Would payroll deduction loan repayments cause a non ERISA voluntary 403(b) plan to become ERISA? I believe many non ERISA plans use repayment by check or "home" billing method, but does anyone have thoughts about payroll deduction?

Thanks!

Never had this come up. Not in my materials. I searched the board and found a similar, but unanswered question from back in 2007.

Medicare premiums; pre tax like insurance premiums?

Medicare co-payments; can claim under a health FSA?

Participant is dying of cancer and fills out application for DB pension. He selects the 100% QJSA option with an annuity start date three months out. He dies at age 64 (after earliest retirement age under the plan) but before the annuity start date. The surviving spouse believes she is entitled to the participant's selection, while the Plan says she is entitled to a 50% QPSA. IRS Reg. 1.401(a)-20, Q&A 18, seems to say that the surviving spouse is correct.

Here is the text of the relevant Q&A from the Treas. Reg.

"Q-18: What is a qualified pre-retirement survivor annuity in a defined benefit plan?

A-18: A QPSA is an immediate annuity for the life of the surviving spouse of a participant. Each payment under a QPSA under a defined benefit plan is not to be less than the payment that would have been made to the survivor under the QJSA payable under the plan if (a) in the case of a participant who dies after attaining the earliest retirement age under the plan, the participant had retired with a QJSA on the day before the participant's death, and (b) in the case of a participant who dies on or before the participant's earliest retirement age under the plan, the participant had separated from service at the earlier of the actual time of separation or death, survived until the earliest retirement age, retired at that time with a QJSA, and died on the day thereafter. If the participant elects before the annuity starting date a form of joint and survivor annuity that satisfies the requirements for a QJSA and dies before the annuity starting date, the elected form is treated as the QJSA and the QPSA must be based on such form.

Is the surviving spouse correct, and do we potentially have a plan qualification problem here?

A plan sponsor of a 401K plan was late contributing the employee's deferrals basically on every payroll date in 2009. The first contributions for the year was not sent in until April 2009 and then around August contributions stopped all together. All the missed deferral contributions was caught up in May 2010. The lost earnings have been calculated and will be made this week.

My question is how to show this on the 5330. On Sch C of the 5330. Is the "date of transaction" the 7th day after each pay date since they were all sent late? If I have to list each date is attaching a copy of the VFCP Calculator printout acceptable since there is not enough room on the form?

Since the restoration of loss earnings will not be made until this week (7/2010) will I include that date any where on the 5330?

I guess I've been lucky and haven't had to file a 5330 before so it's new to me. I really appreciate any guidance on this. Thanks!

If pension plan participants elect direct deposit of benefit payments, TPA makes deposit but does not send any confirmation of deposit to participant. Participant can see the deposit was made by checking bank account statement. TPA sends 1099-Rs at end of year, but that is the only document that a participant gets showing gross pension payments, tax withholdings, etc. Is this a problem?

Just trying to get a handle on this...

Some basic questions.

Do the assets need to be pooled? How are assets divided up for funding purposes? (are the pooled, but tracked separately?)

If an employee leaves one employer and goes to another, how is the shortfall liability made up?

Thanks,

Client does not include bonuses in allocation of safe harbor 3%. After running the 414(s) Test, the plan fails, i.e., it looks as if the defintion of compensation is discriminatory in 2009. How is this corrected? And to what level?

The plan document also limits the HCE group to the top 20%. Does this limitation have to be applied to the 414(s) test, just as it is used for adp/acp testing? Or can I chose not to limit the HCE group for this test?

Thanks for you guidance.

We are preparing a June 30, 2010 FASB valuation (we are the actuarial firm). We used a 6% discount rate for the 6/30/2009 FASB valuation. This seems quite high now looking at the FAS 87 moody rates published on this board. We need to discuss the discount rate with the client and the auditor but it seems that a rate around 5.5% is reasonable. Any thoughts?

You ask why you have to email me separate pdfs of all the attachments when the information is in the audit report pdf you were so gracious to provide.

I agree all of this stuff is contained in the audit report and preparing separate attachments is redundant and causes discomfort when you sit down. My suggestion is to voice your complaints not at me, the lowly messenger, but rather to the DOL, IRS, American Academy of Actuaries and anyone else who couldn't care less about utility, anyone's inconvenience, or client expense, let alone your humble, professional opinion.

Alternatively, you may wish to take a ball-peen hammer and repeatedly strike the middle of your forehead.

Preparing 2009 Schedule SB for 12/31/2009 val. Line 15 (AFTAP) of the Schedule SB says that if the valuation date is other than the first day of the year then you must report the final certified AFTAP based on 2009 valuation results (and reflecting 2009 contributions). So when we prepared the 12/31/2009 valuation the certified AFTAP did not reflect any 2009 contributions. Since the Schedule SB must reflect 2009 contributions then another AFTAP must be certified and entered on line 15? So if the AFTAP is including contributions then it would make sense that the Target Normal Cost would have to be added to the Funding Target to be consistent? Correct?

