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

We haven't been asked to take on this case yet, but I want to be ready if anything comes of it. A not-for-profit has a 401(k) plan (I specifically asked if the caller meant 403(b) and was assured that we're talking about a 401(k) plan) that is apparently invested in individual annuity contracts for the employer's nearly 1000 participants. The employer wants to move the plan to another investment firm. The current provider (and holder of these annuity contracts) says that each participant must agree to the transfer because each person has his or her own contract. I was flabbergasted when I heard that. Could that be true?

If a key employee contributes 8000 and has a compensation of $200,000, his contribution percentage is 4%, so a minimum top heavy contribution of 3% would need to go to all non-key employees. If this key employee is over age 50, can we subtract 5500 from the 8000 and make his contribution percentage 2500/20000=1.25% so that the minimum top heavy contribution due to employees is 1.25% rather than 3%? We were not required to move any of the 8000 to catch up to pass ADP testing.

Thanks

I posted this one a few months ago, but in case you missed it

this is a modified summary of accounts reports that mimics the 5500 account data format.

I use the user defined fields to track the suspense account changes, so its possible you will have to modify the report slightly if you are using the number fields for some other purpose.

of course its a use at your own risk, but I haven't run into any problems with the report. might have to adjust distributions if there was a corrective distribution and other such things, but its the best I can do for now.

success the second time around.

This year's import files failed the first time around, there was something wrong with the import file initially but the folks at Oppy appeared to have fixed that.

by the way, since this doesn't appear to be documented well on the Relius help screen (I can't find any mention of it anywhere), the Oppenheimer import file is a PAS file and you use

FASCore (or I think even GreatWest) as the Vendor Name

Looks like this year Oppenheimer has also included a PAS.xls file which could be used if you want to create your own DER routine.

Participant is at 415 limit. So monthly benefit is $16,250. 100 x Projected beneift = $1,625,000. NRA = 62

Actual insurance is whole Life Policy with Death Benefit = $3,000,000.

In applying incidental death beneift using the 2/3 rule, you are supposed to calculate the ILP Premium and 2/3 of ILP is deductible.

Question: In determining ILP, what is the premium funding toward: $1,625,000 or $3,000,000 or something else

(Or how do we calculate the IL premium?)

Thanks for all responses.

.

Two people, HCE and NHCE.

-Plan is integrated at taxable wage base.

-NHCE terminated (no break) and does not qualify for a contribution.

-Plan is failing ADP test and a small QNEC would pass the ADP test.

As it turns out, the QNEC would allow us to pass the average benefits test as well.

The question is, do I have a nondiscrimination problem, in light of the fact that I need to pass (a)(4) testing with and without QNEC's. I maintain that I have a design based safe harbor allocation, which is being adhered to, and is therefore stil in tact. I failed the ratio percentage test but passed Avg. Benefits. I am only yusing Avg. Ben. for COVERAGE, not for (a)(4) testing, and to the best of my knowledge, I am not required to pass coverage with and without QNECS. So am I OK?

OR does that fact that NHCE is getting a nonelective contribution (i.e., the QNEC) that is less than HCE's mean that I now need to satisfy rate group testing?

Sometimes when you finish writing a question, you change your mind about what the answer is... And in this case, I think I just convinced myself that I do indeed have an (a)(4) problem because QNEC's are not exempt from (a)(4) testing. Thoughts?

Plan is top-heavy and subject to Gateway Minimum.

Participant is terminating with 450 hours of service 11/1/2010.

Question: is terminating employee entitled to the 2010 TH/Gateway Minimum distribution (even though not meeting the 1,000 hours threshold)?

Thanks for all responses.

It was recently discovered that the company I work for has been using pre-tax dollars for the employee's group health and group term life insurance premiums without a formal, written plan document. No enrollment forms were ever obtained from the employees. This started approximately six years ago.

Our insurance broker obtained a written plan document for the company with an effective date of 01/01/11. He informed us that enrollment forms were not required - that our employees were, by default, already in the plan and did not need to enroll. He also informed us that new hires did not need to enroll.

I am not an HR person but I do share the accounting duties. It is my limited understanding that this is a Premium Only Plan and falls under Sec. 125 of the Internal Revenue Code which requires us to have a written plan document and also requires us to obtain written enrollment/election forms from each participant. It is also my understanding that these forms should be obtained prior to the effective date of the plan.

What should we do from this point forward? Do we immediately stop using pretax dollars for benefits, amend the effective date of the plan to a later date to give us time to send out the enrollment forms and Summary Plan Document to all participants? Or, do we continue using pretax dollars for beneifts, keep the effective date of the plan 01/01/11 and obtain enrollment forms from the employees ASAP? If we use the second approach, will we be in compliance with IRS code and regulations upon receipt of the enrollment forms even though they are dated after the effective date of the plan?

