Plan doc allows Service to count towards eligibility for "Affiliated Employers". For example, Bank A sponsors Plan 1; Bank A Holding Company acquires Bank B. Bank B adopts Plan 1 and Bank B employees' Service counts toward eligibility.

Question: Bank C fails. Bank A takes over Bank C from Regulator (i.e. not an acquisition like Bank B). Bank C employees are now Bank A employees. Employees' Service with Bank C count towards eligibility for Bank A's Plan?

I think not. Any other opinions or determinative guidance on this?

Can a DB plan sell qualifying employer securities to the employer/plan sponsor? I know that the answer lies in the prohibited transaction exemption under ERISA Section 408(e), but I've read it and the regulations several times and can't nail down the proper interpretation. If you assume that the first two requirements (adequate consideration and no commission) are satisfied, it comes down to requirement #3, which says:

(3) if--

(A) the plan is an eligible individual account plan, or

(B) in the case of . . . an acquisition of qualifying employer securities by [a plan which is not an eligible individual account plan], the . . . acquisition is not prohibited by Section 407(a).

Does (B) mean that the exemption applies to a DB plan only if the plan is acquiring securities and it doesn't exceed the 10% limit of Section 407(a) (in other words, the exemption is unavailable for a sale by the plan), or that any acquisition or sale by a DB plan is OK, as long as an acquisition doesn't violate Section 407(a)?

Help!! Thanks!

Line 38 of the 2009 Schedule SB states "Excess contribution for current year (excess, if any, of item 36 over item 37).

Is everyone just taking that statement (37-36) at face value and ALWAYS putting the difference between items 37 and 36 on that line regardless of what the client is actually electing for a pre-funding CB ?

The instructions to Line 38 talk about putting on line 38 the maximum amount the client "may elect" to add to the pre-funding credit balance.

If the client does not want to add to the pre-funding CB are you putting $0 on line 38 or still stating the 37-36 amount and then addressing the amount added to the pre-fundiing CB on item 11(d)(b) on the subsequent year's Sch SB (portion of funding to be added to pre-funding CB) ?

Thanks for any input.

A 401(k) plan allows for plan loans. A participant defaults on the loan (fails to make the required payments), so the loan is treated as a deemed distribution.

Why does the financial statement continue to carry the deemed distribution as an "asset"?

Owner-Participant is required to take a Required Minimum Distribution this year from Defined Benefit Pension Plan. Owner-Participant's accrued benefit, as determined under the Plan's benefit formula, is $850,000. But, because of the Plan's investment losses during 2007-2008, if the Plan were terminated today, the Plan could pay the Owner-Participant only about $450,000. Generally, the RMD is calculated based on the participant's accrued benefit. Is there a reasonable argument for basing the RMD calculation on what the Owner-Participant would actually receive at this time, i.e., the $450,000?

this is one of those reports with 'bells and whistles', so to speak.

its the rate group report (landscape), so if you dare to even want to look at this report, you would rename gndrategrpl.rpt to something else, that way you can always get it back if you don't want this report.

added contrib, comp and % of pay. age and the numbers for the ratio pct test.

so if you print this report and select the HCE with the smallest e-bar you end up with a report sorted by E-Bar (largest to smallest, but not NHCEs who are not in any HCE group)

In addition you get to see what is 'going on' for you'll see a group of nHCEs starting with the youngest, then an HCE, then another batch of NHCEs, the next HCE, etc., but you also see the age ranges of the NHCEs compared with the HCE in the rate group testing.

suppose you gave the NHCEs 1/3 the rate of the HCEs (The HCEs received '3 times' what the NHCEs received)

you would expect the age groupings between the NHCE and HCE to be 13 years (because, if 8.5% interest rate is used you have 1.085 ^ 13 = 2.88 (slightly less than '3 times', but by the time you imput disparity it all works out)

I apologize for the elementary question, but I am preparing Form 5500-SF and its coming up as an error when checking. Total number of participants on 5b is 55. Total number with account balances on 5c is 48. The error is saying that the number on 5c cannot be less than the number of 5b. It is a 401(k) plan that offers a match. I am counting all participants who are eligible whether deferring or not to come up with 55. When I count the number of participants with account balances it is 48. Should I put 55 on 5c?

The instructions on S-F are unclear but the 5500 instructions I believe say the numbers should be the same.

Thank you

We have a client who let a participant take a hardship withdrawal without requiring them to take a loan. The client states that they weren't aware that they had a loan program. They have also not stopped 401k deductions. We have instructed them to stop the deductions now. I assume that this is an operational failure and it should be self corrected. Is this a prohibited transaction? Would we file a 5330 with a 15% penalty on the amount that was distributed in error or does nothing need to be done?

Plan paid out all but 3 participants in '08, the year the company decided to terminate the plan. 2 of the remiaing 3 were paid out in 2009 and the last on 1/5/10. Company closed and there are no remaining employees. A Summary Annual Report doesn't haven't to be prepared for either '09 or '10, correct? I could see preparing an SAR if the Company was alive and well and simply closed the plan but this is a complete close. Thanks.

