We have a 'new' client. The company is an S-corp. The owner receives a w-2 and a k-1. The prior TPA used both the owner's w-2 pay and k-1 earned income as his 'compensation' for testing purposes, limits, contributions, etc.

I always thought that for a s-corp, the definition of compensation could only be w-2 comp. Am I missing something? Can anyone provide some guidance?

Thanks.

Sort of a survey of opinions and/experiences here.

Generally, pre-approved plans are no longer required to obtain determination letters. My question is this: what has been your experience when plan termination rolls around? What I'm really trying to get at is this: if you do a formal plan termination, the IRS reviewer is wanting to see plan documents and amendments all the way back to the year one.

What's your experience if the plan DID apply for (and receive) a D-letter for, say, GUST? When you do a plan termination now, are they only requiring docs/amendments POST D-letter, or are they still going back beyond that? Assuming the former, then it seems like not obtaining a D-letter just postpones the problem and increases difficulty, so that going back to the old practice of requiring a D-letter for all plans might save some agony in the long run. (Of course on a side note, requiring terminating plans to be currently updated for all interim law changes is stupid beyond belief, since operational compliance is always required regardless, and substantially contributes to the difficulty, but that's a gripe for another time.)

Would be interested in your thoughts on ths issue.

I have been in business for the last 28 years, have acquired some plans, and have lost some plans. We all have. Clients move their plan investments all the time.

Usually a TPA loses a client because the client is either unhappy with the way the TPA has been handling the business or because of fees.

However, over the last six months, I have lost 3 clients for neither of these reasons- these employers were approached by John Hancock agents to move the investments from wherever they were to Hancock and/or Hancock related products.

Nothing in and of itself wrong with that. It's just that most reps will ask the employer if they are happy with the TPA services --= these people do not even ask, they sell a bundled product, "go with Hancock and, oh by the way, you have to use our TPA."

I got a little suspicious after I lost the first case, but this looks like a pattern. I complained bitterly to one of the regional marketing reps for my area when I lost my third case. He did not see anything ethically wrong with this business practice.

Hancock seems to be the only company that condones such practices.

I am wondering if anyone else is or has been in the same situation.

We've been having a discussion in our Benefits Department about this topic and I would love to get some outside input.

We offer our employees six supplemental policies through Allstate. Three are offered through our S125 plan (Cancer, Supplemental Health Options, and Heart/Stroke) and three are not (STD, Accident and Universal Life). Employees can enroll in or drop any of the six at hire and during Open Enrollment.

Our discussion and questions surround the three plans that are offered outside of the S125 plan. Since they are offered outside of the S125 plan, is it permissible to allow employees to enroll in or drop coverage outside of OE -- at any time during the year? We don't have any written policy/procedures on this; it has just always been done that way.

How do other companies treat these benefits?

Thank you for sharing your opinions and expertise.

Wekiva

We have a plan sponsor (one participant plan) that has never filed a Form 5500-EZ since the plan's inception in 1989. We've contacted an ERISA attorney for assistance and (s)he instructed us to go back in time as far as we can and prepare the delinquent EZ filings for submission to the IRS. We now are in the process of preparing the EZ's for plan years 1999 - 2008 (brokerage statements prior to 1999 aren't available so we can't do them); however we don't have all of these tax years available on our government forms software (we have 2004 to the current year form). Should we complete the 1999 - 2003 EZ's on a 2004 form, and then each year after that on the correct year's form or should we complete all delinquent years on a more current year form, or? Any input would be greatly appreciated.

Thanks!

(Only) one of four Directors of a Company will benefit under a top-hat plan being newly adopted. (An additional employee - not a director, will also benefit).

Any problem with having the benefitting director sign the plan adoption resolution (as a director) or should he 'recuse' himself for this particular resolution?

This relates to a privately-held company.

Client sponsors a safe-harbor 401(k) plan (using the 3% employer non-elective). The Plan has an end-of-year employment requirement to receive the "discretionary" employer contribution.

