Company has a defined benefit plan that provides for only a single life annuity for unmarried participants, and a joint & 50% survivor annuity for married participants. The plan has no other forms of distribution, and married participants CANNOT waive joint & 50% survivor benefit or name a beneficiary.

Company and the plan's actuary take the position that this arrangment meets the requirements of Code section 417(a)(5), hence the usual QJSA and QPSA rules don't apply . . . and, the recently added qualified optional survivor annuity ("QOSA") requirement does not apply. In a nutshell, they explain that, when 417(a)(5) applies, it knocks out all of the QJSA, QPSA, and QOSA requirements in 417(a)(1)(A).

Makes sense to me, but . . . the IRS guidance to date merely says that if Code section 401(a)(11) apply to a plan -- i.e. a defined benefit plan -- then the QOSA must be added to the plan.

Any thoughts? If the QOSA requirement applies, I'd rather tell the company to to a nonamender VCP, instead of having an IRS review during the next determination letter submission say "failure to amend for PPA, audit cap sanction."

Thanks in advance.

An employee's spouse's employer is not renewing their FSA plan for 2011 because they will be closing (and I assume don't want to deal with any losses due to uniform coverage). Our plan year is not on calendar year, so he did not sign up with ours last month. Would this be a qualifying event for him to add coverage under our plan? When I ran it through ChangeofStatus.com it said no, but that doesn't seem right to me, so I wanted to verify.

Thank you.

As an actuary who has worked with DB plans for 39 years (yes I am old), I seldom had any input into clients investment choices. However, I noted that clients tended to either want stock market investments, fixed investments or real estate (less common the past couple of years) as their primary investment strategy.

It now seems that I am being bombarded with information about hedge funds. While hedge funds are no panacea, they offer the potential for investment returns not subject to stock market ups and downs.

I would like to know if your experience is similar. What percentage of your DB clients are considering such hedge fund investments?

A client has a self-funded medical reimbursement plan and trust for rank and file employees. They have wrapped their fully insured benefits for the management classes into the self-funded plan. The question we have is should they now remit the insurance premiums to the trust or can they still remit them directly to the insurer? What are the pros and cons?

What happens when eligiblity for both is the same?

A one-person DB plan. Participant, age 55, wants to take distribution and roll it over to a Roth IRA.

What are his options?

(a) in-service distribution? (not possible since he is less than NRA)

(b) terminate plan? (is it possible to establish a new plan in the future?)

Any other options?

Thanks.

We have a client who is purchasing another company and that company will be adopting the 401(k) plan that is in place. Our client wants to know if they can have different eligibility & entry date requirements for the new company. Possible?

Thanks

Do matching contributions count when testing profit sharing contributions? I know the match is subject to ACP, but am not sure whether they count as profit sharing contributions.

Hi,

I am over 50 with an indvivual k plan and my salary is 100k. The 25% company profit sharing contribution is 25k plus I defer 22k fir a total of 47K. Maximum contribution to a plan for 2010 is $54,500.

Can I have the company make a matching contribution to get me up to the max? The plan is a TD Ameritrade Indvidual Prototype plan.

Thanks for your help.

In calculating the present value of accrued benefit of a participant for loan limit purposes, would you use plan rates? Lump sum distribution 417e rates?

I have a new client who asked me a strange question.

He asked his broker if the broker's fees could be paid outside of the plan and the broker told him no. He now wants to know if he can "put the money back into the plan" to cover the brokers fees (i.e., make the accounts "whole"). This wouldn't be a contribution obviously, but I've never had a client want to do this, or if it can be done. Has anyone had this question, or know the answer?

Thank you so much!

Material advisors who make a tax statement on or after November 2, 2006, with respect to transactions entered into on or after November 2, 2006, have disclosure and list maintenance obligations under sections 6111 and 6112. Persons required to disclose these transactions and/or maintain lists of advisees who fail to do so may be subject to the penalties under sections 6707A, 6707, 6708, 6662, and/or 6662A

For those of you that deal with 419, captives, abusive 412i and section 79 scams YOU should file. Lance Wallach

Former participant wants to take a distribution but would like the check made out to his spouse. Is this permissible? If so, I would think 1099r reporting would be under the participant of the plan and not the spouse receiving the check?

