A participant is requesting a Medical Hardship for his daughter who is blind. The hardship request is for electronic equipment which he plans to buy to aid in his daughter's mobility; braille readers, scanning devices, a GPS navigation unit, and related software totalling $11,000. The participant has provided printouts from an online catalogue outlining the function and price of each unit, but has not yet purchased any of it. The participant states that these items are not covered by insurance, but no explanation of benefits is present. My questions are as follows:

1.) Do "mobility aids" for blindness qualify for Hardship expenses.

2.) If so, are the online catalogue printouts sufficient documentation to justify the withdrawal?

3.) If so, do we also need an explanation of benefits in addition to the other docs showing that these items do not fall within coverage?

We have a plan that has some question during an IRS regarding eligible compensation. The sceneriois this: An employee did not turn 21 until 05/25/2009 (of course plan requires you to be 21, 1000 hours and 1 year) And the entry date is 06/01/2009. The IRS is saying we need to use full year salary for ADP testing purposes. Practice has been that from January 1, 2009 Until May 25, 2009 (when he turned 21) it is considered INELIGIBLE compensation. Thus you would only use Compensation from 06/01/2009 to the end of the plan year 12/31/2009. I would love for some feed back on this.

Sponsor improperly excluded eligible employees from participating in a 403(b) that also provides for nonelective contributions. From what I can see the Universal Availability rule applies to salary deferrals only. I'm unable to find eligibility rules under 403(b) for employer contributions. I understand that once you make employer contributions you become subject to ERISA (with a few exceptions) and would have to follow the age 21 and 1 year of service eligibility rule for employer contributions.

I can correct the failure under VCP with regard to salary deferrals. The sponsor would also like to correct the failure to make employer contributions. My problem is that I'm not seeing a 403(b) violation with regard to those employer contributions as there is no eligibility requirement (that I can find) under 403(b) for employer contributions. With no 403(b) violation I don't see how I can correct this specific issue under VCP. Can anyone see a correctable violation of 403(b) here?

Employee executed an "Election Not to Participate" form for a 401(k) Plan.

The form states it is effective for a minimum of 5 plan years.

I was always under the impression that if you elected not to participate in a plan it was irrevocable and lasted for the duration of your employment.

Any thoughts?

I need some help to understand my ESOP's diversification policy. my job left me in June, 2006. I was born on May 13, 1952 so I should have turned 55 in 2007. the benefits clerk said I had 10 years in the plan. the plan year runs from Sept. 1 to Aug. 31. stock in my account was repurchased and placed in a money market.

I think I became a “qualified participant” and the “qualified election period” should have started in the plan year Sept. 1, 2006 to Aug. 31, 2007. The “adjusted account balance” for this plan year should be the sum of prior diversifications (zero) plus “stock in the person’s stock account as of the last day of the plan year preceding the applicable plan year”. I have an ESOP statement that says I had 100% vested stock worth over $380,000 as of August 31, 2006. as of Aug. 31, 2007 I should have been able to withdraw $95,000.

does that make sense? thanks for any help ...

following is from the plan document:

Section 7.10 - Diversification. Each Qualified Participant (as defined below) may elect within 90 days after the close of each Plan Year in the Qualified Election Period (as defined below) to withdraw all or any part of the excess of 25% of his Adjusted Account Balance (as defined below) comprised of stock acquired by or contributed to the Plan over the sum of the number of shares of Stock (adjusted for Stock splits, etc.) previously withdrawn pursuant to this Section 7.10. In the alternative, a Qualified Participant may directly transfer the portion of his Eligible Participant Account covered by the election to the Pacific Hide & Fur Depot d/b/a Pacific Steel and Recycling 401(k) Plan or another qualified plan of the Employer which accepts such transfers, but only if the transferee plan permits employee-directed investment and does not invest in Company Stock to a substantial degree. The Trustee will make the direct transfer no later than 90 days after the last day of the period during which the Qualified Participant can make the election. the resulting number of shares shall be rounded to the nearest whole integer and shall be withdrawn from the Plan. In the case of the sixth election year in which a Qualified Participant can make an election pursuant to this Section, “50%”’ shall be substituted for “25% in the preceding sentence. The distribution shall be made in cash or in Stock as provided in Section 7.1 and shall be made within 90 days after the election period with respect to which the election is made. Any allocation of Stock after the Qualified Election Period shall not be subject to diversification under this Section 7.10.

