Hi everyone!

For those relius webclient users trying to submit EFAST2 filings.....has anyone had issues publishing multiple years for one client? I have updated the filing year in the plan info sheet but when I try to publish the 2nd year it just overrides the first year I published. (For example, if we have a 2009 filing and a final 2010 filing....the 2010 filing overwrites the 2009 filing).

I was hoping someone had a tip on how to get this to work or knew that there was a glitch in the system?

Thanks!

Vicki

A participant in a 401(k) plan currently has no designated primary beneficiary. The participant's mother has recently incurred costs for medical expenses.

Can the Participant designate her Mom as her primary beneficiary and then take a hardship distribution (i.e., make the change and take a hardship distribution after the particiular medical expenses were incurred)?

Hi All.

Hopefully some of you are still around and haven't taken off for the holiday weekend already. Because I have a real interesting situation. I have a prior PS plan that is 100% terminated, kaput, dead! Plan was terminated, all benefits distributed, no more filings required. Recently, a class action settlement occured with a financial provider which the Plan previously used. The Plan received a class action settlement check for a couple of thousand dollar (not significant money). What to do? I don't even have a plan to control allocation. However it is clear that this money would have been allocated to current participants if the money had been received when the Plan was active.

I appreciate any suggestions (and code cites) as to how to handle this situation.

Thanks!

Say a one participant plan has a pvab worth 50k and a separate rollover into the plan of 100k and he is 100% vested in his AB.

Does the rollover have the same requirements as his formula AB?

For example if he is under age 62 (i.e. less than NRA) and he withdraws 70k of rollover portion. Could it simply be a taxable distribution possibly subject to 10% tax? Or is it disqualifying premature distribution and prohibited transaction? Is it subject to spousal consent?

Like to think that the rollover could be treated separately, but don't quite think that is the case.

My understanding is that the value of the entire AB is 100k + 50k or 150k and that the maximum loan is 50k for this person. So a withdrawal of 70k could conceivably consist of a 50k loan and a 20k excess loan and if the total was defaulted then the first 50k could be a deemed distribution and the next 20k would be a deemed dist, a premature distribution and a prohibited transaction (since it is the owner).

Thanks.

I would like to know if a participant in a pension plan has a right to attend meetings of the trustees

We have a Cross Tested Safe Harbor 401k Profit Sharing Plan. The Safe Harbor is a 3% Non-elective contribution and discretionary profit sharing contributions are made every year. In going through previous plan years we found that the plan failed the Gateway Test and the Nondiscrimination Test under 401(a)(4) in 2008. In 2007 the plan passed the Gateway but failed the Nondiscrimination Test. Both tests were passed in 2009.

We have calculated what the contributions needed to be to pass these tests for both years not including any interest that will have to be paid. My question is how do we correct this? Is there a correction program available for this? And what penalties may we be looking at?

I really appreciate any guidance!!

I have a participant that is turning 70 1/2 during 2010. They are still actively employed at this time and are not now, nor were they ever a 5% owner so they need not take an RMD attributable to 2010 unless he actually retires later this year.

The plan allows for in-service withdrawals and he wants to use the ISW option to roll his entire account to an IRA at this time. The question that I have is, if he rolls his money over to an IRA now, what happens if he retires later in 2010. Will that not trigger the RBD in which case he will need an RMD for 2010 and the rollover that he did prior to his retirement now becomes the RMD (which can't be rolled over) since it was the first money out of the plan for the year?

Please let me know what I am missing.

A general purpose loan is taken with a 4 year term. Is it possible to refinance the loan to extend the term to 5 years in order to reduce the required payments? In Sal's book, it seems to be possible but I don't see an example of how it's done. Would it seem reasonable to take the remaining balance and amortize the payments over the remaining term plus 1 additional year? I appreciate any suggestions.

Client closed a location in 2009. Their attorney advised it was not a partial plan term. I don't know the numbers yet, but for purposes of this question, let's assume that is correct.

Atty prepared amendment to accelerate vesting to 100% for all participants at location that closed. Does this need to be BRF tested?

I have read the instructions, called DOL - were nice but just told me to read the instructions or call the IRS on EZ questions, Was on hold with the IRS for over 1/2 hour and gave up.

Situation.

Controlled Group

Both companies covered under one plan.

Both companies have one EE each - husband in one, wife in other.

Can I file an EZ? I think the controled group issue that I had before went away.

Any ideas?

Pat

I am interested in information regarding restrictions around paperless enrollment within a 401(k) plan.

My question is related to obtaining electronic signatures via Web or IVR systems.

I have always believed that the enrollment form is an agreement (e.g. a contract) between the Employer and the Employee to withhold a portion of the compensation and deposit the contribution into the plan trust. Therefore, obtaining an electronic signature via the ESIGN act will suffice in relation to official execution of this agreement.

However, I am being told that there are 15 states in which such an electronically signed agreement is invalid because those states do not recognize or allow electronic signature for agreements.

Is it true that a participant's paperless enrollment into a 401(k) plan is invalid in some states?

Thank you in advance for your comments.

Suppose a small employer wants to terminate their DB plan ($750,000 in the plan). The current plan year began July 1, 2009. They will freeze now and terminate the plan before June 30. The plan is not subject to PBGC.

