If a company contributes to a union retirement plan for its employees covered by a CBA, may the company's 401k plan include its union-covered employees and permissively aggregate with the union retirement plan, considering just the union-covered employees working for that company and count the company contributions to the union retirement plan in the nondiscrimination testing of the company's 401k plan?

A client has a plan that is filing under VCP due to untimely amending for PPA & EGTRRA. The trustee has signed the adoption agreement, but the custodian will not sign until after a successful VCP submission.

Will filing under VCP without the custodian signature be a problem?

Thanks for any responses.

Non-calendar year plan - Match forfeitures sent to Trustee who uses to reduce future Match contributions. This last plan year employer suspended Match but it is now once again active. Roughly $6000 of Match forfeitures were sent to Trustee during last plan year and are now available for current Plan Year use. How and/or where is the $6000 of forfeitures shown on the 5500SF so it balances? List as an "other" expense? Any suggestions? Thanks

I have a client that was a participant in a multiple employer plan. My client has discovered a plan error that was in effect for many years. It seems like a pretty simple fix to go through VCP with a retroactive amendment. However, the multiple employer plan is not willing to do that (EPCRS says the multiple employer is the party that submits for VCP), so we are fixing the error via SCP. It is getting expensive for my client to fix the error, but I do not have anything to push back with, to get the plan sponsor to go thru VCP. Has anyone walked through VCP with a multiple employer plan? Is it as onerous as I am being told (the whole multiple employer plan is open to review)? Am I stuck with the m-e plan's decision? Thanks in advance.

according to the Sungaurd Relius Bulletin:

A plan administrator may use Form 5558 to obtain an extension to file Form 8955-SSA. The IRS Announcement indicates that the rules for obtaining an extension are the same as those applicable to the Form 5500. However, the draft of the revised Form 5558 requires the plan administrator to sign the extension request for a Form 8955-SSA but does not require a signature for an extension request for a Form 5500.

(aside from the automatic extension that will be granted for 2009)

................

I guess the IRS want's your signature, but the DOL doesn't care.

Funny that there should be a similar thread popping up just when I'm about to post this, but I'll start fresh.

I have an employer with an employee who lives and works in Taiwan - not a US citizen. The employer say he "...is an employee but pays no [uS] taxes."

At the moment, the plan does not exclude non-resident aliens, but I'm not quite sure what his status is - all of the discussion I've seen on resident vs. non-resident alien seems to assume some US presence; maybe it's a given that someone getting paid by a US company and living in a foreign country is a non-resident alien but that wasn't obvious to me.

The plan says ""Employee" means any individual who is employed by the Employer..." There's no built-in exclusion for non-US citizens with no US presence.

Assuming that the intent is that this person is not to be in the plan, do I just check the box to exclude non-resident aliens and figure that covers it, or am I missing some implicit thing that keeps such a person out, or...something else?

Employer sponsors profit-sharing plan with annuity distribution options. Needs to give qualified pre-retirement survivor annuity notice to participants who are age 32 through age 35. May this QPSA notice be included as part of the SPD? Or must there be an entirely separate QPSA notice to satisfy the requirement?

I am a partner physician who participates in a self-directed 401K and Profit Sharing Plan. Our plan includes about 40 physicians and other employees for the corporation. Since the plan is self directed I have a professional financial planner manage my money. He charges me a fee about 1% per year (WRAP), he does not charge any other commissions or fees. He bills the corporation quarterly, and they pay his fees directly- this money is NOT taken out of my retirement account, but is "yellow sheeted" and comes out of my quarterly bonus (saving me income taxes on this payment). I am the only physician that does this, but many others now also want to do the same thing. I know that those who just have a brokerage account can not deduct commissions or brokerage fees.

Our new office manager got approval for this by our accountant, who gave the following reply:

Fees associated with the self-directed retirement plan accounts can be paid from the retirement accounts themselves or from funds outside the plan. If paid outside the plan, the fees can be yellow-sheeted. Ideally, invoices for the fees to be yellow-sheeted would be addressed to XXX, FBO the participant.

· An option, not as ideal, would have the expenses submitted by the participant to XXX as a yellow sheet reimbursement.

His advice on this treatment “follows the notion that corporations can choose to pay plan admin fees from retirement assets or from corporate funds as a tax-deductible expense”.

He than wanted to ask our lawyer the following question:

Does this policy (XXX’s “choice” to pay admin fees) require consistent treatment among all participants?

