Client does not want to fund the 2009 Safe Harbor Non-Elective Contribution. They want to know what the consequences are. The only thing I can think of is that the plan could be disqualified for not following the terms of the plan.

Any chance they could fund the NHCEs but not the HCEs?

Thank you.

Kate Smith

can someone verify the abilyt to file a 5500-SF for 2009 even if the plan answered YES to loans on the 2008 Schedule line 3f

Asssume the plan(s) are with John Hancock and not a money purchase plan.

a colleague point to the 5500 preparers manual as stating (PRACTICE POINTER) that if you answered YES and entered an amount on line 3f (participant loans) of the 2008 Schedulke I, it most likely does not meet the requirements for the simplified reporting.

Any one have a clarification/comment on that?

I have a client who is trying to terminate a 403(b) TDA plan. Their current carrier is telling them they cannot terminate this plan because the carrier does not offer an individual QJSA product. The carrier suggested they find a carrier that does have a QJSA product and roll the group 403(b) plan over to this new carrier and terminate the plan at that point. I would like to provide my client with a list of carriers that will take this transfer and then terminate the plan and offer the QJSA individual product to the plan participants. I also need to find out the cost of doing this. I welcome any suggestions, I am located in the Pittsburgh, PA area.

Does anyone know the specific IRC Section or Treasury Regulations that states that amounts distributed from a Roth IRA are not permitted to be rolled over to a designated Roth account under section 401(a) or section 403(b) plan?

My client believes that they submitted their 2008 5500 even though it does not show up on freeesrisa.com. I called the EFAST2 helpline and the plan came back as not received. The system said it should be resubmitted. Hence my question:

Has anyone resubmitted before getting a letter?

Since they are sure they mailed it in they are not interested in submitting using DFVC.

Can they resubmit via EFAST2 using "other attachment" to explain that is was sent in on time but not received?

Question realates to Small Plan Audit and Bonding. I have a plan that has employer stock as an OPTION. We are filing a 5500 and Schedule I. I am wondering abou the required bonding. The employe stock is over 5% of the plan assets. Employer stock is not traded. (small company) I don't understand the Qualifying Employer Securities below. I looked up the sight and I still am confused. Do they need a bond covering the entire amount of the Employer Stock to get out of the Small Plan Audit Requirements?

Thanks

Pat

I"n the case of an individual account plan, any assets in the individual account of a participant or beneficiary over which the participant or beneficiary has the opportunity to exercise control and with respect to which the participant or beneficiary is furnished, at least annually, a statement from a regulated financial institution referred to above describing the assets held or issued by the institution and the amount of such assets;

Qualifying employer securities, as defined in ERISA section 407(d)(5); "

Filing a Schedule A with a LTD plan. Is it mandatory to complete question 11 regarding "did the insurance company fail to provide any information necessary to complete Schedule A"?

Plan terminated 12/31/09, but 5 people still have balances. Should we show in item 5 that there are still 5 participants and 5 people with account balances? Just wanted to make sure we don't show zero participants, etc. thanks

Participant would like to reinstate back into the ABC Plan. When participant rolled out of the Plan, all of his money was traditional pre-tax; however, when he rolled it to the IRA, it was converted to Roth. Since the Plan does allow Roth rollovers, is it permissible to allow the money to be restored as Roth?

Plan is an off-calendar year of 5/7 - 5/6. Entry dates are defined as "Semi-annual. The first day of the 1st month and the 7th month of the Plan Year" There is nothing specific to semi-annual entry dates in the BPD.

My question - would you take this definition to mean that entry dates are actually 5/1 and 11/1? The 11/1 date I'm ok with - but the 5/1 date would be in the prior plan year so I don't get how that would work.

Example: Plan year 5/7/2009 thru 5/6/2010

First Entry date: 5/1/2009???

Opinions, please!

It seems we are seeing conflicting information in EBIA, ASPPA and on these boards. If someone would be so kind as to fill in the following blanks regarding the depositing of Employer contributions for Plan and fiscal year ending 12/31/09:

1) If you have NOT filed an extension for your entity's tax return, a discretionary match must be deposited before _________ for a 2009 or deduction or before _________ for a 2010 deduction.

2) If you HAVE filed an extension for your entity's tax return, a discretionary match must be deposited before _________ for a 2009 or deduction or before _________ for a 2010 deduction.

And then the same two questions for:

Safe Harbor Match

SHNE

Employer Discretionary (PS)

QNEC

Most of these I am sure are the same but I want to get this all straightened out once and for all. We have generally provided clients with more stringent deadlines but I would prefer to have the most accurate info. Thanks in advance.

Is it mandatory that the plan offer the HEART Withdrawal?

A client wants to change their cafeteria plan (which includes Health FSA and Dependent Care) from an 8/31 plan year end to a calendar year end. I have read that a plan year change is permitted but only for a valid business purpose. They have had their plan for many years but would like to make this change so that their employees can make their annual elections based on the health insurance benefits for the same time period as opposed to making them in August each year (before they even know what the health insurance benefits will be in the upcoming year). They would also like the change made so it agrees with their fiscal year and is in line with their health insurance. They do not want the plan year to be changed to circumvent the requirements of Code Section 125.