For purposes of this Section:

(a) “Qualified Participant” means any Participant (including former Employees) who has completed at least 10 years of participation under the Plan and has attained the age of 55.

(b) “Qualified Election Period” for an individual means the six Plan Year period beginning with the Plan Year in which the individual becomes a Qualified Participant.

© “Adjusted Account Balance” of a Qualified Participant for a Plan Year within the Qualified Election Period means the sum of all distributions of Stock made pursuant to this Section in prior Plan Years plus the Stock in the person’s Stock Account as of the last day of the Plan Year immediately preceding the applicable Plan Year.

Notwithstanding anything herein to the contrary, if the Fair Market Value of Stock allocated to a Participant’s Account on or before the last day of the Plan Year immediately before an election period during which the Participant is eligible to make a diversification election is $500 or less (and never exceeded this amount), then the above diversification of investment rules shall not apply. In determining whether the Fair Market Value of allocated Stock is $500 or less, Stock allocated or acquired for accounts of all employee stock ownership plans maintained by Affiliates shall be aggregated.

A public company is considering adding its stock as an investment fund under its 401(k) plan and making the stock fund an ESOP so that it can take advantage of the dividend deduction under Code Section 404(k). Under this setup, does the requirement that a participant must be allowed to demand that his benefits be distributed in the form of employer stock apply to his entire account, or just the ESOP portion of the plan (i.e., company stock)?

For example, if at retirement a participant has an account balance of $500,000, $200,000 of which is invested in company stock and $300,000 of which is invested in other available investment funds, is he entitled to demand that the entire $500,000 be invested in the form of company stock, or only $200,000?

plan has 2 classes. Class A = 10% class B = 5%.

person 1 works 1000 hours and switches from A to B.

how is the benefit determined?

is it the sum of the two parts?

document is silent, except for saying is you go from eligible to ineligbile you figure things up to the moment you became 'suspended' and start over once you become eligble again.

Our plan has a few thousand retirees who retired before 1984 and whose benefits are provided under an annuity contract with John Hancock. We are very disappointed with Hancock's services to this group. Resort to normal customer service channels have been unavailing. Any suggestions?

We have a situation where the merger of two plans within same company occurs on 13/31/10, but assets will not be transferred until 4/01/11. It's always been my understanding that the date of the merger is controlling for purposes of Form 5500, so that in this case legal control of the assets transferred on 12/31/10 and the former plan will file a final 2009 Form 5500 and will not file for 2010. I have read previous posts on this point and that seems to be the consensus, but I am unable to find any guidance supporting this position. Can anyone cite to some guidance on this point?

Employer A sponsored their own 401(k) Plan for several years. In 2009 they transferred the assets of that Plan to a multiple employer plan (sponsored by an HR Services outfit) in which they became an adopting employer. It is a safe harbor plan. Now 2011 (eff. in March) they want to spin-out of the MEP into their own plan. I understand that they would have to ADP/ACP test for the short year under the MEP. A few questions -

1. My thought would be the Plan (2011) would essentially be a new start-up plan for this Employer A with assets attributable to them being transferred from the MEP. This would be Employer A's #002 plan. However,

2. If the 2011 Plan is a start-up (eff. March 2011) and this Employer wants to have a calendar year Plan year, would they be eligible to establish this Plan as a Safe Harbor plan? There would obviously be more than 3 months left in the PY to make elective deferrals, BUT would this Plan be considered a "successor plan" and thereby prohibiting a plan year with fewer than 12 months?

I suppose a way around that would be to establish the Plan Year as 3-1 to 2-28 for an initial full 12 months and then change to calendar year in the future if need be.

3. Or, rather than treat the 2011 plan as a new Plan, could it be treated as a continuation of their "separate plan" while participating in the MEP thereby resolving the "successor plan" and short year testing issues. What would the plan number of this plan be? Not 001, that one has long since been dissolved. 002?

Thanks for any comments.