· Does the fact that participants also include non-physician employees complicate the application of this policy?

· In addition, does inconsistent treatment among all participants raise an issue of additional “contributions” to those who are reimbursed?

· The Profit Sharing and 401k investments are commingled in many (or all) accounts. Does the fact that Profit Sharing contributions are made by the corporation and 401k contributions are elective by the employee make a difference in the discussion?

Your formal guidance on this topic would be helpful. Thank you.

This is his response:

The purpose of this email is to respond to the issues raised regarding the reimbursement of investment management fees incurred by participants in the 401(k)/Profit Sharing Plan (“Plan”). I note the following for your consideration:

(a) The tax treatment of plan expenses paid or reimbursed by the sponsor of a qualified plan is a material issue in most case. Specifically, depending upon the nature of the expense, the payment or reimbursement of the expense may either be a deductible expense by the plan sponsor under Section 162 or 212 of the Internal Revenue Code (“Code”) or a plan contribution subject to the contribution limitations under Sections 404 and 415 of the Code. In the case of the Plan, where the maximum contribution is generally made for all physicians, any payment or reimbursement of a plan expense that is categorized as a contribution would have a significant impact on the Plan’s qualified status.

(b) As a general rule, the tax treatment of the payment of an expense paid or reimbursed by the plan sponsor hinges on whether the payment constitutes a plan overhead expense (in which case the payment is a deductible expense for the plan sponsor and not treated as a contribution) or a payment that is “intrinsic” to the value of the plan assets themselves (e.g., sales commissions) (in which case the payment will be treated as a contribution).

© At least one private letter ruling (PLR 9252029) has concluded that the plan sponsor’s direct payment of investment management fees were deductible by the plan sponsor and not considered plan contributions; provided that the fee was based on the value of the plan's assets and not related to brokerage or other transactional fees. Interestingly, the Internal Revenue Service issued and then revoked three private letter rulings (PLRs 8941009, 8941010, and 8940013) which concluded that investment management fees that were paid by the plan trustee and reimbursed by the plan sponsor were considered plan contributions. No clear guidance appears to exist explaining the different conclusions reached in these private letter rulings.

(d) Based on the above, while it is difficult to conclude why direct payments of investment management fees are treated differently then reimbursement of these fees, from a conservative standpoint, if XXX is to pay investment management fees, these fees should be paid directly to the investment manager. Unfortunately, I understand that this direct payment is not possible in all cases.

(e) If XXX wishes to pay investment management fees, the failure to pay these fees on behalf of all plan participants, arguably, may result in a violation of Section 401(a)(4) of the Code which requires that “benefits, rights and features” under the plan be provided in a nondiscriminatory manner. While not entirely clear, the fact that non-highly compensated employees would be required to potentially bear expenses not paid for by XXX exposes the plan to a potential violation of Section 401(a)(4) which would impact the qualified status of the Plan.

Based on the inability of XXX to pay investment management fees directly in all cases and the potential discrimination issue, we would not recommend a policy which includes the direct payment or reimbursement of investment management fees incurred by XXX physicians within the Plan and the associated "yellow sheeting" of these expenses.

As always, please call me with any questions or concerns.

XXX

Our office manager concluded the following:

What does this mean? Essentially the last paragraph in Mr. XXX email gives us the advice we need to make a decision. The inability to pay investment fees directly for all investments held by participants in the plan and the fact that we are not reimbursing expenses for all participants HUB is recommending that we not reimburse or “yellow sheet” these expenses for the partners. The basic issue comes down to maintaining the qualified, read “tax deductible”, status of our entire Profit Sharing and 401K Plan. I believe that Mr. XXX explanation is clear and unequivocal.

Effective in 2011 we will not be reimbursing any expenses related to investment fees for the Profit Sharing or 401K Plan.

I do not agree with this conclusion, my financial planner also does not agree - he states that this is done all the time and follows the law.

I know this is a long post, but I would appreciate your opinion on this issue

Thanks

401k plan does not match catchup. ADP test fails with catchup recharacterization. Plan doc does not clearly say how to treat match on catchup recharacterization. Am i correct to assume first off that that newly designated catchup amount does not get matched? Then would that amount be returned to HCE's similar to ACP failure refunds?

We are in the process of putting together software/subscription requirements for a new TPA practice. Coming from a large firm, we had an inhouse daily research on current topics. Not having access to that anymore, We have found a variety of free daily or weekly newsletters such as 401khelpcenter, freeersia, benefitslink, etc. CCH has a free subscription and a pay subscription. What is the general consensus on sufficient digest/updates to provide necessary goings on for a tpa practice? are the free resources sufficient?

