A client in 2009 had merged the 401k plan of a subsidiary into the Parent company's 401k plan. The subsidiary 401k plan was funded in part by a GAC, which contained some assets (say 20%) which could not be liquidated at the time of the merger, and thus, the GAC still exists outside of the Parent 401k Trust (the liquid assets were liquidated and transferred to the Parent 401k).

Should the subsidiary 401k plan's GAC be reported on Schedule A for the Parent 401k's Form 5500? Are there any special issues we should be aware of?

Thanks.

hello all!

We have a client who set up a 401k profit sharing plan.about 30 participants.They asked that we assist with establishment of accounts at Schwab and want each participant to complete an application to establish their own self directed account.The money will likely start in the participant's money market type account and then be available for each of them to invest as they choose (i.e. no menu of investment options) and access on-line just as if they had their own savings account with Schwab.

Is this a permissible type of self directed arrangement?

thanks!

If not doing a VFCP filing and simply putting in lost earnings and filing Form 5330 how are the earnings calculated?

Would the plan still have to use the "Old VFCP" method comparing the highest returning fund to the IRS underpayment rate?

Was the elimination of the highest return option an incentive to get Plans to file under the VFCP?

How are others handiling this situation in practice?

Comments are apprecitated.

Thanks,

If a 403(b) plan is frozen, must participants be vested in any nonvested matching and nonelective employer contributions in the same way that participants must become vested in a frozen qualified profit sharing plan?

We are looking into freezing our small-ish DB plan and then terminating it when we have enough money in the plan to be able to purchase annuities and close it out once and for all. Our actuary tells us we're currently short of the amount needed to do that and that annual contributions will need to continue.

A broker approached me and said we could buy annuities now in the name of the plan, stop making contributions, and just allow the amount on the annuities to build for a few years and then terminate. Is there likely to be a catch? I presume we'd be far over-paying for the annuities. Or something.

What's this guy talking about?

Subchapter-S corporation on extension for 2008 until 9/15/2009.

Client deposits discretionary employer contribution on 9/15/2009.

For reasons unknown, the safe-harbor match is not deposited until 11/15/2009.

Principals usually receive the maximum annual additions under IRC Section 415.

As I understand the situation, the amount of the safe-harbor match is treated as an annual addition for 12/31/2009 rather than for 12/31/2008. Assuming that the safe-harbor match for 2008 (deposited on 11/15/2009) was $9,200 for Charlie Shareholder, his maximum “new” contribution for 12/31/2009 (excluding the 2008 safe-harbor match) would be equal to $39,800 rather than the normal $49,000.

Are there any exceptions to the IRC Section 415 contribution crediting rules that would help in this situation?

Any other thoughts?

Thanks for your consideration of this problem.

Charlie Laur

I'd like to see what BenefitsLink people think about the following hypothetical situation.

A person serves as an administrator of a retirement plan for the limited purpose of instructing the recordkeeper and insurer to pay final distributions. The former employer ceased operations many years ago. If the employer kept records of the plan's administration, they are long gone. The termination administrator, based on her experiences, suspects that the plan might be tax-disqualified, but lacks evidence to prove or disprove whether the plan is qualified.

Given this uncertainty, the termination administrator does not want to send a standard 402(f) notice because she does not want to take responsibility for even an implied statement that the plan is tax-qualified. Rather, the administrator would prefer to edit the notice, adding the following:

This notice describes Federal income tax treatments and rollover opportunities that could apply if the Plan qualifies for tax treatment under Internal Revenue Code section 401(a). The termination administrator will obey the Plan's terms that allow you to instruct that your distribution be paid to an eligible retirement plan. However, the termination administrator does not know whether the Plan is tax-qualified. If the Plan is not tax-qualified, this notice's explanations of Federal income tax treatments and rollovers would be incorrect.

Assuming that the termination administrator isn't worried about dealing with inquiries (she'd answer them all by saying that the notice speaks for itself), are there downsides to using the disclaimer and warning?

Client has a DB plan and a Participant left employment 10 years ago, but has a vested benefit. At the time of termination the plan's only form of benefit was an annuity. 3 years ago the Plan was amended to permit participants to receive a lump-sum. Participant is about to become age 65 and wants to elect a lump-sum.

My question is can the participant who terminated 10 yrs ago elect to receive their benefit in a lump-sum? Or do they have to receive an annuity based on the plan provisions at the time of termination?

