is anyone seeing processing stopped statuses flip over to Filing Received? We have a lot coming back in the last day or two (even after adjusting for higher volume) as processing stopped, but nothing obvious is jumping out at us as a cause.

Is there legal authority that permits an employer to charge highly compensated individuals a higher premium than nonhighly compensated individuals? For example, $500 premium for employees with incomes $50k-$100k, $1000 for employees with incomes $100k-$150k, and $2000 for employees with income $150k +. Is this set up simply a reasonable classification under 105(h)?

with an end of the year valuation(year x), when

using the results to compute the following year's(x+1) aftap

is the fact that contributions were late for year x immaterial

for the year x+1 aftap?? in other words, the effect of late interest

impacts year x funding but does not impact 436 in year x+1?

Does the remedial amendment period for 403(b) plans that's discussed in Notice 2009-89 cover late amendments to bring a plan document into compliance with new law changes that require an amendment (i.e., the equivalent of a missed 401(k) interim amendment to a 401(k) plan)?

For example, if a plan is being maintained pursuant to a written document signed in early 2008 to comply with the final regulations, could that plan be amended after the deadline to adopt an interim amendment for a new law change so long as the amendment is just intended to correct the form of the plan and the plan operationally complied with that law change?

Or, is this the type of circumstance that should be corrected with a VCP Appendix F submission? Anyone tried this?

Would appreciate feedback on this issue.

This issue relates to Indian Tribes and the controlled group rules. Assume an Indian Tribe directly owns a number of entities (corporations, LLCs etc...). The parent-subsidiary controlled group rules apply to corporations, partnerships, sole proprietorships, trusts and estates. The Tribe is none of those, so it seems like an Indian Tribe cannot be the parent in a parent-subsidiary controlled group. Similarly, a Tribe is not an individual, trust or estate, so it cannot be the common owner in a brother-sister controlled group. The recent tax exempt entity controlled group regulations do not apply to government entities and IRS Notice 95-48 states that Tribes are treated as government entities.

It certainly seems reasonable to conclude that entities owned directly by an Indian Tribe would not be considered to be a controlled group as to the Tribe. Does anyone disagree with this logic?

Although this post deals with non-governmental plans and this might not be the best board for this topic, I figured those who deal with governmental plans might have a good deal of knowledge about tribal entities and how the controlled group rules apply.

A company I work with is trying to reduce the paperwork required for administering their cafeteria plan, because currently they require an individual to both enroll in a group health plan and fill out a separate salary reduction agreement to elect to have their pay withheld pre-tax. The pitfall is that they have had individuals change their health coverage (for example, drop a spouse due to spouse's change in employment status that affects eligibility) and forget to fill out an election change form in order to change their status, and the person continues to have their same election taken out.

I understand that the most recent regs addressed automatic enrollment in a group health plan with a corresponding pre-tax election, but what about just an automatic linking of group health plan election and pre-tax election? Can the plan doc legally be drafted to state something like, "you will automatically enroll in the POP when you enroll in a GHP, and such election will be automatically adjusted if a change in enrollment in the GHP corresponds to a qualified change of status under Section 125 and the change of status regulations"? The choice between tax and benefits is essentially - choose the health plan (with pre-tax) or choose no health plan and get the increased salary (no opportunity for after-tax payment of health benefits). Thoughts?

In researching the topic for fiduciary standard of a governmental 401(a) plan, I have not found an ERISA standard. In fact, I have been advised by many well- respected people in the 401(a) plan market that there is no fiduciary standard for a governmental 401(a) plan. "The Governement is not going to sue the government" is the standard response I am receiving. However, i cannot fine any supporting documentation to back this up.

Further, are there state fiduciary imposed standards on a state municipality for a 401(a) plan?

Thank you in advance.

We have a case where an employer needs to make a top-heavy contribution for the 2009 plan year. Company states that it does not have the money to pay the contribution and intends not to make a deposit. We are unsure of how to reflect this on year-end valuation and on Form 5500 - whether we should show top-heavy contribution amount as a receivable or handle otherwise.

