When running the ADP test, we can disaggregate otherwise excludable employees using the early participation rule or running two separate tests. Can the early participation rule be used in the 410b test also or is it's use limited to the ADP and ACP tests.

Thanks.

Does California require withholding on non-periodic (e.g., lump-sum) distributions?

Does anyone have a current list/spreadsheet of which states require withholding on non-periodic distributions?

Thanks!

When can I amend the allocation methods of a standardized plan? Before anyone works 500 hours or before the first day of the plan year?

Company A purchased Company B via an asset sale in July 2010. Company B employees became employees of Company A on the acquisition date. Company B did not have a retirement plan. Company A has a 401(k) plan with immediate eligiblity and entry date.

Agreement is for acquired employees to begin participation under Company A's plan 1/1/2011 with vesting service counted from July 2010.

My question is: can we amend the plan now to provide that acquired employees begin participaiton on 1/1/2011 or should it have been done prior to the sale? Is an amendment even necessary if the sale documents provide for participation as of 1/1/2011? (I know an amendment is necessary for vesting service).

Thanks for any input!

So I was reading the article in the BenefitsLink newsletter from the DOL (EBSA) regarding a new website that they are co-sponsoring with AICPA. I clicked on the link to the website www.choosingaretirementsolution.org and starting checking it out. The section that you can use to help you determine what kind of retirement plan to choose seems to have a glitch in it (I hope). I decided to choose options for a small employer (under 100 employees). You can enter any type of entity, and I also chose that I wanted employer contributions only with a vesting schedule. No matter what the entity, it comes up with no retirement plan options available. I sure hope not! Defined benefit plans do not seem to be provided as an option here. I was surprised that the EBSA would co-sponsor something like this.

Anyone else check it out?

My document requires the offset be "by the Participant's monthly benefit provided from the Profit Sharing Plan non-elective accounts attributable to contributions and associated earnings for plan years beginning on or after January 1, 2010" So I use account balances to calculate the offset, no problem.

Does this also dictate the testing methodolgy? For future years, to avoid exposure to bad investing on the PS side, could I still operationally test for non-discrimination based on current year accruals & contributions only?

I have a couple plans that are terminated.....one plan made a PS contribution many many moons ago and we are left with numerous participants without addresses and minimal balances. We were considering transferring their balances to 'Unclaimed Funds" any thoughts

Another we have participants with substantial balances and would like to open rollover accounts but not sure how to go about it (where, how, fees, trustee responsibilities.......)

I have a couple plans that are terminated.....one plan made a PS contribution many many moons ago and we are left with numerous participants without addresses and minimal balances. We were considering transferring their balances to 'Unclaimed Funds"

Another we have participants with substantial balances and would like to open rollover accounts but not sure how to go about it (where, how, fees, trustee responsibilities.......)

Here is the situation:

A business, ACME Widgets, appointed X (a company, not an individual) as investment manager for ACME's sponsored ERISA plan assets. X is not a bank or a financial institution.

X is the fund manager of a group trust. The Trustee of the Group Trust, Big Bank, is not Trustee of ACME's Plan.

X plans to invest almost 100% of the ERISA Plan's assets intothe Group Trust.

Is this permissible?

I see some old threads on pieces of the following question, but I would like to try to get an answer (if that's even possible) on the whole thing.

Situation: ESOP (C Corp) distributes shares in a lump sum. Participant exercises put option and is paid annually over the next 5 years (by the employer), w/ interest on payments after the first one. Newer ESOP so FMV is less than cost so no capital gain issues. Questions:

1. Does participant get a 1099-R from the plan showing a lump sum distribution of the total FMV on which they pay tax in the year of distribution? I don't see how the plan would have any other option, the participant's balance has been distributed, in spite of the fact that the participant won't actually receive all the cash for the next 5 years.

2. As the participant receives payments over the following 4 years, does the employer give them a 1099-int for the interest? If not, on what basis do you say so?

3. If the participant rolls the distribution, would the IRA trustee be the one technically exercising the put and they would then hold the paperwork evidencing the "adequate security" and the promissory note? Side issue, I have to think it would be rare to find a trustee willing to do that; among other things they'd have to value the note. If that's not the case, what would you say is being rolled when and how does that work with the 60 day rule?

4. Does a 1099-B come into play? I would think if the 1099-R reporting is as in #1, and the interest is as in #2, there is nothing left to report on a 1099-B. Of course if those aren't right, then maybe the B is used. If so, how? The B instructions say a corporation is not a broker if it purchases odd-lot shares from stockholders on an irregular basis, but it is if it regularly redeems stock. Seems a little grey.

