In order for an HCE to take a lump sum from his employer's DB plan, he was required to invest 125% of the distribution amount in a restricted IRA. There is a Security Agreement in place. He invested the assets in a variable annuity. The financial institution is both the owner and the beneficiary of the annuity. The participant is the annuitant. This took place about 3 years ago. Now, we're trying to determine what options are available to him if he wants to get out of this annuity (understanding that the Restricted IRA provisions must remain in effect wherever he invests). Paying the surrender charge will be the first deterrent, but if he decides to bite the bullet, the Security Agreement says that the DB Plan Administrator and the Participant can agree on a successor custodian or trustee and provide the current financial institution with transfer instructions.

The original investment representative is now out of the picture, and the replacement rep doesn't seem to understand what this Restricted IRA is. I'm hoping that the fact that the institution is the owner and beneficiary under this annuity won't cause a problem. Any thoughts from those of you who have run into this type of arrangement before? I don't see any problem with the Restricted IRA itself -- I'm just not sure that an annuity was the way to go.

I have a small DB plan where the owner is taking his RMD. During 2009 he took $9995. This is and END OF YEAR valuation so the assets as of 12/31/09 are less the $9995 he took. There is no Target Normal Cost for the year.

When calculating the Funding Target, since it's based upon the accrued benefit as of the first day of the plan year, would I add back the $9,995 RMD distribution that was taken on 12/01/2009 for "calculation purposes" for and End of Year valuation?

Seems to me if you need to "pull out advance deposits" you should "add in" distributions....right?

How soon does the average plan force out termed associates? Monthly, quartely, day after terming?

We have not been doing forced distributions as we shoull have, nor has our record keeper. We want to clean this up. Our plan spells out force outs, under $5,000 but only for the amount-- not the timing. We do have a fair amount of rehires, so we want to be careful.

Thank you

A client has approached us to be their TPA.

The client has a 403b Plan and a separate Profit Sharing Plan.

The client never adopted a written plan document by December 31, 2009. The 403b plan just has salary deferral, no employer money.

What do we do about not adopting a written document by 12/31/2009?

The client would like to merge the 403b Plan into the Profit Sharing Plan. Can this be done? Can the 403b assets be transferred to the Profit Sharing Plan? Does the 403b plan have to be terminated?

Looking for some thoughts....

Thanks.

I need a little help!.

I have a group health client (63 employees) where the employer currently pays 100% of the premiums for both Employee AND Dependent Health Coverage, They wish to continue this practice for all of their current employees however they do not wish to pay for benefit coverage for any future new employees, and they've asked me how they might effectively do this. The idea is to not reduce any benefit their current employees have while reducing their future cost exposure.

I can't think of any way they can effectively do what they want, but I can't find a statute that specifically precludes this type of "discrimination". Any ideas would be greatly appreciated.

A public school is the employer. Can the employer contribute to a 457 or 403(b) plan for an employee if the employee chooses not to elect the medical insurance offered by the employer. If the employee was to take the medical insurance, the employer would pay a portion of the premium. There is a cafeteria plan in place for this employer.

I am perplexed. The definition of "includible compensation" appears to allow contributions to a 403(b) for five years after an employee's termination of employment. The 403(b) explanation at irs.gov confirms that understanding.

On the other hand, RIA has the same definition for includible compensation but then (citing the regulations) indicates that the exclusion does not apply to former employees. What am I missing? Can a contribution be made by the former employer which is taxable income as contributed?

In his self-directed account, the owner of a company is invested in his company stock (about $120,000 worth). He gradually wants to buy back these shares. Under what conditions may he purchase the stock from the plan?

Are paid interns considered common-law employees and, if so, can they be categorically excluded from participating in a plan (subject to the minimum coverage and nondiscrimination rules)?

There is some discussion in my office as to whether 13B should be marked No or left blank. We haven't filed any plans yet so can someone provide me some information on whether a plan is rejected with or without line 13B completed?