I'm divorcing, and have agreed to liquidate my 401K giving my soon to be ex-wife 100% of the funds in the account. The account is with Fidelity, and I filled out the online assistance form Fidelity has for creating QDROs. Though neither my company, nor the Fidelity respresentative mentioned anything about the filing of forms FL-370-FL375, my soon to be ex-wife (who lives in New Jersey while the plan and myself live in California) told me her attorney stated all these forms needed to be filled out and submitted with the QDRO.

Is this correct? From what I am reading about the Joinder, it looks as though it is used it there is a dispute over the amount one party or another (or possibly and employer) would fill out if they wanted it to go before a judge.

Any help on this matter will be greatly appreciated, as I have filled out our Marital Settlement stating she gets 100% of the 401K as an equalization payment, and also the QDRO giving her 100% of the funds.

Stephen

Are 403(b) plans eligible for the DFVC program?

Thanks

We have an employee who rolled over their total balance to a ROTH-IRA. The account indulded a ROTH-401(k) potrtion where the total account value is less than the sum of the ROTH 401(k) contributions. Example Roth account at time of rollover $9,000 total Roth contributions $10,000. The instructions for form 1099-R indicate you list the basis in box 5 - the $10,000 but our 1099-R program gives us and error when box 5 is greater than box 1.

We think

Box 1 - $9,000 (amount rolled)

Box 2 - $0 since it was rolled

Box 5 - $10,000 (roth basis)

To me it seems obvious that the participant should carry over the $10,000 basis from the ROTH-401(k) but IRS guidence in 402(A) code & regs, such as it is doesn't apprear to address this situation.

Any thoughts? Since we have about an hour ledt to mail 1099-Rs I think we'll do them with the error and file an amended/corrected 1099-R if we have to.

In general, if you exclude an employee from participating in a 401(k), you can correct that operational failure under Rev. Proc. 2008-50 by making a QNEC equal to 50% of the "missed deferral". In a 401(k) plan, the missed deferral is the ADP for the employee's group. Since an ADP test is not performed in a 403(b), are there any alternatives to the ADP as the "missed deferral"? Can we go with the 3% that would be used in safe harbor plan?

we had a client that had some deferrals transmitted late. we answered the question yes on the 5500 and basically self corrected including even paying the excise tax and filing for 5330. we recently received a letter from the DOL saying that we need to correct using the VFC program. anyone ever have a situation where they corrected but outside the VFC program and will the DOL accept this correction if inform them about it?

I believe that the sale of employer s-corp stock to the employer's plan would be a PT by virtue to 4975(f)(6). Can someone confirm this? Thanks.

A plan provides for participation after 21 & 1.

The employer is a husband and wife and one common law employee.

The employee is hired 1/10/2009 and would be eligible for DB plan on 7/1/2010.

They also have a profit sharing plan.

On 6/20/2010 (just before employee is eligible) they amend plan to change eligiblility to 21 & 2 and to only include shareholders. Thus the common law employee would never enter DB plan.

If such a plan provision were incorporated prior to an employee being hired it would seem perfectly acceptable.

However, this amendment was done after date of hire and before date of participation.

Is such an amendment allowed? I haven't found much in the way of plan amendments during the period between hirre and participation.

Thanks.

A 80 employee bank has an esop and it allows a one employee Title LLC to participate in the plan.

The title company adopts the plan, but their is no affiliated service or controlled group arrangement according to the bank president.

If a plan document defines compensation as W-2 wages, should the plan include post-death cmpensation paid in the year of death and reported in Box 3 of the W-2 and on the Form 1099 MISC? Usually I just think of using Box 1 W-2 wages, but post-death wages only go in Box 3 on the W-2 from what I can tell, so I don't know if that makes a difference.

If an actuary has discretion in setting some of the assumptions used to value a qualified DB plan, does that make the actuary a fiduciary? In general, isn't an actuary considered a fiduciary to a DB plan?

I think the actuary needs to provide a written fee disclosure document to the plan sponsor to comply with the new fee disclosure rules.

Also, I don't see anyting in the new fee disclosure rules that address participant disclosure. Thus, the focus of the new rules is full disclosure of fees from covered service providers to the responsible plan fiduciary.

Thank you in advance to those who choose to reply.

LL&P