I have an offset Cash Balance Plan where four Doctors accrue beneifts in the Plan and the remaining "Participants" are in the Plan but their benefits are completly offset by the Profit Sharing allocaiton. The Professional organization has more than 25 employees but only four have a benefit. Is this Plan covered by the PBGC?

Hi!

I started a Traditional IRA before the amount contributed was tax deductible. From 1978 to 1986 I made contributions on which I paid taxes on. From 1987 to 2004 I made contributions to this account that were tax deductible.

In April 2009 I opened a Roth and contributed a portion of my Traditional IRA to my Roth. I have calculated that the amount I paid taxes on was 3% of the total value as of April 2009.

Supposing the amount I moved to the Roth was 100,000.00. Would 97,000.00 be taxable and the 3,00.00 non taxable?

Thanks, Joe

I have a plan that was written to release forfeitures when the vested balance was paid out.

The client read the Adoption Agreement (what a surprise) and learned that he had the option of releasing forfeitures earlier and he liked the 5 year break in service rule.

This is amendable, right? There is no benefits, rights, and feature isssue, is there?

Thanks for your guidance.

Does anyone have (and would be willing to share) or have a link to a "bullet point" summary of qualified plan provisions impacted by EGTRRA, PPA, etc.?

Thanks!

Can a plan pay the expenses related to a large plan audit? We are leaning towards no, because the audit company is engaged with the plan sponsor to perform the audit, not with the plan. Any thougths?

Payroll sends contribution file to 401k service provider and then the provider does an ACH to take the money out of sponsor's bank account to fund the contribution. Unfortunately the 401k service provider doubled the contribution amount so the ACH was for more than the amounts listed on contribution file.

Contributions were employee deferrals plus match. The amount that was withheld from employee paychecks is correct. The error is just that the amount funded in plan is double.

This error involved all participants who had contributions for this payroll. The total amount that was over funded is $2,800. This is a small plan with 21 employees currently contributing.

We haven't had this happen before and I would like suggestions regarding appropriate correction alternatives.

1. Do we reverse the trades and remove the amount of overfunded contribution plus any earnings from employee deferral and match sources and place in error correction or forfeiture account? Assuming document permits. If reversal of trades produces a loss then what?

2. Do we take no action and just leave the extra funds in participant accounts and adjust with next contribution? If we do this does this create an issue with prefunding deferrals and match contributions before the money is actually withheld from paychecks?

3. One thought was for the trades to be reversed and overfunded amount plus earnings to be returned to employer but I'm concerned about ERISA rules regarding reversion of assets to employer and plan assets to be managed for exclusive benefit of participants.

Proposal 2 would seem the easiest and since this is a mistake I'm thinking this wouldn't be considered prefunding of contributions.

Thank you for any suggestions you can provice.

Facts: Client was supposed to pay out (in lump sum) US employees under compliant 409A plan in certain traded securities with a FMV of $1000X. The securities stopped trading prior to the payment. Client is forced to scrap this plan and wants to institute a new plan which would pay the same employees in 48 monthly cash payments, with the first payment being made on the date the lump sum payment of securities would have been made. The total of the cash installment payments will be about $500X, materially less than the $1000X lump sump payment under the original plan.

Question 1: Is this a "substitution" under 1.409A-3(f) or are there any other provisions in the Regs. that would make this problematic?

Question 2: If this is a "substitution", I assume that the payments would be in violation of 409A as a prohibited subsequent deferral. How is the amount to be taxed calculated based on the proposed regs. under 1.409A-4? More specifically, is the violation of 409A occuring in the year of the "substituion" or is each payment after the initial payment considered a separate violation, with penalty taxes being imposed on each annual payment?

Any advice or guidance is extremely appreciated! Thanks in advance.

I vaguely remember their being a requirement that DB plans w/ a social security offset formual allow participants the opportunity to provide actual social security earnings history instead of the employer relying soley on reasonable estimates. Does anyone know where this requirement can be found???

thanks.

We just adopted a daily recordkeeping platform (Relius). However, when we receive the dividends and post them, it allocates them slightly different than our trust system (Addvantage). We've talked to both vendors and neither can provide resolution.

Should we "force" one of the systems and if so, which one?

Also, with daily accrual of dividends, how should mid-month distributions be handled? It seems problematic to try to "pre-pay" the accrued dividends, but if we don't, wouldn't we have to issue a second check to the distributee for the dividends after they are paid? It seems like we will be mailing a lot of checks in the amount of 5 cents!

In a section 105 plan, can the employer have the employees pay a portion of the premiums, and then use that money to pays claims??

Would appreciate comments on whether or not I'm getting this correct:

No credit balances are maintained.

A client plans to contribute the last piece of their 2009 calendar year plan contribution - $100,000 - on 9/15/2010

The plan sponsor (i.e., plan administrator) has elected to determine the actuarial value of assets as average value.

So, for purposes of computing the 2010 minimum contribution (officially after 9/15/2010), we determine the fair market value of assets on 1/1/2010 by including the discounted value of the $100,000, which in turn is used to determine the average value.

However, suppose I will certify the 2010 AFTAP in May 2010. We cannot include contributions that have not been made as of the certification date. Consequently, for purposes of calculating the AFTAP, I must not include the (discounted value of the ) $100,000 in determining the fair market value that is used to determine the average value.

Consequently, I must determine two average asset values as of 1/1/2010 !!!

