2010 Calendar Year Plan. 2010 AFTAP was certified in September based on September 2009 segment rates. AFTAP was 80% after deemed credit balance waiver of $100,000.

If 2010 funding assumption election has yet to be completed and employer wishes to elect January 2010 segment rates, an additional deemed credit balance wavier of $20,000 would be necessary to keep AFTAP at 80%. Is this acceptable since AFTAP would still be 80% or is it too late for additional deemed waiver of credit balance??

Thanks.

There is a difference of opinion around our office as to who should directly respond to an IRS Proposed Penalty Notice for a late filing and input from you guys would be greatly appreciated. Typically (and especially lately) these type issues are resolved by faxing documentation supporting why the filing should not be considered as late. Here's where the difference of opinion comes in-should the TPA respond directly to the IRS on the plan's behalf or should the Plan Administrator respond directly to the IRS....or does it even matter?

What are the best software or web site options for testing small 401K plans that belong to a control group? I want to run different scenarios to try to get a better understanding of how different parameters affect things like 410B testing. For my purposes, all 401K plans in one control group would be Safe Harbor plans with a 4% match that immediately vests.

Where I currently get extremely confused is when you have two or more companies - each with their own 401K plan - and each company wants to use a different profit share. How much disparity between the different plans is allowed for the profit share is really not clear to me at this point. If HCEs exclude themselves entirely from the plan with the more favorable profit share, how does that affect the ability to have disparity between the two profit shares?

An example that is totally hypothetical, use a single control group that consists of:

Company A: 2 HCEs, and 6 NHCE, and 100% participation to at least 4% by both categories of employee

Company B: 2 HCEs, and 3 NHCE, and 100% participation to at least 4% by both categories of employee

If Company A had a $20K profit share and Company B had a $60K profit share, I assume it is going to fail some test since the HCEs are disproportionately benefiting from their larger percentage in Company B against a larger profit share. What if the 2 HCEs remove themselves from the Company B plan? In that case could the profit share for B be $60K against the $20K for Company A?

There may be other variables I need to fill in to answer the question, which is why I want software or a web site that lets me specify a more detailed profile for employee salaries, contributions, age, etc.

My budget for this is under $1K. Hopefully someone makes software with a license that is affordable for control groups with small numbers of employees.

Any recommendations are appreciated.

I have been with this office since 3/07. It has come to my attention last week that there is a SIMPLE IRA plan that some of the employees are in. It seeems it has been inplace for about 8 years. When I approached my employer about the plan he said yes for employees after 3 years of employment,I am there almost 4-I asked him for the information and he is supposed to get it for me next week.

My questions : Is the 3 year for elegibility correct?-He said he decided the terms of the elegibility--I thought it was $5000in 2 previous calander years?

Since I started in 3/07 and made over$5000 in 2007 and 2008 would I have been elegible 1/09 or 3/09 or 1/10?What date would I have been elegible and when should I have been notified?

I also have a coworker who was hired a month before me who has not been informed of this. I understand that if he missed notification there would be some kind of "correction" by the employer into the plan.How does that get calculated and by whom? Does this get reported to anyone? ERISA,IRS,DOL? ESpecially since I am not the only one. Any input appreciated.

SEP has elected one year of service out of the preceding 5 years, if hired in 2010 and worked any hours, would that person become eligible in 2010 or 2011 for contributions? I think they would become eligible for contributions in 2011, if they work that is..

Thanks,

Anybody have any thoughts on using the model comparative chart published by the DOL in connection with the Participant Fee Disclosure Regs. for purposes of satisfying the S-8 requirements for providing financial data for the participant directed investment options under a plan? The S-8 requires financial data for "each of the past three fiscal years" but the DOL regs require the average annual total return for 1-, 5- and 10 yr periods for each option. Obviously, these two requirements don't synch exactly but it makes no sense to have two separate charts. For those of you who have to do the prospectus/SPD what are you doing? Thanks for any input.

Calendar year plan/dual entry dates

Employee hired 6/12/06, termed 6/29/07 before entry date of 7/1/07 (had 12 months and 1000 hours during employment)

Rehired 9/1/2010.

She obviously had breaks in service in 2008 and 2009.

Is she eligible to participate in the plan on 1/1/11 or does she start over with a hire date of 9/1/10?

Our plan document provides that if the Plan's vesting schedule is amended, then each Participant with at least 3 years of service has the option of keeping the old vesting schedule. I have been asked if this would apply even if no money has been contributed to the account subject to vesting. In other words, the plan right now only has 401k and SH money in it and no PS. The ER wants to amend to change the vesting from 100% and then start making PS contributions. Based on this plan language, I don't see how we can make new PS contributions subject to a different vesting schedule for those with at least 3 years of service. Am I misunderstanding the language?

Thanks

Given a DB/DC combo plan with cross-testing.

Plan has:

3.0% Safe harbor 401(k)

4.5 PSP contribution

Total Employer contribution = 7.5% which covers:

5.0% Top Heavy

7.5% Gateway

Question: Is the "1,000" hours and "end-of-year employment" requirement for PSP employer contribution applicable in this case?