Company would also like to terminate the plan (but will also owe top-heavy contribution for 2010 plan year). We are not cerrtain how the non-compliant act of failing to pay this contribution affects termination of the plan.

Please help!!

A custodian is charging a Plan an Asset Based Fee, but it's NOT a transactional fee deducted from participant accounts

Instead, the fees are assessed against the unit values of each fund that a participant holds assets in.

Is this considered Direct or Indirect Compensation for Schedule C reporting?

We are a US based company with a handful of employees based in the UK.

One of our UK employees (UK citizen) has requested maternity leave. I have found much information on line, but one thing that I am still uncertain about is vacation/holiday accrual.

The employee is going out in Nov. 2010 and wants to use her remaining holiday/vacation days immediately before her official maternity leave begins. This aspect is fine. However, the employee is also requesting to use the 25 days of holiday/vacation pay that we give annually on the back end of her official maternity leave, thus giving her 1 year + 25 days of time off.

I dont think we have issue with her taking the 25 days, but must this be paid leave? What if at the end of the 1 year and 25 days she decides not to come back to work....we have no way of recouping this money.

Thanks for any input.

My understanding is that if you have multiple IRAs - some with pre tax, some with after-tax, and some with both, you cannot pick and choose which ones to convert to a roth, but have to aggregate them all to determine the taxable/non-taxable portion of the amount that is being converted. In other words, if I have 3 IRAs - one with 10,000 after tax contributions and 2,000 earnings and one with 8000 pre tax and I want to convert the 10,000 after tax to a roth, then I would pay tax on 5000 on the conversion. Is that correct? If so, where is the authority for this in the code and regs. Again, if correct, when is the total value of the IRAs determined? At the end of the year, time of conversin, etc. Thanks.

Is an accurate participant count on the 5500 really THAT important?

I mean, if we had put 34 actives and it was really just 32 or 36?

Would a govn't auditor really get upset in that case?

I'm not talking about a case in which the difference would mean filing as a large plan or not. And I'm not talking a significant delta of like 20% or anything like that.

It is my understanding that mandatory employee contributions (increased by a certain amount of interest) to a defined benefit plan are nonforfeitable ("Accumulated Employee Contributions"). Code Sec. 411(a)(1).

It is also my understanding that the simplified recovery rules (the "Simplified Method") is used to calculate the taxable and tax free portions of annuity payments made from a defined benefit plan.

Question: How do these two separate concepts fit together?

Hypothetical: Employee participates in a DB plan requiring employee contributions. At retirement, the participant has contributed a total of $10,000 to the plan (and will recover $30 of that amount tax-free per month under the Simplified Method). The participant's Accumulated Employee Contributions equal $15,000 (i.e., the $10,000 she contributed + a certain amount of interest). She will recieve a monthly single life annuity of $500. The plan provides that a beneficiary will receive any unrecovered Accumulated Employee Contributions that exist at the participant's death.

Assume the participant dies after receiving 10 monthly payments. At that point she has recovered $300 of her tax basis ($30*10) and $5000 (500*10) of her nonforfeitable Accumulated Employee Contributions. Who gets to recover the still unrecovered tax basis? Is it taken into account on the participant's final tax return, or does it go to the beneficiary who will receieve the unrecovered Accumulated Employee Contributions? Do you think Code Section 72(b)(3)© answers the question?

Thanks

My understanding is that in order to termnate a 401k PS plan it requires a resolution and a plan amendment and maybe even additional statutory compliance amendments to be based on current laws.

Are there situations where just a resolution is sufficient?

Don't have the specific plan doc I am referring to, but a standard doc I use suggests that a plan term canbe facilitated upon delivery of written notice to the plan administrator or trustee. I don't necessarily assume that to mean that a resolution (and no amedment is sufficient).

Thanks

Plan uses an ACA. What they want to do is each year require an eligible employee to decline to make deferrals or they will withold deferrals. So an eligible employee who declines when first eligible will have to decline again the following year and the following year (etc. etc.) or the employer will withhold.

Is this acceptable? Any laws (Fed or State) being violated? Once a participant declines under AE isn't it up to them to decide to participate?

