I was told that the statutory test is generally not enforced. The same source indicated that, in practice, these plans have been held to be nondiscriminatory if the same benefit is available to all eligible employees.

For example, say $5,000 is available to all employees. All employees are eligible, but only 10% of employees utilize the self-insured medical benefit at all. Since less than 70% of all employees benefit, it appears the plan would be found to discriminate. However, according to my source, if the IRS audited this plan, they would accept it as nondiscriminatory.

What do you think? By the way, of the 10% of employees that do utilize the plan, an overwhelming majority are non-HCEs.

Looking at Reish and Reicher's website, 404© is specifically meant for individual account plans that can have participant investment direction. Reish and Reicher say that means qualified plans. Can it apply to 403(b) also? I would think so, but does anyone know any differently?

db froze in 2008. combo plan, is the minimum still 5% in the DC plan (except for new employees who aren't participants in the DB?

My Company filed a form 5330 for 2010 about 1 month ago, but it appears we have some additional corrections. Can I just send in another Form 5330 with additional corrections?

The SB instructions provide, "On an attachment to Schedule SB, list the rate of retirement at each age and describe the methodology used to compute the weighted average retirement age, including a description of the weight applied at each potential retirement age, . . . "

A plan provides for unreduced early retirement at age 62 and 20 years of service. The retirement assumption is that participants retire at normal retirement age (65) or otherwise when first eligible for an early retirement age. This statement describes the methodology. However, the weights are dynamic and not an assumption but rather a function of the participant demographics.

Are those with analogous provisions providing the "weights" (i.e., w% at 62, x% at 63, y% at 64, and z% at 65) and if so, are the percents weighted by benefits or liabilities.

We administer a DB plan that is PBGC covered. There are 98 participants in the plan. The plan sponsor plans to purchase annuity contracts for all the participants since lump sums are not paid (and they do not want to amend to allow for this option). There are some participants in pay status and some active and terminated participants with deferred benefits. Benefits are frozen as of 12/31/2004.

We plan to choose August 15, 2010 (or 8/31/2010) as the plan termination date (due to the 60 day notice). Can the plan sponsor purchase the annuity contracts before the plan termination date? If so how can we file the Form 500, etc. with 0 participants as of the plan termination date?

Any thoughts?

I searched the forum trying to find something regarding this topic and couldn't find anything, so here is my question.

I have a profit sharing plan which has a graded vesting schedule according to the plan document as

0%, 20%, 40%, 60%, 80%, 100%

But for the past three distributions, the participants were all vested at 100%.

Clearly the plan sponsor did not following the plan document. Can she retroactively amend to change the vesting schedule to 100%, since no benefit was taken away from the other participant's?

(any forfeiture would have gone toward the employer contribution).

And what if she wanted to keep the currect vesting schedule, would there even be a fix since none of the participants were affected? (They each have their own segregated accounts).

I looked at rev proc 2008-50 which explains how to fix vesting problems but this is only if the distribution gave too little! In this case the distributions were too much.

thanks for any thoughts on this.

A charity's president signed a vendor's "Plan Establishment Form" in 2008 thinking it was a 403(b) plan document. It was not -- it lacked the items required by 403(b) regs like eligibility and benefits description. So they had no plan document as of 12/31/09 as required.

I know the IRS is coming up with a retroactive amendment correction program if sponsors adopt a new 403(b) prototype when that becomes effective but Announcement 2009-34 says that relief applies only to periods after 1/1/2010. The relief does not apply to the 2009 tax year (the first year when a plan document was required). So for the 2009 year, we had no document. I'm thinking the charity needs to go through VCP to correct the 2009 year. My question -- has anyone done this already?

A tax exempt entity currently has a 403(b) plan. The sponsor would like to add a match, but only for some of the employees, but it would be quite expensive to pass ACP tests.

If we set up a top hat 457(b) plan for HCE matches, will that remove the need for ACP testing in the 403(b)? HCE's would still defer in 403(b).

Are there any problems with this combination?

Question on testing a frozen cash balance plan:

If a Cash Balance plan is frozen for contribution credits, but still provides interest credits, are participants considered to be "benefitting"? I would think the logical answer is no, however if the plan were NOT frozen, I know the accrual rate is based on BOTH contribution and interest credits earned during the year. So there seems to be a contradiction in that interest credits are only counted towards accrual rates if there is also a contribution credit provided during the year. Is this correct?

How is everyone making out with efiling? What percentage of your plans have successfully efiled?

I was told that the DOL has received less than 5% of all plans so far.

So far we have had 4 of our clients receive letters from the IRS on their questionnaire project. We operate a small TPA firm and it seems that 4 out of the total 1,200 letters is an astonishing figure. What have other TPA's experienced with this?

A client would like to freeze their Plan instead of terminating it so that participants can continue to pay back loans. Would service for vesting also freeze? Can the employer unfreeze the Plan at a later date if they decided that the company will not go out of business? If so, how do you unfreeze a Plan.

I am trying to find out more about deemed IRA's (traditional or Roth) and if they are allowed within a 401 a?

I have found that the Economic Growth and Tax Relief Reconcilitaion Actof 2001 allows it, but I am meeting resistance

with the plan adminstrator. The plan adminstrator is saying that you can not have a Roth IRA within in a 401 a, so

I am asking for help to see whom is right in this instance.

thank you

Bryan

A client receives a late notice for their 2007 5500. One of the options in the notice is to complete Section 1 of the notice if the plan sponsor has already filed the return. In Section 1, the plan sponsor would indicate their Name, Address, EIN, Plan Year Ending and the last question asks, "Date filed with EBSA and Acknowledgment Plan Number number". Can someone please tell me what an Acknowledgment Plan Number number is? Also, the instructions do not request a copy of the return. Would anyone suggest sending a copy with the response. Thanks.

403(b) Plan filing Form 5500-SF. The plan has 403b deferrals, match and employer non-elective. Would the following codes be used?

2E for the non-elective ER $

2F for the 404© compliance on the product offered

2G for the fact the participant's all self direct their funds

2K for the match

2L for the 403b arrangement

I'm just wondering if the non-elective ER $ goes under the 2E code - Profit Sharing. Since it is a non-profit sponsor do we use this code or ignore the fact there is non-elective money?

What is everyone else doing out there?

What are the thoughts on excluding leased employees? Does 414(n) apply to a 403b? I know a 403b plan can only cover common law employees, however after the statutory one year and other leased requirements, the leased employee is treated as a common law under qualified plan rules?

Can I get some suggestions for search services? I know this has been covered before but the one that is most recommended - I can't remember the name - seems geared towards high volumes, with minimum fees. We need to search for one or two here and there...

If I will now submit forms in behalf of my clients (i.e., no one else will need to get to the forms online), then I presume that I don't need to use Webclient and there would be no advantage to using it?

Also, I would obtain EFAST2 credentials as what "Filing Signer" and "Transmitter?"

I wasn't sure if this was the correct board to post this on, but I couldn't find another spot that was more suitable.

I have a potential new client that is a hedge fund company. They have roughly 40 employees and do not currently have any kind of qualified plan. They are interested in a DC plan but want to offer funds within their hedge (that they manage) as plan investment options. This sounds like a prohibited transaction on its face. They realize that they would have to offer other investments to round out a diversified lineup. It made me wonder how brokerage firms handle a 401(k) plan at their firms. For example, if I am an employee at Fidelity, does Fidelity offer Fidelity funds as investment options within the plan? If so, how do they avoid PT rules and the fiduciary provisions of ERISA? It would seem that this is close to what my client wants to do.

Any help you can provide is helpful.