In studying for the ERPA exam, I came across a section which mentioned the tax ramifications to employees of a failed ACP test resulting in Excess Aggregate Contributions. Why would employees get taxed at all? The excess agg cont (which includes allocable gains) is being forfeited to the Plan's forfeiture account. What am I missing? Thx.

Let's say, hypothetically speaking, a fund company decides to pay a TPA a "fee" (albeit a small one) for every rollover that comes out of the Plan and into an IRA with said fund company.

I don;t know, it just doesn't seem right. Smells like a PT...

I shouild repeat that the fee is very very small (less than $20 or so).

Are tax-exempt 457(b) plans subject to the ERISA bond requirement?

Does a DC plan's SAR need to report the termanted participants vested benefits due ? I know it reports beneifts paid however not finding much on this.

Thanks,

ADP test fails - one of the HCE's terminated, the plan has immediate distribution and he immediately rolled his money into an IRA. I'm not sure how to proceed. Any suggestions?

I left a job that was a HD plan with an HSA. During the course that I was uninsured I was able to continue to use the funds in my HSA.

Since I recently married I enrolled in my husband's insurance plan who particpates in an FSA.

Question: Can I still use my HSA to pay for qualifying expenses even though I am now under a plan with an FSA?

Obviously I am no longer able to contribute to my HSA, but would like to use up the money remaining.

Thanks.

Employer maintains PSP with cross-tested allocation formula which provides for various classes of participants based on various objective factors. Employee would presently fall into one of the classes, however, Employer and employee want to provide in employment agreement that employee will agree to forego x% of retirement contribution based on various factors which are to be looked at upon year-end. Looks like such an agreement would not only be pre-empted by ERISA, but would also be in violation of IRC §401(a)(13) as to the qualified status of the PSP. Anyone see any other issues with this? Thanks.

I am doing a death benefit calculation for a 60 year old terminated vested participant.

I am really stuck on this one, it being my first death benefit calc.

Participant terminated 5 years back with 13 YOS. Death benefit as per the plan document is 50% QPSA. Plan's early retirement criteria is attainment of 55 years along with 15 YOS.

My first confusion is whether I should value the QPSA as on the date the participant would have attained Earliest Retirement Age, i.e. in 2 years time(assuming he would have been rehired and completed another 2 YOS) . Should I then apply the Early retirement reduction factors to the Accrued Benefit? The Plan document reads :

"No actuarial adjustment to the Annual Benefit is required for (a) the value of a Qualified Joint and Survivor Annuity, (b) benefits that are not directly related to retirement benefits (such as the qualified disability benefit, pre-retirement death benefits, and post-retirement medical benefits)"

Does this mean that no reduction to the accrued benefit should be made? Or am I getting this all wrong and should just value the entire vested benefit at NRA payable today?

Also should this benefit be determined as at the Date of death(April 10) or now(Feb 11). The interest rates will vary accordingly or is a time lag of less than a year ok?

All help will be much appreciated. TIA.

401k client is just now ready to file the 5500 for calendar 2009 (past due since 10/15/10). At this point, what is the recommended (official and unofficial) course of action?

I seem to recall that you can't amend a DBP to be a PSP, or a DCP into a DBP. Right?

a high school has immediate entry on deferrals, but a 2 year waiting period for the employer match. their new doc states that for matching purposes, the match has two entry dates the earlier of the first day of the plan year (June 1) meeting 2 year requirement or first day of the 7th month(dec 1). However, they have not been administering the plan as such. They assess eligibility at the first day of the plan year (June 1) and if a employee lets say started working in August of 2007, they qualify for the two year requirement as of June 1, 2009 or appx 1.8 years. Something under the "3/5ths rule". Since they are a school and a lot of their employees being in August.

Aside from the fact their document is not in line with how they are administering the plan, is this 3/5ths rule ok?

If you have a short plan year for one month, I cannot find any cites which indicates if I have to prorate compensation or prorate the short plan year service in a Unit Credit formula. For example:

Short plan year 12/1/2010 to 12/31/2010. Participation date is 12/1/2003. The participant has 8 years participation, including the one month short plan year.

High three year average monthly compensation is $10,000.00: a 2% unit credit formula. The accrued benefit as of 11/30/2010 is $1400.00. ($10,000 X .02 X 7).

Is it correct to apply a full year's accrual for the 12/1/2010 to 12/31/2010 short plan year making the participant's accrued benefit as of 12/31/2010 $1,600.00? ($10,000 X .02 X8)

Or is it correct to prorate the service or prorate the comp making the accrued benefit as of 12/31/2010 $1,416.16? (pro-rating service $10,000 X .02 X 7.0833) or (pro-rating comp $1,400 + ($10000 X .02 X 1/12)).

Sponsor did not set up loan repayment in payroll. Not long enough to be deemed distribution. It appears there are corrective procedures under IRB 2008-50 which allow for the re-amortizing of the loan vs. requiring the participant to make it immediately current. It's not clear to me if this can be done under the self-correction program. Can someone confirm that this can be self corrected? Thanks.

A participant in the 403b plan is going to receive a payout under the 457f plan this year, which is included as W2 income. Can he make a Roth 403b deferrals on the deferred compensation payout? The plan uses the 3401 definition of compensation, and there are no other exclusions.

Thanks!

Company A is purchased by Company B. Company A has a frozen 401(k) which is currently being audited. If B was to merge A into its' plan what liabilites to B could there be?

I know this is a vague question so thanks in advance.

Are there any "SPECIAL" rules relating to 457(f) and 409(A) and a federal non-profit credit union? I realize they are governed by the IRS, NCUA, GAAP, IRC 457 and 409(A) but are there any special nuances specifically to them other than the codes and governing bodies themselves?

I understand there is a 10% cap for counting Davis Bacon/Prevailing Wages in the ADP testing, however does that limit only apply to NHCE's (i.e., are all HCE Davis Bacon contributions counted in the HCE's deferral percentages for the ADP test??), or does that 10% limit apply across all employees?

401k plan with directed investment. The two owners (naturally) purchased investment in Canadian gold maple leaf coins. Does anyone know if this meets the exception provided in 408m (I think that's the section). If not, this would be a distribution, correct?

LLC with 5 plan participants: 2 members, 3 other employees. One member starts dating an employee. The employee is asked to resign. 20% of the plan participants have now left under circumstances that may not have been of her choosing. About a month later, the LLC member whose girlfriend was asked to leave, also leaves. We now have 40% of the plan participants terminating in the same year, related to the same event, but not at the same time.

The bundled plan service provider says that both people left voluntarily, so no partial plan termination. If the employer wanted to treat this as a partial plan termination, how is it documented?

Clients who are self employed ( Schedule C or K-1 ) can now deduct health insurance premiums for computation of their self employment taxes.

How does this impact the calculation of "pension income" for their 401K plan ?

In the pasy you subtracted one half of their SE tax as well as the employer plan contribution to arrive at "net pension income" to do your plan contribution calculation.

THanks !