A major insurance company takes the position that the use of an asset allocation model in a 403(b) plan triggers SEC scrutiny because the asset allocation model is a investment company (ie mutual fund) for SEC purposes. Does anybody know of any backup for this position. The asset allocation model consists of 5 model portfolios

a non profit is going out of business and they maintain a 457(b) for one of their key employees. What hoops do they need to jump through to distribute the funds? If I am not mistaken, the participant could only rollover the 457(b) to another 457(b) plan. Are there forms that need to be distributed to the participant? A resolution to terminate the plan? The original plan was effective July 2003 and the plan was restated in 2005 to incorporate regs Rev. Proc. 2004-56 amendments to the SBJPA and Automatic Rollover Amendment.

Should a benefit payment election form and notice of tax treatments be provided to the sole participant?

thanks

Do I have to have an HCE sign off an ADP refund? I know the refund is mandatory, but, for example, they could elect to waive out of the 10% withholding.

Or is the employer allowed to proceed without the elections? Is there any guidance on this?

We have an employee called to active duty effective May 4th. Under the terms of our plan, his coverage is continued through the end of May. The employee does not want to pay for coverage in May since he will be covered by TriCare. Is this a status change under the cafeteria plan rules? Unless TriCare is considered an "employee benefit plan of the employer of the employee" I don't think it is. Any thoughts?

We are working on a takeover 401(k) plan that includes a match allocation based on years of service. Eligibility requirements for the match are 2 years of service/age 21. The client wishes to use the following formula for the upcoming year:

0% match for participants with 0-3 years of service

25% match for participants with 4-10 years of service

50% match for participants with more than 10 years of service

Assume that coverage and nondiscrimination testing will pass (no HCE’s). With a participant receiving a 0% match until attaining more than 3 years of service, does this impose an impermissible service requirement for receiving the match contribution?

Have a situation where a participant should have been paid in 2008 but was not.

Section VII.D. of Notice 2008-113 appears to contain some inconsistent language. It states in the first paragraph that the amount is includible in income only when paid to the service provider. But then it states in VII.D.3. that the amount needs to be included in income in the year it was scheduled to be paid. Also, Section IX.B. states the correction notice is to be provided to the service provider by 1/31 of the year following the year the error is discovered, and the service provider must attach that notice to his return for the year the error is discovered.

Example: Payment scheduled for 2008 but not paid until 2010. If the employee must file an amended return for 2008 and include the payment as income for 2008, but the employee attaches the notice describing the error to his 2010 return, does that make sense? Shouldn't the notice be attached to the amended 2008 return? Or is the amount in fact included in income in 2010?

Any thoughts?

I have an Employer that contributed a QNEC to the plan during 09 for the 09 calendar plan year. Their reason for doing so was to slightly increase the acct balances of the nonkeys so that the plan would not be top heavy for 2010. They gave the contribution in the form of a QNEC so they could also use it in the ADP test.

The problem is that the prototype document they are using has an option for QNECs but it wasn't chosen.

Is it possible to amend the plan now for 09 to add the QNEC? They don't want to have to go thru EPCRS. I suppose the only other option is to call the contribution a profit sharing contribution but then there is an issue because it didn't go to the keys and it can't be used in ADP test.

We have a client who acquired the stock of another company a few years back and continued to have employees of that previous company continue to participate in the previous company's multiple employer plan. Our client has now done a plan-to-plan transfer from the multiple employer plan to its own 401(k) plan. When we submit for a determination letter request for our 401(k) plan, how much information do we need to include on the previous multiple employer plan and the plan-to-plan transfer itself? I know that when we merge a plan, we include all of the amendments, previous determination letter, etc. for the merged plan prior to the merger, but I cannot seem to find guidance saying whether this level of detail is also required upon a plan-to-plan transfer. I am asking because the multiple employer plan has been quite difficult to deal with and seems unwilling (without a fight) to provide us with all the information we would need. If anyone can point me to any guidance on this issue, I would greatly appreciate it!

Many thanks!

In the case of an off plan year, what compensation is used for ADP testing? Plan year or calendar year?

3 companies are part of a control group with 3 separate plans. 2 plans have standard 401(k) with discretionary match and profit sharing. The other has standard 401(k) with safe harbor match and discretionary profit sharing. I looked at the testing just done and it passes 410(b). Any issue here with disparate benefits? I would think it wouldn't pass because of that safe harbor piece.

A calendar year DB Plan was frozen to new participants 1/1/2008. The 2008 AFTAP was 80%. The 2009 AF TAP was 73% and a Notice of Benefits Restriction was delivered to all participants by 4/30/2009. The Notice did not state the 2009 AF TAP.

April 1, 2010 is creeping up and I've yet to receive census or asset information. Thus, as of 4/1/2010, AFTAP will be presumed to be 63%. Thus, there is no immediate change in the extent of the restriction.

My reading of the final 436 regs. leads to the conclusion that the Plan Administrator does not have to distribute a Notice of Benefits Restriction for 2010 unless the AF TAP would later be determined or presumed to be less than 60%.

Any comments?