Restriction on OTC drugs and medicines w/out a prescription

Does anyone have any ideas on whether this restriction applies only to drugs and medicines? I have heard somewhere that items such as Band Aids, Blood pressure meters, etc are still acceptable. Any ideas, any reg’s to back it up?

Can you avoid the implications of Section 409A(b)(3) if the NQDC plan is sponsored by an entity that is in a separate QSLOB than the sponsor of the pension plan which is "at risk"?

EE says they handed in paperwork to enroll in 2008 (elig. for plan in 2006) and that ER did not submit. Office Mgr. of er says they did not ever receive paperwork. Broker has copy of paperwork submitted in 2008, but doesn't look like it went anwhere from there/did not make it to the ER.

If ER wants to correct (versus do nothing):

If we were to pursue corrections based on "exclusion of eligible ee", & the "lost opportunity cost" to make deferrals, the make-up payment is based on 50% of the pre-tax deferrals the ee would have made which is based on the ee's Comp times the ADP of the EEs class. However, no one else defers into the Plan (only three elig.). The orig. enrollment forms document that the ee wanted to defer 10%.

Since we cant base the calc an ADP% (it would be zero), would we just use the 10% intended deferral %?

Our pension document provider supplied us with blank form notices and distribution elections behind one of the tabs in the binder they sent to us.

We administer sign-up's and distributions in-house. A recent, informal compliance audit of our plan records showed that 32% of the packages we'd put together or the elections we'd based payouts on were incorrect or incomplete. (We had less than 0.1% error rates in providing SPDs, safe harbor notices, and 401k sign-up's.) Our risk management director wants us to outsource preparing distribution compliance.

Neither our pension document provider and our Form 5500 provider will prepare distribution notice/election packages, or routinely review completed and signed elections that we receive back. Our pension document provider did explain that they based our plan documents on documents the provider obtained from Sungard Relius.

Does Sungard or some other company offer a service of preparing distribution notice/election packages based on Sungard plan documents, review elections turned back in, and then advise us of when and how to make payout?

What I would really like, if it is available, would be an online service where one of our benefits employees could log in, enter information about the terminated employee and her benefits, and then it would generate the notices and elections appropriate for her in light of our Sungard documents. Does anyone know of such an online service?

A fire district established a FICA alternative plan paying 7.5% of compensation for all eligible participants. To comply with Section 3121(b)(7)-2, contributions are invested in a fixed investment (no variable investments) and benefits must be 100% nonforfeitable. The employer wishes to add an additional employer contribution of 7.5% of compensation subject to a vesting schedule and invested in separate account options allowed under the group annuity contract. Are there any issues the employer faces in adding this additional contribution to the FICA alternative plan?

Hello,

For 401K plans through an insurance company, what amounts are you reporting here? The commissions paid to the broker? What about any "TPA Basis Point Fees" (that is language used by ING in their Schedule A information).

Thank you.

Client filed return for YE 10/31/09 on 6/9/10. Sent on paper to Lawrence KS. Rec'd Notice 1393 from IRS saying return must be elecctronically filed. I called EFAST2 helpline and was told I needed to call IRS. I called IRS (877-829-5500) and was told the return has to be filed elecronically - call EFAST2. (I thought I saw an article on this subject recently but can't find it.) What to do now?

We have a connection/friend who is an RIA. They are getting audited by the DOL. They had requested a listing of all of their qualified plans that they do work for, and she has selected a sample from that list. The DOL apparently knows that they are just the RIA. What could the DOL be looking for? We've never heard of these sorts of audits before... Has anyone been through one?

Our client is a controlled group of corporations with each controlled group member maintaining its own 401(k) plan. With the expiration of Code Section 410(b) transitional relief for 2009, some of the plans failed the coverage test. We have looked at multiple testing methods. The most viable is applying the average benefits test and converting the allocation rate to a benefits rate through cross testing. However, the contribution required to correct the failure is extremely significant even though it is the least expensive of the alternatives.

Has anyone had experience or heard of the IRS, through VCP or otherwise, permitting the correction of a coverage failure by reducing and forfeiting contributions made for the highly compensated rather than making additional contributions for the non-highly compensated or adding eligible participants? Will the IRS consider alternatives to the traditional correction approach in light of financial or business hardship that would result from the traditional correction method? We understand there may be anti cut-back issues with our alternative approach.

Please let us know your thoughts or any ideas.

Our client is a controlled group of corporations with each controlled group member maintaining its own 401(k) plan. With the expiration of Code Section 410(b) transitional relief for 2009, some of the plans failed the coverage test. We have looked at multiple testing methods. The most viable is applying the average benefits test and converting the allocation rate to a benefits rate through cross testing. However, the contribution required to correct the failure is extremely significant even though it is the least expensive of the alternatives.

Has anyone had experience or heard of the IRS, through VCP or otherwise, permitting the correction of a coverage failure by reducing and forfeiting contributions made for the highly compensated rather than making additional contributions for the non-highly compensated or adding eligible participants? Will the IRS consider alternatives to the traditional correction approach in light of financial or business hardship that would result from the traditional correction method? We understand there may be anti cut-back issues with our alternative approach.

Please let us know your thoughts or any ideas.