I've been so concerned about getting stuff out the door that I entered the monkey-see-monkey-do mode. As such, having gotten caught up, I've paid a little more attention to reading the crud I'm now required to proudly disseminate. Here is the boiler-plate acknowledgment for receipt of the client's authorization to file his 5500 in his behalf:

PART II - Acknowledgement of Receipt of Authorization

On behalf of Potrezebie Consulting, I hereby certify that the firm will use the authority granted only for the express purposes described above; that the firm will not disclose confidential information to any parties other than the DOL, as required for EFAST filing; and that the firm will take reasonable steps to assure that confidential information provided by the Plan Administrator or Plan Sponsor is protected from unauthorized disclosure.

It finally occurred to me that the information being provided and to which I am swearing on my grandmother's grave that I will not disclose, will be posted on the DOL website and become public record. In such case, what constitutes "unauthorized disclosure" and what are the reasonable steps I must take? I'm unsure but in good faith, I've decided not to divulge my middle name to Mike Preston and David Rigby.

I have a plan that disbursed the last of their assets in March of this year. This means that the Final 5500 should be filed at the end of this month. The client did obtain signer credentials for EFAST2 for their 2009 filing. Datair had said that they were going to have their 2010 forms ready for their software update by october, but now they have changed their minds on me (shocker, I know). I wasn't sure if we could file a 5558 to extend the deadline of the 5500 for a final or not. My boss says no, but Datair says yes. Forgive me if i don't trust the software provider....

So can I file a 5558 for this client? I also have one due 11/30, but I hope that Datair will have their promise fulfilled by then. I leave for a two week trip to Europe on the 22nd of this month, so I was trying to get the 10/31 filing done before then. We aren't going the IFILE route BTW.

Thansk for your opinions...

Employer sends out notice telling employees: effective DATE the employer contribution is reduced to X%.

The timing and delivery of the notice comply with Code section 4980F.

The notice fails to state what the employer contribution was before the change. See 54.4980F-1 Q&A 11(a)(3)(i).

So the notice is technically deficient. Assuming a technically deficient notice is no notice at all...

54.4980B-1 Q&A 14 & 15 address the failure to provide a 204(h) notice

Q&A - 14 states that for egregious failures all applicable individuals are entitled to the greater of the benefit to which they would have been entitled without regard to the amendment. Egregious failures are either intentional (which this was not) or result in a failure to provide most of the individuals with most of the info they are entitled to receive. I believe we are safe here because everyone got most of the info and the info they didn't get in the notice (info regarding the employer contribution prior to the change) they already had in their SPD.

Q&A - 15(b) says the excise tax doesn't apply in two situations:

1. no excise tax is imposed on a failure for any period during which it is established to the satisfaction of the Commissioner that the employer exercised reasonable diligence, but did not know the failure existed. (This is also in 4980F©(1)) - I have no idea how you do this. Do you?

2. no excise tax applies to a failure to provide a Section 204(h) notice if the employer exercised reasonable diligence and corrects the failure within 30 days after the employer first knew or exercising reasonable diligence would have known that such failure existed. (See also 2980F©(2)) - This has potential. Has anyone ever "cured" a defective 204(h) notice in this way?

There is an example in the regs but it assumes the 204(h) notice contains the proper information, it was just misdelieverd to a group of participants.

I am wondering how this works in my case because the notice relates to a change that took place over a year ago. It seems like participants would be confused if the employer handed out a new notice saying essentially - effective last year we changed the employer contribution from Y% to X%.

Company X is terminating their DC (401(k)) Plan and there are outstanding loans. Can employees continue to pay back their loans after the plan termination date, up until assets are distributed? The company will still exist after the plan temrination and will still be issuing payroll checks from which the loan payments would be made (plan also allows for check payments, so payments may also come directly from participant). I cannot find anything in the plan document that governs this and am still looking for the separate loan policy. The bigger question is whether I'll even find anything in the loan policy - i.e. is this even up to the plan sponsor, or do the IRS regs specify whether or not this is allowed?

Need answer asap - thanks!!!

In the past a statement could be attached to the 5500 stating that the audit would be sent in later. Now with efile I don't believe they allow this. Any suggestions? This is for an ESOP