What is meant by this sentence Taken from Rev Proc 2005-16:

In addition, the employer must complete a new signature page if it modifies any prior elections or makes new elections in its adoption agreement.

What's the general format for the signautre on amending a prototype? We ususally just copy and paste the applicable sections into word and check/uncheck the applicable boxes.

But then, more or less, we just have the employer sign. Are we required to use the actual pre-approved signautre page which includes all of the disclosures, etc?

Employer stopped deducting (for a handful of participants) according to elections for last pay period of December and the first three pay periods of 2011. Suggestions on the best way to correct this?

A correction offered in the IRS "fix-it-guide" for an impermissible hardship is for the participant to repay the hardship amount plus earnings, consistent with SCP under Rev Proc 2008-50. For a hardship taken in 2010 and repaid in 2011, I am wondering how to tax report. The 2010 1099-R (already issued to participant) reflects the amount of the hardship withdrawal. Rev Rul 2002-84 (issue #3) leads me to conclude the amount is supposed to be taxed in 2010, and then the participant might be able to take a deduction for the repayment in 2011; the repayment would not create a tax basis in the 401k account.

The participant is unhappy with this tax result. The participant wants to pay back the hardship in 2011, but wants the 2010 Form 1099-R amended to reflect a $0 distribution. The participant is under age 59-1/2, and does not want to pay the early withdrawal penalty nor 2010 income taxes on the withdrawal.

The plan would like to correct under SCP assuming it is eligible, though I think if an early withdrawal penalty applies, the only way to request waiver of early withdrawal penalty would be under VCP.

Can anyone point me to some guidance that would allow us to amend the 2010 Form 1099-R to $0 when the SCP repayment correction is done in a later tax year? Thank you in advance.

Are there specific limits for a person who is both a 493(b) employee and independent contractor, and therefore contributes both to the university plan and a SEP?

Is there any way to find out what my ERPA score is? I took and passed the tests, and wodner if I got a C- or an A+...

Co A sets up 401k in 2008. In 2009 Co A buys assets of Co B and hires some of A’s employees. President of Co B owns 10% of Co A. Co B has no NHCEs.

For the employees that used to work for Co B, Co A continues to remit ee deferrals and matching to Co B’s SIMPLE-IRA. Co B is still the sponsor of the SIMPLE, even though Co A made the contributions and took the deductions.

I am thinking VCP. However I am correct in that both A & B would have to go to VCP?

Co A would have to go to VCP since they had both a 401k and a SIMPLE. Co B would also have to go to VCP as their plan received contributions on behalf of Co As employees.

I have a takeover 403b plan. The plan has union and nonunion employees. The collective bargaining agreement has differences in benefits between the plan document. Which governs? Does the plan document supercede the collective bargaining agreement or vice versa? Any help would be greatly appreciated.

I have a purely profit sharing plan, 1 participant - the assets are less than $250,000, however, there is a life insurance policy within the plan. Is the plan subject to nondiscrimination testing and 5500?

If an asset in the divorce that is to be divided is an IRA of the husband, does the spouse avoid the 10% early distribution penalty if the amount is paid directly to her from the husband's IRA?

If instead it is routed through an IRA in the spouse's name, does the 10% penalty then apply when she takes the withdrawal from her own IRA?

She is under age 59 1/2 years.

I have several sets of groups. All state 1000 hours to receive an allocation with the exception of a few. The exact situation is that I have 4 partners in a group and all want something different, allocation wise. I therefore was going to amend the groups to place each highly paid participant in their own group, problem solved for 2011. Side note - It is a calendar year plan

I was always under the impression if there was a 1000 hour requirement for your group and no one had met the 1000 hours, the groups could be amended up until that point.

My colleague is stating that the group can not be amended after the first day of the plan year. If that is the case, can someone point us the direction of where the law states the rules regarding this so we can read the provision. My colleague can't seem to find it and says he's is not really 100% positive either.

Thanks

Has anyone seen any authority explicitly requiring an annual allocation of forfeitures in a 403(b) Plan? There is a host of authority in the qualified plan world (the most frequently cited being Rev. Rul. 80-155). I have no reason to believe the IRS would take a different position with respect to 403(b)s, but I'm wondering if anyone has seen the issue directly addressed. Thanks.

Hi all,

I have a few smaller clients now that have terminated in January/February 2011 and wish to take care of everything ASAP to close out the plan.

Does the Relius software, when transmitting to the DOL, convert the FilingForPlanYear field (along with corresponding PlanYearBegin Month/Day/Year info) into the correct XML language to allow me to publish a 2011 plan year Form 5500/schedules on the 2010 Form?

The reason that I ask is that I have one client that was able to do that successfully it seems, but I have another client that receives the X-048 ERROR message:

Fail when Filing Header, Form Year does not match Filing Header, Plan Year Begin, unless the Filing Header Prior Year Indicator is set to 1.

Both the unsuccessfully filed and successfully filed versions show up under the 2010 Form Year (drop-down option) and also show the Plan Year to be 2010 (under the planbook search views) - rather than 2011. At this point I can't figure out a difference between the successful and unsuccessful planbooks.

