Suppose you have a retiree who retired from Company A and went to work at Company B. Company A offers Retiree Medical. The Retiree Medical Plan says that if you decline coverage (which the retiree did since the retiree had coverage from Company B) or you elect the Catastrophic coverage, you will not be able to enroll in A's Retiree Medical Plan unless you can show loss of coverage under another group medical plan. This is not defined, but the Retiree Medical Plan does say this includes loss of coverage as an active employee, coverage as a dependent of an active employee, coverage as a retiree under another employer's plan, coverage as a dependent of a retiree ,or coverage under an HMO.

Former employee is on COBRA from Company B. Now wants to come back to A's Retiree Medical Plan since she forgot that A has a plan. Should COBRA coverage be treated as a loss of coverage under another group medical plan?

here is a strange one:

Client had given us the wrong EIN number back in 2007 (new client & plan). I discovered this when I was trying to validate the 2009 5500 in RGF this year, it would not validate the number. I verifed with the client that the number was in fact incorrect and they gave me the correct number. 5500 and schedules will validate with the correct number.

Now...when I fill in form 5500, Part II, 4a, 4b & 4c (so that the EBSA and IRS will know that we updated the EIN number), the form will once again not validate. I even tried importing it to the EBSA website anyway but it won't accept the form for import.

When I spoke with Relius support the first time, they told me that the system isn't "smart" enough to know that the number was invalid. No one is sure why the number wouldn't validate before. I have a new incident in to try and fix this newest problem but since the wait is long I thought I'd see if anyone else has had a similar problem and/or any fixes??

ok - addendum to this...I found out that "28" is not an acceptable start for an EIN. You can't even enter it. This is why it won't validate.

The problem is that the 2008 form WAS filed with the EIN beginning with "28", so I've emailed the EFAST help area and hopefully will get an answer soon.

I'll update this post when I hear back....

We have a client that changed their plan year from fiscal to calendar in 2008. Of course there was a short plan year filing in 2008.

This year when we did the 5500 extension request back in July no one checked the dating in the RGF software and consequently the extension had the wrong plan year ending on it. (The old plan year end date which would have been 04/30/2010). The extension did, however, have the correct requested extended date of 10/15/2010.

The client received a notice from the IRS that the extension was denied. The notice stated that it was received after the filing deadline?? [i'm not sure why that is because if it truly was a 04/30/2010 plan year ending it is well within the timeframe, wrong dates and all - probably a standard form notice] The notice had a phone number (with a 30+ minute wait) and then an address if the client preferred to write. We had the client send a letter back with a copy of the corrected extension, explanation of the plan year change and asked them to please approve.

We have already filed the 2009 5500 online.

Has anyone else had this happen? Do you know what the odds are that the IRS will approve the extension? They did receive it timely and it had the correct extension request date, just an incorrect plan year ending date.

Thoughts?

If a plan allows for hardships to be taken from other sources in addition to salary deferral (eg, match), do deferrals still need to cease for 6 months?

My client has gone into Bankruptcy and terminated its plan as of July 2009. The company itself has been liquidated according to bankruptcy procedures. All plan assets were liquidated by December 31, 2009. The company no longer exists. VG is in the process of completing the 2009 Form 5500 that will show plan assets are $0. Since the company had over 100 EEs at the beginning of 2009, and in order to file the Form 5500, they need to have an external audit performed.

Since the company is bankrupt and no longer exists, thus there are no assets in order to pay an external auditor, is the External Audit still a requirement? Is it a shortened audit or normal fullsize audit? Are there alternatives to a regular audit?? (FYI: they pre-paid for the Financial institution to complete Form 5500)

I am only aware of two possible options..........either the company disengage VG from the duty of the Form 5500 (and they just not file it) or they find a former officer of the company who is willing to pay "out of pocket" for the external audit.

Questions 1: Are there any other options that you are aware of?

Question 2: What are the ramifications if they don't file a 5500?