Thanks.

Is everyone leaving line 11 blank or checking no when the plan isn't subject to the minimum funding requirements?

The special catch up appears to increase the contribution limit for the last 3 years prior to normal retirement age. Is this an employee based catch up like the age 50 catch up? In other words, can the amounts that relate to the special catch up be non-elective contributions or must they be salary deferrals? I don't have a lot of experience with 457(b)s, so please don't bash me!

Any swing or ballroom dancers out there? I will be in Chicago for the Great Lakes Benefits Conference and ERPA Conference in June. I am looking for a dance event for Wednesday, June 16th or or Thursday June 17th. Does anyone know of anywhere reasonably close to downtown?

Is anyone far enough along with E-FAST to have an opinion on whether the Schedule SB attachments "label" requirements (e.g., Line 19c, Plan Name, Plan No, EIN#, etc....) can be satisfied by simply "checking" the pre-labelled boxes in the E-FAST attachment menu (e.g., summary of plan provisions).

-OR-

Do we still need to have all the info (Line #, EIN#, Plan Name) pre-printed on each attachment itself PLUS then check the appropriate pre-lablled attachment from the E-FAST attachment menu.

Seems to me if the pdf attachment is going along with the 5500 E-FAST filing and the pre-labelled box is checked identifying the attachment type that should be sufficient, but maybe I'm wrong.

Some of the attachments are not easily and completely labelled as needed from our software so I'm hoping the E-FAST pre-labelled attachment menu would be sufficient. Thoughts ?

if the sponsor has never amended the plan which includes a period of many law changes and 3 remedial amendment period would you just send the IRS the most recent EGTRRA document or would they request that you recreate all the amendments?

We have 2 plan sponsors who are terminating their 401(k) plans in favor of 403(b) plans. Both plans sponsors are inquiring about simply transferring the assets from the 401(k) to the 403(b) without giving the participants an opportunity to receive a distribution. I don't see that it is permissable, but wanted to double check.

Thanks in advance for any guidance.

Hi,

How does an S corp/LLC get the 35% healthcare reform insurance credit? Provided that they meet the requirements for the credit, how can they receive it? Since an S corp (or even LLC's taxed as a partnership) are not taxed at the federal level, how is the credit claimed? Instead the corp. income is passed thru to the owners that then claim it on their individual fed. tax returns.

An individual who is well-versed in the bill explained that these types of companies can still attain the credit. I just do not know how it is claimed.

Thanks.

Has anyone come across any private letter rulings, or are there any cases, or regulations discussing on what basis an administrator may reject a beneficiary designation form? For example, if the participant indicated that both primary beneficiaries should receive 100% of the benefit or if the total designation exceed 100% on the benef designation form. My thought is that it is ambiguous and the plan document would control. See Metropolitan Life Insurance Company v. Parker, 436 F.2d 1109 (9th Cir. 2006).

Can you file a form with the IRS for a determination for a control group? I know you can file the Form 5300 for an ASG determination?

If we have adotped a prototype plan but want to also get a determination letter, is there a deadline for filing a Form 5307? Does it make a difference if we also sponsor an individually designed plan that is being restated this year for Cycle E submission?

Our client sponsors a safe harbor 401(k) plan. The company fiscal year end is June 30. The plan was on the same year end as the company through June 30, 2009 until the plan year was changed to calendar year end, with a 6 month short plan year ending December 31, 2009. Going forward, they would like to base their deduction on the plan year beginning in the fiscal year.

The company plans to make a profit sharing contribution for the short plan year and one for the 2010 calendar year. Both plan year's begin in the fiscal year. Can they deduct both contributions for the 6/30/2010 fiscal year?

Have a small DB plan with about 30 participants that we took over about 5 years ago. The plan will terminate soon. If we submit for a DL, must we restate the document for EGTRRA first? Usually, we would have no problem restating with our volume document.

The problem is the plan has a 100% J&S normal form of benefit. Our EGTRRA volume document only allows for a single life normal form but many optional forms and the ability to modify the QJSA to 100%.

The EGTRRA document has a provision that allows us to designate protected benefits other than those described in the plan.

If we must restate for EGTRRA, perhaps we can designate the 100% J&S normal form as a protected benefit under the plan.

Anyone see any problems with this?

Thanks a million!