I have dealt with an Auditor who has done the Employers 401K limited scope Audit for the past nine years. I have only been provided hands on training and have learned the 5500 the hard way. The Recordkeeper and the Auditor are the only trainers I have had (along with my research and sites like this).

My first question is "Isn't the Employer obligated to change Auditors at least once every 2 to 3 years" ?

The Auditor is required to only audit and report - correct? This Auditor walks a fine line between being an Auditor and being the one who dictates my job duties.

Each year it seems this Auditor adds another job duty to my responsibilities. I will be researching the fiduciary sites also. However, I need to ask this question, this auditor has prepared the "Statement of Financial Assets" and included it with his Table of Contents along with his "Independent Auditor's report" and "Independent Auditor's communication of internal Control related matters" for the past 9 years, and has never relayed to me that I should be preparing this "Statement of Financial Assets". Now after nine years, he states that there is some sort of new "law" that "I', as Plan Administrator should be preparing this (even though he includes it in his report). If I should have been preparaing this report for the last nine years, why has he just this year gone to my employer to tell them this report is my responsibility?

Is there any rule that requires a union to notify participants when they reach pension eligibility age?

I'm assuming (whether correctly or not) that most participants would know when they are eligible, but, just wondering if there is a rule requiring a formal notification.

Thanks

Because the regs distinguish between hardships from Custodial Accounts and annuity contracts, what would TIAA be? Most auditors were reporting the CREF funds as mutual funds, and not separate accounts - does that mean they are custodial accounts not eligible for hardship (with respect to employer money)?

Pulitzer Prize winning cartoon (1926) of Daniel Fitzpatrick, cartoonist for St. Louis Post-Dispatch

Code Section 414(u)(8)(A) states that "an individual reemployed under such chapter is treated with respect to such plan as not having incurred a break in service with the employer maintaining the plan by reason of such individual's period of qualified military service." The accompanying USERRA-related regulations, in 20 CFR 1002.259, say that "the employee is not treated as having a break in service with the employer...for purposes of participation, vesting and accrual of benefits..."

What about where a plan requires a certain length of service to even be eligible for the plan? Does USERRA require an employer to count an employee's military service toward that service eligibility requirement? Or would USERRA's protections only kick in once the employee is already eligible to participate in the plan? USERRA's choice of the phrase "not treated as having a break in service" seems to imply that the employee is already eligible to participate.

Thanks.

We have a small DB plan that had RA of 55 and we changed to RA 62 with a fully subsidized ER benefit at 55. The owner is at the 415 limit. My concern is that should the plan terminate when the owner is under 55, we could have a overfunding problem. We use the Corbel DB prototype and my interpretation is that distributions made prior to ER would be calculated using age 62 factors. Is this pretty much standard? Anything we can do to prevent this problem?

I have someone (non-owner) who needs to take an RMD for 2010. She is 74 and separated from service in September 2010. Her RMD is slated to be about $600.

However, earlier in the year, she took a hardship distribution for $1,000.

Does she still need to take the RMD?

I would tend to think not because the hardship:

1. was paid to her (not rolled over)

2. wasn't eligible for rollover

3. taxes were withheld

4. it was for more than the RMD

5. tax form will still be code '7'

Your thoughts are appreciated.

If a company has 100+ employees in multiple QSLOBs but no single QSLOB has >100 participants is an audit still required?

as long as it is less than 10%, can an employer contribute and deduct the FMV of a contribution of employer stock to a defined benefit plan?

We have received conflicting information regarding when the first required minimum distribution may occur. The information received implies that the first RMD may not occur until the actual Required Beginning Date (RBD). However, can't a participant request their first RMD to be paid at any time after they retire as long as it occurs on or before their RBD?

The RBD as defined by the document is April 1 of the calendar year following the later of the calendar year in which a Participant attains age 70½ or the calendar year in which the Participant retires, except that the benefit distributions to a “5-percent owner” must commence by April 1 of the calendar year following the calendar year in which the Participant attains age 70½.

The document further defines the “Distribution calendar year” to be the calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first “distribution calendar year” is the calendar year immediately preceding the calendar year which contains the Participant’s “required beginning date”. The required minimum distribution for the Participant’s first “distribution calendar year” will be made on or before the Participant’s “required beginning date.” The require minimum distributions for other “distribution calendar years,” including the required minimum distribution for the “distribution calendar year” in which the Participant’s RBD occurs, will be made on or before December 31 of that “distribution calendar year.”

Example: A non-5% owner participant who is age 74 retires as of January 15, 2010 and would like to take his first required minimum distribution before the end of this year to avoid having two minimum distributions processed in 2011. His RBD is April 1, 2011.

The Forms of Distribution selected in the Adoption Agreement are: 1) Lump sum and 2) Partial withdrawals or installments are only permitted for required minimum distributions under Code Section 401(a)(9).

