payroll auditor is also the auditor for the sponsoring union. This seems like a conflict of interest to me. Is anyone aware of any ethical/professional guidelines for auditors so I can look into this? Has anyone dealt with this kind of matter previously?

Have a client who has indicated their assertion that a participant can change their elected BCD in the middle of the election period, without requiring a new retirement kit to be sent. As the administrator, not sure we can or should support this.

An example would be:

-Participant contacts administrator on 3/15 and requests paperwork for a 4/1 BCD

-Administrator sends paperwork to participant at least 8 days prior to elected BCD, constituting a successful QJSA notice

-Participant decides not to retire, works two more months and contacts service center on 5/20 requesting a 6/1 BCD

-Administrator does not have enough time to generate and send kit to participant within 8 days of newly requested BCD

-Administrator sends paperwork, but pushes BCD to 7/1 instead of 6/1

Client believes 6/1 BCD should be honored and that no new paperwork is required, even though participant has materially changed original request based on the new BCD.

Is the original paperwork sent with the 4/1 BCD legally invalidated based on new BCD, or is paperwork on file still valid since was sent within last 180 days meaning participant could sign and return original retirement paperwork but use for the 6/1 BCD?

I'm confused as to exactly which entities must comply with this... Per the regs, it is the Covered Entity that has to comply - what if the CE utilizes TPAs? We have an eligibility TPA sending files to our insurance carrier. Do the eligibility files from the eligibility TPA to the carrier have to be in the 5010 format? The carrier has indicated that it is okay with continuing to receive the file as is and the eligibility TPA will charge an arm and a leg to switch formats...

Is there any way to limit the number of key ees in the top heavy test? I've heard conflicting information regarding possibly limiting the number of officers counted as key for testing purposes.

Thanks in advance.

Participant is beyond NRD (1/1/2004) and there are excess assets in the plan. It is possible to have the the participant make an election (with spousal consent) to pay retroactive monthly payments (back to some date) to use up the excess assets?

For example, assume the monthly benefit is $16,666.67 (payable as a life annuity) and the corresponding lump sum is $2,078,000 (maximum). Assume the market value of the plan assets is $2,400,000. Assume he elects the joint and 100% survivor annuity of $14,000 per month, this would result in retroactive payments of 23 months to use up the excess assets (so retroactive to around 7/1/2009). He would continue to receive the joint and 100% survivor annuity benefit and would have the option to receive the benefit in a lump sum at plan termination (sometime at the end of this year, I think).

PPA allows for in-service distributions so I'm wondering if it can be retroactive.

His accrued benefit will not increase in the future (stuck at highest 3 consecutive years from way back).