Client has a payroll cycle where the paycheck for final payroll period which ends 12/31 is paid in the first week of January. Their deferred compensation plan states that deferrals for the final payroll period are attributed to the prior year when earned, not paid, to comply §1.409A-2(a)(13).

The client inadvertently neglected to deduct any deferrals from the first January 2011 paycheck that was attributable to December 2010 wages. They are planning on correcting by deducting from the next January paycheck. There are no insiders and amounts in question area all less than 16,500 for each individual.

Under Notice 2008-113, does this fall under IV.A as a correction of a missed deferral in the same tax year (2011) or under V.B as a correction in the subsequent tax year (a deemed deferral for 2010 corrected in 2011)? I can argue both sides so I'm letting the client's counsel be the tie breaker, but I'm curious if there is a right answer.

We currently administer tax-exempt 457(b) plans and are looking to streamline the distribution process. I have found where we can act as payor of these distributions and withhold a flat rate of 25% as opposed to returning the funds to the employer and have them process these payments. If we elect to do so, would we report our EIN as payor on a the W-2? Additionally, at any point can we report these on a Form 1099-MISC since these are non-employees to our firm? Any assistance would be much appreciated!!

Anybody worked to correct situation where employee elected Roth 401(k) deferrals for the year but doesn't discover that plan sponsor misread or made a mistake and treated deferrals as regular (pre-tax) deferrals until employee gets their W-2.

Seems the regular deferrals for 2010 need to be rechacterized as Roth deferrals but that's going to require putting in some more money in order to get to the full Roth deferral amount that was elected once you deduct taxes from the regular deferral amounts, etc.

Does plan sponsor have to make that up entirely on their end or can they request participant to pay the additional amounts they had already elected / agreed to contribute on an after-tax basis. I have not researched but wonder if there is an EPCRS-type solution for this?

Thanks for any thoughts or assistance you may provide.

A small medical practice that includes only HCEs set up an HRA. Prior to the HRA they had been using HSAs. One of the partners says he would rather keep his HSA and either not particpate in the HRA, or perhaps do both if he must participate in the HRA. He likes using the debit card that comes with the HSA. I thought I heard that the use of debit cards was going to be temporarily unavailable until they figure out how to overcome the problem with needing an Rx for over-the-counter drugs. Can this partner continue to march to a different drum, or must he conform and go with the HRA only?

I have a top heavy plan with constantly changing ownership. When a key employee's ownership drops below 5% (or 1% and earnings drop below the required amount) they become a former key employee, and their account balance in the plan is excluded in determining the top heavy ratio. For all other purposes (minimum vesting and benefit) they are a non-key employee.

Many of these key employees also have children working at the firm. When the key employee owns more than 5% (or 1% and earnings are over the required amount) the child is also considered a key employee by attribution (IRC 318). However in a following year when at any time during the year the parent's ownership fell below 5% (or 1% and earnings drop below the required amount) and the parent is considered a former key employee, and their account balance in the plan is excluded in determining the top heavy ratio, is the child also a former key employee, and their account balance in the plan also excluded in determining the top heavy ratio? Or are they just non-key and their balance still included in the top heavy ratio?

The confusion is in the section in the top heavy regulations that refers to 318 attribution, only refers to attribution to a key employee, not to a former key. And the part of the regulations that discusses former key employees gives examples with ownership losses for the key employee but never discusses that someone who has ownership by attribution could also be a former key. On the other hand the regulations do define former key as someone who used to be key.

thanks!

holly

I have a client (partnership, but I don't think it makes a difference) who is implementing an HDHP with associated HSA.

They require a $75 per payroll contribution from employees for premium contribution.

They have decided that the cost savings of moving to this plan is significant enough that they are going to deposit the $75/payroll into the employee HSA. There are some employees with dependent coverage who want to put additional monies into their HSA through payroll deduction.

How does the employer handle these deductions in their payroll?

A client made a contribution in excess of deduction limit by more than 25,000.

The plan provides for the refund of an employer contribution, but it does not explicitly say that a contribution is conditioned to it being deductible.

In order to get a return of such contribution the IRS request requires that the plan provides for a return of contribution and either in the plan or by means of a resolution a statement stating that plan contributions are conditioned on their deductibility.

If plan sponsor creates a resolution today can it make an IRS request for return of a prior contribution? That is, the contribution maed prior to the resolution.

Contribution was made less than a year ago as the plan requires such refund within the year. Of course by the time they hear from IRS it would have been longer than a year.

Any thoughts?

Thanks.

Must a terminated non-vested participant in a defined benefit plan recieve the report required under ERISA Section 209(a)? Is there some question in the industry on this matter and if so what is standard practice?

With respect to a situation where a withdrawal and demand for withdrawal liability occur prior to the withdrawing employer filing for chapter 11, can anyone confirm that the fund becomes an unsecured creditor and the employer should cease to make any scheduled payments until ordered by the bankruptcy court.

Does anyone know where I might locate some guidance or discussion regarding what elements of our HIPAA Privacy Policy should also be included in our Employee Handbook and general policy manual (for HR)?

What are other companies doing?

Coverage question:

For profit sharing contributions, if the plan has a last day/1000 hours requirement, if a participant terms with less than 500 hours, they can be counted as "excludable".

Does the same hold true for matching contributions?