It is clear from the regs that to use this catchup the employer must be a qualifying organization, for example a school, and the employee must have 15 Years of Service with that employer (although there are special rules for churches). Assuming all of this applies, when applying the calculation, does the 403b plan have to have been in effect for 15 years (or any other deferral plan)? So if the plan has only been around for 5 years but the employee has 15 years of service, can the catchup be used? Also, do you only look at prior plans of that same employer, or do you look back at ANY prior plan that a participant has deferred to, even if with a different employer.

Example - employee contributes $1000 for each of the 5 years that the 403b was in existence, therefore maximum average is 15 years x $5000 = $75,000, less $5000 used = $70,000 available, therefore $3000 catchup can be made for this year?

I have a 30 life DB plan recently submitted to the PBGC for termination. About 18 months ago, two participants who were eligible to receive distributions (NRA) elected to retire and take their money as a life annuity. Now it comes time to liquidate the assets. What happens to these two? Are we forced to purchase an annuity for them or can the "re-elect" and take the "balance" as a lum sum.

Our doc is a Non-standardized Corbel Prototype.

Any thoughts?

Doug

Hi,

If the ACP test is failing, is there a "borrowing method" where you can apply any excess from the ADP test to help pass the ACP test.

I know we have used in past years and I'm trying to understand how it is performed and calculated. I have found the term Multiple Use Test in articles, and this piece of info:

"The annual contribution percentage (ACP) test is similarly performed but also includes employer matching and employee after-tax contributions. ACPs do not use the simple 2% threshold, and include other provisions which can allow the plan to "shift" excess passing rates from the ADP over to the ACP. A failed ACP test is likewise addressed through return of excess, or a QNEC or qualified match (QMAC)."

Also, I see a prior thread about ACP Failing, and not sure I clearly followed if the refund is only ER Match contributions, is this taxable to the HCE?

Thanks!

Chris

Please give me suggestions for the best bank to use for HSA accounts?

I am thinking of my credit union; no fees to open the account, I think. But I would like to get some more recommendations from your experiences

"Bob" is a sole proprietor with no employees. He is 50+ years old. He has a Solo K plan. His earned income before contributions is $100K. He has already contributed $22000 for 2009, designated as salary deferral.

Just to be sure I'm doing this right, he cannot put any additional employer contribution in because he already exceeds 404 limit.

Does somebody have a simple spreadsheet that would help with calculating maximum deductible for above type situations?

Thanks!

While on vacation last week, I attempted to use my Bank of America VISA and it was rejected. Since I hadn't made many purchases, I decided to call BOA. A few days before, some hacker (or some hacker's system) has opened a new checking account in my name but with a Connecticut address. (I've lived in St. Louis forever and this anommoly in itself did not stop the train. A couple days later, an attempt was made to transfer my lines of credit (nontrivial sums) to this checking account and that transfer was thwarted. Bottom line is all our banking is with BOA, I use billpay to pay bills, I have direct debits of certain insurances and mortgage, and certain direct deposits, and of course, multiple BOA credit cards. I spent 5 hours at BOA (in Naples, FL) closing accounts and opening new ones. I will likely spend appreciable time over the next couple months totally unravelling the mess. Worst part is that it is unlikely I will ever know how the gates were compromised. While I lost no money, I suffered loss of time and aggravation. All this sad story told, this is not quite the same as living (or dying) with ALS, it's not the Tsunami or Katrina, the Hindenburg, or Chicago Fire.

I tell this story for those who do on-line banking with BOA, though it likely applies to other major banks as well. I presume for marketing reasons, BOA allows users to open on-line checking accounts. You cannot elect out of this option. Therefore, besides practicing safety (don't store passwords on your hard drive even though this is convenient), check your banking positions regularly. This is particularly an issue for someone who is an infrequent on-line user to whom my advice would be, don't take the risk at all and close down your on-line banking.

BOA has been wonderful in assisting with the recovery from the identity compromise but I nonetheless blame them 100% for affording the opportunity for this to have happened.

Has anyone seen a good discussion or any guidance on what makes a business associate an agent vs. an independent contractor under the HIPAA breach notification rules? I know that the preamble is replete with references to the federal common law of agency, but that is a huge field. The Restatement of Agency focuses on the right to control the actions of the business associate, which in the agreements I have seen is almost never present. I mostly work with group health plans, and the last thing they want is control over the business associate--performance standards, yes, but not control over performance of services.

On the other hand, many of these business associates are held out to participants and beneficiares as authorized to act on behalf of the plan, e.g., EAP provider, third party claims administrator, COBRA administrator. Is that sufficient to make them an "agent?" That's different from the control test--they are acting on behalf of a disclosed entity, but does not fact make them an agent?

I'm interested in other views on this question. Thanks.

Can someone please help and confirm the required 1099-R code for Excess Contributions?

I have a plan that failed the 2009 ADP test and is making refunds today (i.e., prior to March 15th ), should we be reporting it as a Code P or Code 8. I am assuming Code 8, since it is now taxable in 2010 (our software is still insisting its Code P).

Also, is there any reporting difference if the refund takes place after March 15th?

Any comments are appreciated.

I am working on a ADP test and I have two owners of a company who deferred $16,500 each and now they are reporting to me what their K-1 will show zero earned income.

What are the conseqeunces of this and what has to be done?

Do I include the owners in the ADP test?