To help me understand this process, can anyone tell me the paper trail (i.e.…tax reporting) that occurs when an individual rolls over pretax 401(kl) monies to a Roth IRA? In other words, what is the paper trail that shows these funds converting from pre-tax to after-tax money? How is the fact that this money is converting from pretax to aftertax via a direct rollover to a ROTH IRA reflected on both the 1099R and the 5498? Is there other tax documents that would be produced as part of this paper trail?

Hi,

I have a plan that has Schedule A data, in reading the instructions for the 5500 SF I believe I can use the SF even when a plan has Sch. A info provided from insurance companies. I just enter commisions paid on line 10(e). Any thoughts or do I need to complete 5500 and schedules?

Thanks,

Jason

Is a DC plan that is not otherwise subject to the QJSA rules required to offer a QOSA when participants elect a form of life annuity under IRC § 401(a)(11)(B)(iii)(II)? If not, is the plan required to offer a QOSA if such participants change the form of life annniuty perviously elected? Does it matter wether the life annity is paid under a qualifed plan distributed annuity (QPDA)?

Small DB plan with unusual situation of 3 NHCEs leaving employment (not employer initiated). They have 2 employees already excluded by class. To pass 401(a)(4) for 2010, they will need to provide benefits to 2 of the 3 with an 11(g) amendment as neither will work enough to accrue a benefit. The employer will be replacing the 3 employees.

The plan has a 1 yr eligibility period.

This is not likely to happen, but suppose the new employees (all of whom would enter 7/1/11) terminated employment before that date. Could they be brought into the plan and provided a benefit with an 11(g) amendment? I know this can be done in a DC plan.

Thanks.

My first Roth distribution!

Participant became eligible to enter the plan on 1/1/2009 and elected to make Roth deferrals which totaled $210. Needless to say, she terminated in 2009, and is now requesting a lump sum distribution. She is 42 years old. Her earnings on the Roth deferrals are $30.72. Am I taxing the whole thing or just the earnings, or nothing, since the earnings are so small (assuming that only the earnings should be taxed). She does have a profit sharing allocation that will get taxed, but I wasn't sure about the Roth part, since she has not met the 5 year requirement.

I am thikning that the earnings are what's to be taxed; since she has $2082.23 vested balance in the P/S, do I lump the earnings in with that and take the 20%?

ok - this has come up a lot lately in plans we have recently taken over and I'm starting to doubt my own memory! For a failing ACP test our plans all forfeit the match to the match forf. acct and it is then used to reduce future matching contributions.

I have a takeover plan, however, where the ACP failure matching contribution was paid out to the participant (and has been for quite some time throughout past years). (Let's assume for argument sake that the ADP test passes.) Is this acceptable? How can this be paid out to the participant? Why would the participant receive a 1099-R form for Employer match and pay tax on something that was not part of their payroll? I'm trying to get my arms around the logic of this procedure that was in place.

thanks in advance...

I have a client who puts $7,500 into a 403(b) plan at the medical school here.

He also has a SIMPLE in his medical practice to which he defers $14,000 ( he is over age 50).

He also receives a matching contribution of about $8,000.

His CPA's tax software is not allowing the full deduction for the deferrals for the 2 plans.

Are we missing something here ???

Thanks.

i can't, for the life of me, understand why the big PEO, administaff, won't offer to run emplyee's HSA contributions through their cafeteria plan. does anyone know? they already offer pre-tax deductions for 401k and FSA, so why not HSA? is there any downside for administaff to amend and restate their section 125 to include an HSA module?

do you know of a PEO (like administaff) that does offer to pre-tax deduct HSA contributions? our small business will switch to that PEO!

administaff currently runs payroll and also is the interface for the insurance carrier unitedhealthcare

An avatar of this question has been asked on this board previously but every case has a slight unique twist to it, so it merits my asking, I think!