Any thoughts?

Thanks!

I am trying to complete the contribution calculation for a plan, but am going back and forth on whether an employee re-enters the plan in 2010 or not. The plan has basic language that an employee re-enters if he is not gone for longer than 5 consectutive 1 year breaks in service or his original service with the employer. Here are his dates:

Date of Hire - April 15, 1995

Date of Termination - June 30, 2002 (worked 1,000 hours each year - 8 Years of Service)

Date of Re-Hire - April 19, 2010 (worked 1,000 in 2010 as well)

If I count from his original date of hire (April 1995) to each following April (April 1996, 97, 98, etc.) he has 7 Years and 2 months where he worked. If I take 7 Years and 2 months from his termination date, that would end sometime in 2009, and he would not re-enter the plan when he was hired in 2010.

However, if I look at Years of Service (where he received 1,000 hours), he received 8 Years of Service, including 2002. Starting the count from 2003, 04, 05, 06, 07, 08, 09, and he is re-hired in April 2010, he only had a 7 year break in service, which is less than his years of service of 8. Counting this way, he re-enters the plan, receives the safe harbor contribution and the profit sharing contribution.

What are your thoughts on the issue? As I said, I have been going back and forth.

IT seems to me very clear that a pooled profit sharing plan is required to disclose to participants the value of each investment held by the Plan under PPA. ARe people doing this? I'll be honest, I have not. I have some pooled plans where the list would be pages long... I've also taken over other pooled plans and never seen anyone else doing this.

Question regarding a participant who has After-Tax money in their Profit Sharing Plan:

A participant is retiring and rolling their balance into an IRA. If for example over the years they have contributed $100,000 of after-tax dollars and now there is a balance of $500,000 in their after-tax account ($400,000 in earnings); can the participant take the $100,000 of after-tax money as a distribution and roll the $400,000 of earnings into the IRA?

Thanks in advance for your help.

I'm getting more confused the more I look for this answer. An employer is considering closing a division. If they decide to proceed, they expect to pay several months of severance pay to the impacted employees. This pay would be within the same plan year as the termination, but potentially more than 2 1/2 months after the termination date.

They have 2 questions:

1. Can they include the severance pay in plan compensation for purposes of deferrals and employer contributions?

2. If they include severance in plan compensation, are participants required to wait until after the severance has all been paid to take a distribution

Where I'm getting hung up is the part of the definition that says pay that would have been paid if the employee had continued to work for the employer. Does that include pay at the employee's usual base pay rate even though they are not performing any service, or is it intended to only refer to things like accumulated vacation pay, sick pay and pending commissions?

Plan 1 has a safe harbor match of 100% on 1st 4%.

Plan 2 has a safe harbor match of 100% on first 3%, plus 50% on next 2%.

They want to merge plan 1 in to plan 2 mid-year.

Seems to me they may have to wait until the end of the year or it will invoke testing?

If medical expenses for a participant are paid by an employer Health Reimbursement Arrangement or Flexible Spending Account would this be considered a medical expenses for hardship purposes (i.e., the plan following the safe harbor reasons)?

Hi All,

I often work with small plans that use brokerage accounts at wire house, such as Morgan Stanley Smith Barney ("MSSB"), as custodian of the plan assets. It has come to my attention that, upon any qualified plan distribution, MSSB now requires the plan trustees to sign an agreement to hold MSSB harmless and to indemnify MSSB for any issues that arise from any such distribution. While unnecessary, I don't have a major issue with the hold harmless language. However, I think it's egregious for MSSB to require indemnities to process plan distributions. Both in the account application and the letter that the trustees must now sign upon a plan distribution, the trustees have already agreed to hold MSSB harmless for any issues (including tax issues) related to the plan distribution. For MSSB to force their clients (who pay them handily to custodian their plan assets) to indemnify them for any costs, including attorneys fees, in order to process plan distributions from their own accounts, which were established without prior notice of such indemnities, is absurd, if not unethical. For example, if MSSB settles with any party (e.g., IRS, DOL, participant, beneficiary, etc.), the plan trustees will be forced to be bound by that settlement by virtue of the indemnification clause.

I'm sure that many of the independent (non-producing) TPAs on this board who deal with smaller plans have clients who use MSSB to custodian their plan assets. I'm in the process of trying to work with MSSB's compliance and legal departments to have them remove the indemnity provision from their plan distribution agreement. However, from past dealing with MSSB and other large financial institutions, I anticipate that I will not receive the desired resolution. If, after I hear back from MSSB, they continue to insist on including the indemnity provision in their required plan distribution agreements, does anyone have any suggestions in relation to starting a "grassroots effort" to show solidarity regarding this issue to try to force MSSB to change its ways?

Thank you for your time and response to this matter.

Best,

Todd Heller, Esq., CPC

Heller Pension Associates, Inc.

theller@hellerpension.com

If a person owns all of a company that sponsors a 401k plan and is the plan's only trustee, can he continue to so serve after declaring personal bankruptcy?