hi

a plan has a normal retirement age of 65+5 but an unreduced early retirement of age plus service equals 80..

If a person terminates employment at age 45 with 25 years of service, would we calculate the lump sum today based on full commencement at age 55 (when age plus service equals 80) or would we base it on a deferred benefit payable at age 65 (since he CURRENTLY does not satisfy age plus service equals 80)?

and, if the current lump sum IS based on a deferred to 65 benefit, it seems like we should disclose to the participant that if they wait, they will get a huge bump up at 55 when they can get an unreduced benefit/lump sum? (in order to satisfy the "consequences of failure to defer" language)

and i guess a further extension of the question would be how to handle funding calculations? could we/should we take into account this future unreduced early? (if a participant is 54 and the lump sum is based on a deferred to 65 benefit but then the following year he is entitled to an immediate unreduced benefit....seems like the plan could suddenly become underfunded if we dont somehow account for the unreduced benefit)

thanks for your help

chris

We're getting ready to go through the VCP for a late amender plan. Do we need to have original signature pages to submit, or can we use signature pages that have been emailed to us?

Thanks!

can't really find any authority one way or the other but can a corporation rescind a termination if for example a merger or corporate sale doesn't occur? the corporation has both a DB and a DC plan.

It seems to me that a service provider and service recipient may agree to a reduction in an annual payment under a plan that is subject to 409A, assuming that the SP agrees to permanently waive any right to the amount that has been waived. Is there anything in the regs that would not allow this type of waiver? Should I be concerned that this may constitute some type of operational failure?

We administer a 401(k) Plan that excludes Interns from participating in the plan. The plan has passed coverage testing every year except in 2010. We need 2 more to benefit in order to pass coverage, but there were a total of 4 excluded interns in 2010. When preparing the corrective amendment and allocating QNEC's / corrective contributions to those affected, do we have to include all 4 that were excluded even though we only need 2 to pass coverage? If we only have to include 2 out of the 4, who do we choose and how is that determined? I've looked at the plan document and it doesn't answer this question.

Any input on this would be greatly appreciated.

Thanks!

A tax-exempt has two 457(f) plans for two different executives. One plan has a vesting and payment trigger for disability and the other does not. An attorney for the organization who has no particular specialization in employment law or benefits law is questioning whether the difference is a problem under the Americans with Disabilities Act.

I've never really heard that question posited before. Has anyone else come across this issue?

Thanks!

We have a client with an ESOP plan that indicates that if a participant chooses to diversify, the amount is transferred in cash to the 401(k) plan of same plan sponsor. The participant cannot elect to receive the diversified amount as cash to rollover elsewhere. Question: how should the 401(k) plan recordkeep for the transferred amount? My feeling is that this should be considered an elective plan transfer not a rollover. Do we need to worry about any cutbacks and mirror any optional forms of benefits and withdrawal provisions that may be more favorable in the ESOP?

Two companies, A and B, transferred 100% of their assets to Chuck (who owned part of A). Chuck then sold 50% of those assets to Bill. Chuck and Bill then eash transferred the assets which they owned (50% of each of the assets of the two companies) to form Company C, LLC. A & B no longer exist, only C. B had a plan and A did not. They elected to continue to maintain B's plan and when the document was restated, B was included as having their service count towards participation in the plan, because they were already particpating in the plan.

The question is should they also have allowed prior service with A to count towards participating in the plan?

Suppose you have two 401(k) plans sponsored by one company. Assume the plans are not top heavy and they have nondiscriminatory classifications.

As far as Employer Contributions:

Plan 1

- Covers all employees hired before xxxx date

- Provides 15% to owners, 5% to all others

Plan 2

- Covers all employees hired after xxxx date

- Provides 2% to all participants

- There are no Key or HCE's in this plan

Our understanding is that as long as both plans pass 401(a)4 and coverage independently, the 5% gateway does not apply to plan 2.

Suppose plan 1 fails 410(b). Is it possible to use ABPT to pass coverage? Or must both plans then be combined, and thus deemed to not pass coverage independently?

Thanks much

If a plan is submitting Appendix F Schedule 2 within 1 year of RAP for EGTRRA VS nonamender, the fee is 50% of the normal fee based on the 5500 participant count. For 51 - 100 participants, 50% of the fee is $1,250. If only Schedule 1 applies for a more recent amendment such as PPA, the fee is only $375. If both of these schedules are submitted together within the same VCP application, what is the fee? Is it only $1250, or is it $1250 + $375 = $1625 if submitted by 4/30/2011 (1 year expiration of RAP)? Thanks in advance.