Anyone have experience setting up a retirement plan for a professional athlete? Income will consist of endorsement $$$$. His salary is paid by the "league" and is subject to the league pension plan. Any insight, issues or links to articles on the subject is appreciated.

Background Information

-A calendar year plan suspends it's safe harbor match effective March 31. A partner's K1 is $50,000 and their salary deferral is $9,000.

Question

For the purpose of calculating the partner's contribution, what is the appropriate methodology for determining applicable compensation and deferrals subject to the safe harbor match? Should both amounts be prorated for the three-month period, or are both the compensation and deferral deemed to be earned/made on the last day of the year providing a zero match for the partner?

A participant in the plan rolled after-tax money into the plan back in 2005. At the time, the plan did not have an aftertax source but the plan recently added Roth 401(k). The participant is now requesting that we code the money as after-tax and distribute that along with the associated earnings out of the plan.

Question 1: Can after-tax money be re-classified as Roth 401(k) contributions?

Question 2: The participant wants the after tax-portion moved to a traditional IRA and the earnings moved to a qualified 401(k) plan. Is this possible?

Hello:

Hoping someone can confirm either way.

Participant requested and was granted a hardship withdrawal for the purchase of a primary residence. After the approval (and the check cashed) the participant's mortgage was denied and thus the purchase is not occurring.

I do not believe that the participant has an option to re-deposit the hardship amount back into the Plan but just want to make sure that there is not a strong view on the other side.

I think the only thing the participant can do at this point is retain the money with the prospect of needing the funds to purchase a primary residence in the future if they are savvy enough to do that.

There is not an opportunity to put it back in the plan, nor is it eligible for rollover to an IRA either.

Thanks for any insight anyone might be able to offer.

Sincerely,

andmik

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I know that there are different types of post-secondary educational schools that qualify for a hardship distribution. This participant wants to cover her son's tuition in massage therapy certificaion program. Just wondering if anyone knows if meets the "post-secondary education" requirement.

Forgive me if this is an overly-simple question but I do not normally work with DB plans and was asked a question recently and wanted to see if I was way off-base.

Individual participates in a DB plan that requires a Year of Service in order to satisfy general eligibility service requirement. The Year of Service requires 1,000 Hours within a 12 month period. That period is initially measured from Hire Date to Anniversary Date with the 12 month period shifting to Plan Year if the individual does not earn 1,000 Hours within the first 12 months of employment. The Plan operates on a fiscal rather than calendar year plan year with 6/30 plan year end

The Plan efines Benefit Service and Vesting Service for purposes of calculating benefits as each Plan Year in which an "employee" earns 1,000 Hours of Service beginning with the Plan Year in which the individual was last hired. (The Plan also includes typical Break in Service provisions for crediting prior service following re-employment after Break in Service.)

As I read these provisions, it seems an individual could basically accrue 2 Years of Service for Benefit Service / Vesting Service purposes at the point they first satisfy the basic Year of Service eligibility provisions at the point of their 1 year anniversary. For example, PYE is 6/30, individual hired in December 2009 earns 1,000 Hours of Service in first Plan Year they were hired by getting 1,000 hours by 6/30/2010. Individual will not satisfy the basic service / eligibility requirement until the first anniversary of employment (December 2010) at which point they will have worked 5+ months in a second plan year starting 7/1/2010).

Is this correct? Are such provisions common in DB plans? I know I have seen DB plans where individuals below a certain minimum age (e.g., 21) get credit for Years of Service with 1,000 hours earned in Plan Years before turning age 21 get credit for those years but not sure I've really dealt with that in connection with the regular Year of Service requirements. Thanks.

Looking for affirmation here:

A client signed an election in the second half of September 2009 to add a portion of the excess 2008 contribution to the Prefunding Balance as of January 1, 2009, which was immediately used in part to cover some of the 3rd or 4th quarterly contributions (due 10/15/09 or 1/15/10) and overall minimum for 2009 (due 9/15/10). Assume that they had a proper filing extension to 10/15/09 for the 2008 5500 filing.