My enrollment periods for health insurance and for FSA election are not co-terminus. My sequence of events:

• My current traditional (not an HD plan) health insurance policy will end soon. It ran from March 15 2009 up to March 15 2010. So open enrolment is coming up on March 14 2010. I would like to consider enrolling in an HSA-qualified HD plan, and it will be in effect from March 15 2010 to March 14 2011. However, I made one uniformed decision earlier:

•I enrolled in FSA for 2010, and it runs from Jan 1 2010 to Dec 31 2010. The FSA 2010 enrollment period was in Dec 2009, which is much earlier than the medical insurance open enrolment period. Why did I enrol in FSA? because I was ignorant of the FSA/HSA interaction

I elected $720 for the entire FSA 2010 year, so I am paying $60 per month to fund my FSA. Till date, I have contributed $ 180 dollars , but have used up about $200 dollars.

It is not a limited purpose FSA

•My employer (actually it is the PEO Administaff, who is the 'employer' for our small start-up company) allows me to pre-tax deduct my FSA amount, but DOES NOT offer this pre-tax deduction for HSA amount. Also the employer does not offer HSA a/c trustee service. Forget about matching HSA!!

•A HD health plan is not as attractive to me without an HSA. But I can't have both an HSA and an FSA, can I?

•So can I switch my 3-month old FSA (2010) to an HSA, without the employer facilitating the switch?

Can I convert my FSA to a limited FSA?

If not, can I stop my FSA?

If I can't get out of FSA and just cannot establish an HSA, then can I just use my FSA along with my new HDHP?

Thank you

Really stuck on this benefit calculation for a while.

The plan sponsor has decided to pay an involuntary cashout to a terminated participant aged 60 years with 5 years of service who is 100% vested.

The plan document says that early retirement eligibility is completion of 55 years of age with 10 years of service. The early retirement reductions are stated age-wise. No separate information(reduction) for TV's who start collecting annuities before age 65 mentioned in the plan document

So do I reduce the accrued benefit for this particular TV based on early retirement factors or is he not eligible for early retirement(due to insufficient service)? Or should the accrued benefit not be reduced at all since it is a forced cash-out?

If he had completed 10 years of service would he then be eligible for early retirement?

Alternatively if he was currently aged 40 years then would his accrued benefit be reduced actuarially?

Sorry for the numerous queries, just want some basics clarified.

Thanks a lot in advance

A cash balance plan is newly effective 1/1/2009. The vesting service is credited from the plan's effective date forward, and the vesting schedule is 3-year cliff.

The plan sponsor wants to amend the vesting schedule for 2010 to include all years of employment. The question is, does this affect the participants that terminated non-vested in 2009? Would they have to go back and pay those participants their vested accrued benefit assuming they had 3 or more years of total service? Or would it only affect the participants in 2010 and going forward?

I'm advising a terminating money purchase plan. There are missing participants and all of the methods for finding them (using the DOL's FAB 2004-02 list) have been used. The next step would seem to be to set up IRAs for them and do rollovers.

But how do we deal with the spousal consent requirement? I see that the FAB has a footnote that makes the assumption that the DC plan does not provide an annuity option which, of course, the money purchase plan does.

Does anyone know of DOL or other guidance on how to deal with this situation? We obviously need to get the money out of the plan in order to terminate it, but I'm not seeing how we have a valid distribution without the spousal consent.

I have HSA questions I am hoping people can assist me with:

1) If an employee is actively at work, age 65 and enrolled in Medicare Part A, can they participate in the Employer Sponsored HSA? If so, is the contributions tax qualified?

2) In an employee has and HSA with an Employer Sponsored HDHP, and is covered through their Spouses Traditional HMO type plan, can the employee who is primary with the HSA, still submit to their spouses plan as the secondary payor? Or is the HSA participant precluded from being covered under their spouse's plan?

3) Dependent children who are coved under both parents plan (One spouse with HSA w/ HDHP, one with Traditional HMO), using the birthday rule and the HSA parent is prime, will it coordinate as normal?

I sure hope someone can help me out this!!!

