If my 1/1/2009 AFTAP is above 94% but the FTAP is below 80%, am I required to burn enough of the carryover balance as of 1/1/2009 to get the FTAP to 80% for 430 purposes?

I was just contacted about an employer who has 125 employees with pay over $5,000 in 2009. Last week 30 employees were still deferring into this Plan.

Does anyone have nay ideas about correcting this?

I think they should stop all deferrals to that Plan now and will need to call these after tax contributions to an IRA when they do w-2s for 2010.

Anyone else have any ideas?

In the old days (5, 6 years ago) when a participant terminated employment, a plan trustee could simply send an instruction letter to the investment provider and it was honored.

We now have a small DB plan termination with all benefit elections properly executed. We would like to prepare an instruction letter for the trustee to sign and forward to the investment provider. The letter would say please make a check payable to XXXXX Trust company FBO Mary Smith etc. However, the investment provider is telling us they can only make checks payable to the trustee. They then recommend these checks be deposited into the corporation checking account and then disbursed to participant's or their IRA's.

We even offered to have a signature guarantee on the trustee instruction letter, but the investment provider will not accept that.

Anyone run into this situation? Seems not right to deposit plan money in a corporation account and then make distributions.

An employer has a 401(k) plan with a match. The plan states that a match is calculated per pay period.

I know that the plan sponsor has to transfer the elective deferrals to the plan in a timely manner. But what about the match?

Can the plan sponsor hold on to the match for a longer period of time? I know some plans don't even calculate a match until the end of the plan year.

When is the deadline to submit the match to the plan? Is it the end of the next plan year? Is it based on the employer's tax filing deadline?

Can a tax exempt 457(b) plan forfeit a participant's benefit if they are terminated for cause? We are talking about employer contributions (not sure if that makes a difference). It's an odd situation. The plan provides for full and immediate vesting, but allows a forfeiture for termination for cause.

Participant turned 70 1/2 in 2010, so first distribution would be based on account balance as of 12/31/09. Here's where it gets complicated:

His account balance was only 27,401.32. That amount includes a 2009 deferral of 22,000 and earnings on that 22,000. He is self-employed and his income for 2009 ended up being a loss, so we had to withdraw the 22,000 plus earnings in 2010 (because you cannot have a deferral if you don't have any income).

The record keeping system is calculating his 2010 RMD based on a balance of 27k. Should we calculate this by hand and use a balance of 27,000 less the 22,000 deferral, less the income?

It is a confusing case and hope this detail makes sense.

If the IRS has sent out anotice saying that the Form 5500 is late and that a penalty will be assessed, can the plan sponsor participate in the DoL's DFVC program and get a waiver of the IRS penalty?

That is, can they get a waiver of the IRS penalty if the participate in the DoL program after they've received notice from the IRS? or is there no hope because they already got the letter from the IRS?

I just wanted to verify - a step child would NOT be counted as a Child for attribution/ownership purposes unless legally adopted, is this the understanding?

Here is the situation:

Determination of Top Heavy for 2010 (as of 12/31/2009), I have 2 persons who are 1% shareholders but did not earn the required compensation in 2009 to be Key Employees. However, these same individuals were also 1% owners in 2008 and did have greater than the required comp in 2008 to be considered key employees as of 12/31/2008 for TH calc (for purposes of the 2009 plan year). This is not a safe harbor and neither of the 2 individuals took a distribution in 2009.

My question is this: for the 12/31/2009 test (which applies to 2010), are these 2 individuals included as Key EEs even though they earned less than the 150K comp requirement in 2009? I thought that they would be treated as 'former key employees' and their balances excluded from the 12.31.2009 test altogether. TPA is saying that because they were Key as of 12/31/2008, they are automatically KEY for the 12/31/2009 test in spite of the fact that for 2009 they both earning less than $150K.

If I want to view the latest available Form 5500 for our DB plan is there a way to do it on-line? A DOL website? Other?

If the assets of a multiple employer plan are held in a single trust and one of the employers terminates may the remaining employers use the forfeitures resulting from the termination to offset future employer contributions?

For purposes of this analysis, assume that forfeiture assets have been used to fully vest affected participants and that additional forfeiture assets remain. Assume also that the plan document is silent on this point.

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What are the tax consequences to the ER for disqualification to a DB plan?

I understand that the regs provide that if funded and has more than one participant, ER may take a contribution deduction only if a separate account is maintained for each employee. This doesn’t really make much sense to me. If the money is distributed to the participants, then the ER should get a deduction for the compensation paid to the participants. Thoughts?

The 50% lump sum restriction had been in effect for a calendar year plan effective 4/1/2009. There were six participants who elected to take the 50% lump sum and start an immediate pension. The plan sponsor contributed additional amounts in 2010 for 2009 so that at least for the time being distribution restrictions no longer apply. The sponsor would like to offer those six the opportunity to take the remainder of their pension in a lump sum.

I know we have the "annuity start date" issue. I have also been party to plan terminations where annuitants were offered lump sums.

Any thoughts on whether or not offer to allow participants to revoke their election and elect lump sum payment is doable?

Here is the situation:

Plan makes a Safe Harbor 3% contribution. In addition, they make an additional 4% ps contribution that has a last day/1000 hours requirement. Normally the last day/1000 hours would be tested through coverage but since both ps contributions are tested together that feature is not being tested.

So in practice, you have some participants only receiving a 3% contibution and some receiving the 3% and an additional contribution. So not everyone is getting the same "level" of benefit. Does this require "general" testing.?

I have a retiree who is at age 67, but his spouse is age 60. Is the spouse an "early retiree" for the purposes of the Program? Because the participant is over age 65, he is not an "early retiree" for the purposes of the Program.

Thank you!

Where could I find a current State Income tax witholding table for 401k distributions?

Does anyone have a link with information about this new program and how employers can collect and submit premiums to the goverment for employees that will be enrolling in this program? I didn't have much luck on Google.

Are we able to require dependents over age 19 to be full-time students for dental coverage after September? I have seen some language from HIPAA stating that we need to treat dependents over 19 as any other individual (similar situation individual) under the benefit plans. However, I think benefit plans is just referring to health coverage, correct?

Can the fee incurred to a third party advisor (i.e. not the custodian) for IRA distribution planning be paid to the advisor directly from the IRA without being treated as a taxable distribution?