I am helping a client conduct a DEA; the problem is that we are approaching the deadline for eligibility verification and only half (170 of 343) of the affected members have submitted their forms. We don't want to terminate 50% of the dependents knowing the majority are eligible but also want to have some "teeth" in the deadline.

We recently reached out to all of the employees who have not turned in their forms and had them sign for a second DEA packet. Beyond that I'm not sure what else to do to ensure compliance.

Suggestions? Ideas? Help!

Thank you.

Has anyone ever used a special tax form or maybe a custom form to send to an employee once he/she has rolled money into a 401(k) from an outside source? I know with IRA's if you roll money into it, you get a Form 5498 so I didn't know if there was anything like that for 401(k)s? Thanks!

Can i just use the 2009 5500-EZ to do a final/short filing for a 2/1/2010 to 2/26/2010 plan year?

I have several clients getting proceeds from the Bank of America Fair Fund. It looks like it has to do with MFS funds.

What should we do with these proceeds?

I would think that pro-rating the funds across people who held positions in the funds, but the cover letter mentions that it applies to account held from 2000 through mid-2003. It would not be feasible to see who held accounts during that period.

However, I don't think it would be fair to spread it out across people who currently have a position in those funds.

I thought of just putting it in the forfeiture account, but I recall some time ago that this wasn't a well-regarded disposition.

Any thoughts?

What is the timeframe to receive a acknowledgement letter for a submission?

We received a good portion of acknowledgement letters for EGTRRA document that we submitted (up until about April 23, 2010). Most of the acknowlegement letters we received were date about 3 to 4 weeks after we submitted.

Anything that was mailed after 4/23/2010 we haven't received acknowledgement letters for (all postmarked before 4/30 of course).

Of course my worst fear is that we didn't get them in on time. I was wondering if anyone is still receiving acknowlegement letters or if all of them were sent out already?

Did anyone submit the last week of April? Or were we the only ones backing up a truck load submission to the IRS at the last minute!!

Hypo:

Companies A, B, and C comprise a controlled group.

Company A sponsors a traditional safe harbor plan utilizing the ADP safe harbor provisions of Code Section 401(k)(12).

Company B sponsors a non-safe harbor plan and utilizes the ADP test under Code Section 401(k)(3).

The plans maintained by Companies A and B are not aggregated, and they pass coverage and nondiscrimination testing separately.

Company C wishes to establish a new plan utilizing the automatic enrollment and QACA safe harbor provisions of Code Section 401(k)(13).

Query:

May Company C's new QACA safe harbor plan be aggregated with Company A's traditional safe harbor plan? Alternatively, may it be aggregated with Company B's non-safe harbor plan? Or is aggregation with either plan precluded by Treasury Regulation Section 1.401(k)-1(b)(iii)(B), which states that an employer may not aggregate plans with inconsistent ADP testing methods? If aggregation is precluded, then the only way Company C can proceed with its new plan is if it can separately pass coverage testing, correct?

I have a young business owner who wants to convert all his current retirement savings to a Roth IRA while the income restrictions are lifted. He can't take an in-service distribution. Can he terminate his solo 401k, convert the assets, and then start another plan at a later date?

Is there a limit to the number of hardships a person can take within a plan year or within 12 months. The plans document does not specify any hardship limits except to only take from deferrals. The participant in question took a hardship in Sept 2009 and is requesting another to prevent forecloure. Thanks.

1/1/2009 valuation data was sent to us late and we were not able to obtain certified AFTAP from actuary until after 10/1/2009. Actually done in January 2010 at 128%.

The presumed AFTAP of <60% applies to benefit restrictions. I believe it also applies to credit balances correct?

So for the 2010 year the MRC cannot be reduced by the pre-funding balance because of the late AFTAP. Correct?

Thanks.

It is my understanding that if a plan characteristic exists (e.g., is contained in the Plan Document), then that characteristic/feature should be coded appropriately on line 8a. There are instances, however, in which a plan characteristic is available but has never been used. For example, a 401(k) plan may allow for a discretionary match with no matching contributions having ever been made to-date. The same can be said of after-tax employee contributions or employer profit sharing contributions to a 401(k) plan. Is it necessary to code these as characteristics on line 8a prior to their actual use?

Has anyone checked the new box at the bottom of Schedule SB (see attached)?

New_Schedule_SB_Box.pdf

I had a client who filed for bankruptcy. The bankruptcy trustee call me, the TPA, about eight months after the filing. In our conversation I mentioned the trustee of the profit sharing plan who is also the owner of the corporation that filed for bankruptcy. She informed me that he wasn't the trustee, that she now was and that she had closed the brokerage account and transfered all the money to her trust account.

Next, I start getting calls from the "old trustee" and from the bankruptcy trustee's attorney asking if her transfer of the money to her trust account had adverse consequences on the ability of participants to roll their money to an IRA. Is her trust account a plan account? Is anyone aware of a special status given to her trust account under these circumstances and her ability to appoint herself trustee?

