The special catch up appears to increase the contribution limit for the last 3 years prior to normal retirement age. Is this an employee based catch up like the age 50 catch up? In other words, can the amounts that relate to the special catch up be non-elective contributions or must they be salary deferrals? I don't have a lot of experience with 457(b)s, so please don't bash me!

Any swing or ballroom dancers out there? I will be in Chicago for the Great Lakes Benefits Conference and ERPA Conference in June. I am looking for a dance event for Wednesday, June 16th or or Thursday June 17th. Does anyone know of anywhere reasonably close to downtown?

Is anyone far enough along with E-FAST to have an opinion on whether the Schedule SB attachments "label" requirements (e.g., Line 19c, Plan Name, Plan No, EIN#, etc....) can be satisfied by simply "checking" the pre-labelled boxes in the E-FAST attachment menu (e.g., summary of plan provisions).

-OR-

Do we still need to have all the info (Line #, EIN#, Plan Name) pre-printed on each attachment itself PLUS then check the appropriate pre-lablled attachment from the E-FAST attachment menu.

Seems to me if the pdf attachment is going along with the 5500 E-FAST filing and the pre-labelled box is checked identifying the attachment type that should be sufficient, but maybe I'm wrong.

Some of the attachments are not easily and completely labelled as needed from our software so I'm hoping the E-FAST pre-labelled attachment menu would be sufficient. Thoughts ?

if the sponsor has never amended the plan which includes a period of many law changes and 3 remedial amendment period would you just send the IRS the most recent EGTRRA document or would they request that you recreate all the amendments?

We have 2 plan sponsors who are terminating their 401(k) plans in favor of 403(b) plans. Both plans sponsors are inquiring about simply transferring the assets from the 401(k) to the 403(b) without giving the participants an opportunity to receive a distribution. I don't see that it is permissable, but wanted to double check.

Thanks in advance for any guidance.

Hi,

How does an S corp/LLC get the 35% healthcare reform insurance credit? Provided that they meet the requirements for the credit, how can they receive it? Since an S corp (or even LLC's taxed as a partnership) are not taxed at the federal level, how is the credit claimed? Instead the corp. income is passed thru to the owners that then claim it on their individual fed. tax returns.

An individual who is well-versed in the bill explained that these types of companies can still attain the credit. I just do not know how it is claimed.

Thanks.

Has anyone come across any private letter rulings, or are there any cases, or regulations discussing on what basis an administrator may reject a beneficiary designation form? For example, if the participant indicated that both primary beneficiaries should receive 100% of the benefit or if the total designation exceed 100% on the benef designation form. My thought is that it is ambiguous and the plan document would control. See Metropolitan Life Insurance Company v. Parker, 436 F.2d 1109 (9th Cir. 2006).

Can you file a form with the IRS for a determination for a control group? I know you can file the Form 5300 for an ASG determination?

If we have adotped a prototype plan but want to also get a determination letter, is there a deadline for filing a Form 5307? Does it make a difference if we also sponsor an individually designed plan that is being restated this year for Cycle E submission?

Our client sponsors a safe harbor 401(k) plan. The company fiscal year end is June 30. The plan was on the same year end as the company through June 30, 2009 until the plan year was changed to calendar year end, with a 6 month short plan year ending December 31, 2009. Going forward, they would like to base their deduction on the plan year beginning in the fiscal year.

The company plans to make a profit sharing contribution for the short plan year and one for the 2010 calendar year. Both plan year's begin in the fiscal year. Can they deduct both contributions for the 6/30/2010 fiscal year?

Have a small DB plan with about 30 participants that we took over about 5 years ago. The plan will terminate soon. If we submit for a DL, must we restate the document for EGTRRA first? Usually, we would have no problem restating with our volume document.

The problem is the plan has a 100% J&S normal form of benefit. Our EGTRRA volume document only allows for a single life normal form but many optional forms and the ability to modify the QJSA to 100%.

The EGTRRA document has a provision that allows us to designate protected benefits other than those described in the plan.

If we must restate for EGTRRA, perhaps we can designate the 100% J&S normal form as a protected benefit under the plan.

Anyone see any problems with this?

Thanks a million!

Does the board support Tapatalk? I've used it on my blackberry with a couple of other boards and really like using it instead of the blackberry browser for boards.

Thanks.

Is anyone aware of legislative amendments needed for a 457(b) top hat plan? I can only think of a couple optional provisions - ie adding beneficiary hardship distributions, and differential pay - the ability to defer from diffential pay.

One is PPA one is HEART, I am not sure what deadlines apply?

Are group long-term disability contracts usually written that if a person goes on STD leading to LTD in the first year of employment and has a pre-existing condition, that the employee is never eligible for long-term disability for the pre-existing condition?

We have a peospective client who is an LLC, but all employees havee their income reported as K-1. The client wants to establish a 401(k) plan. So far so good.

But now I am informed that several of the employees have set up SEP's for themselves based on the K-1 income from the LLC. Am I missing something? If what they really have are IRA's that's ok, but it was expressed to me that these were SEP's.

