After the plan year began, an employee is claiming that he made a mistake in his Medical Spending Account election. He elected $3,000 (the MSA maximum of the plan) and now claims he meant to elect $300. The past several years the employee elected $500.

His initial phone call to me indicated he wanted to elect $500 instead of $3,000. I informed the employee of the status changes that would allow a change in his election. The employee now indicates he is ADHD and he made a mistake and meant to election $300, not $3,000 (which is a change in story from initially wanting to change to $500). He indicates his mistake is atributable to his ADHD condition. He indicates that his ADHD is the reason he added an extra zero to the election. The employee is claiming there is a provision by the IRS for "clear and convincing evidence" that a mistake has been made.

I believe there was a "change of mind" in his election, not a mistake. Anyone have any guidance on the "clear and convincing evidence" or other suggestions?

My client has identified several Participants that were never enrolled in the plan, and require a QNEC to correct the missed contributions dating back from 2009. However, they have set them up in our Recordkeeping system in the meantime, and intend to have them go through the automatic enrollment process (QACA).

My client is stating that the Participants should be enrolled at 4% rather than the normal 3% automatic enrollment. They feel that this is necessary since the Participant would have experienced a 1% automatic increase in January 2010. However, they are also asking if they should be given the 30 day opt out period, or if they should be manually enrolled immediately at 4%.

Question: Is the automatic enrollment at 4%, is that the correct method for the QNEC, and also if the 30 day opt out window would still be required?

So, anyone here that if you haven't efiled by 10/12, web client isn't guaranteeing the transmittal? What are the other options for our late filers, DOL site?

the current CPI - U (Consumer Price Index) values for

July - Aug 2010 are 218.011 and 218.312

Two years ago the values for

July - Aug - Sept were 219.964 219.086 218.783

since we are still below those numbers, there will be no change in the limits next year (stopping short of some type of regulation change).

In fact, before the limits will go up, the values for the three month period from July - Sept must average 222.2

so, looks like everything will stay the same again for 2011.

Situation: Terminated Plan. Calendar 2009 was filed already and is filing received. All assets liquidated on 7/31/10, and a final 5500 was prepared for 1/1/10 through 7/31/10. In the Plan Info sheet I have the correct date ranges, and I indicated 2010 in the filing year. I used the 2009 form, because this was all done before it was possible to use the 2010 form.

When the client signed, he received this error message.

"Fail when Filing Header, Form Year does not match Filing Header, Plan Year Begin, unless the Filing Header Prior Year Indicator is set to 1."

Anyone know what I messed up?

This is always confusing to me

Say participant has annual annuity (limited by 415b) of $251,000. Participant is age 72.

Plan calls for lump sum to be the greater lump sum of PPA interest/mortality and UP84/5%

Definition of actuarial equivalence otherwise is UP84/5%

Lump sum factor using PPA interest/mortality is 9.80 (effective interest rate is about 4.7%)

Lump sum factor using UP84/5% is 7.90

Lump sum factor using 5.5%/PPA mortality is 9.35

Is the lump sum $251,000 x 9.35 = $2,346,000?

Should the PDF file containing the signed copy of the SB include all of the SB attachments or should it simply be the first three pages.

Of course, all instructions, including EFAST2 website information appear to remain silent on this issue.

I have a question about COBRA insurance.

I am a 22 year old graduate student, about to turn 23 (in October). I am insured by Mom's company, a large corporation. They will stop insuring me at the end of October because I will have turned 23. My understanding is that at the end of October, I will be eligible for COBRA. Furthermore, my understanding is that at the beginning of 2011, my Mom's company will be required to provide me coverage again because of the new health care law.

What would be the consequences of going without coverage from the end of October until January, 2011? If it turned out I needed medical care, could I sign up for COBRA at the last minute?

Say a company sponsors a DB pension plan and a DC 401k plan.

The db plan provides for plan loans to all participants on same basis.

The 401k plan does not allow for plan loans.