Owner would like to pre-fund some of the employer contribution for the year. Actually, he'd like to make his entire salary deferral contribution and pre-fund his entire employer contribution.

I am certainly comfortable with his pre-funding the 3% safe-harbor for all participants based on participant comp to date, since there is no service or EOY requirement to receive same. He obviously can't pre-fund any of the staff participants' "discretionary" contribution, as he won't know until December 31st who's still employed and eligible for same. Curious, though, whether his pre-funding his entire discretionary contribution would be considered blatantly/possibly discriminatory?

Thanks for any and all input.

We have a correction in EPCRS for failing to provide a participant the opportunity to defer. Does anyone know where I can find guidance on when this failure has occurred. I am not aware of specific requirements for a non-safe harbor plan to provide notices other than the SPD (and that can happen after the employee is eligible, right?), am I missing something? Are we left to facts and circumstances?

This concerns a situation where a plan's FTAP is between 96% and 99.9%.

Presumably, the following three statements are all true with respect to 2010 plan years (assume that the plan was in existence before 2007 and not subject to the Deficit Reduction Contribution requirements in 2007):

1. If the plan's assets, net only of PFB, are at least as great as the Funding Target, then any existing shortfall bases are eliminated and none are started, without regard to the relationship between assets - PFB - COB and the Funding Target.

2. If the plan's assets, net only of PFB, are below 96% of the Funding Target, then you establish a new shortfall base as usual in 2010 (using assets - COB - PFB vs 96% of Funding Target, net of discounted value of remaining prior shortfall amortization amounts, which in most instances in 2010 will mean an offsetting, negative new base thanks to the generally high investment yields for 2009).

3. If the plan's assets, net only of PFB, are at least as great as 96% of the Funding Target and there were no shortfall bases last year, then, irrespective of the COB, there are no shortfall bases this year.

Question: If there was at least one shortfall amortization base last year and this year's assets, net only of PFB, are at least 96% of the Funding Target but not 100%, is there any doubt that you can establish a new, partially offsetting shortfall base this year (assuming that plan experience in 2009 was favorable)?

I have heard it said that if the plan falls between 96% and 99%, then PPA says you do not establish a new shortfall base (but one is not at liberty to eliminate prior shortfall bases). Note that under such an interpretation, one could easily encounter a situation (especially with recent ifavorable nvestment performance) where a plan that is 95% funded could easily have a lower minimum required contribution than an otherwise identical plan that is 96% funded. How could that ever legitimately be the case?

I am hoping not to have to put a support ticket in for this since they are so backlogged. Has anyone else figured out how to add a Preparer to Web Client? The process should be easy, however I am realizing that my "playing around" in the system in the past has now created problems. In order to test things out and see how emails would look as if we were the client, etc I set up a few email addresses in the office as clients - now I need them to be preparers and I have no clue how to delete them as clients and make them preparers!!!! Is this even possible? We're really hosed if it isn't possible.....

Anyone have any suggestions?

My client has an employee in bankruptcy who is considering a hardship withdrawal.

His attorney told him his distribution would be exempt from any action taken by the Court as the funds are not considered wages. In other words, would he be required to disclose to the Bankruptcy Court his intent to take a hardship withdrawal? Would the Bankruptcy Court have a "claim or levy" on any funds disbursed from his retirement account?

One of the ABC Company's attorneys thought he would have to obtain approval from the Bankruptcy Court to request the hardship.

ABC Company has an employee in bankruptcy who is considering a hardship withdrawal.

His attorney told him his distribution would be exempt from any action taken by the Court as the funds are not considered wages. In other words, would he be required to disclose to the Bankruptcy Court his intent to take a hardship withdrawal? Would the Bankruptcy Court have a "claim or levy" on any funds disbursed from his retirement account?

A 6 person plan has filed for a standard termination with the PBGC. The owner is going to waive benefits to the extent necessary. The owner does not want to wait 60 days before distributing benefits, but would like to do so immediately.

While the PBGC Form 500 Schedule EA-S requires a proposed distribution date not earlier than the 61st day after filing the Form 500, is there any restriction on the earliest date that benefits can actually be distributed?