I have a client who is obsessed with "employment agreements", several of which include a stipulation that the employee will elect out of the 401(k) plan. There is one particular employee who was hired in May 2006 and elected out of the plan. At the end of 2008, the employee terminated employment. He was then rehired on April 1, 2009. At this point the employee will not be electing out of participation. Can he do this? If so, the next big question is the entry date. The plan dictates that any former participant shall become a participant as of the rehire date. Is this employee considered a former participant because he was eligible to be? Was he considered a non-benefitting participant? AND if he wasn't a participant, can they use his prior service to satisfy the eligibility requirements??

I have just run into a situation in which a DRO was approved as a QDRO, with a retroactive assignment/benefit split date of six years ago, which is fairly common for this particular plan. However, the 401(k) plan recordkeeper refuses to administer, stating that it is not legally required to maintain records further back than six years, and there was a change in recordkeeper five years ago, and thus, there are no Plan records to use for an assignment date earlier than the date of takeover. (Just as an aside, when the QDRO was approved, this information about recordkeeper administration was not known to legal counsel or the TPA.)

A couple of questions - (1) can a DRO be denied because the Plan has inadequate records related to the account balance as of the assignment or split date; and (2) is this common for recordkeeper's to not maintain adequate information beyond six years or due to taking over an account from a former recordkeeper?

I would also appreciate any comments regarding whether, going forward, the plan or QDRO procedures may be amended to refuse to approve DROs with retroactive benefit split dates. There may be a legal answer to that and I have not researched it yet. Even that change would not appear to address a situation in which a youngish participant has a QDRO for which a distribution is not available for more than six years because of no distribution event, such as severance of employment and or early retirement age. Comments about how to avoid this issue would be appreciated.

Thank you!

In 2011, we are redesigning our health plan options and will be adding/deleting some health care plans. We are planning on having an active enrollment for the first time in many, many years and we thought that we could say that the "failure to make an election will result in defaulting into one particular plan". This was something that I had been involved in about 10 years ago with another employer. A co-worker recently said that unless the current plan of an employee did not make the redesign cut, we could not simply default them into one plan because salary withdrawals are required. Comments? Thanks.

I have a plan that is terminating that is a wait-and-see Safe Harbor plan. They dutifully gave the notice in November that they MIGHT make the 3% non-elective.

I'm pretty sure they have to follow up with one that states that they won't be doing it for 2010.

Does it have to be a stand alone notice? Or can they just put it in the notice they are giving everyone that the plan is terminating?

I have a plan that is terminating. And I understand that a successor plan cannot be in place for at least a year after the assets of the first plan have been distributed.

However, what type(s) of plan might a successor plan be? Just a 401(k)? Could they put in place a PS plan? SIMPLE? SEP? SEP IRA?

Hi,

Participant received an ineligible profit sharing contribution, terminated and received distribution that included ineligible ps contribution amount. The ps account had a loss by the time money was withdrawn.

I can try and get the money back from participant (it was a rollover, which might make it somewhat easier...) and if that fails the employer, I believe has to 'make the plan whole'.

However, at which amount to must I try and return to the plan? Say the ineligible contribution was $1,000 and the loss was $200, do I return the original $1,000 from participant or the $800 from the participant then the ER makes up the $200 loss amount so that the total is returned? Or perhaps only the $800, since that what would have been forfeited at the time of the distribution?

Thanks,

Jason

I'm hoping someone here has done something like what I'm facing, or can give me some good suggestions at least.

A small bank has a 401k plan for its employees. It also has IRAs of customers. Some of the customers' IRAs hold stock in the bank. The bank converted to be an S corporation. That caused UBTI to the IRAs. So the bank's 401k plan purchases the bank stock from the customers' IRAs. To do so, the bank lent its 401k plan $2,100,000 without taking any security. The TPA is telling the bank that the loan needs to be secured to be exempt from prohibited transaction rules. According to the TPA, the loan can be securitized now and 'cure' the problematic loan.

This is outside my experience, and am hoping for any direction that anyone can give me.