The July 1, 2009 minimum contribution is $100,000, but no contribution has been made yet for this plan year. The 100% owner has 90% of all the plan benefits and wants to sign a "waiver" to forego receipt of any of their own benefits that do not get fully funded. They want to put in $50,000 into the plan and waive the rest.

According to one enrolled actuary, the affects of the plan termination and any signed "waiver" of benefits by a majority owner, if done by the end of the plan year, can be reflected on the schedule B and thus a new actuarial valuation can be done to show a July 1, 2009 minimum of $0, even though benefits accrued for the year (the waiver undoes the accrual).

If that's true, wouldn't that also affect the maximum deduction as well? The EA hesitated on this but thought the plan could always deduct up to an amount needed to fund lump sums, even if the owner's benefits were waived.

1. Can the July 1, 2009 truly be modified as described to now show a minimum of zero?

2. If so, would the employer be able to contribute and deduct an amount to partly fund the final benefits?

Sole proprietor has a tax qualified plan. The State has seized all assets, including the assets of the one-man retirement plan. We don't have the protections of ERISA's anti-alientation rules...would 401(a)(13) protect the benefits from State seizure of assets?

Routing filings function is not working. This issue is not with your computer. PBGC is aware of problem and should have resolved in next day or two.

Hi,

We just picked up a new client. The client has a profit sharing plan that he wants terminated asap. The plan document has not been amended since 2004. The client was misinformed and did not realize that amendments were necessary - he has been acting as though the plan was terminated for some time.

Some of the plan assets have been distributed - but most are still in tact. This is a 2 person plan (1 owner 1 employee) - I believe the employee received a distribution from the plan in March 2010.

We are going to update the plan for any missed amendments and file under VCP. My question is - is it possible to avoid restating the plan? If the employer adopts a termination amendment as of of February 1, 2010 (employer would sign this amendment with today's date) - would a restatement be necessary since the plan terminated before the restatement deadline?

This is a small start up business and any fees we save this employer would help him out. My thoughts was to update any missed amendments, adopt a termination amendment as of 2/1/2010 and file under VCP.

Thanks for any help.

Linda

We have an employer with the potential for a number of seasonal / temporary employees that come and go during the year (Spring and Fall seasons). Some of these individuals will likely accrue 1,000 Hours of Service during the course of a 12 month period / Plan Year. The Plan historically has required a Year of Service to be eligible. My understanding of the eligibility rules is that these individuals likely have to be permitted to participate in the 401(k) Plan once they have 1,000 Hours of Service even though they will not be employed on the last day of the Plan Year or work continuously throughout the year.

First question, is there any way to generally exclude these sorts of seasonal employees from entering the Plan? For example, the volume submitter plan document includes one eligibility option which provides for "______ (not to exceed 12) consecutive months of employment from the Eligible Employee's employment commencement date. If the Employee does not complete the stated number of months, the Employee is subject to the 1 Year of Service requirement in f. above." My understanding is that this option still may not work to exclude the seasonal employees who come and go and come back under the Plan. That is to say, unless an employee has an extended break in service, service spanning rules could require the period(s) of absence to be counted as eligible service. Does that seem correct?

Any way we may be missing to exclude these sorts of seasonal employees from entering the Plan?

Second question, the 401(k) is deferral only so no match and thus not that much of an issue to permit the seasonal employees to make elective deferrals if they desire. Employer is thinking about adding a profit sharing contribution to the Plan now, however, and does not want to have seasonal employees receive that profit sharing contribution. Assuming that the eligibility provisions are such that the seasonal employees with 1,000 Hours of Service are in the Plan and assuming they continue to accrue 1,000 Hours in each Plan Year, can the employer impose a Last Day requirement on the profit sharing piece and effectively deny the seasonals a profit sharing contribution? Because of the seasonal periods, none of the seasonal employees would ever generally be working on the last day of the Plan Year (December 31)--although they may or may not return to seasonal employment the next spring.

DB Plan is the beneficiary of an insurance policy with a face value of 1,000,000 with a cash value of 100,000.

Plan wants to assign the policy to the individual participant (HCE) and get the policy out of the plan. Currently owner is the only participant but he will be hiring some employees during 2010. Plan will be amended accordingly so as not to purchase insurance for participants.

How is this accomplished

Does the participant pay cash value back into the trust

Is “springing cash value” an issue?

Assuming we can satisfy coverage and nondiscrimination tests, is it possible to exclude union employees from participating in a DC plan, regardless of whether they are covered under a CBA? For example, if union is certified during the third month of the plan year, can they be excluded even if there is not yet a CBA? They would not meet the definintion of "collectively bargained employees" and consequently could not be disregarded for purposes of testing, but is it otherwise permissible to exclude union members as a class of employees?

Due to the economy, client was not able to fund their 2008 Safe Harbor 3% nonelective contribution. They are able to do so now. Since we are past 12 months following the plan year, but still within the 2 year self-correction period, is this eligible for self-correction? Or, is this a qualification issue and as such must be submitted under VCP?

Recently had a client report their audit cost about $33,000. This seems pretty high to me as the last I heard Form 5500 audits were more like the $5,000 to $10,000 neighborhood - for limited scope where the plan has a certified annual asset statement. A full scope audit was required because of the lack of a certified annual statement. Employer uses a TPA for recordkeeping and all money is invested in one mutual fund company that informed them they do not provide certified annual statements. Have you had the same experience with mutual fund companies? Thank you for any information you can share! Employer is located in Texas.