Does anyone have a link to the old IRS Tax Savers Credit Notice that was in Spanish?

Form 5307 asks whether the plan has received a determination letter. If you check no, it says you must submit copies of all prior plans and/or adoption agreements.

My thought on this is that the prototype approval letter does not count as a FDL and the sponsor must submit all prior plan docs. Or am I reading too narrowly? If my interpretation is right, is there any practical limit on how far we have to go back if the plan has always been a prototype? Does the IRS really want reams of old master documents and adoption agreements? We're a VCP nonamender so we do have to get a FDL.

Any experience with this would be appreciated! Thanks!

Is anyone aware of a product of this sort in existence or in the works?

Presumably when regulations issue on how nondiscrimination rules will apply to insured arrangements it may have to change but just wondering if anything exists at the present time.

160.410 (Affirmative defenses) provides that no civil penalty will apply to violations which are "corrected" within a 30 day period (or such additional period allowed by the Secretary). What is the appropriate "correction" method where the violation is a breach resulting from mailing PHI to the incorrect individual?

We are preparing the applications to file with the IRS and PBGC for a plan termination. There are 98 participants in the plan (some active, terminated vested and retirees). The company is going to purchase annuity contracts for all the participants. The plan does not pay out lump sum benefits (unless under $5,000).

On the Notice of Plan Benefits instructions I don't see what is included in this situation for the active and terminated participants when the company will purchase annuity contracts. In other situations where there will be a lump sum, you show actuarial equivalence and the 417(e) rates, etc. I think I would include the basic data (name, birth date, hire date, term date, NRD, salary history, monthly accrued benefit in the normal form of payment).

Then I would include a statement that ..."the Plan Administrator intends to purchase an annuity contract which will provide all plan benefits in accordance with the terms of the plan." They will receive a Supplemental Notice of Annuity Information that will include the possible insurers.

Sound OK?

Is a DC plan required to meet the cross-testing gateway requirements in order to calculate the average benefit percentage test on a benefits basis? The question has been asked a couple of times in this forum and the answer is believed to be no.

In the regulations, it is clear that if there are DB plans in the mix and the optional rule under 1.410(b)-5(e)(3) is used for the ABP test (include DC plans only), the testing must be done on a contributions basis. However, if there are no DB plans, it seems to be less clear. The IRS has informally said the gateway requirements apply (see Joint Committee on Employee Benefits Q&A with the IRS and US Dept of Treasury based on a meeting with staff May 11, 2002, Q&A 6). Therefore, I am interesting in hearing how others have concluded that the gateway requirements do not apply.

Thanks

I have a plan that allows for a participant to direct their salary deferrals only; their safe harbor and their profit sharing go into a pooled account that is directed by the trustee. Would you consider this 404© compliant? My boss wants me to code their 5500-SF with a 2F and I disagree.

With the new rules on deposits we have people starting to send contirbutions in prior to the paydate. My undertanding is that if this is done the contribution can be considered an employer contribtuion not employee deferrals.

Is the date that is important here the paydate or period ending?

For example if the employee earned the money but has not been paid yet would it be feasible to process a contribution prior to the paydate?

9/1/10 employee eligible to join 401(k)

Plan Year 9/1 - 8/31

Defers $16,500 by 12/31/10

Can she continue her salary deferrals 1/1/11 for 2011 W-2 Tax Year or does Plan Year prevent additional deferrals until 9/1/11?

Never been asked this before so I appreciate help from anyone who knows answer. Thank you.

We (TPA) have a client with a DB plan that has been around for 2 years. While originally, the only employees/participants were the two shareholders and their spouses, things suddenly took off and they found themselves with a couple hundred employees. While it was active, the plan provided benefits at the 415 limit level. The plan was frozen before any of these new employees satisfied the eligibility requirements (which would have been 1/1/10).

My problem is that for 2009, the client made the maximum deductible DB contribution, which included a signfiicant cushion amount. So now, this frozen plan, which will likely never be resuscitated, is signficantly overfunded.

If the client reallocates these excess assets to plan participants pursuant to some future plan termination, the 415 limits will have grown enough (through additional years of participation) to accommodate it, but will that allocation constitute an accrual in that future year, that would have to be subjected to 401(a)(26), 410(b), and 401(a)(4)? If so, considering the other employees, I don't see how it can possibly pass muster. Am I wrong?

Hi,

A lone participant has passed away and the wife is wrapping up the affairs of the plan. a life policy was in the plan with a Face amount of $55,000 and a CSV of appx $35,000 at the last plan year end. What will be her tax implications on that policy, if any and how will that policy be reflected as a distribution? Will the CSV at the time of death be used for 5500 purposes or the Face amount?

