Anyone have a standard distribution form in Spanish that they might be willing to share?

I've recently changed jobs and found myself working on QACA plans for the first time. I think I remember that the change rules are the same as the traditional safe harbor plans, but I'm questioning my memory.

A plan has 2 year eligibility for discretionary contributions (both match and PS) and 1 year eligibility for deferrals and QACA contributions. The client had conversations 8 months ago with consultants from two service providers who understood that they wanted to amend their plan from a 3% non-elective contribution, to an Enhanced Safe Harbor match at 4%, retaining the QACA features. A letter of intent was signed indicating a desire to amend the plan.

Both consultants subsequently left their jobs before action was taken. Based on the letter of intent, a new employee of one of the service providers obtains a second, more detailed letter of instruction from the client and prepares the amendment. The amendment is signed in late December and the QACA notice showing the revised terms is provided to the employer at that time. It is not known if the notice was ever distributed to the employees.

The client now says that they did not want to make this change (despite signing multiple documents indicating otherwise) and wants to know what their options are. Short of destroying the signed amendment and everyone pretending to have never seen it, do they have any options for 2011?

Curious if anyone has an opinion with regard to this situation:

Employee leaves, DB plan pays lump sum distribution. Former employee returns later making a claim that the distribution was not calculated properly. Claim is based upon non-discretionary factors in plan. Former employer, who is also Plan Admin, responds with threats of civil suit on completely unrelated matters should the former employee pursue her benefits claim. This goes on for a while until it is clear admin remedies are exhausted.

Would something like this be grounds for a civil action under ERISA 510? or is there something else?

much appreciated

IS there an issue in offering annuities as a payout option in a 457b tophat plan? The employer owns the assets and the assets are subject to creditors. It may be difficult to pay an irrevocable annuity to a participant while the assets are subject to creditors. Can anyone add some light to this?

Thanks!

I have a plan that is subject to the ADP Test, and it is going to fail the ADP Test this year. Here are the facts:

3 HCEs

HCE 1 – under 50, Compensation $184,933.34, deferrals of 10,113.72 (5.47%)

HCE 2 – over 50, Compensation $139,516.62, deferrals of $13,445.60 (9.64% with extra 5500, 5.70% without)

HCE 3 – over 50, Compensation $131,000.00, deferrals of $12,654.30 (9.66% with extra 5500, 5.46% without)

Plan is using Prior Year testing, and the maximum amount they can contribute for 2010 is 5.42%. The company tried to have them contribute the 5.42%, and then added an additional $5,500 for catch-up contributions for the 2 HCEs over age 50. Plan document has no deferral limit, and says that the participants can contribute up to the maximum amount it will not cause the Plan to violate the ADP Test.

My question is concerning when I take out the Catch-up contributions. Since the participants have not deferred $16,500, do I have to calculate their ADP based on total deferrals (which would be the $13,445.60 and $12,654.30), or, can I take out the 5,500 BEFORE I run the ADP Test since they reached the ADP limit first, exclude the Catch-up contributions and then run the ADP Test using deferrals of $7,945.60 and $7,154.30.

Here are the results of both ways:

1. If I keep the full deferral in the ADP Test, there are total excess contributions of $11,528.23, and the excess is allocated $1,885.25 to HCE1, $5,217.14 to HCE2, and $4,425.84 to HCE3. Because HCE2 and HCE3 are over 50, their contributions get re-classified as catch-up, so they have no refund, while HCE1 is stuck with a refund of $1,885.25 before allocable income.

2. If I take out the $5,500 before we run the test, there are total excess contributions of $528.23, and the entire amount goes to HCE 2 (before allocable income). Both HCE2 and HCE3 get to use the $5,500, and HCE1 is not stuck with a big refund.

Please let me know what you think. Thanks.

Let us say a doctor has a clinic in the U.S., and he's a 100% owner. He's also a 100% owner of a clinic in Puerto Rico. If the U.S. clinic establishes a plan, is it a controlled group and must he include the Puerto Rico employees?

I believe it IS a controlled group. I find no dispensation for this in the CG rules. HOWEVER, it sems to me that he can perhaps make a valid exclusion from his U.S. plan of all the Puerto Rico employees if they receive no U.S. source income. So this would allow him to exclude them all and still pass testing.

Agree/disagree? thoughts? Thanks!!

As I look into this further, I think my initial opinion was probably incorrect. It appears to me that the Puerto Rico employees will generally need to be included, or at least included for testing purposes. It may be possible to exclude them on a "regular" basis such as for hours, or by classification if you can still pass coverage testing. There's no exception in the controlled group/affiliated service group rules, and it appears that the exclusion under IRC 410(b)(3)© - that is, for employees who are non-resident aliens and receive no U.S. Source Income - is not generally available for employees in U.S. possessions. See the following from Revenue Ruling 2008-40 - emphasis is mine. There might possibly be some "wiggle room" on this, but apparently many Puerto Rico workers are either U.S. citizens OR are considered U.S. residents for income tax purposes. I guess it would require an ERISA or tax attorney to apply this to the specific situation with the Puerto Rico employees.

