Employer A sponsors a safe harbor 401k plan for Employer A and all of its adopting controlled group members. All current controlled group members of Employer A participate.

A new entity will become a member of Employer A's controlled group in April 2011 through a corporate acquisition. Can new entity elect to become an adopting member of Employer A's safe harbor plan effective May 1, 2011 (i.e. mid year)?

Say an owner of a company with 5 NHCEs implements a safe harbor 401k plan.

All employees are non excludables for discrimination testing.

The owner wants to exclude employee 5.

Can the plan document simply provide in its terms that employee 5 is excluded? This as opposed to trying to create a job classification like all engineers are excluded from the plan.

thanks.

I am starting to have required minimum distributions made out of my 401(k) plan. I previously made after-tax contributions. For purposes of computing the portion of the distribution which is a return of the basis, are the RMDs treated as periodic or as nonperiodic payments? No annuity contract is involved, just basic distributions from the account.

Have a participant who turned 70.5 in 2010, so his RBD is 4/1/2011. But is still employed and not a 5% owner, therefore his RBD is not until after he retires if he opts to postpone his RMD. I have that correct so far, right?

He took an in-service distribution of most of his account balance earlier in 2010 and rolled it over. He now wants to take the remainder of his account balance as an in-service distribution and again roll it over. Can he?

My thought is we cannot stop him since the plan allows for the in-service distribution and his RBD is not until after he retires, which has not yet done. Is this correct? I cannot find anything in the ERISA Outline Books that even talks about in-service distributions at all, let alone how it may impact an RMD.

If he cannot do this, his RBD is still not until after retirement and the in-service w/d he took earlier in the year does not turn into an RMD, right?

lets say you have individuals who are employees of a company and participants in the company 401(k) plan and also receive 1099 income from a member of the controlled group. what would they have to do to include their 1099 compensation in the plan? i am thinking they would need to adopt the plan as a sole proprietorship and account for any unpaid social security withholding. am i on the right track. plan definition of compensation is total compensation/w-2.

I am looking at a plan document that was amended effective 1/1/09 to change the NRA from 60 & 5 YOP to 62 & 5 YOP. Previously ER was 55 & 10 YOS and the reduction was AE. Now ER is unreduced from 62 to 60 and then AE before 60, there is no longer a service requirement. The plan pays the lump sum on termination of employment. There was no 204(h) notice distributed with the amendment.

I know Notice 2007-69 gave 411(d)(6) relief but I am still not sure, having read some other posts on various boards, that a 204(h) notice isn't required if you wanted the future accruals to be payable at age 62. The benefit fromula was not changed in any way with the NRA amendment. So how are future accruals handled? Would it be that the 1/1/09 AB (or the AB through the date of adoption) would be adjusted to age 62 and then all future accruals would be automatically an age 62 accrual, or would all accruals, past and future, be adjusted from 60 to 62? I would think the former but there is no language in the document to this effect.

Getting to the point, this is a small plan and the plan sposnor was perfectly happy with the age 60 NRA. I am wondering if simply adding an amendment clirifying that "all optional forms of benefit will be based on the age 60 unreduced accrued benefit" would in any way run afoul of the law. Basically then the change in NRA would only effect the issue of in-service distributions not being allowed until age 62 and other than that the plan would be the same as before the amendment changing NRA.

I would appreciate any thoughts on this. Thanks.

Plan has always provided for a 50% match on elective deferrals and capped the match at $1,000. In the EGTRRA restatement, the document preparer omitted to check the box capping the match. Error has now been discovered a year later. Matches are still being made according to the old plan document that caps match at $1,000. Error was caught by document prepaper (who admitted that similar errors were made in other plans). Matches are made on a payroll basis.

I was hoping to correct this by retroactive amendment under VCP. Section 4.05(1) of Rev Proc 2008-50 states: A Plan Sponsor may use VCP and Audit CAP for a Qualified Plan to correct Plan Document, Demographic, and Operational Failures by a plan amendment, including correcting an Operational Failure by plan amendment to conform the terms of the plan to the plan's prior operations, provided that the amendment complies with the requirements of § 401(a), including the requirements of §§ 401(a)(4), 410(b), and 411(d)(6).

A retroactive amendment of this nature seems to obviously be a violation of the anti-cutback rule.

The other alternative is to amend prospectively and make uncapped matching contributions for participants for the time period between the effective date of the EGTRRA Restatement and the date of the prospective amendment. However, this is an extremely large amount of money and would cause the sponsor a financial hardship.