Last question - I know we have an exposure here in case of an audit. How many years back can they go and how harsh are they on penalties?

Thanks in advance for any assistance.

I'm not thinking clearly this morning with regard to top heavy. I have a plan with no eligibility for 401(k) contributions (all enter 1st of the month following hire). Plan is safe harbor. Plan is top heavy. Employer wants to make a profit share contribution for 2010. I know as soon as there is a profit share allocation the safe harbor top heavy "free ride" goes away.

Profit share eligibility AND allocation is 1 year of service, 1000 hours, last day rule.

This Doctor has 5 employees, 4 of whom are eligible for profit share without question. The 5th employee is a participant under the 401(k) portion due to the immediate eligibility, but not contributing.

She has worked approx 315 hours per year since her hire date. She is not termed.

I believe that she is required to receive a top heavy minimum contribution because even though she has not met the eligibility/allocation requirements for the profit share portion she is a plan participant as of 12/31 (due to the 401(k) eligibility) and therefore must receive a top heavy.

That being said - this is a comp to comp basic profit share formula. If the other participants receive, say 15% of compensation, must she also receive 15% of compensation or can 3% only be allocated to her?

Am I all wet and she can be excluded entirely from any profit share allocation?

any help appreciated

The employer is going to move from individually directed accounts into a pooled account with trustee direction. Is blackout notice required? Is there something else that participants need to be able to do for this to happen?

So I just concluded a VCP in which the Plan Sponsor failed to include several employees in its DB Plan. We received a compliance statement and the Plan Sponsor has made a contribution on behalf of the omitted participants.

One of the omitted participants is 77. Had the contribution made on time, the participant would have been receiving RMDs for a couple of years now.

I have never run across this issue before. Has anyone else ever dealt with it?

I know EPCRS offers a mechanism to fix RMDs that are not processed in a timely manner. Does anyone think I need to do another filing to correct late RMDs?

I have a couple questions regarding Union EE's in a 401(k) PSP.

I have a controlled group wherein some of the companies have union employees. And for some companies, the union ee's are eligible to participate, and in some they are not.

1) How do I do the coverage test? Test "regular" and union separately? And if I test the unions by themselves, what does that population look like? Because union ee's can be excluded statutorily, will I have a 100% rate because I can exclude some of them right off?

Here's an example:

5 Regular

6 Union A (eligible)

4 Union B (not eligible)

Does my coverage test have 15 people (regular + all union)? 11 (regular + elig union)? 5 in one test (regular) and 11 in another test (all union)? Or 5 in one test and 6 in the other (excluding the 4 non-eligible union from test completely)?

2) And I'm assuming my ADP testing will be done the same way? (Though I know I have to at least separate the regulars from the unions).

We don't do much with either DBs or church plans, so I'm really out of my element here. I don't believe that participants under a non-electing DB church plan would be protected from creditors because they aren't under ERISA. But just because it seems logical to me doesn't make it so. I also found an earlier link that said a church plan isn't covered by the PBGC either. Is that true whether or not they chose to be an ERISA plan, or would an ERISA church plan be required to pay PBGC premiums? Your help is appreciated.

Does Box 5 get filled out with the amount of the in-plan Roth conversion on a FOrm 1099-R for 2010? The IRS website has instructions for 1099R reporting for in-plan Roth conversion and one of the bullets sayd to Report the basis in the amount rolled over in box 5 (Employee contributions) - does this mean to report any amount that was after tax contribuitons and would therefore not be taxable at the time of the conversion or does it mean to put the entire amount of the in-plan conversion (that is now the basis for the Roth account) in box 5?

Any thoughts? At first I thought the entire amount but now I'm starting to think maybe not?

Client that maintains a PSP w/115+/- participants wants to provide in updated SPD that an applicant applying for a plan loan will be subject to a one-time $125.00 loan processing fee as well as an annual fee of $100.00 (on account of audit charges from accountant and plan auditor concerning loans). I am not a TPA and thus don't have a good handle on what the range is on such fees. Can anyone give me an idea if the above is within reason? Thanks for your help.

We have a client that failed to file the 5500 timely.

They paid various legal expenses for the DOL submissions to correct the late filing.

They now want to run those fees through the plan.

I know great thing to do. You fail to do your job and now you make your employees pay for it.

But it isn't clear to us what type of expense this is.

Any help and reason why you think the way you do would be helpful.

Sorry, the question isn't fully clear.

We don't know if they can do that. Although so far the answer is looking like it is a "no".

If anyone has something real black/white on the subject let us know.