Govt. owned hospital buys the practice of a doc.

Doc sponsors his/her own plan (401a plan, not 403b plan).

Doc is now an employee of the hospital.

What can/must happen to the plan?

Is the plan frozen? Terminated?

Can the hospital continue to operate the plan?

Is it possible to credit a dividend that is not used to repay an exempt loan to allocated shares only, and no portion to shares in suspense?

LEt's say the SH Match excludes HCE's. Are the hce's elligible for a discretionary match without running the ACP Test? i.e., would the ACP Safe Harbor still apply to them? [edit: of course, I would apply all of the ACP Safe Harbor Rules; such as not going over 4% of pay].

In my situtaion, I am trying to eat through some forfeitures, and none of the non-highly's deferred. In fact only owners deferred.

A DB plan participant passed away without a spouse and no beneficiary designation form. The plan says that installment payments must be made to the participant's estate because the plan is underfunded and cannot pay out a lump sum. As a result, the estate must remain open for an indeterminate amount of time to receive these payments. I'm wondering if the executor can assign the benefit -- or if there isn't some way to get around keeping the estate open. Is the plan administrator just being stubborn, or is there really no other option?

The employer went trough chapter 11 bankruptcy; it has a self-insured plan for active employees. Before bankruptcy it offered retiree medical plan. Now, it has to offer the retirees COBRA coverage for life. Can the employer offer the retirees an insured plan and the active employees the same self-insured plan? Assume that the insured and self-insured plan offers the same benefits and coverage but the premiums for the insured plan are higher then the self-insured plan. The retirees would get the same benefits and coverage but would pay a higher premium than active employees. Is this allowed?

We have a governmental employer that just received 501c3 approval from the IRS, and due to an acquisition they will become an ERISA sponsor. Can a 457b governmental plan be restated as a top hat plan, or should the plan terminate and then a new top hat plan be set up?

Once the performance criteria has been established for incentive based compensation, can the criteria be changed during the perfromance period?

We have been asked what to do about an IRS auditer taking the position that plan amendments must be dated as well as signed. The plan sponsor has signed the documents and certified that they were timely made but the agent is pressing for more.

Does the IRS have the authority to do this?

As a matter of administrative practice, does anyone know what the IRS does in this situation?

A plan uses the basic safe harbor match formula calculated on a per pay period basis per the plan document. A participant’s annual compensation exceeds the $245,000 annual compensation limit (it is actually $901,000). The participant’s deferral percentage each pay period is less than 3% of his pay period compensation, therefore, he received a 100% match of his deferrals each pay period (he deferred $16,500 and received a match of $16,500). This results in a 6.73% match when divided by the $245,000 compensation limit. Is this calculation correct? It does not seem to be, but we haven’t been able to find anything that specifically states how to handle the $245,000 compensation limit with a per pay period match calculation.

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.