Let's assume a deferral-only plan satisfies all of the requirements to be considered exempt from ERISA.

If they decide to allow participant loans for specific purposes, such as medical reasons, can they still be a non-ERISA plan?

If so, what should they be careful to do (or not to do) so they are not considered to be "maintaining a plan"?

Our document does not allow deferrals to be made on severance pay, per the 415 amendment. When we do the testing, do we include the severance pay in ADP testing, in calculation of a 3% NEC, in calculation of a match, etc., etc or do we exclude the severance pay from all the calculations?

It seems clear that until it is possible to establish standing elections to apply COB / PFB to cover required quarterly contributions, it will be necessary to deal with the rules as described in the 430/436 final regulations for handling elections made after the respective due dates for the quarterly contributions. This raises (at least in my mind) a number of questions:

1. At what point must one reflect the methodology in the regulations (i.e., apply an amount towards the minimum required contribution based on the quarterly amount due, discounted back from the election date to the quarterly due date at effective interest rate + 5% and from there to the Valuation Date at the effective interest rate, but reduce the remaining COB / PFB balance by the quarterly amount discounted from the date of election back to the Valuation Date at the effective interest rate as is)? Certainly with respect to elections for plan years beginning in 2010 or later, but what about the 2008 and 2009 plan years? The instructions to the 2009 Schedule SB appear to imply that the 2008 results should be recalculated as though the final regulations were effective for that year's determinations. The regulations were promulgated on or about the contribution deadline for calendar year 2008 plans, and were lengthy and complex enough to render it essentially impossible to call upon plan sponsors to adjust their contributions for the 2008 plan year to take into account the impact of the regulations. If the special discounting is required for 2008 plan years, some sponsors who paid the amounts their enrolled actuaries told them would discount back to the amount needed to cover the remaining minimum required contribution could find themselves with unmet minimum amounts for that year.

2. If there were some cash contributions made between a quarterly due date and the date that an election was made to apply more than enough COB / PFB to cover all of the quarterly amounts (such as the amount needed to cover the entire minimum required contribution), do you use the cash contributions (with the +5% interest rate used to discount them back to the quarterly due date) or the COB / PFB as elected?

3. If one intends to cover the entire minimum required contribution with COB / PFB, is the net result of making an election after one or more quarterly due dates that the COB / PFB is reduced by more than the entire minimum required contribution?

Does anyone know if the IRS recently has issued any comments/pronouncements regarding its willingness to accept scrivener's errors?

I know that the general topic of what to do about scrivener's errors is being discussed within the Service, but I don't know whether or not anything has been issued yet.

My apologies if this has been addresed previously.

Have a client with a DC plan under which the business owner is currently the only eligible participant. The business has a couple of other "employees", but they never receive enough credited Hours of Service (intentionally) to become eligible to participate.

Wondering if this plan is eligible to file an IRS Form 5500-EZ vs. -SF. The business owner is obviously the only one "benefitting" under the plan, but I'm not sure if she would also be considered the only one "covered".

Thoughts?

We have a Safe Harbor 401k plan with a 3% NonElective employer contribution. This is for a non-profit and we file a 990. If the 990 for 2009 is due October 15, 2010, is the employer's 3% 401k contribution for the 2009 plan year also due October 15, 2010? In other words, is the due date the tax filing deadline plus extensions, if any? Thank you.

p. 9 of the recently issued Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan under the PPACA provides that HHS does not intend to enforce the requirements of HIPAA or the Affordable Care Act with respect to nonfederal governmental retiree-only plans. Also, the regulations provide that HHS is encouraging states not to apply the provisions of title XXVII of the PHS Act to issuers of retiree-only plans.

1. Can anyone confirm that this language applies to retiree-only plans created both before and after the enactment date (ie, it applies to plans that would be grandfathered and those that would not be grandfathered)?

2. Can anyone point me to a useful secondary source outlining any requirements under the healthcare reform act that still apply to retiree-only plans?

Many thanks!