Would this qualify as a valid business purpose?

In 2005, a 12 participant PSP hired a new adviser, released its TPA and started a 403(b) plan, which all but 3 participants account values were transferred into the new 403(b). A resolution to terminate was never prepared nor was a black out notice or notice to interested parties prepared.

Additionally, 5500's were not prepared from 2005 on, nor was their plan document updated. I know the 5500's can fairly easily be resolved by using a DFVC, but what about the "false" termination issues? Could they retroactively terminate the plan and file under EPCRS? When they were transferring money to the new 403b back in 2005, they noted it was a "change in plan provider" as a reason for the distribution on the participant forms, not plan termination.

It seems the new adviser dropped the ball big time, when establishing the new plan and the plan sponsor as well.

As part of the Omnibus Reconciliation Act of 1990 ("OBRA"), as an alternative to the payment of FICA taxes, state and local governments may establish a retirement program to cover part-time, temporary or seasonal employees. In order for an employer to avoid FICA tax liability, its FICA alternative plan must satisfy certain design and benefit requirements. A FICA alternative plan:

must provide a benefit of at least 7.5% of compensation;

contributions must be credited with a reasonable rate of interest

benefits must be 100% nonforfeitable.

A question has come up whether these type of arrangements may allow participants to invest in variable funds and permit loan distributions.

Based on Treas. Reg. §31.3121(b)(7)-2(e)(2)(iii)©, variable investments would not provide a reasonable rate of interest and would conflict with providing a benefit comparable to an OASDI Social Security benefit. The practical approach would be to offer only a fixed investment (i.e., stable value fund) as the only investment option.

There is no explicit reference in the regs prohibiting loans. It is implicit in the nonforfeitability requirements of the regs that require a covered participant to be "unconditionally entitled to a single-sum distribution from the retirement system equal to 7.5 percent of the employee's compensation over the period of covered service, plus interest." Hence, there should be no access to the funds before termination of employment, retirement, death or disability. It would follow that such plans would not allow for in-service withdrawals on account of a serious financial, attainment of age 59-1/2, or loan distributions.

What do you think?

1) All employees switch from payroll of the employer to the payroll of the leasing company.

2) They now participate in that employer's multiple employer plan

3) No break-in-service, so we can't pay people out

4) Can't terminate because of the existence of a replacement plan.

So what do we do?

1) Merger to multiple employer plan (seems unlikely)?

2) Nonelective transfers to new plan and then plan termination of old plan.

Have never really used nonelective transfers, but I'm pretty sure they would apply hear

An NQDC plan currently provides for payment upon the earlier of a 409A-compliant Change in Control event or a 409A-compliant Separation from Service. NQDC plan sponsor would like to remove Change in Control event as a payment event and leave only the Separation from Service as the permissible payment event.

The guidance in 1.409A-2(b)(6) indicates that the deletion of a permissible payment event is subject to the subsequent deferral election rules under 1.409A-2(b) where the deletion of the payment event may result in a change in the time and form of payment of the deferred amount. 1.409A-2(b)(6) also states that the subsequent deferral election requirements are applied separately to each payment upon each payment event.

I'm struggling to determine how to apply this guidance in this situation. Does this mean that the subsequent deferral election rules would require the change not to be effective for 12 months following the change, and for the payment event to simply be 5 years following a Separation from Service? This would seem to satisfy the five-year push requirement because in any instance, even if a Change in Control occurred immediately, the payment would be delayed an additional five years.

Welcome to the new ERPA message board.

Feel free ask your questions, express your concerns.

The linked-to paper argues that health coverage reform sets up incentives for an employer to design its “self-insured” group health plan to motivate those who consume more medical care than others to prefer individual insurance over employment-based coverage.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1651308

Do you think that the authors’ theory is realistic?

The authors suggest that one inducement for an employee (and his or her family) to leave an employment-based plan might be the employer’s cash-wages payment in an amount somewhat more (recognizing some tax differential) than what would have been the employer’s “contribution” to the employment-based health plan. [Pages 22-23 of the paper, pages 23-24 of the .pdf] Is this realistic?

If an employer were to offer such a cash-wages payment, would the choice run into constructive-receipt issues? Or would Section 125 protect those who chose the group health coverage as not having had constructive receipt of the available but not-taken cash payment?

Profit-sharing plan provides forfeitures are used to reduce the employer discretionary profit-sharing contribution.

Employer says - we want to provide that forfeitures are going to be allocated in same manner as profit-sharing contribution as an additional contribution and not used to reduce the employer contribution.

My question - do we really need to amend to provide this?

For example, employer has $150,000 set aside to make a contribution and also has $20,000 of forfeitures.

If the plan document is not amended, can't employer declare a $170,000 profit-sharing contribution and then reduce it by the amount of forfeitures to $150,000. A total contribution of $170,000 is made - $20k from forfeitures and $150k from the employer - achieving the same result without amending the plan?