I've just completed the ASPPA DC-3 and DB exams and was considering taking the ERPA exams the first of the year. I was wondering how the ERPA exams compare to the ASPPA exams as far as difficulty. I know ASPPA views these two designations comparable to each other but wanted to see if anyone who has taken the exams recently could give their 2 cents.

Thanks!

A U.S. citizen non-resident plans to establish a Seychelles Island corporation. He will be the sole owner and employee of the corporation. The corporation will contract with a U.S. corporation to provide consulting services to various entities in Asia and Europe. The U.S. citizen only travels to the U.S. once a year. Can the Seychelles Island corporation establish a defined benefit plan for its sole owner-employee which will be qualified under Section 401(a), provided that the trust established is a U.S. trust?

Small company started an "owner-only" 401k plan. Problem was that there was an eligible employee not covered, maybe more.

There is the owner, owner's wife, a part-timer and a full-timer. So he could have kept out the p/t (if less than 100o hours) and the owner's wife. But then again, if the document never said that, that might not work anyways. But the F/T looks like she had to be in regardless.

What is the fix here? The plan has only been around 3 years and the owner has only put in no more than $10,000 401(k) money into the plan. No other money in the plan. He could go back and bring the F/T in, with ER contributions, earnings, etc. But he would be on the hook for 3 years of missed 5500's, correct (he's never filed since it was 1-life & under $250K). That's a $1,500 DFVC filing. Then there is a VCP filing to bring the F/T. Plus the ER contrbutions for 3 years, plus earnings. And assuming the document (if there is one) doesn't exclude the owner's wife or have a 1000/1 Year wait to get into the plan, he might have to do the same for the other 2 people. Who know, maybe another VCP filing for a missing document?

I haven't seen all of the workings on this yet, but some/most/all of the above will be true and if so, its going to cost him a lot of money to fix.

But, he only has $10,000 in the plan. Is it better/cheaper to have the plan DQ'd, have what's in there now taxable to him, and re-file his tax returns for the past 3 years? Is there a way to guess/quantify what plan DQ might cost him?

Thanks for any comments.

If a participant is laid off (with the understanding that they will return to work at some point in 2011) as opposed to having terminated employment, are they still on the hook for ongoing loan payments? I'm sure the answer is yes, but what I mean is this:

Participant has about another year to go on loan repayments and her balance is around $800. She is being laid off on 12/31/10. Her last loan repayment via payroll is also on 12/31/10. Since she will be laid off, she was hoping she could lower her repayments to something more managagable while she is out. Is this allowed? Probably not, right?

If the plan allowed for more than 1 loan at a time, could she take an additional loan out, spread the payments out over 5 years, and repay that loan with smaller payments?

Joe Smith is a 57yr old Key & HCE. Joe defers $10, 500 for the 2010 plan year. The plan uses Current Year testing. In order to lower the HCE's ADP & thus pass testing, can 5,500 of the 10,500 be recharaterize as catch-up before the ADP test is ran?

Can a self employed individual that has hired his spouse, create and contribute both his deferral and his wife's deferral into one investment account or must each individual open and maintain separate deferral accounts? The business owner intends to manage the investments as the trustee. Tks for any input.

Does the DOL's transitional relief (provided in FAB 2009-2)--that generally permits the Form 5500 to ignore certain pre-2009 contracts--apply only to 2009, or does it carry over to future years' Forms 5500?

We have an on-going IRS audit on a client's 403(b). The audit started in Fall 2008. We've been responding timely to information requests, but it was taking 3-6 months each time before we heard back from the agent. Our last contact was an 8 page letter we sent in February in response to an information request. We have not heard anything since then. Do they have a limit on how long they can drag this out?

Plan has per payroll period matches for plan year 1/1/09 - 12/31/09. We ran the ACP test for this client and determined that an HCE needed a refund. The ACP refund was processed timely before 3/15/10.

Later, client determines that they did not calculate the 2009 matches correctly and therefore corrects this by depositing the additional matches to the plan. Now, we are re-running the ACP test and we find that the HCE who previously received the refund now should have had a lower refund processed. What is the correction for this excess distribution?

An employee rolled over a distribution that wasn't eligible for rollover to an IRA. Is there a deadline by which the rollover transaction must be unwound? If it is never undone, is the IRA forever tainted? Or is there some sort of statute of limitations?

We have a 401k plan sponsored by a large medical practice. They commonly "acquire" employees, meaning recruit, medical staff from different practices around the country. It appears the employees are mainly HCE doctors, but could also include NHCE medical staff such as RNs, PRNs, etc. They have been granting these new hires with 100% vesting under the k plan, which has a 3 year graded schedule. I know there is a special merger and acqusition rule in the 401(a)(4) regs that allow a one time BRF test, but this is not an acquisition. My question is does this granting of full vesting create an annual BRF test? These employees during the first year of hire would be NHCE correct, so what would be the testing issue in the first year? In year 2 I could see testing. However, when you look at the rules for imputed service and vesting, it appears it may be ok to impute vesting or up to 5 years of service, as long as certain conditions are met - see excerpt below. Employer does not want to credit prior service with the current employer, because this is hard to track,, some of the doctors are contract employees etc. So how can they accomplish their goal in terms of drafting the plan, and if possible avoiding testing?

ERISA Outline Book

2.b. Granting of pre-participation service. Pre-participation service means any service prior to the employee's commencement (or recommencement) of participation, with the employer maintaining the plan or with a prior employer. For the granting of pre-participation service to be nondiscriminatory, the provision must apply to all similarly-situated employees, there must be a legitimate business reason to grant the service, and there must not be significant discrimination in favor of HCEs, neither by design nor by plan operation, resulting from such grant of service. Treas. Reg. §1.401(a)(4)-11(d)(3)(iii)

Individual A earns $200K each year from a C-Corp he owns from 2000-2005. He converts the C-Corp to an S-Corp and takes $20,000 as W-2 income from 2006-2010.