Worse, the AFTAP determined in May will be 79%. If I am requested (and I will be) to recalculate the AFTAP in September after the plan sponsor makes the $100,000 contribution, the AFTAP will be 81%. The 2009 AFTAP was 73%.

So, lump sums will be restricted to 50% effective April 1 through September whenever and thereafter unrestricted (other than for HCEs). Further, (unless I plan to croak before October 1) there is no purpose in certifying the AFTAP in May since it is already presumed to be less than 80%.

I have a plan with two LLC sponsors both filing as partnerships. LLC A has same members as last year with same percentage ownership. LLC B has 3 members. First is LLCA at beginning of year had 75% interest, at end of year 85.71%; Member 2 individual with no interest in LLCA at beginning of year had 12.5% at end of year 14.29%; Member 3 individual with no interest in LLC A at beginning of year 12.5% terminated employment 8/31/09 so no interst at end of year.

Self Employement earnings on K-1 reported as follows Member 1 (LLCA) 0; Member 2 $135,000, Member 3 $66,861. Both Members 2 & 3 received their Guaranteed payments less Ordinary business loss.

Have a top heavy allcoation to make for employees of LLC B, query on how to allocate top heavy allocation cost among members of LLC in a fair and reasonable (ok and legal) way. Do I take 14.29% of EE top heavy allocation and apply to Member 2, or prorate the allocation and count 8/12s of allcoatin at 12.5% level and 4/12s at 14.29%? Do I allocate share to Member 1? DO I allcoate 8/12s of contribution to Member 3? Ultimate goal is to determine plan compensation after deductions for contributions made to plan.

Getting a headache... I would really appreciate some insight on this. Thanks much in advance for your help.

Nancy

I have a plan with two LLC sponsors both filing as partnerships. LLC A has same members as last year with same percentage ownership. LLC B has 3 members. First is LLCA at beginning of year had 75% interest, at end of year 85.71%; Member 2 individual with no interest in LLCA at beginning of year had 12.5% at end of year 14.29%; Member 3 individual with no interest in LLC A at beginning of year 12.5% terminated employment 8/31/09 so no interst at end of year.

Self Employement earnings on K-1 reported as follows Member 1 (LLCA) 0; Member 2 $135,000, Member 3 $66,861. Both Members 2 & 3 received their Guaranteed payments less Ordinary business loss.

Have a top heavy allcoation to make for employees of LLC B, query on how to allocate top heavy allocation cost among members of LLC in a fair and reasonable (ok and legal) way. Do I take 14.29% of EE top heavy allocation and apply to Member 2, or prorate the allocation and count 8/12s of allcoatin at 12.5% level and 4/12s at 14.29%? Do I allocate share to Member 1? DO I allcoate 8/12s of contribution to Member 3? Ultimate goal is to determine plan compensation after deductions for contributions made to plan.

Getting a headache... I would really appreciate some insight on this. Thanks much in advance for your help.

Nancy

Date of loan = 3/30/2005. For whatever reason, the participant was behind on payments but has been doubling up to catch up (he was getting "default danger" notices). Final payments have been withheld from pay (prior to 3/30) but not yet submitted to the recordkeeper. Recordkeeper states the loan has defaulted. I argue the cure period applies and the default is not until 6/30 (quarter-end folllowing). Recordkeeper argues that would be the case if this were simply for missed payments, however, because we're beyond 5 years different rules apply.

I imagine this wouldn't be an issue if he weren't already blacklisted. Surely they're not immediately defaulting anyone whose final payment is not received by exactly 5 years post-issue.

Thanks,

Kelly

an employee received w-2 earnings for 6 months of a plan year then became a member and received a K-1 for the remainder of the plan year. My concern is only how to determine K-1 earnings for plan purposes. If she had $151,541 of SE earnings (line14(a) of K-1) and you deduct $3,554 as Section 179 deductions(Line 12 of k-1), would that amount ($147,987) be what you use towards 415 limit of $245,000?

The plan defines comp as w-2 wages with the only adjustment being the exclusion of comp while not a participant.

Here are a couple of questions.

a) can an LLC currently be taxed as a sole proprietorship make a tax election now to henceforth be taxed as a C corporation?

b) if so, can the owners be added to payroll for the personal services they render and receive MERP benefits?

If an ESOP loan is refinanced and the term of the loan is extended, under 409(o)(1)(B), can distributions to participants be delayed until the refinanced loan is repaid in full? Any guidance would be greatly appreciated.

A tribe's health plan covers employees of the tribal government and its commercial enterprises. I assume that it is subject to COBRA and that the tribe must comply with ARRA subsidy rules for all its employees. What about a plan that covers only employees who perform gov't. functions? Although the plan would be treated as a state gov't plan for ERISA purposes, I don't believe it would be covered under the Public Health Act, and so it wouldn't be subject to COBRA at all? Any thoughts?

A tribe's health plan covers employees of the tribal government and its commercial enterprises. I assume that it is subject to COBRA and that the tribe must comply with ARRA subsidy rules for all its employees. What about a plan that covers only employees who perform gov't. functions? Although the plan would be treated as a state gov't plan for ERISA purposes, I don't believe it would be covered under the Public Health Act, and so it wouldn't be subject to COBRA at all? Any thoughts?

This might be a stupid question... If the AOCI increases from the prior year is that good or bad?