I am trying to better understand the legal requirements pertaining to a POP and I am having some difficulty.

1. I have heard that in order to meet the legal requirements, employees must have a choice in actively electing a salary conversion/deduction to cover their premiums...however, most companies that I have encountered or spoken with, do not have a seperate form/document for employees to make such an election. Some have told me that by default, electing any qualified company benefit with an employee premium satifies the "choice" requirement. I think this might work, but if so, then shouldnt there be some language in the plan documents that specifiy...."by electing to participate in the Company Medical Plan I uderstand that I am electing to have a portion of my salary used for the payment of medical premiums" or something to that effect? Can anyone share such language that appears in your plan docs? Or how are other companies handling the requirement for employees to choose cash or premium payments?

2. Plan Document....I believe that one is required, but are most people doing this as a stand alone document or combining it with the Flex Spending Doc? Would it be appropriate to put the POP document into a wrap document? I dont believe a POP requires a 5500 filing?

3. Testing....If the POP is available to all, how could it fail testing? What testing needs to be done and how are other people handling the testing?

Thanks in advance.

A DB plan had an 8/1-73/31 Plan Year. On October 1, 2010, Plan Sponsor elected "unconditionally and irrevocably" to apply $400,000 of its FSCOB to offset the 2010 minimum required contribution (of $400,000). On December 28, 2010, Plan Sponsor amended Plan to change Plan Year to calendar year effective January 1, 2011 and thus created a short (5-month) Plan Year, 8/1/2010-12/31/2010. The actuarial valuation has been revised and the 2010 minimum required contribution is $250,000 based upon projected accrued benefits 12/31/2010 as opposed to projected accrued benefits 7/31/2011.

There is likely is no "right" way to deal with this and I'm trying to keep in mind that I will have to provide reasonable entries on Schedule SB. So, I offer:

(1) Treat the election as being for $250,000, or

(2) Request the Plan Sponsor to amend the election that is unconditional and irrevokable, or

(3) Apply $250,000 to reduce MRC and consider the remaining $150,000 to be "burned" (without any additional election and it is too late to make such election anyway) so that the entire elected amount is used, or

(4) Ignore the Plan Year amendment for 430 purposes since it was adopted after the actuarial valuation date, which would mean show full year entries on SB even though the SB will be for the period 8/1/2010-12/31/2010.

Any thoughts????

I have currently submitted aproximately 40 CB/401k offset plans. This process began back in June of 2009. After two deficiencies from the IRS agent, we prepared the requested changes and sent them in and are now waiting for the first letter to be issued.

I know that there is a buzz in the industry regarding the legality of these types of arrangements. Has anybody received a favorable letter on this arrangement? If so, how long did it take you to receive it? Any suggestions or guidance would be appreciated.

Thanks, everybody.

Suppose the following:

Participant is age 72 on 1-1-2012 and has over 10 years of service

Participant has a consecutive 3-year comp history with each year over $500,000

New plan is established 1-1-2012 (has never had a DB plan)

415(b)(1)(B): 100% x 3-yr avg comp = $245,000

Assume:

$195,000 limit x AE increase factor = $350,000 (for this example)

What is his maximum accrued benefit for 2012 for 415 purposes?

Is it 1) the lesser of:

Or, is it 2) the lesser of

Or something else altogether?

edited for typo

When writing 401(k) Plans, we have always written the Plan to use compensation from the Look-Back year to determine an HCE. Is there any reason we wouldn't be able to use current year instead?

Thanks in advance for your help.

Two-fold question:

1) Is it possible for a 401(k)/Profit Sharing Plan to adopt either the Traditional Safe Harbor or the PPA Safe Harbor plan design at any time during the plan, or are they limited to the beginning of the plan year?

2) If a plan elects the PPA Safe Harbor design and implements a default percentage of 6%, are they required to have any automatic increases of 1% in subsequent years?

Can someone provide me with the Code or Regulations that state the Safe Harbor information.

The trustee/plan sponsor of a 1 person PSP (which covers just him) called me today to see if he could use about 1/3 of plan assets to purchase land. He told me that eventually, he would like to sell the property to his wife, via a 3rd party, as they want to build a home on it. Apparently, he laready communicated his "desires" to the broker, who after conferring with my boss, told him that it was not a good idea, and to speak to an ERISa atty in his state. I guess he didn't like that answer (he really wants the property, but I am guessing he doesn't have $700k sitting around to buy it). I wanted to find some documentation in the EOB (ERISA Outline Book) that talks about arms-lenght transactions. his thought process is to buy the property with the plan assets, and in about a year or 2 (after they sell something eles, I think), he wants to sell it to an in-law who would turn around and sell it to the wife (who is not a part of the plan, just the trustee/plan sponsor/participant's spouse). I'm thinking this could be prohibited, but wanted to site him. Anyone know where in the EOB I can find this? We have the 2009 edition, but any hints or tips would be helpful...