Assistance is always appreciated.

Suppose a plan sponsor has a group health plan that consists of medical coverage options for actives and separate medical coverage options for retirees. Plan year begins January 1st. There is one plan document/written instrument and it files one form 5500. Does anyone have any thoughts on whether, to avoid PPACA compliance for the retirees, the employer could create a separate group health plan for the retirees (that is, create a separate plan document and begin to file separate form 5500s) effective January 1? Other than sparking challenges from the participants, I can't see any reason why this would cause a problem, since the preamble to the GF regulations discussing the retiree-only exception does not limit the exception to existing-retiree only plans. I'm wondering whether anyone had thought about this or perhaps has identified other risks. Thanks.

If a plan document describes the standard method for determining ADR, may qualified matching contributions be taken into account as allowed by Treasury Regulation 1.401(k)-2(a)(6) without an amendment?

If an amendment is required, may the amendment be effective for the entire year in which the amendment is adopted (calendar year plan), or are only matching contributions made after the adoption eligible?

I was recently asked the question if permitted disparity can be used to pass ADP and/or Top Heavy testing.

I have a 401(k) plan client who has NO intention of ever putting company $ into the plan. Because of that they have never allowed HCE's into the plan. Now some of their move vocal HCE's are getting antsy and we need to search for a solution. Again, the employer will NOT contribute any money.

Once of the partners at my firm mentioned something about permitted disparity. Does any know if this can apply in this situation?

i'm looking for the full disability table with these factors

age 20 Male .036% Female .017%

Age 30 Male .055% Female .043%

Age 40 Male .109% Female .1%

....

Age 60 Male .68% Female .465%

I'm also looking for a withdrawal table with these factors

age 25 male 9.9% Female 14.9%

age 30 male 6.9% Female 9.9%

....

age 50 male .4% Female 1.7%

age 55 male 0% Female .4%

age 60 male 0% Female 0%

i'm just trying to reconstruct a prior result.

Andrew

An employer maintains a cash balance plan which is general testing with other defined contribution plans also maintained by the employer. All eligible employees receive a 1/2% accrual under the cash balance plan so 401(a)(26) is satisfied. The gateway for the NHCEs is satisfied with employer contributions made to the defined contribution plans.

Can the gateway and 401(a)(4) nondiscrimination testing be satisfied with contributions made to an ESOP as opposed to a money purchase and/or profit sharing plan?

Furthermore, the cash balance plan benefit for non-owners is offset by the actuarial equivalent of the participant's account balance in any defined contribution plan maintained by the employer. Can the ESOP account balance be used for purposes of the offset calculation?

Is it possible to allow a terminated employee who is receiving severance pay to continue their 401k loan payments from the severance so that the loan will not go into default upon termination, but upon discontinuance of receiving pay?

EE has a large loan balance of almost 30k and owner is very concerned about it going into default and she would owe the taxes and penalty. She will be receiving severance for one year. Is there anything we can do? I am certain that he would be willing to make any plan amendments necessary if there is some way to deal with this.

Thanks for any thoughts!

A significant shareholder of a company wants to take an in-service distribution of his ESOP account and roll it to a self-directed IRA. Anyone think that that gives rise to a prohibited transaction with respect to the IRA? Possible issues flagged by others are:

(1) Because he is a fiduciary of the IRA, this could be construed as his using the assets of the IRA for his own benefit. (4975©(1)(E))

(2) To the extent he owns 50% or more of the company, the company is a disqualified person such that the rollover to the IRA could constitute a prohibited "sale or exchange ... between a plan and a disqualified person." (4975©(1)(A)).

I've reveiwed varous secondary materials on the IRA prohibited transaction rules and a number of DOL advisory opinions but haven't turned up anything squarely on point. (Most of the advisory opinions involve more affirmative "transactions" than a rollover -- having the IRA invest in, or make a loan to, an entity in which the IRA fiduciary has an interest, for example). Am I missing something?

I know the reg gives the example regarding a primary residence hardship and the loan causing the inability to get 3rd party financing for a mortgage for the residence, but should this be interpreted to say a loan should not be required if it would cause further hardship. Basically, if the person can't get 3rd party financing how would increasing their debt help them.

A local Union wants to sponsor a 401k for members/employees of 1 company. The company wants nothing to do with the 401k plan. Is this allowed?

We doint know the filing acknowledgment ID, the prior tpa is being unresponsive, etc.

(hypothetical situation, but I'm not seeing an obvious workaround, and this woiuld seem to be a common situation).