Thanks,

Plan is TH For 2009 (TH in 2008), question regarding the allocation for TH. Lets say the key makes a deferral contribution (and no other er contributions are made) of 5% of comp, my understanding is that then all P's eligible for a TH will receive 3% TH contribution (based on full yr comp). However, if the key defers only 2%, then all eligible P's will receive a 2% TH allocation since this is the highest percentage for the key, is this correct?

With apologies to Jim Stafford:

I was born a turkey (ba dum ba dum)

Been a turkey all my life (ba dum ba dum)

All my friends are turkeys (ba dum ba dum)

Got a turkey for a wife (ba dum ba dum)

They say that this Thanksgiving (ba dum ba dum)

Is gonna be my last (ba dum ba dum)

They want to cut my head off and stick dressing up my a**!!!!

I am advising an ER that has a health plan that has been in place since before 3/23/2010 and continuously covered EEs since. The major medical benefit is provided through a high-deductible ($10,000 per year) insurance policy that once met, provides coverage with co-pay and co-insurance responsibilities of the EEs. The health plan also includes a buy-down MERP--the ER pays for dollars $2,501-9,999 of the health expenses applied to the insurance annual deductible, yielding a net annual deductible to the EEs of $2,500 per year. The health plan does not call for the ER to pay any part of the co-pay or co-insurance responsibilities of the EEs under the insurance policy.

The ER would like to preserve the grandfathered status of the health plan, avoiding many of the new PPACA '10 requirements. In assessing the plan design for 2011, and what can be changed without jeopardizing the grandfathered status, we've discovered a quagmire that the regulations (Treas Reg § 54.9815–1251T) do not seem to address. The problem is that the TPA has been since before 3/23/2010 determining employees' claims as though the ER is responsible for paying 50% of those co-pay and co-insurance responsibilities of the EEs. Granted, the TPA has not been operating the health plan as written.

To keep the grandfathering, the regulations make clear that there can be no increase to the EE's "cost-sharing" of the co-insurance and only moderate increases in the EE's "cost-sharing" of the co-pays. If we instruct the TPA to operate the health plan as written from this point forward, are we increasing the co-insurance and co-pay obligations of the EEs and jeopardizing our grandfathered status? Or is that type of administrative correction to bring the operation in compliance with the health plan's documents allowed without compromising the grandfathered status of the health plan?

My client wants to introduce an early retirement window plan with a COBRA subsidy as well as a nice cash payment. The client's health plan is fully-insured. Does Section 105(h) cause a problem here?

Plan sponsor issued a maybe 3% Non Elective Safe Harbor Notice for 2010 Plan Year. Sponsor funded 3% for January 2010, then in February decided they couldn't afford contribution and issued a "No we're not going to be Safe Harbor notice". Plan is Top Heavy for 2010 and Sponsor did not realize top heavy implications and now wants to rescind their "No we're not" notice and be Safe Harbor for 2010. Can this be done???

Thanking you in advance for your help.

I hope somebody's available to help me out in this short week. I've inherited a plan with lots of loan problems.

1. An employee took a $2,500 loan on 10/19/04.

a. The first payment was not made until 1/24/2007 (Well outside the Grace period, should the loan be defaulted as of 3/31/05)

b. Here we are in November 2010 and the participant is still paying down the principal of the loan. Maturity date is 11/06/09.

c. Would I have the option of defaulting as of the maturity date or less likely at 3/31/10(Maturity plus grace periord)

d. Must the 1099 include interest accured through the date the loan is defaulted

2. I have several other loans that haven't gone past the maturity date but did have more the two quarters without a single payment. Do I have the option of re-amortizing those, keeping the same maturity date. Or do they have to be deemed at the end of the quarter following the quarter of the missed payment.

-We are taking this client through VCP as they are still operating on a pre-GUST doc so we can easily tack on items for correction. This plan is audit size and I have no idea how it go so far out of whack. Any help is greatly appreciated.

Assuming the valuation has the assumption that the expected benefit form is a lump sum distribution then the annuity factor used to develop the Fdg Target and TNC should then be the GREATER of (a) 417e factor or (b) actuarial equivalence (if different), is that correct ? I realize the discount will use the 430 segment rates but I'm just concerned with the annuity factor itself. Thanks.