Can I establish a plan in 2010, based on the $200K/year comp he earned from 2000-2005 for 415 and benefit purposes? My initial thought was yes, but I wonder if the change of corporate structure impacts anything. (neither corp ever maintained a db plan.)

Also, the S-Corp makes a lot of money without requiring many hours worked. He is currently age 71. I know I can avoid the MRDs at least until he is vested, but what if we use a 1000 hour rule for vesting service and he can document he never works 1000 hours after the effective date of the plan. I'm thinking about using 1 hour of service for accruals, but 1000 hours for vesting. If we use a 5 YOP rule for NRA, wouldn't that allow me to avoid MRD's until his NRA, or do you think that might be considered some sort of avoidance and therefore be frowned upon by the boys in DC?

I think it is ok to ignore past service for vesting, even though I am considering past comp for 415 limits and benefit accruals. Any problems with my thinking?

We have a governmental 401 (a) plan with a 7.5% mandatory FICA replacement contribution, designed to be a 414() pick-up. Since the employee portion of the social security tax rate is being reduced by 2%, the employer wants to know if the mandatory pick up amount should also be reduced under the plan?

Any thoughts??

Under PPACA, a group health plan cannot rescind coverage under the plan with respect to an individual once the individual is covered under the plan unless the individual performs an act, practice, or omission that constitutes fraud, or unless the individual makes an intentional misrepresentation of material fact. In addition, a group health plan is allowed to cancel coverage retroactively for non-payment of premiums.

The Interim Final Rules set forth an example which states that an employer who sponsors a group health plan provides coverage for employees who work at least 30 hours per week. Individual A has coverage under the plan as a full-time employee. The employer reassigns A to a part-time position. Under the terms of the plan, A is no longer eligible for coverage. The plan mistakenly continues to provide health coverage, collecting premiums from A and paying claims submitted. If the plan discovers that A no longer works at least 30 hours per week, the plan cannot rescind A's coverage because there was no fraud or intentional misrepresentation of material fact. The plan may only cancel A's coverage prospectively.

I am wondering how other employers, who use automated benefits systems, are planning to comply? Also, does anyone know if these rescission rules are intended to "trump" HIPAA's special enrollement rules?

A small DB plan covers the company owner and 5 employees. Plan assets are invested very aggressively (not our recommendation). In early 2008 the plan had assets of $1.8m and liabilities of $1.4m. As of January 2009 assets of $200k and liabilities of $1.5m. As of today assets of $1.8m and liabilities of just under $1.7m.

The owner has reached NRA and we would like him to be able to take an in-service distribution of his entire benefit. This way he can satisfy his gambling addiction with his benefits and not affect employees.

I believe any reasonable method can be used in valuing benefits for determining whether plan assets will exceed remaining benefits by more than 110%. How about valuing benefits using funding segment rates (yes those same rates that make new DB plan benefits exceed assets by 20%)?

Many states do not conform to PPACA/HCERA and Notice 2010-38 regarding federal tax exclusion of value of coverage provided to over age dependents (up to age 26 regardless of student status, etc.).

In determining imputed income at the state level resulting from such coverage, what of the instance of an employee who is already paying the maximum family coverage premium? Addition of a minor dependent would not increase his or her premium, so can there really be said to be imputed income at the state level? And for the employee whose overage dependent causes coverage to increase from, say, self-plus-one to family coverage, is the imputed income equal to the difference between the old and new premium amounts?

I would be interested in others' comments as we head into Form W-2 season.

Thank you.

I am reviewing a plan valuation (new plan to me with 3 participants) this plan did the following in applying the change in NRA from 55 to 62:

1. Added an unrelated ERA (i.e. 55 & 25) for AB as of 1/1/09.

2. For the couple of employees under age 55 the plan essentially determined the AB to be the actuarially increased benefit from age 55 to age 62 with wearaway. It seems reasonable.

3. For the employee over age 55 (this one seems a little dicey to me) who has over 25 years of service they consider such person eligible for immediate retirement for the AB up to 1/1/09 (that seems fine) and additional accruals after 1/1/09. It seems that the additional accruals after 1/1/09 may be eligible for NR at age 62 instead of immediately.

Any observations?

I know I can revisit Notice 2007-69 (I beleive that is the one).

Thanks.

It seems to me that it is still not entirely clear if the 5500 forms are tax returns or information forms. Also, there seem to be risks for obtaining or not obtaining a PTIN number for certain employees.

The IRS Page, "New PTIN Requirements for Tax Return Preparers" " requires all paid tax return preparers... apply.. for a PTIN...before preparing any federal tax returns in 2011". Does this mean that if we hold off preparing 5500 forms from January 1st on until the entire situation becomes clearer, there are no penalties or problems for delaying applications for PTIN numbers past December 31st? In this regard, if we continue to complete 5500 forms directly on the Efast site or on our 5500 form software but do not submit them are we considered to be "preparing" 5500 forms?

...when does the document have to be in place? Lets say for a new 2010 calendar year end plan. Before they fund the plan?

A retiree started taking monthly pension payments out of the DB plan at age 58 when she retired. Now that small amount of income is precluding her from receiving some low income assistance. She'd like to suspend payments but the plan document doesn't really contemplate that situation. Is she stuck because her election is irrevocable, or is there some rule out there that would allow her to halt monthly payouts until a future date?

Thanks