Thanks.

How much relief is available under the operational failure guidance for non-exempt SARs? I can study the Rev Proc but maybe someone can advise on how, in very general terms, generous the relief is.

All:

Just a heads up for Web Client users. There are 3 security questions that the plan sponsor has to answer when completing their profile for the first time. I just found out that if the client is inactive for over a period of 1 month and tries to login to Web Client they will need to provide the answers to ALL THREE security questions before they are allowed to proceed.

What does this mean for us? It means since practically every client will only access this system once a year to complete their 5500 filing they will ALL have to remember the answers to the security questions when signing in next year to sign the 2010 5500.

I forsee this being a complete disaster. Please submit an incident to Relius and let them know that they need to remove this feature from their system. I sent them an incident yesterday.

Thanks!

Form 5500-SF instructions, for a one-participant plan, indicate that the only Part III items that need to be completed are Lines 7a-c and 8a.

The sofware that I am using automatically populates Lines 8c (total income), 8h (total expensee), and 8i (net income).

Since the amounts automatically populated by the software do not represent the actual totals, should I blank them out?

Our office has been trying to make a determination on the new feature code 2T. Is this new code referring to a "general" default investment option contained within an investment contract or is it specifically referring to the QDIA rules? If other than a QDIA, what if a default investment option is available in the contract but isn?t being utilized because affirmative investment elections have been made by all participants? Should 2T still be used under these circumstances?

We have yet to see a participant directed contract that doesn't contain a default investment option and are not even sure under what circumstances that would ever occur. In which case, it would seem that if 2T isn?t for a QDIA, then every single filing we do with participant direction should have 2T listed. If so, what?s the point of having the code?

Employer is Self Employed and has 2 employees.

Employer does not provide health insurance.

Employer increased wages for 2 employees in order to assist them with purchasing their own policies.

Employer purchases own policy but has the company pay for his premiums only.

In addition, he takes a credit on his Form 1040.

Is this allowed or is this discrimation?

We are a TPA that obtained signing credentials to sign on behalf of our clients. We use Relius government forms to prepare the forms. We will follow the instructions with respect to the new procedure (authorization from client, .pdf file of first 2 pages of 5500, etc). With this new rule can we just import the .xml files (schedules, etc) generated by Relius government forms and import once logged in as the TPA at the DOL website or does Relius have to do a fix first? There was a note at the Relius website that "SunGuard will be incorporating the option into its software for later release". Since we are not using Relius Web Client I wouldn't think we have to wait for a fix. Any thoughts?

I have a question on church and religious organizations and adoption of a 457b plan.

I do not think a steeple church or QCCO under 3121 can sponsor a 457(b) plan. However, it appears that a 414(e) religious organization that is not a steeple church, can sponsor a 403(b) plan however since the employer is not subject to ERISA, the plan would be a deferred comp plan for all plans, and NOT a top hat plan. However, as a governmental plan, the features of the plan are similar to a top hat - ie no loans, no rollovers, no age 50 catchups

Can someone confirm??

Thanks!

45 year old male recently divorced, has IRA valued at $31,000, currently taking annual 72(t) distribution since 2005.

Divorce decree says they must split the IRA 50-50.

Continuing the same annual payments from 50% of IRA balance will deplete account prior to age 59 1/2.

Can payments be reduced for IRA owner due to divorce decree without tripping the tax liability for all prior payments?

Thanks!

I know certain DC plans can exclude collective bargaining employees or non resident aliens, but what situations can this apply to DB plans? A long time employee has never benefited from his company's plan. Assume he met eligibility requirements.

I an not familiar with 403(a) plans and appreciate our comments. It is my understanding that these plans are funded solely by employer contributions and thus are ERISA qualified arrangements. Do these plans requrie a plan document? Can monies from these plans be transferred to a 403(b)plan? Can the 403(a) be converted to a 401(a) plan?