Husband owns 100% of Corp. A - Wife is not involved in this at all.

Corp A has solo 401K plan - husband is the only employee

Wife owns 51% and husband owns 49% of Corp. B

Wife manages Corp. B and is an employee of corp. B

B has safe harbor plan and has multiple employees

Do they come under controlled group?

Thanks

Ok, I have a unique question (I think) and I haven't been able to find the answer online. Sorry if this has been brought up before but here goes.

If you contribute $10,000 to your ROTH IRA, and let's say your earnings on that amount were $4,000 (nice!). But before Dec 31st, you withdraw $5,000 so that you have met the maximum contribution limits ($5,000 per year). Are you then forced to also withdraw the earnings on the excess contribution and treat it as income? The irs.gov website makes it seem that way but I thought I was reading it wrong.

Basically what I want to do is contribute more than the max, earn $$$ on that amount, then reduce my contribution to the legal limit, while protecting my earnings in the ROTH IRA.

Let me know if this makes sense and if this is possible. It seems to me that it would be nice, but not possible.

Where the "robbing from peter to pay paul" comes in, is that I want to take a loan from my 401k to fund my ROTH IRA and then put the money back at the end of the year. The reason for this is because my 401k options at my company are getting me a 6% return per year if I'm lucky. I have my own investment method that is netting me 6% per MONTH on average and want to grow my money that way instead. It would be nice if it were tax free through the ROTH IRA. Thus my question. Thanks for any help!

I've never been clear on this. Is a "Premium Only Plan" (POP) only considered a POP when there are actual pre-tax insurance premiums through an insured product, or can the benefit funded through the POP plan be self-insured as long as it's an employer-sponsored group benefit?

A consulting firm claims they made an error in the contract with the plan and charged too many basis points for their fees. I believe this affected 3 plans in the controlled group and during one or two prior plan years. Is this a prohibited transaction? If they claim administrative error or oversight does that ondo any prohibited transaction liability for the plan sponsor, as the fiduciary, that allowed plan assets to be used to pay excessive fees?

Remedy is to disgorge the excess and return to the plan, plus lost earnings I would think. Should it be recommended that the sponsor file under DOL Voluntary Fiduciary Correction Program?

Thanks for any comments you may have!!

Has anyone assisted a plan in making (and documenting the basis for) a determination that a normal retirement age less than age 62 is 'reasonably representative of the typical retirement age for' the legal services industry?

I am helping a pension plan sponsored by a law firm (no ERISA expertise in that firm) that specifies age 55 as the normal retirement age, and did not raise it timely.

I am looking to find documentation that might support a normal retirement age less than 62.

Please e-mail me at 401kplans@gmail.com if you do have such a situation and documentation.

In case anyone is interested in the potential difference, I calculated a couple of examples manually. Assuming Schedule C incomes of $200,000 and $100,000, with a pretty hefty health insurance premium deduction of $16,000, the difference in the maximum contribution between someone claiming this deduction and someone who doesn't, is $42.00 and $226.00 respectively. If you drop the premium in half, reduce the differentials by half. Rounding could change these numbers by a small amount.

All this, of course, is assuming my several thumbs didn't get tangled on the calculator...

I assume that the MPPAA reorganization rules still apply after PPA. Is there any guidance that talks about the intersection of the reorganization rules and the PPA rehab rules?

I am preparing a response to a lengthy DOL document Subpoena request.

Has anyone does this recently and/or have any insight on EBSA/DOL's preferred document presentation format with respect to physical organization of the documents?

I am providing description and enumeration in the cover letter, of course, but just don't want to get the physical presentation wrong.

I know IRS no longer likes tabs and binders, but maybe DOL still does?

Thanks for any comments!!

I am preparing a response to a lengthy DOL document Subpoena request.

Has anyone does this recently and/or have any insight on EBSA/DOL's preferred document presentation format with respect to physical organization of the documents?

I am providing description and enumeration in the cover letter, of course, but just don't want to get the physical presentation wrong.

I know IRS no longer likes tabs and binders, but maybe DOL still does?

Thanks for any comments!!

Participant in 401(k) plan will be age 70 1/2 this year. Not an owner, so no RMDs required until participant terminates/retires. But participant also has IRA from which RMDs must be made. Can the participant rollover the IRA into the 401(k) to avoid the RMD?