Hi,

I'm trying to determine if excess deferrals due to an ADP failure that are recharacterized to catch-up are subject to the 10% employer excise tax penalty. I do not believe so but I could not find any documentation supporting this view. Also, with respect to ACP failures, I have found that non vested match excesses amounts should be included as part of the calculation. However, I am not certain regarding ATM. It seems to me that since ATM is subtracted from the match prior to running the ACP test, it would not be included in the calculation. But again, I cannot find documentation to suppor this. Any assistance would be much appreciated.

Thanks,

RRB

We have a plan where once a participant maxed out their deferrals last year they increased their loan repayments. My question is how should the extra loan repayment be applied to the outstanding loan balance. My thought is that the extra should all be applied to principal but the plan provider applied the overage to the next payment so it went to the next payment's interest and principal. The way they did it they show the loan payments are caught up thru late 2012. I have checked the plan document (document, adopiton agreement, loan policy and SPD) and cannot find where it addresses how extra repayments should be treated. The plan is a prototype plan and we use Relius Documents. If the extra should be paid all on the principal then this would definitely get the loan paid off much sooner so I want to make sure we apply this correctly.

Can anyone help me out with this?

Thanks!

Setting up a cash balance plan for an S-corp with 3 partners. Just want to confirm how they take the deduction for their own contribution---is it taken on their personal 1040 or the K-1? I understand the other contributiuons for the non-owner employees would be shown on the corporate return form 1120s.

Also, if one of the partners in the s-corp is currently paying off a note to one of the other partners (as part of a buy-out), could he make his interest payment to the other partner through the cash balance plan? If so, would he also deduct that on his own return even though the contribution went into the other partner's account?

thanks,

Estimated attendance was 750-850, a far cry from the peak of 2,600. Average age looked over 50, which may be generously low. Owing to economic factors, aging attendee population, and the shrinking DB plan arena, it's questionable how long the EA meeting format can garner sufficient interest without significant reshaping (or significant legislation).

Of note is number of former private sector actuaries/consultants who now work for IRS.

American Benefits Council Exec. Kenneth Porter commented that Congress believed defined benefit plan funding was fixed and expressed no interest in discussing the subject.

Massive brain power continues to be focused on minutia, actuarial standards, and saving DB plans rather than focusing on retirement and retirement income policy. Perhaps, it's a matter of what you can get your hands around? Perhaps it's a matter of what constitutes continuing education in Joint Board's eyes.

The above are my observations, perceptions, and thoughts and are not intended to represent nor should it be inferred that they represent the general thinking.

Corbel's SIMPLE document seems to say that the 25% test must still be satisfied?

AM I reading this right?

I have a client who has a 401(k) Plan that has 1 year of service and age 21 eligibility requirements. They allowed two ineligible employees to participate; one failed the one year of service and the other failed the age requirement. Both are NHCEs and neither is related in any way to the owners. I would like to correct this through SCP, but have only ever done this with an Amendment that changes the eligibility provisions on a prospective basis in conjunction with the continued participation of the previously-ineligible employees. However, the employer wants to correct without distributing the money back to the two employees and does not want to change the eligibility requirements on a prospective basis (it would be an administrative nightmare with the amount of census turnover related to his business).

One employee is now eligible. However, the employee who failed the age requirement will not be eligible to participate for another couple of months. Is there a way to self-correct by:

1. Adopting an Amendment that does not changing the eligibility requirements, but rather just allows the two employees

to have participated to the extent they already have prior to becoming eligible;

2. stop the one employee's elective deferrals until he is actually eiligible; and

3. not distribute the prior elective deferrals?

Any ideas?

Plan allows for safe harbor hardships, participant paid for medical expenses in prior years with a loan taken from bank. Now participant wants to pay for loan with hardship distribution. Would this fall under a safe harbor hardship rule?

I have a client with a payroll system that stops taking contributions when the maximum allowable comp reaches $245,000.

They have an employee that reaches this limit mid year. Since he is only contributing 5% of pay, he has only contributed $12,250. In realty, he would actually like to save the full $16,500. Can they just over ride their payroll system until he reaches the $16,500 limit?

This is a safe harbor paln.

At testing time will the vendor just consider that he save 6.7 percent of his comp then?

Thanks in advance!

I have a traditional DB plan that has been frozen for several years. currently there is 1 hce and 3 actives with vested benefits. The plan sponsor wants to increase the benefits of the HCE about 20%. Would the plan violate anything by increasing the benefits to all participants by 20%? or would the plan have to unfreeze, let everyone who was not in the plan in and increase the benefits that way?

if a plan sponsor changes valuation date from 12/31 to 1/1 for the 2010 plan year my understanding is that such change would be acceptable as provided in the 430 regulations.

And as a result when completing line 8 of Form 5500 Schedule R it would be checked as "N/A".

Does my interpretation seem on point?

thanks