Does this seem a tad bad? Any thoughts are appreciated.

Plan is a calendar year plan that permits both employee pre-tax (elective contributions or elective deferrals) and employee after-tax contributions. The plan design includes an EACA, an eligible automatic contribution arrangement. Initial results indicate that the 2009 ADP test fails but the 2009 ACP test passes with room to spare. What is the deadline for recharacterizing employee pre-tax contributions as employee after-tax contributions? 2½ months or six months?

Treas. Reg. Section 1.401(k)-2(b)(3)(iii)(A) states that "excess contributions may not be recharacterized ... after 2½ months after the close of the plan year..." That's a straightforward argument in favor of the 2½ month deadline.

Treas. Reg. Sections 1.401(k)-2(b)(2)(vi)(A) and 1.401(k)-2(b)(5)(iii) extends the 2½ month deadline for making corrective refunds not subject to the 10% excise tax to 6 months for EACAs. Those changes are effective beginning in 2010. Is there room for a good faith interpretation argument to indicate that the extension of the 2½ month to the 6 month deadline could apply for the 2½ month recharacterization deadline too for 2009? It seems like the policy of not having to worry about testing results for six months would apply to both versions of the 2½ month deadline.

A 5 doctor practice that has a 401k plan wants to restructure so that the oldest MD, age 57, can retire in 5 years.

They would like to restructure so that the 57 year old MD sells his interest in the practice, and the other 4 MDs pay him out over that 5 year period. The 57 year old would now form a professional corporation and contract with the practice of the remaining 4 MDs to provide medical services to the practice's patients, and the practice would pay the PC (which would in turn payroll the money to the 57 year old MD). The practice would bill and collect for the 57 year old's medical services. The 57 year old MD's name would continue to be part of the practice's name.

For neither the practice or the PC would derive more than 50% of its gross revenues for providing management services to the other.

The PC would then adopt a DB plan for just the 57 year old MD, not covering any employees of the practice.

Would there be an affiliated service or controlled group problem?

The situation is this: a 4-partner law firm is owned 25% each by the professional corporations of the 4 partners. The partnership has 5 staff employees, all employed and on the payroll of the partnership. Each of the partners is on the payroll of his or her own PC, which contracts with the partnership to provide attorney services to the partnership's clients.

There is no question but that the partnership and 4 owning PCs are an affiliated service group.

There is one 401k plan that covers the 5 staff employees and the 4 partner lawyers, passing minimum coverage. This 401k plan also passes nondiscrimination tests (X-testing).

One of the lawyers (X) caused his PC to adopt a 412(i) plan, and mistakenly told the TPA that neither he nor his PC owned an interest in any other employer.

Later the true ownership is discovered by the TPA, who immediately raises multiple concerns. The obvious one is that the 412(i) plan is failing minimum coverage and is discriminatory. That is not the issue of this post.

The TPA has also notified the partnership that it has liability exposure (albeit slim, but exposure nonetheless) to the staff employees (or IRS or EBSA) for making contributions for them to the 412(i) plan, so that it will then pass minimum coverage and nondiscrimination. However, the 412(i) plan documents only indicate that the 412(i) plan covers the employee's of X's PC. The partnership did not consent to or otherwise sign the 412(i) documents (actually learning of the 412(i) plan's existence only after it had existed for 2 years.)

The TPA can point to no authority for the proposition that the partnership could be held responsible for making such contributions. However, the TPA says it is not unheard of for the IRS to take that approach with partnerships in situations such as this, where the partnership did not sign on and the plan specifies that it is limited to just X's PC.

The TPA has further frightened the partners, telling them that the 412(i) plan of just X's PC places the partnership's 401k plan at risk of tax disqualification, even though it has passed minimum coverage and nondiscrimination. Again, the TPA can point to no authority for this proposition, but insists that it is not unheard of for the IRS to take that approach with partnerships in situations such as this, and attempt to disqualify the partnership's 401k plan.

I don't see how the IRS could either hold the partnership responsible for contributing to X PC's 412(i) plan for the staff employees or disqualify the partnership's 401k plan.

Do you?

I prepared the form 5500SF and Schedule SB on the IFILE system.

As the actuary my understanding is that I need to print the Schedule SB, sign it and then scan it as a pdf file and then attach the pdf signed schedule SB to the Form 5500SF filing along with all the other Schedule SB pdf attachments. Is that correct?

Can't think of another way to get actual signature, etc.

Thanks.

I have a 401k plan with cross-tested profit sharing. Eligibility is from date of hire for 410k and profit sharing. All participants get a profit sharing at the end of the year except terminee's under 500 hours, so all non-excludable plan participants benefit for profit sharing coverage and discrimination testing.

The ADP test fails. Can I restructure the ADP test into "otherwise excludable" and "statutory eligible" participants even though I'm using all participants to test the profit sharing? In other words, is there any consistancy requirement between my testing methods?

Craig