1. The proposed regulations gave until the filing deadline for the relevant 5500 to make such an election.

2. The final regulations, effective as of 2010, only give until the payment deadline for the year with the excess contributions. Anybody have an idea why they would have done that? Pretty much precludes (absent a standing election) grabbing any excess portions of a last-minute contribution. Or is that the reason?

3. The election made in late September 2009 to add to the Prefunding Balance as of the beginning of the 2009 plan year is thus valid.

Incidentally, any word on when (if?) the IRS is going to allow standing elections to use Carryover/Prefunding balance to cover quarterlies?

If you are looking for a few extra ERPA CE credits, the IRS does some free phone forums that count as ERPA credits. The next one is scheduled for 9/30.

http://www.irs.gov/retirement/article/0,,id=218995,00.html

I've done two so far. You get an e-mail afterwards for documentation.

hold my annuity assure me that the government will be okay with this once I start my annuity payments. It makes me a little nervous because I don't want to make a mistake.

1) If a plan's benefit accrual formula has been frozen, but the amendment was not a hard freeze, and benefits increase due to an increase in average compensation, should those increases be funded through the target normal cost or do they get lumped into the funding target?

2) If a plan is frozen but a participant continues to be a active past normal retirement age and their benefit increases due to actuarial adjustments for late payment, does that increase end up in TNC or FT?

After bedeviling us since the dawn of time, the DC plan missing participant issue has jumped the fence and infected non-qualified plans as well. What to do?

After reviewing a stack of recent, nominally-409A compliant NQ plan documents, I found a number of approaches:

• The participant's benefit is provisionally forfeited if the employer cannot locate him/her after a reasonably diligent search; benefits can be restored with/without interest if the participant reappears.
  
• The participant's benefit is irrevocably forfeited after some period of time (1 to 3 years) if the employer cannot locate him/her after a reasonably diligent search.
  
• The participant's benefit is paid to his/her representative/beneficiary/surviving spouse after some period of time (1 to 3 years).
  
• If the participant's benefit is subject to escheat, it is paid to the unclaimed property administrator at the appropriate time.
  

Although irrevocable forfeiture is a bit harsh, that potentially seems like a safe approach depending on how it is implemented. The question I have about that approach and all of the others is the fact that the plan may be retaining the money for some period of time (potentially years) beyond the originally-scheduled payment date. One plan weaseled a bit on the subsequent payment to a participant who reappears and allowed for payment only to the extent permitted by 409A (whatever extent that may be, if any). Even the irrevocable forfeiture approach seems to be a little problematic if the diligence process goes beyond the end of the year of distribution. The plans that allow for multi-year delays bother me - I am not sure how the drafters got comfortable with that other than just through the common sense argument (i.e., the IRS is not really going to penalize a delayed distribution where the participant was really missing and not just trying to time the payment).

One solution I devised was to pay out on the originally scheduled date(s) with appropriate reporting and withholding, forward the check to the last known address, and if the check comes back, stick it in the drawer for however long the escheat holding period is and then transfer the check (after tax money at that point) to the unclaimed property administrator.

If anyone has come up with a better solution for this problem or has heard one of the IRS poobahs opine on it, I would be grateful if you could bring some light to this dark corner of 409A.

In 2008 controlled group was comprised of 8 entities. ADP test was run on the controlled group and the NHCE ADP was calc'd at that time for use in the 2009 ADP test as prior year testing is used. In 2009, 1 of the entities is no longer part of the controlled group and needs to be tested alone. I am unsure how to determine the 2008 NHCE ADP to use for this single entity. Can someone point me in the right direction?

If a defaulted loan that is a deemed distribution is repaid by the participant, how is the deemed distribution reported on the 1099-R if the outstanding amount is fully repaid by the end of the year in which the deemed distribution must be reported?

Anyone know where I might find a chart compiling all of the state law couterparts to the HITECH breach notification rule? Am looking specifically for notification standards that are more stringent than under HITECH.