A plan sponsor has a DB and 401(k) PSP. The key employees are benefitting in the DB plan. The key employees are specifically excluded from receiving any profit sharing contribution in the 401(k) PSP. They are eligible to defer but have never deferred antyhing.

Are these two plans required to be combined for TH determination? Are the key employees considered participating in the 401(k) PSP even though they arent contributing anything, because they are eligible to defer?

TPA Administrative fees and stop loss brokerage commission and net stop loss premiums are billed to and paid by employer, net premium is sent to stop loss carrier, so their schedule A does not include broker commission. TPA pays the broker commission to the broker. Is this reportable on the schedule C as an indirect payment, or does the general rule below apply?

Q-3. Will Schedule C disclose plan expenses which an employer pays directly?

No. Schedule C discloses administrative expenses which the plan pays, directly or indirectly. Schedule C will not disclose an expense which the employer pays directly, and for which the plan does not reimburse the employer. If, however, the plan reimburses the employer for an expense payment, show the expense as a direct payment by the plan to the service provider.

What is the deadline for governmental plans to amend to comply with the applicable 401(a)(9) regulations?

Also, did anyone submit a Cycle C governmental plan and find that the IRS asked for a 401(a)(9) amendment from 2003?

It's my understanding that governmental plans were unlikely to need an interim amendment in 2003 to comply with the 2002 401(a)(9) final regulations and that they have until the end of their EGTRRA RAP to amend for 401(a)(9), but I'm wondering if this is the position the IRS is taking on the issue.

Would appreciate any suggestions or comments on governmental plans and 401(a)(9) document compliance.

I have haard that a group of recipients of the infamous 401(k) Plan Questionnaire is collectively petitioning the IRS for an extension of the 90 day response period.

Has anyone heard of this or know how one could "sign on" to such a petition?

Thanks.

In 2008 the 401(k) plan had 131 participants at beginning of year. A large plan filing was made for this year. At the beginning of 2009 there were 120.

Does the exception to the audit apply? The instruction say you may "elect" to filing under the same catagory as as last year implying you could opt not to. If I have a option I would elect to file as a small plan.

Please comment if you have experienced the following scenario:

Nonprofit client has TIAA-CREF 403(b) arrangement. Client has two TIAA-CREF contract numbers, one for the "RA" plan which receives salary deferrals and matching contributions, and one for a GSRA or group supplemental retirement annuity, which receives no match but which is intended to receive salary deferrals above and beyond the maximum amount or percentage that the employer matches. Both arrangements permit loans and have other features requiring employer administrative efforts such that even the GSRA is an ERISA arrangement despite receiving no employer match. Client traditionally filed a single Form 5500 return using plan number 001 for the RA arrangement.

Ascensus sends out plan checklists for each contract number.

Employer completes checklists separately and receives two adoption agreements and two SPD, one for each contract number. The SPDs say nothing about the "other" plan and each cite the full salary deferral and catch-up limitations.

One is identified as plan 001, the other as plan 002.

Does the client now have to file two Form 5500s, one for the RA and one for the GSRA?

If so, must the employer "merge" the two arrangements onto a single Ascensus checklist (which is permissible) in order to eliminate plan 002 and the attached reporting obligations?

Comments and input much appreciated.

A client sponsors a new-comp discretionary profit sharing plan. Each employee is his/her own allocation group. On a payroll by payroll period, the client would make a contribution to the plan of 5% to each eligible participant (both HCE and NHCE), except the owner who would receive slightly more. In early spring 2009, the client fell on hard times and elected to stop making all contributions to the plan for 2009.

I just received their 2009 census and was reviewing some of the nondiscrimination issues. Comparing the annual compensation to the actual employer contribution, one of the HCE’s received exactly 5% of their compensation because they terminated before the client stopped contributing. None of the active NHCEs received an annual allocation greater than 1.29%.

Does this mean they’ve failed the gateway test? It is my understanding that the 1/3 test is based on compensation as an eligible participant. Is there anyway to justify that compensation is only through the date the client stopped making deposits? At that point they easily would not have violated any nondiscrimination rules.

Note the plan was never frozen. The client elected to simply stop making the discretionary contributions.

Any thoughts are appreciated.

Hi all,

As I'm sure you all know, the COBRA subsidy ended on May 31, 2010. We have employees who really need this subsidy to help them manage the cost of healthcare after termination. (We are a school and those employees are not actually terminated until August 31, 2010).

I am hoping that Congress will extend the subsidy again so that our former employees get some assistance with the high cost of health care.

Does anyone have any thoughts or opinions about whether the subsidy will be extended again? Also, have any of you thought of writing to the powers-that-be to express the value of the subsidy?

Many thanks for your thoughts,

~R