Back in the good old days (they were more old than good!), it was common practice to fund a DB plan by purchasing paid-up deferred annuities. Each year, additional annuity contracts would be purchased for increase in accrued benefit. Thus, the Plan was fully insured and except for some final benefits cost, was pretty routine to terminate.

So, presuming the Plan/Trust so permits, the Plan can still fund with paid-up annuities.

Suppose we have a frozen non-collectively bargained single employer frozen DB plan that is covered by the PBGC. The Plan has not been amended to terminate. An annuity quote is obtained and the Plan is sufficiently funded to purchase nonparticipating annuities with precisely zed dollars remaining.

Could this annuity purchase be effected as an investment decision? If so, could the plan then be terminated without the PBGC having conniption fits? Same questions but annuities are purchased only for those in pay status and terminated vesteds?

I am looking to purchase used books and materials for

1. the ERPA-SEE exam - specifically ERISA OUTLINE BOOK 2009 (or 2010 or 2008)

2. Joint Board for the Enrollment of Actuaries EA2-a and EA2-b books

Kindly respond to my post and feel free to post your own needs for used books to this topic, so that a community may assist one another.

An existing Profit Sharing Plan adds 401(k) deferral provisions effective 7/1/2010. Since the 401(k) portion of the Plan is only effective for part of the year, I believe that you may do the ADP test based on the full Plan Year or just the part of the year (7/1/2010-12/31/2010) when the 401(k) portion was effective.

Assuming that the ADP test is done based on the partial year, does the maximum compensation taken into account need to be prorated? So if someone earns $150,000 during the 2nd half of the year, can you use that figure or must it be reduced to $122,500 ($245,000 x 50%)?

I know that if this was a short plan year, you would be required to pro-rate, but techncially it's not a short plan year.

Also, in a situation where participant enters a Plan mid-year, their compensation is not required to be pro-rated.

I'm hoping that this would be considered more like when a participant enters mid-year and therefore the compensation adjustment is not required. But I want to make sure!

Thanks.

BTH

Client has Safe Harbor 401(k) plan with SH Match requirement. The total employer contribution for the 2008 tax year was $20,000 for Safe Harbor Match and $60,000 for the Employer Discretionary Profit Sharing Contribution. The client made a timely deposit of only $60,000. Assuming we can use a portion of this deposit for the required safe harbor match, the client still has an issue with what they put on their 2008 corporate tax return.

What are the client options if they still want the total $60,000 allocated as a profit sharing contribution? If they deposit it now is it deductable for 2010 and/or does the 10% excise tax penalty apply for a nondeductable contribution for 2008.

What would be the issues if the only deposit due had been the Safe Harbor Match and it was not deposited by the corporate due date? Penalties?

Participant, age 68, is taking a total in-service distribution. He is rolling the distribution into an IRA. $48,000 of the balance is after-tax money.

Can he receive a non-taxable $48,000 lump sum distribution and rollover the balance to his IRA?

Thank you.

Kate Smith

We were advised by the DOL that the Form 5500 had to be signed by the Plan Administrator (Plan Sponsor optional) in order to be accepted. In fact had to amend a 5500 for just that (filing signer signed as Plan Sponsor and not Plan Administrator). The 5500 instructions on page 6 seems to indicate this as well.

I have been reading the Form 5500 filing guide from Sungard and they indicate that the "DOL will not consider a filing that has only a plan administrator's electronic signature as a proper filing".

What has everyone been doing?

Does a 403(b) plan sponsor have a responsibility to keep a copy of each prospectus on file (assuming the retirement plan vendor can provide one to any employer or the plan sponsor upon request)?

Has anyone ever found a way to still comply with ERISA and yet make the SAR a little less obvious as to how much is in the trust? I have a few plans where the owner has a million dollars in the plan and the one or two employees have a couple of thousand in the plan due to turnover and the owner hates how obvious the SAR makes it as to how much is in the plan for him.

Thanks.

James

A participant elected payout under a 20 C & L starting 1/1/2004. Participant died 12/31/2008. Client has been unable to locate designated beneficiary. Attorney has advised not to pay survivor benefit to estate lest beneficiary show up at a later date and the plan could be on the hook for paying the death benefit twice. Presumably, this is sound advice?

In any event, participant received 60 payments so 180 payments are due.

Suppose on 1/1/2013 beneficiary is located. What should be paid to beneficiary? [the plan is silent]

(a) 180 payments starting 1/1/2013

(b) 48 back payments plus 132 payments commencing 1/1/2013

© 48 back payments accumulated with interest plus 132 payments commencing 1/1/2013. If ©, what interest rate should be used when the plan -- which is 3,000 years old -- states a single non-age specific factor (.865) for conversion to 20 C&L and the underlying interest rate (and mortality table) is not stated in the plan?