I have just been contacted by a client who is named as one of several beneficiaries in a recently deceased woman's estate. Apparently, the woman had an IRA with Wachovia and when she set up the IRA was told that if she did not name a beneficiary, the beneficiary would be her estate. She did not name a beneficiary, but after her death, Wachovia now advises that since the date she began her IRA with them, they have changed their rules and now her IRA will not go to her estate, but to her spouse, or if she has no spouse to her children. This woman's will was drafted wth the intention of disinheriting her son and yet now, it appears from what Wachovia is saying, that he is entitled to receive her IRA. Has anyone else dealt with this issue? Any ideas?

Does the recipient vendor in a ROTH contract exchange need to know when the participant first made ROTH contributions to the transferring vendor? the cost basis?

I'm sure this has been discussed before. Two partners, no other employees. Each partner would like to control their profit sharing contribution to the plan. If the partnership prepares a resolution to the effect that governs the allocation, would this avoid a possible deemed CODA?

Plan's loan program provides for a cure period not to exceed the last day of the calendar quarter following the quarter in which the loan payment was due.

If the loan payment is due in the 3rd quarter, the cure period ends on 12/31/2010. Would you consider the loan to be in default as of 12/31/2010, or does the participant get the benefit of the "entire" cure period, and the loan is considered in default on 1/1/2011?

Thanks!

A plan with a safe harbor match provision is thinking about amending to remove the safe harbor. A notice that the safe harbor will be discontinued in 30 days is distributed. Plan sponsor changes their mind after figuring out that the top heavy minimum will cost more than the safe harbor match. No amendment is ever signed.

What sort of notice is required now?

Anybody familiar with MBO Partners (f/k/a mybizoffice.com) and the 401(k) Plan they offer. Based on their website, they indicate they have created a unique sort of set-up for independent contractors and consultants that they call a portable employer of record (PER). Basically if you are an independent contractor or service provider, it appears you can sign up with MBO and have them bill your client, etc. and they will provide you with a W-2 instead of a 1099 for your receipts. They say that basically they establish a separate division or group under MBO Partners for each consultant then the consultant more or less hires themself through the separate MBO division.

Of particular interest to me is the 401(k) Plan they offer to their consultants and advertise as one of the key advantages to going with their PER model rather than typical indendepent contractor arrangement. They say that their arrangement / plan will permit consultants to defer up to the maximum annual contribution $49,000 each year. Apparently you make elective deferrals on the employee side and because each consultant is also a separate employing group or division under the MBO Executive 401(k) Plan, the division can also make employer matching and profit sharing contributions (presumably determined on a division by division basis).

I'm trying to figure out exactly how their 401(k) plan can permit this and whether that all seems viable. Would welcome thoughts from anybody with experience with this or similar arrangements.

Small plan, where owner has $500K with a financial advisor, and the employees have their money with a recordkeeper (perhaps Asensus). Because the money is actually held by someone other than asensus, they are subject to the small plan audit waiver disclosures.

1) Does everyone agree with me so far?

2) Let's say the SAR says plan assets are $1Million. You disclose that trust company ABC is holding $500K. How are people handling the fact that a little simple math can be revealing regarding the owner's balances? OR perhaps people will question, "where is the rest of my money?".

We've done two things in the past:

1) We've added the two pockets of money together and said "ABC Trust Company and Pershing" and then put the total investmetns held, toghether.

2) Concluded that getting a statement from Asensus is so close to being an individual account plan that it's probably OK and skipped the disclosure (as I'm sure thousands of plans do simply because they haven't put as much thought into this as I have!

I have a client with a cross tested 401(k) and wants to add a cash balance plans covering the same employees. I have a few of questions.

1. I assume the 401(k) plan will have to provide the 7 1/2% gateway. I remember something about proposed regs that changed this but were withdrawn. I don't think the withdrawn language was included in the final regs. Is the 7 1/2% gateway still the rule?

2. If the answer to #1 yes, are terminated participants who still get interest credits considered benefiting under 410(b) so that they get the gateway? I know terminated participants will not have any compensation and 7 1/2% of zero is zero. Maybe this is how it is avoided but I want to make sure I am not missing somethign here.

3. I assume we will need to eliminate the end of year requirement in the 401(k) plan so that the employees who terminate during the year and benefit under the CB plan can get the gateway under the 401(k) plan. Is there any other items I should look for to make these two plans work together?

Thanks

Does anyone know whether individual participants in a Non-Qualified DCP are allowed to direct their own investments in the Plan?

We are trustee of a DCP with about 10 participants and we are attempting to develop an investment policy. We are unsure about whether it would be considered constructive receipt (by the participants) if we allow them to direct the investment process. Does anybody have any thoughts, or know where we can read up on this?

Thank You!