Is this permissible or is he restricted to having to receive his first RMD on April 1, 2011 and second RMD by December 31, 2011 as suggested by the prototype provider?

Plan fails ADP, one of the HCE's who requires a refund took a hardship and earlier in the year and is about $800 short of the refund amount. How is the ADP failure corrected when this happens?

Can part of the earlier hardship be 'recharacterized' as part the the ADP refund? I would assume that the 'recharacterized' amount would be the $800 or could it be the entire ADP refund amount (the hardship was well over the ADP failure amount).

Thanks for the help.

In a SIMPLE IRA plan that allows for catch-up contributions and the employer contribution is in the form of a matching contribution, are catch-up contributions matched:

(1) all of the time

(2) none of the time

(3) at the discretion of the plan sponsor

Thanks

We elected the "5 Yeear Rule" in the adoption agreement for RMD's after death, but before distributions begin. Participant dies, spouse is sole designated beneficiary. Particiapnt turned 70.5 in 2009 which was the year of death. So

a) Does the 5 year rule apply, because he died before his distriubtions began? OR

b) Will the beneficiary (who is basically the same age) be required to begin taking distributions by 12/31/2010 (12/31 following end of year of death).

I know the participant can roll it to an IRA, etc.,, but before she rolls it over, the question is do I need to do an RMD using the single life table.

Could someone summarize the IRO requirements for Cafeteria Plans based on the new Healthcare reform?

We have a DB plan with 2 participants. One participant has terminated employment. The owner is trying to termiante the DB plan and get the terminated participant's benefit out of the plan. The problem is that the terminated participant is being "difficult" and claims they will not accept a distribution.

I believe the employer can simply purchase an irrevocable annuity for the terminated participant, but I have two distribution questions: (1) Could the employer distribute a Lump Sum to the participant (assuming the plan allows for a lump sum upon the plan's termination)? (2) Alternatively, could the employer unilaterally transfer the "difficult" participant's benefit to the employer's profit sharing plan without the participant's consent? Of course, the benefit would retain the same distribution features of the DB plan and would be tracked separately within the profit sharing plan.

At the ASPPA annual conference, Lorraine Dorsa mentioned that she tries to avoid using an employee's name when defining a rate class for benefit accrual (DB plans), to avoid the possibility of it creating a problem because of the 'similarly situated employee' issue. This approach was mentioned not just for NHCEs, but also for HCEs.

We have a few plans where the HCE accrual rate groups are defined by using the HCE's name, for example "Group A consists Captain John Smith, an owner-employee" and the document has a definition for owner-employee.

I think the potential problem exists any time one person ends up in a class by themselves, regardless of what language was used to get them into their own class.

Do you think this poses a significant issue or problem that would merit re-writing a few plans?

Got a primary residence loan where the orignal term was 15 years. Currently, the loan will be fully repaid in 6 years. Is there any reason that this loan cannot be refinanced into a signle loan, repaid in 5 years, together with receiving additional proceeds of $X?

Great West is saying we can't., but I don't believe them!

Does anyone have thoughts about how to advise a non-federal governmental plan sponsor who has recently converted from a fully-insured to a self-funded health plan with respect to nondiscrimination testing under 105(h). Initially, my thoughts were that because there is no explicit exemption from 105(h) for governmental plans (unlike in the qualified retirement plan context where governmental plans are exempt from 410(b)), self-funded governmental plans need to be tested.

But I recently spoke to someone who does nondiscrimination testing for one of the large benefits consulting firms and he said they don't really have governmental clients that they do the testing for and he may never have seen it. He doesn't think that 105(h) nondiscrimination testing is on the radar of governmental employers and he thoughts were to maybe hold testing a self-funded governmental plan at this point because: (1) no guidance has been issued for testing fully insured plans under PPACA yet and governmental plans (fully-insured and self-funded) might be exempt entirely, and (2) there has been little to no enforcement of 105(h) for self-funded plans and the Service won't start with a governmental plan.

Any thoughts? Has anyone heard anything about governmental plans being exempt from nondiscrimination testing when the guidance is issued?

A municipality let go about 30 employees in July 2009. These employees sued for wrongful termination and won. Now municipality has to reinstate them as if they never left and pay them for all the back pay. Of those that were contributing to 457(b) deferred compensation plan, nine took lump sum distributions and one set up installment payment distributions.

Is plan required to restore participant accounts by allowing participants to payback distributions and adjust for any gain/loss? Also, would plan be required to withold for pre-tax elective deferral contributions from the judgement award of back pay?

With the risk of oversimplying things, company adopts a 3% participant directed profit sharing for hourly employees and a 3% cash balance for salaried employees. Company must permissively aggregate both plans for 401a4. Would the participant direction among other benefits be considered a benefits rights and feature that must be tested? Would both plans need to be tested for BRF? What are the issues?