Suppose we have a top heavy 401(k) plan with 15 participants where the key employee (over age 50) made $100,000 and salary deferrals of $5,500. No employer or match contributions were made. When we run the ADP test, our system tells us he would only be entitled to $2,100 of catch-up. This would mean $3,400 would be considered non-catch up and they would fail the test. This would also create a top heavy minimum correct?

Shouldn't we be able to use the entire $5,500 as catch up not subject to ADP testing and top heavy?

The interim final rule re grandfathered plans under PPACA states:

Most employer group plans that I am familiar with enter into insurance contracts for one (sometimes two) years. For a calendar year plan, the policy, certificate, and contract all will state that the plan starts on January 1, 20XX and ends the following December 31. Is a rollover of the contract to the next year considered a "renewal" and not a "new policy, certificate, or contract of

insurance" such that the grandfathering status can remain (assuming nothing else in the policy changed)? Or will all policies lose the possibility of grandfathering upon their expiration date?

I think the former result is the correct one, but the language isn't clear to me and I have had one health insurance expert tell me that the latter is the correct interpretation.

Does the result change if the insurer modifies the language of the rollover communication to state that it is a renewal and not a new policy, etc.?

Thoughts?

I am helping a client conduct a DEA; the problem is that we are approaching the deadline for eligibility verification and only half (170 of 343) of the affected members have submitted their forms. We don't want to terminate 50% of the dependents knowing the majority are eligible but also want to have some "teeth" in the deadline.

We recently reached out to all of the employees who have not turned in their forms and had them sign for a second DEA packet. Beyond that I'm not sure what else to do to ensure compliance.

Suggestions? Ideas? Help!

Thank you.

Has anyone ever used a special tax form or maybe a custom form to send to an employee once he/she has rolled money into a 401(k) from an outside source? I know with IRA's if you roll money into it, you get a Form 5498 so I didn't know if there was anything like that for 401(k)s? Thanks!

Can i just use the 2009 5500-EZ to do a final/short filing for a 2/1/2010 to 2/26/2010 plan year?

I have several clients getting proceeds from the Bank of America Fair Fund. It looks like it has to do with MFS funds.

What should we do with these proceeds?

I would think that pro-rating the funds across people who held positions in the funds, but the cover letter mentions that it applies to account held from 2000 through mid-2003. It would not be feasible to see who held accounts during that period.

However, I don't think it would be fair to spread it out across people who currently have a position in those funds.

I thought of just putting it in the forfeiture account, but I recall some time ago that this wasn't a well-regarded disposition.

Any thoughts?

What is the timeframe to receive a acknowledgement letter for a submission?

We received a good portion of acknowledgement letters for EGTRRA document that we submitted (up until about April 23, 2010). Most of the acknowlegement letters we received were date about 3 to 4 weeks after we submitted.

Anything that was mailed after 4/23/2010 we haven't received acknowledgement letters for (all postmarked before 4/30 of course).

Of course my worst fear is that we didn't get them in on time. I was wondering if anyone is still receiving acknowlegement letters or if all of them were sent out already?

Did anyone submit the last week of April? Or were we the only ones backing up a truck load submission to the IRS at the last minute!!

Hypo:

Companies A, B, and C comprise a controlled group.

Company A sponsors a traditional safe harbor plan utilizing the ADP safe harbor provisions of Code Section 401(k)(12).

Company B sponsors a non-safe harbor plan and utilizes the ADP test under Code Section 401(k)(3).

The plans maintained by Companies A and B are not aggregated, and they pass coverage and nondiscrimination testing separately.

Company C wishes to establish a new plan utilizing the automatic enrollment and QACA safe harbor provisions of Code Section 401(k)(13).

Query:

May Company C's new QACA safe harbor plan be aggregated with Company A's traditional safe harbor plan? Alternatively, may it be aggregated with Company B's non-safe harbor plan? Or is aggregation with either plan precluded by Treasury Regulation Section 1.401(k)-1(b)(iii)(B), which states that an employer may not aggregate plans with inconsistent ADP testing methods? If aggregation is precluded, then the only way Company C can proceed with its new plan is if it can separately pass coverage testing, correct?

I have a young business owner who wants to convert all his current retirement savings to a Roth IRA while the income restrictions are lifted. He can't take an in-service distribution. Can he terminate his solo 401k, convert the assets, and then start another plan at a later date?

Is there a limit to the number of hardships a person can take within a plan year or within 12 months. The plans document does not specify any hardship limits except to only take from deferrals. The participant in question took a hardship in Sept 2009 and is requesting another to prevent forecloure. Thanks.

1/1/2009 valuation data was sent to us late and we were not able to obtain certified AFTAP from actuary until after 10/1/2009. Actually done in January 2010 at 128%.

The presumed AFTAP of <60% applies to benefit restrictions. I believe it also applies to credit balances correct?

So for the 2010 year the MRC cannot be reduced by the pre-funding balance because of the late AFTAP. Correct?

Thanks.