Does anyone have any insight/ advice on how to correct this error?

Does anyone else find it interesting that Adrien LaBonbarde was the priciple author of Notice 2010-83? Isn't Adrien with Milliman in Texas?

Was Adrien working for the IRS when he wrote this? I don't ever recall seeing this before where a non IRS employee writes the Notice. Kinda smells funny doesn't it?

Scenario:

1. C-corporation is 100% owned by S-corporation.

2. Individual who is 2% shareholder of S-corporation is W-2 employee of C-corporation.

Question: May 2% shareholder make pre-tax contributions to HSA as employee of C-corporation? Or do same restrictions and rules apply because the C-corporation is owned by the S-corporation, and the employee is a 2% shareholder of the parent S-corporation?

When calculating whether or not a participant has 15 years of service for catch-up purposes, is the "as of " date the beginning of the Plan Year? I can't find anything really definitive in the regs. although to me "beginning of the plan year" is implied. Does anyone have something more concrete?

I have a single owner-participant DB plan that terminated in December 2008.

Somehow the benefits were not distributed and now the client intends to take a distribution prior to 12/31/2010.

The lump sum that was calculated at 12/1/2008 was much higher than current one valued at 12/1/2010 due to change in interest rates.

But does this not lead to reduction in benefits (anti-cutback) that client was eligible to collect on plan termination?

Should this benefit be the lower one since distribution is occuring now or should it be the greater of the two?

Thanks in advance for all replies.

Was there a cut off date for plans who have terminated but the sole participant haan't taken their money as to if we have to amend or not?

Can anyone explain what this amount is?

Prohibited payment.--For purpose of this subsection,

the term `prohibited payment' means--

(A) any payment, in excess of the monthly amount

paid under a single life annuity (plus any social

security supplements described in the last sentence of

section 411(a)(9)), to a participant or beneficiary

whose annuity starting date (as defined in section

417(f)(2)) occurs during any period a limitation under

paragraph (1) or (2) is in effect,

Thanks

Plan fails 2008 ACP test. Refund required was $80; it didn't get made. Using the 1 to 1 correction plan sponsor can make the refund and then make a qnec of that same amount. The qnec should be allocated pro-rata, based on compensation, to all eligible NHCE's. The difficulty is that there are close to 100 eligible NHCE's. Is there a deminimus amount before you have to allocate to a participant?

Thanks in advance for any guidance.

The Q & A provides an example where the plan could be amended to allow in-plan Roth conversions for pre-tax accounts at age 59 1/2, without otherwise permitting a distribution of these amounts from the plan. I'm interpreting that this would also apply to sources other than a pre-tax account (e.g. match, profit sharing). I would think that the Notice would be more explicit if the intention is to limit a conversion only option to the pre-tax account.

I need to find a reference that specifically states that an Employer can sponsor more than one 401(k) plan simultaneously.

I am taking over a DB plan that provides a death benefit of the greater of policy proceeds less c.s.v plus Theoritical Reserve, or the PVAB and unfortunately I have very little experience with this method of providing life insurance in a plan. There will be 2 new entrants in the plan this year, and the plan will be purchasing policies for each of them.

What assumptions must be used to calculate the Theoritical Contribution for this purpose? Is it required to use the plan's AE, or can I use any "reasonable" assumptions? I would think that it would have to be consistent from participant to participant, so will I have to go back to the prior administrator and request their methodology?

Is a traditional 410k plan with salary deferral money only (no employer match or NEC) subject to top heavy testing and minimum contribution requirements??

Some employers want to limit the availability of In-Plan Roth conversions to only active employee’s eligibility for in-service distributions. The reason for this is that once terminated employees move their funds to Roth, they are more likely to leave the balance in the plan for at least 5 years to get the tax advantages and it could be difficult to find terminated participants 5 or more years later.

In the latest newsletter from Sal Tripodi, he seemed to indicate there would be an issue if a terminated employee's balance was over $5,000 and couldn't be forced out, but wanted to roll the account within the plan to the Roth and was not permitted the same right, it would be "like the participant would be forced out" because taking the balance out of the plan would be the only way the participant could get the funds converted. Also may create a benefits, rights, and feature issue? Is anyone else doing In-Plan Roth conversions and if so are you limiting the availability to active employees eligible for distribution?

Does anyone have updated information (or links) on what states will permit self-funded nongrandfathered plans to participate voluntarily in state external review?

Thanks in advance.