I thought the Oct. 09 final regs addressed this but now I can't find a cite so maybe I'm wrong.

Does expected HCE restricted distributions play a role in whether the actuary can assume the expected form of payment will be an annuity vs. a lump sum ?

I have a plan that offers lump sums but about 50% of the benefits are for HCEs where the plan has never been well funded enough in its 30 years of existence, nor expected to be in the future, to pay out lump sums to the HCEs (this is an ongoing non-profit org plan that is not likely to terminate). There are no plans to increase funding levels.

Given this expectation of restricted HCE payments on the bulk of the benefits do the Regs allow an assumption that the form of payment will be an annuity (i.e., restricted series of distributions over the lifetime of the HCEs) even though some lump sums will be paid to lower paid non-highly compensated employees. The AFTAP tends to range between 85-90% each year.

Under 164.404 the obligation is on the CE to give the breach notice. Anyone seeing the BAAs wanting to send the notice to the individuals and the media (presumably to make themselves look better?). Although there is some appeal to this, I would worry the CE is on the hook if it is screwed up.

Thoughts? What are others doing?

I could use some help on doing and EOY valuation....

When doing and EOY val...is the FT calculated as of the beginning of the plan year then adjusted to the end of year with effective interest?

And, is the 150% cushion applied to the FT at the BOY or the EOY adjusted FT?

TNC as I see would simply be calcualted as of the EOY on that type of val.

What are you guys doing?

We consider our LTD recipients (whether or not receiving SSDI benefits) to be active employees with respect to health, dental and vision benefits. As such, we expect our health plans (self insured) to be primary and Medicare secondary. Recently one TPA stated that these employees don't qualify as "current" employees according to the Medicare Seconday Payor guidelines. Can we not consider them active employees on a leave of absence status?

What type of document are you using for Governmental plans where Employees make the salary reduction contributions through a 457 Plan and the Employer makes contributions through a 401(a) plan; Profit Sharing, Match or both?

Are you filing for LOD under Cycle E if using an IDP document?

If using a Volume Submitter are you relying on the Opinion Letter or filing for LOD by 04/30/2010?

Thank you!

Does anyone know where I can get a list of plans that are eligible for pre-tax contributions?

I know medical, dental, vision, life to $50k, but I would like a specific list with examples.

Thanks,

Carrie

I'm looking at Treas. Reg. section 1.411(d)-3©(ii), which provides a 180-day waiting period before you can eliminate an annuity as a redundant optional form of benefit. The preamble to the regs says the waiting period was inserted because the IRS was concerned about participants receiving notice of eligibility to elect a QJSA, and having the option eliminated before they could make an election.

Treas. Regs. section 1.411(d)-4(e) allows elimination of an annuity form of benefit if you give the participants a lump sum.

My question is, if you eliminate the annuity form of benefit by giving participants a lump sum form of benefit, do you still have to wait the 180 days?

The example following Treas. Regs. section 1.411(d)-4(e)(3) seems to suggest that you do, but the effective date is November 1, 2005 (60 days after the amendment date rather than 90 days). Does the example mean that the 180-day waiting period applies and the example has a typo in it, or was November 1, 2005 selected for some other reason (and presumably, the 180-day waiting period doesn't apply to elimination of a QJSA with a lump sum option).

Any thoughts?

For 417(e) purposes, can a plan use the average of the segment rates for the 2nd, 3rd, and 4th months prior to stability period?

401(k) plan provides for profit-sharing contribution and matching contributions - both with 6 year graded vesting schedule.

Plan has decided to stop making profit-sharing contributions and make a more generous match.

Lots of plan participants have small partially vested profit-sharing accounts and employee turnover is high therefore there are frequent profit-sharing forfeitures.

Plan doesn't want to allocate p-s forfeitures in the same manner as their p-s contribution because the cycle of people with small partially vested accounts will continue.

Is it permissible to use profit-sharing forfeitures to reduce the matching contribution?

Other solutions?

Employee had excess contributions for 2009, funded $20,000, he was making up for 'catch up' contributions missed in prior years. I am fairly certain that this is not allowed but what is the correction method?

1. Is it to return to the employee, adjusted for g/l?

2. His w-2 would show $20k for 2009 (I assume I do not mess with this), then he should he receive a 1099r for 2009 for the excess or is the 1099r issued 2010 and coded for 2009 excess?

Thanks

What are the suggested options in the following scenario:

A plan did not defer bonus payments according to the participants deferral election in 2009 or prior years; for example 0% was withheld from a bonus UNLESS a participant made a special election to defer from the bonus. The special election should have been the other way. The standard amount should have been withheld UNLESS the participant requested a different amount.

Would they have to make a correction?