A "Broker" has contacted our office requesting that a Safe Harbor 401(k) Plan be amended to allow for Annual Auto EE Deferral Increases be implemented with the Plan Sponsor's asset custodian.

As a Safe Harbor, the Plan does not have Auto Enrollment and that is not a desire by the Plan Sponsor.

To facilitate the asset custodians auto deferral increase procedures, is it necessary to amend/restate the plan document, and if so, does the new provision remove the plan from the Safe Harbor reliance?

Any thoughts and/or experiences? Pitfalls?

Client has a last day requirement for match. The last day for 2011 is Saturday. The participant terminated 12/31 per the client. I believe they should receive the match, if they worked on 12/31 or if the client was closed on 12/31. Is that correct?

Does anyone have any creative suggestions for an employer that cannot afford to fund the 3% nonelective for 2010? They are going out of business in 2011 and terminating the plan. They state they cannot afford to fund it for all participants for 2010, and want to know can they just not fund for the owners? I have suggested they file with the IRS under EPCRS and have IRS review their corrections. Has anyone found any other options? What will the IRS do if the employer fails to fund, or fails to fully fund?

Thanks!

The LLC sponsor of a profit sharing plan is being closed down, and the principal member is forming a new LLC. They want to continue the existing plan and have the new LLC adopt it.

I believe I have seen this done before. Can this be done with just an adopting resolution and a new plan document?

Why would someone have two separate plans, for Davis Bacon, one for everyone else.

-Plan is not top-heavy

-Audit is not an issue (i.e., the immediate eligiblity issue)

Under the remedial amendment period rules, you have until the last day of the plan year to amend a plan for a discretionary provision that is effective during that plan year. Since I am not required to be a safe harbor plan, the amendment must be discretionary.

Therefore, don't I have until February 28, 2012 to amend the plan to add safe harbor for the FEbruary 28 (29th?), 2012 Plan Year? The SH notice was sent out in min-January.

How do the modules for the newly designed CPC designation stack up to the previous QPA and QKA exams? Also, how do they stack up in comparison to the ERPA exam?

I am sure that the actual DB sit down exam and CPC sit down exam are very challenging, but I wonder about the modules.

I'm getting ready to receive the study material and wanted to gage my time to study.

Fyi...to give background info ... I have ERPA, QPA, QKA and APA designation with 10 yrs consulting experience in the industry.

Any advice is appreciated. Share you war story as well!

Company X changed health insurance carriers on 1/1/11. They did not send in a termination notice until 2/15/11...so from 1/1 to 2/15 they had 2 insurance companies. Old insurance A, and new insurance B. The old insurance termination date that was requested was 1/1/11. However, insurance company A terminated the insurance on 3/1/11 saying the termination letter was not sent in a timely manner.

Some employees used the old insurance cards claims were made with insurance A. Insurance B is willing to pay these claims...but the claims have been marked as paid.

Insurance A will NOT subrogate the claims.

So, Company X is left in collections for 2 months of unpaid premiums to Insurance A.

Anything they can do? State of PA.

Suppose you have a new plan with a 12/31/10 year end. The contribution will be funded 3/15/2011. The maximum contribution is the target normal cost. However, interest is applied to the minimum contribution from 1/1/11-3/15/11.

Can the company contribute the target normal cost or must they contribute the amount with interest for the first year?

Must the DC plan have QJSA distribution options to avoid BRF testing if it is part of a DB/DC combo, that is, the DB and DC are tested together for 401(a)(4)?

Anyone have any thoughts on this?

Plan A covers a 24-year old employee and his 24-year old spouse. Both the employee and the spouse are also covered on their parents' group health plans. Assume that the plans do not address the COB issue in the documentation. I believe that for the employee, Plan A would be primary since plans covering a person as an employee are primary over plans covering the person as a dependent. But what about for the spouse? I've seen rules regarding COB when the plans of the parents both cover the child, but what about the case where the spouse and the parent both cover the person?

Client under age 59-1/2 has real estate in a PSP encumbered by a mortgage. Value of real estate has fallen to below what the mortgage balance is. CPA suggests a premature distribution of BOTH the real estate and the mortgage. Since there is no equity, he proposes that the taxable amount of the premature distribution is $0. Thus there is no premature distribution penalty either. The reason for doing this is to gain some tax advantages in the negative cash flow if the real estate is held personally, rather than in the plan.

It doesn't appear that this distribution would be a prohibited transaction. Anybody see any problems with this?

Hi. I am looking for the Highlights for the Prototype 401(k) document for versions 2.0,3.0,4.0 and 5.0. THey are not on the Relius Support site and Relius says they don't have them. Anybody out there who downloaded them and still has them, I would appreciate copies.

Thank you.