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?

Does anyone else besides me run afoul of "flood control"? Perhaps I just type faster than average (since my mother made me take typing lessons so I'd "have something to fall back on") but as I navigate through the forums I routinely get the dreaded red message box, making me sit there and count to 15 before I click again.

I understand why flood control is a good thing, just wondering if it bothers other people and if it can be changed to a different amount of time.

Is it possible to calculate a RMD based on to different market values? 10/31 and 12/31

There's a plan whose PYE is 10/31. The 401(k) and Match is valued daily but the PS source is valued annually (10/31). In the past, the RMD has been calculated on the most recent values available.

Is it permissible for the RMD be calculated based on a 12/31 and 10/31 value or would you suggest the PS be valued at 12/31 and then the RMD be calculated.

The SPD for a plan spells a distribution fee as a fixed amount (no mention that it is subject to change).

The plan sponsor increased the distribution fee on April 1 of this year, but they are still in the process of updating that fee disclosure page for the SPD.

A participant was recently paid out and the higher fee was charged to their account.

Must the change of a participant fee be disclosed before the new fee can be in effect or does a reasonable time period exist, such as 210 days like the SPD, for disclosing such changes?

The company employs about 80 people, 5 of whom are highly skilled, well paid (but not HCEs), hourly employees. Because of their unique skill set they are often approached by competitors trying to lure them away. The employer would like to set up a Top Hat plan for these guys, but the "select group of management or HCE" language has us wondering. From the reading I've done, it seems that there is some room for interpretation about the rigidity of that language. We would be interested in hearing the thoughts of our peers.

ok - I think I know the answer but want to double check.

here is the situation:

Mutliple Employer Plan; calendar year

Allows for Employers to choose safe harbor match to pass 401k testing

Plan uses prior year testing for non safe harbor Employers

Safe harbor Employer ceases safe harbor match as of 04/30/2011 with proper 30 day notice to participant, participant didn't defer in 2010 making the prior year NHCE 0%.

When the end of 2011 arrives we know this Employer will be subject to 401k testing and since the Plan uses prior year testing that will mean a refund of all deferrals for the owner on the ADP test side.

Does he get to keep his safe harbor match as long as the ACP portion passes?

Company is a partnership offering health insurance to partners. Plan is fully insured.

Can the company require the partners to pay more for their insurance than the insurance company is charging the partnership in premiums? For example, the insurance company sets a participant's premium at $100 a month, but the company charges the participant $105 a month and keeps the $5 for administrative costs.

This would be similar to the additional 2% employers can charge for COBRA premiums for administrative expenses -- but outside of the COBRA context. (Is the 2% surcharge under COBRA an exception to something that is not otherwise allowed, or is it a cap on administrative surcharges that are otherwise allowed?)

This situation involves partners in a partnership, but if there is any insight with respect to an employer-employee relationship, I'd be interested in hearing thought on that as well.

Thanks in advance.

I am in great need of advice regarding whether or not my situation is illegal or a sham termination. I would greatly appreciate anyone who is willing to lend an opinion!

Based on Rev. Rul. 2008-40 and 2011-1, you can avoid income tax on transfers from a U.S. qualified plan to a Puerto Rico qualified plan as long as that transfer takes place by the end of 2011. The articles I've seen on this issue dealing with these Rev. Rulings also indicate that you can avoid qualification issues if you make a transfer within this window. My question is whether there are any qualification issues if you simply continue to cover a Puerto Rico employee under the U.S. plan without making such a transfer.

There are 3 participants in a DB plan: (1) Owner, (2) mother of owner, and (3) one employee

401(a)(26) requires the plan to benefit the greater of 40% or 2 employees.

Question: Can the 2 employees be the Owner and his mother?

Question: Is there any farmily attribution problem here?

Thanks for all responses.

Participant wants to take a hardship withdrawal for tuition expenses, room & board for living off-campus plus estimated utilities & meal costs. We have the invoice from the college for the tuition costs, so that's covered. Not sure about the rest. I found some information on the limitations for room & board expenses (allowance provided under Federal financial aid programs).

Anyone have details on exactly what the limitations are for room & board expenses both on- and off-campus? Are estimated amounts for utilities & meals okay?

Thanks for your input!

A claimant has gone through the process of requesting retirement plan benefits and is now up to the point where there will be a hearing. My only involvement is to watch and learn, so I have nothing at stake here. I was told that no court reporter or other mechanism for recording what goes on at the hearing is necessary. The claimant (or the attorney) makes his or her case verbally and then the Plan Administrator responds in writing at a later date. It's as simple as that. It just seems weird to me that there's nothing on the record. For those of you who have participated in this type of hearing before, is that correct?

Company A sponsors a SIMPLE IRA. Company A has been purchased by Company B through a stock purchase. Company B sponsors a safe harbor 401k plan. Company A will continue to maintain the SIMPLE IRA for its employees through the end of this year and then give notice that the SIMPLE IRA will cease 12/31/2011. For the employees of Company A who have not satisfied the two year requirement to rollover their SIMPLE IRA to the 401k plan, can they just keep their money in the SIMPLE until two years is up? In other words, does the clock continue to tick on the 2 year requirement even when the SIMPLE IRA is not actively receiving any contributions?

Additionally, the 2 year requirement does not apply to employees over age 59.5, correct?