4. Application of section 410(b) to U.S. plans of employers with excluded Puerto Rico employees. (a) Background. Section 410(b) requires the sponsor of a qualified plan to include all employees in testing coverage regardless of whether the employees benefit under the plan. Section 410(b)(3) provides certain exceptions to this coverage requirement, such as §410(b)(3)© which permits the exclusion of nonresident aliens who receive no U.S.-sourced earned income from the employer. However, employees in possessions of the United States, such as Puerto Rico, are not excluded from coverage testing under §410(b)(3)© because they generally are not nonresident aliens. Section 410(b) also precludes the aggregation of a nonqualified plan, such as a plan qualified only under the Puerto Rico Code, with a qualified plan for purposes of testing coverage.

A nonprofit enters into a "deferred compensation" arrangement with a key employee. The arrangement document complies with 409A, e.g., proper deferral election and time and form of payment provisions under the 409A -- "the deferred amount will be paid in a lump sum on month/date, 2014, and no earnings will accrue on the deferred amount." But . . . there is no substantial risk of forfeiture, the money is vested up front.

Nonprofit later discovers the error one year after the agreement is signed.

There was immediate taxation to the executive under 457(f) because of the absence of a substantial risk of forfeiture. But . . . is there a 409A penalty if the document otherwise complies with all of the 409A rules? (If the company were a for profit entity, no 409A issue.)

Thanks.

In reflection, I concluded that Lone Ranger and Tonto had to have had a lot of down time. So, the question is why didn't TLR spend some of that time learnin' Tonto better grammar?

Stidying for the ERPA exam and cannot figure this out...

The RAP ends on the last day of the plan year that includes the later of the dates on which the amendment is being "Adopted" or "Effective", OR the due date of your tax return, etc.

Can someone give me a scanrio where the last day of the plan year including the effective date or the adoption date of the amendment would be LATER than the due date of the tax return for the plan year which includes the adoption or effective date? It just seems impossible to ever not be subject to the due of the employers return provision... I'm sure it's got something to do with a fiscal year end plan, but I can't think of the scenario. I suspect if someone told me whne this applied I might be able to understand this nonsense a little bit better!

(edited for some inaccurate language)

I've been with my company almost 2 years, and was enrolled in a medical benefits plan on day one. I was just told the plan I'm in is no longer being offered to hourly employees, it's only being offered to salaried employees. They then offered me a plan that's not much better than no coverage at all. I know they don't have to offer a plan at all here in New York, but can they offer 2 different plans based on hourly or salary, and can they just reduce my plan like this?

In drafting the Cash Balance Plan document (which is converted from Traditional), do you treat this as a:

(a) New plan, or

(b) Restatement, or

© Amendment

Thanks for all responses

My previous job had a high deductible insurance plan that also included a Wells Fargo HSA. I've since changed to a new job that has insurance plans with FSA accounts. If I pick one of these new insurance plans but decline the FSA coverage, can I still make eligible contributions and withdraws from my HSA for medical expenses?

I had a plan termination in which every participant was cashed out. However, I forgot to check the box for final return on the 1096. Is this a big deal? Will I have to resubmit all of my 1099s now to amend the 1096?

Here's the background...

for all of history and 2008, the plan used MVA

2009 and 2010, the plan used 2 year smoothing

Can I get automatic approval to change the AVA to MVA for 2011? or do I have to get approval?

Andrew

Can a pension plan with an AFTAP<80% make a contribution to increase funding to >80% at any time, and then be able to make routine distributions?

Company A has a 401k plan that currently only has elective deferrals; match is discretionary and has not been made in years.

Company B buys Company A mid year. Some Company A employees are paid by divisions of Company B and some continue in Company A. Company A employees deferrals continue to Company A plan until end of year. Plans are merged during following year.

Do all compliance tests on Company A use full year Comp and deferrals, regardless of what entity they were paid from?

Employees do not have the ability to withdraw and rollover because there is no distributable event, correct?

Can someone tell me where I can find copies of all the different Mortality Tables that can be used when doing a Cross Tested (New Comp) Profit Sharing Calculation.

I know there have been posts related to this, but I present this fact set with question or verification.

Numbers used are for simplicity and not necessarily precise.

To my knowledge regs do not address quarterly interest adjustments for end of year val dates, but software provider does make an adjustment for min funding in connection with late quarterlies for end of year val.

Val date 12/31/2010

Actual assets 12/31/2010 = 1,000,000

Plan contribution of 100,000 for 2010 plan year made 12/1/2010 (before val date)

Contribution applied to minimum funding:

Such contribution would be discounted back (2010 eff rate + 5%) to the due dates of quarterlies and then credited to 12/31/2010 at eff rate.

So result of contribution credited was $98,000 for 2010 minimum.

That technique is pretty straight forward.

Calculation of 12/31/10 actuarial assets:

My impression is that val assets would NOT be 1,000,000 less 98,000 = 902,000, but would be along the lines of:

contribution of 100,000 at 12/1/2010 would be increased to 12/31/2010 at eff rate to say 101,000

Valuation assets would thus be 1,000,000 less 101,000 = 899,000

Moral of story is that contributions are adjusted to include quarterly interest penalty for minimum funding crediting, but are not adjusted with quarterly interest penalty when determining plan assets for the valuation.

Is that correct?

Thank you.

I took a distribution from my Roth to purchase a first home. The distribution was less than my total contributions to the account and the account has been open for 6 years. The home buying contract fell apart and I am no longer in the market for a home. I took the distribution about 45 days ago.

My question: Can I return all of the money to the Roth? Can I return part of the money to the Roth?

Under what situations should I secure a Erisa bond for our 401k plan? Do you always need one?

thanks