Anything seem unreasonable about that?

thanks

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To determine the 3-year average comp limit for purposes of Section 415b, I believe 401(a)(17) applies. Was this always the case? Suppose a participant has comp of $1 million for the last 20 years. What would his 3-year average comp be?

The 100% owner is the only employee/participant and wants to freeze the DB plan.

Because this plan is not subject to ERISA, not 204(h) notice is required. Their advisor thinks it's required for all DB plans. Am I missing something?

The 09 and 10 FABs set out situations where a plan sponsor is allowed to ignore accounts in 403(b) plans if certain conditions are met. A frozen 403(b) plan has not had any contributions or loan repayments flow from the plan sponsor for over 3 years. They have filed the previous Form 5500 (obviously an easy task, given no participant data is requested). If all participants meet the FAB requirements, what does the 2009 Form 5500 look like? Do they file it, but report 0 participants and 0 assets? I've got to think this question has been asked before, but I can't find it anywhere. Thanks in advance for any guidance.

The 09 and 10 FABs set out situations where a plan sponsor is allowed to ignore accounts in 403(b) plans if certain conditions are met. A frozen 403(b) plan has not had any contributions or loan repayments flow from the plan sponsor for over 3 years. They have filed the previous Form 5500 (obviously an easy task, given no participant data is requested). If all participants meet the FAB requirements, what does the 2009 Form 5500 look like? Do they file it, but report 0 participants and 0 assets? I've got to think this question has been asked before, but I can't find it anywhere. Thanks in advance for any guidance.

I have a plan that adopted a loan policy pre-GUST. They did not adopt a new one until the EGTRRA restatement when there were required updates to the administration of loans. Does a loan policy stay in effect until a new one is adopted? Assume that no legislative changes are required in the interim.

I have a client who has never had a 5500 filed, since 1994. I prepared the 2009 5500-SF and filed it on time. I am ready to prepare and file thru the DFVC his 1994 - 2008 forms. I will use the 2009 form and IFile them all, as instructed, but my question is: May I use the SF or do I have to use the regular loongg 5500?

THANKS to all who can answer.

When using forfeitures to pay admin expenses, must they first be allocated to participant accounts (say, pro rata, based on account balance) and then swept from the various accounts and used to pay expenses? I saw something that indicates this......which sounds like a huge headache..

A retirement plan SPD is supposed to be written for the average participant (rule of them is w/a 8th or 9th grade level education). That being said, many recordkeepers, have subscribed to a major plan document provider service, who is issuing SPDs that are so incomprehensible, confusing, and conflicting, we as the Plan Sponsor, just can't issue to the participants. Any suggestions on how I can get or create an easily readible SPD? We are thinking of asking for a reduction in our fee from the recordkeeper and hiring a vendor who specialized in this to write it for us. I've tried reaching out to the document provider, but they have not responded as of yet.

Employer with a standardized prototype plan has 1 Year of Service requirement for eligibility. The employer mistakenly believed that eligibility must be met each year, and when an employee cut back to less than 20 hour per week work schedule, the employer told them they could no longer defer. Seven months later the employer has asked us how to fix this. Would this fall under the EPCRS correction requiring the employer to make a QNEC for the lost deferral opportunity?

Let's say a Cycle B filer adopts a new individually designed plan in 2010. (Modification of a pre-approved VS plan document - from whom I have no idea as I haven't seen it, although I think perhaps Datair ight have been mentioned.)

I'm just trying to figure out if I'm nuts. The normal deadline would be 1/31/2013, right? But if client wanted to submit sooner, it appears that it would be eligible for preferential review under Section 14 of Revenue Procedure 2007-44 - excerpt below. Would you agree?

(2) A new individually designed plan whose next regular on-cycle submission period ends at least two years after the end of the off-cycle submission period during which the plan sponsor submits its application. For this purpose, a new individually designed plan is a new plan that as of the date the application is submitted with respect to the plan would be a new plan within its initial remedial amendment cycle under §1.401(b)-1(b)(1) of the regulations, as summarized in section 2.03 of this revenue procedure (determined without regard to the extension under section 5.03 of this revenue procedure).