Employer failed ADP test for 2002 and distributed excess deferrals to HCEs within 2-1/2 months after end of 2002. Because of a plan correction, the Employer had to re-run its ADP test and discovers it distributed out too much in corrective contributions to its HCEs in 2002. What is the correction method? The catchall overpayment provision in Section 6 of Rev. Proc. 2008-50 says the employer is to request the money back but if the employee does not refund it, then the money must be paid back into the plan by the employer if no one else pays. The Employer would just like to issue a 1099-R as to any un-reimbursed amounts so that the employ just pays 10% early distribution tax on un-reimbursed amounts.

I am at a company right now that switched Payroll providers about 2 years ago. The old payroll company had provided a POP plan document and testing to meet Sect 125 compliance, but I can't see where anyone was ever required to enroll in the POP (no enrollment forms have been found in any personnel folder). For the last 2 years, I don't believe there has been any testing for the POP (although I am certain they would have passed testing as all employees are eligible from day 1), there wass no updated plan document for the POP, and still no employees have ever elected to particpate in POP....just an assumption that when they signed up for the eligible benefits that the employee premium would be deducted from the paycheck on a pretax basis.

Any suggestions on how to clean this up and any idea on how significant the company's exposure is?

I have already gotten a plan document from the payroll provider, have contracted with them to do our testing, and will have new employees enroll officially in the POP?

What do I do about the missed testing? What do I do for employees who never signed up for the POP? Technically, I can't retroactively enroll them under section 125.

Any help or suggestions are appreciated.

Thanks in advance.

When a company gets a Federal Funded contract, do they have to set up a fringe benefit account at that time? That is does each contract require a new plan?

I work with a TPA who provides their clients, for which we serve as trustee, a trust and plan document and a service agreement. The TPA says they cannot contract directly with the company on this service agreement. Instead, they have written the document such that the trustee must hire the TPA. I am wondering if this is necessary. And if it is, what is the basis for it. Why can't the client and the TPA deal directly with each other?

Last year (2008) we filed a plan with two numbers in the EIN transposed and have caught it this year. Any idea how to remedy this situation without notices being generated??

Does anyone know where I can find a copy of the attachment for late deferrals? We use the Datair 5500 program and I do not see a copy of the form.

Draft ISO/NSO plan provides that value will be determined by the company using reasonable application of a reasonable method, etc. Service provider is expressing concern that owner of closely-held can manipulate its payout by simply withdrawing equity (or other ways that negatively impact a valuation formula that is used (EBITDA x multiplier less liability).

To address this concern, service provider suggests adding back dollar amount of equity withdrawn during 12 month period preceding the exercise.

Any problems?

If I have 33 Eligible Employees and the Plan has a Top Paid Group Election; 20% = 6.6. Do I round up or down or do I have discretion?

Thanks in advance

I've got a series of small "loans" to a disqualified person that add up to a fairly significant amount. I need more space on Schedule C in order to include all of these PTs. Can I supplement the table in Schedule C to reflect all the PTs? Another thought is to treat these disbursements made throughout the year as one big PT and calculate the "amount involved" and excise tax on the total amount, from the date of the first distribution. I don't think anyone is going to like that idea.

Treasury Reg. 1.415©-2(e)(4) permits, but does not require, salary continuation payments to be included in 415 comp. Does HEART's requirement that differential wage payments be included in 415 comp negate the voluntary nature of 1.415©-2(e)(4)? Is there some difference between salary continuation payments and differential wage payments that I'm missing?

I've seen a number of discussions of the impact of this HEART requirement, but none that contain any discussion of its impact on 1.415©-2(e)(4).

When registering on the EFAST2 website, what is the User Type for a TPA that will be filing on behalf of their clients? Filing author, filing signer, schedule author, or transmitter?

A plan has a zillion dollars of FSCOB and no PFB. FT/Assets 2010 > 80%. Any problem with the getting a signed election now (in 2010) to apply the FSCOB to reduce 2011 quarterlies?

The 2009 MRC for a calendar year plan was $20,000. On January 1, 2010 election was made to apply $20,000 of the FSCOB to cover 2010 quarterly contributions of $5,000 each. In July 2010, the valuation is performed and it is determined the 2010 MRC is $0.

So, what happens to election? Is approximately $20,000 of FSCOB effectively burned, or is $0 burned since there were no quarterly contributions due for 2010?

It would seem that in establishing such an election the appropriate wording would be to state "to the extent required." I presume this is doable since I took the quote directly from the reg.?

Most of our defined contribution plans have Total Participant Directed accounts. For Plans where participants fail to make an Investment election, we place their (the Participant's) Investment in a Money Market. We describe this as the default investment option. I'm curious as to whether we should mark off code 2T on the 5500 SF, Section 9a? I wasn't sure what others are doing with similar default options...leaving this blank because this isn't a QDIA or if they're adding 2T to this section? Any guidance would be appreciated!

Called AFunds this morning to see where required information for question 8f is located since their annual plan expense report explicitly states info is not to be used for 5500 filings. Repeatedly was told there were no other reports, the annual summary could not be used and this was all detailed in the recordkeeper direct agreement client signs when starting the recordkeeper direct program. Question - anyone here get better and more proactive information that me from American Funds on how to answer 8f? Any advice given will definitely be appreciated. Thank you.

Hi,

Plan has participant directed accounts for deferrals and pooled for Er contributions. Plan document states distributions when admin. feasible. Valuation is done yearly for pooled Er funds. Is there any issues with doing a quarterly valuation when there are distribution requests (and no valuation for quarters that do not have distributions)?

Thanks!

I'm looking at a 1989 Multiemployer DB document. It says that actuarial equivalency is based on "1951 GAT projected to 1964"

Can anyone translate what that might be or if such a thing existed and if so where it might be locatable?

Plan is sponsored by US company owned by a foreign company. French citizen that has been working at US company and participating in the 401k is leaving the US company and returning to France to work for the "mother" company.

I believe there are no issues with making a distribution.

What are the tax/rollover issues for a foreign citizen (French) to take a rollover? Is there a treaty that determines when the distribution is taxed or if there is a special provision for foreigners?

Has the IRS published statistics or related information on the number of nonamender governmental plans filing under the EPCRS Program?

Have you utilized the EPCRS Program for a nonamender governmental plan? If so, what type of entity sponsored the plan (e.g., state government, municipality, state agency, etc.).

Here's to Doug Adams.

and remember, Don't Panic.

Nationwide has provided Schedule C information including payments to NW, TPA and financial advisor. Are preparers of 5500-SF for small plans including the total of all of these payments on 8f? Thank you.