NQDC plan permits payment upon death, disability, and separation from service. If a participant dies, becomes disabled, or has a separation from service on or after attaining age 65, the plan pays a “Big Benefit.” If a participant has a separation from service on or after attaining age 58, but before attaining age 65, the plan pays a “Little Benefit.” If a participant has a separation from service before attaining age 58, the plan pays no benefit.

Client would like to reduce the age required for a participant to receive the Big Benefit down from age 65 to age 62.

I conclude that lowering this age requirement constitutes a service providers waiver/acceleration of a condition to deferred compensation described under 1.409A-3(j)(1), which would not violate the anti-acceleration rules of 409A.

Based upon these limited fact, does anyone agree, disagree, or have any additional thoughts? All comments are appreciated! Thank you.

It is my understanding that the new regulation means TPA will need to check every FSA, HRA, HSA receipt and prescription. Can TPA audit instead? I.e Only look at a percentage of receipts/prescritptions to ensure people are doing it right?

If there are rules against it, what happens? What do you do (and what is your risk) if you find out your TPA is not checking every receipt.

I have a plan with a bunch of Dr's that all get a 9% new comp allocation. Well...one of the Dr's doesn't want to get the contribution. Is it ok for an HCE to NOT receive this allocation? Or does he not have a choice and must receive it? Any input appreciated!!

This is probably an old question, but I need to know whether a contribution/allocation to a money purchase pension plan is required if the plan termination date occurs mid-year and the plan terms require an employee to work at least 1,000 hours of service and be employed on the last day of the plan year in order to receive a contribution. The employee already has worked 1,000 HOS but has not completed the second requirement, last day employment, until after the plan has terminated.

Would it make a difference if the account was distributed after plan termination and prior to the last day of the plan year?

Employees of hotel chain were laid off, now they are being rehired. They were previously eligible for the 401k plan. Layoff was for a year or less. Since 1300 are being rehired, the cost of distributing another SPD is very large.

Since they previously received an SPD, does another one have to be issued? There were no material changes to the plan (however maybe the document changed to the EGTRRA restatement)

Any thoughts?

We have several clients who operated single-person or "solo" 401(k)s who distributed all assets from these plans (and closed the account) into IRAs prior to 12/31/08.

The 401(k) custodian is insisting that these clients submit updated Adoption Agreements even though these accounts were effectively closed out. They state that any plan having a balance after 1/1/06, regardless of the plans current status (or status as of 1/1/09 for that matter), terminated or otherwise, must update the document.

It seems illogical that terminated plans require retro restatement. Are updated Adoption Agreements necessary for these plans?

Thank you.

Bob

In trying to verify some factors:

I want to get a response to the value of a52 and a53 with payment of 1 each year at beginning of year.

Based on GAR94 and 4%.

Some of my data includes that

q16 = .000296

l16 = 1,000,000

q117 = 0.50

l117 = 1

l118 = 0

q120 = 1.00

I compute a52 as N52/D52 where N52 = D52 + D53 + D54 + ... D120 and D52 = l52 * v^52.

First please confirm the above data then please let me know your result for a52 and a53.

Thanks.

Gary

Our pension plan had mandatory employee contribution through 1977 and we have been adjsuteing the value yearly since then using 120% of the mid-term afr rates. Under PPA, a question has come up regarding the determination of the accrued benefit attributable to employee contributions and the segment rates that apply for projecting the age 65, our NRD, benefit when an employee applies for retirement. Is anyone aware of a post that addresses the issues? Are spot rates to be used or do the transitional rates such as for Mandatory distributions apply?

Corporate 401(k) Plan Sponsor goes bankrupt. Filed 2007 Form 5500 without attaching the auditor's report, because an audit was never prepared. IRS/DOL rejects the filing for lack of an audit attachment. Plan Sponsor ignores the notice. A couple of months ago, the owner of the bankrupt corporation (sole 100% owner) receives a DOL $15,000 CIVIL penalty notice for failure to provide a complete 2007 Form 5500 filing. DOL says that since it's a civil penalty, there is no recourse and the $15,000 is now due.

Question is: Who pays the civil penalty? Corporation is bankrupt so there's no money there. Is the 100% owner of the bankrupt corporation personally liable for the civil penalty? Thanks for any assistance!

If a participant fails to respond to a mandatory distribution either because he has terminated and his account balance is between $1000 and $5000, or because the plan is terminating and the account must be distributed, then an automatic rollover IRA account can be established for the account, per IRS regulations.

What is the employer has another qualified plan, can the money be automatically rolled over by default to this plan, or must it only go to an IRA?

This question relates to a Form 5500 filing for a group health insurance plan. A company was filing 5500s as an S-Corp, but recently established a new LLC and transferred everything from the S-Corp to the LLC. The insurance contracts are renewing under the new LLC name. Due to the timing of the entity changeover, most of the Schedule A's show the old company name and EIN. Now, we're wondering how to do the 2009 Form 5500. Can we change the entity name on page 2, item 4? Should a final 5500 be filed for the S-Corp and another 5500 be filed for the new LLC?