Could they make the change moving forward only?

Thanks for any guidance on this issue.

I recently requested an corrective distribution for a 2009 failed ADP Test. The recordkeeper indicated that no tax will be withheld, even if the participant requested it, on any corrective distributions made prior to 3/15/10. Is this correct since the distribution is taxable in the year distributed? It makes no sense.

Facts: Distribution to alternate payee ("AP") pursuant to a QDRO occurred in 2009. The distribution was a direct rollover to the AP's 401(k) plan but in a separate account from AP's own 401(k) funds. 1099-R was issued with Code G. AP subsequently cashed out the entire amount that was rolled into the separate account with her employer's 401(k) plan. Approx. one month passed from the date the rollover contribution came into the separate account and when the total distribution was taken.

Comments: I know there is an exception to the 10% early withdrawal penalty under IRC 72(t)(2)© for distributions from a qualified plan to an alternate payee pursuant to a QDRO. In substance, I think this situation qualifies for the exception to the 10% penalty for early withdrawals, but I have concerns about the form of the transactions. The fact that the distribution from the participant's plan was rolled into a separate account within AP's employer's 401(k) plan concerns me. In effect, the plan adminstrator that acted on the QDRO, i.e. participant's plan administrator, did not pay the distribution directly to AP, but rather to the adminstrator of AP's employer's 401(k) plan as part of the direct rollover. The ultimate distribution to AP came from the separate account within her employer's 401(k) plan.

Question: Does anyone know if the 10% early withdrawal penalty can be avoided in this set of circumstances? Thank you.

A medium size employer decides to stop their union's DB plan and start at DC plan because of the costs. The union and employer agree on a 4% nonelective ER contribution (neither safe harbor nor discretionary) for the new DC plan. The adoption agreement states that this 4% nonelective employer contribution is effective 10/31/2009 and that salary deferrals are effective 1/1/2010.

The problem is, the Employer has been dragging their feet in actually starting the plan. Under increasing pressure from the Union to "get a move on" the employer signs the Adoption Agreement February 5, 2010, with the original effective dates above still on the form. It is now 2/16 and there has still been no communication to the employees regarding when they can start deferring. There have been no notices that there is even a plan, no salary deferral agreements, no nothing. The Employer may have even signed the adoption agreement simply because the union was threatening to file some sort of grievance.

Since no communication has taken place (save a few copies of the signed adoption agreement which were emailed to a few Union Employees who asked for it) what are the Employees' options? Do they have "missed deferrals?" Is the Employer not on the hook yet? What are the options for either side

I am a relatively new administrator and wanted to verify the following:

1. If my plan passes the ABT, the threshold for passing 410b w/in each rate group is the midpoint, correct?

2. Assuming each rate group passes and I satisfy Gateway requirements, do I pass 401(a)(4) or is there anything else?

3. When testing each rate group, can I exclude Eligible Terminated Employees w/ less than 500 hours?

Thanks in advance for your comments & help

We have a pure asset deal, where Company A will be purchasing the assets of Company B. Companies A and B are unrelated. Company B sponsors a VEBA. Can assets of the VEBA sponsored by Company B be transfered to a new VEBA sponsored by Company A to provide benefits for the employees who are transferred to Company A?

I have seen many PLRs on the topic where two companies merge, but not specifically in an asset acquisition. And has anyone heard of companies doing this without requesting a private letter ruling?

Thanks.

I have a client who failed to remit employee contributions timely and instead of paying the hefty excise tax reported on Form 5330, I was hoping to file them under the VFCP provided by the DOL. However, one of the requirements is that a Notice to Interested Parties be provided to plan participants. The DOL does not give a model notice and nobody else I have contacted has ever seen one. Is this similar to the IRS Notice To Interested Parties when filing for a determination letter? Anyone have any ideas?

Thanks!

Is anyone familiar with the mandatory official public holidays in Puerto Rico?

Is there a requirement to pay overtime for exempt full-time employees?

What about sick and vacation accrual?

We are a private company in the process of hiring employees who reside and will work in Puerto Rico and we just need to be sure that we are in compliance? any help will be appreciated????

Client has a cross-tested plan that is failing.

It has been recommended to them that they put one HCE in a group by himself and test with a group of NHCEs based on contributions; then test the rest of the HCEs with the other group of NHCEs based on benefits. The two groups of NHCEs are already defined in the plan document. Can you group participants in a plan and test them in different ways?

Currently have a one person D/B Plan with insurance. In reviewing the RMD, the issue was raised that once the participant commences their minimum required distributions, a participant can no longer maintain life insurance coverage, deeming it post retirement coverage. Has anyone run into a similar situation or discussion?

Thanks for your advice or help in advance.

Mike