I have a Profit Sharing plan that is not Safe Harbor and is not top heavy. Owners worked <1000 hrs. and my Relius system did not allocate forfeitures to either owner. I thought this was correct, but our financial advisor feels because they are owners they should receive an allocation. I could not find a direct answer to this in any plan documents. Normally, owners hours are left blank in census, but this past year, their actual hours were entered. Any comments would be greatly appreciated.

We have been receiving IRS notices in regards to our client's 2007 and 2008 filing. We receive the correspondence because it is part of our procedure to file the Form 5500 using our address as we are a bank and are appointed trustee of the plan for most of our clients. We have tried to get in contact with our client in order for them to file the forms and respond with a reasonable cause but they have been unresponsive. Now the IRS is wanting them to pay a hefty penalty. Im thinking my next step is to contact the IRS and have them start sending the notices directly to our client. Any suggestions?

Participant in the WGA (Writer's Guild of America) DB plan makes $500,000 a year from writing.

The WGA plan funds a projected benefit using that income of $125,000 a year at NRA 65.

Can a separate DB plan be set up for the writer to fund the difference to the 415 limit using that income?

Any issues?

Thanks.

I understand that a distribution to a beneficiary from a 401(k) plan due to the death of a participant prior to age 59 1/2 is one of the exceptions. But can someone clairfy for me that a participant who dies at age 45, his spouse receives the proceeds from his retirement account and rolls it into an IRA. Subsequently, she needs to take paymetns from this account in order to supplement her income. Are these payments also exempt from the 10% Penalty. The spouse is also age 45. I believe the answer is yes, but I am hoping some one will clarify that this is correct.

Do the relative value disclosures apply to money purchase plans?

I am doing plan termination calculations – Early retirement eligibility is age 55 and 10 years of service. All those participants who are already eligible for early retirement are easy to handle. What about those for e.g who are 55 and have say 8 or 9 years of service, should we assume that they would have become eligible for early retirement had the plan continued to exist. Who all do we give this consideration to? Or do we just take a call that anyone currently eligible for early retirement will get the benefit of early ret and amend the plan doc to state likewise. I realize that a lot of the plan termination calculations depend on what the plan doc says but just wanted to know what most other people have done in their experience.

TIA.

I've heard that employer health plans that are not changed might be grandfathered around Obamacare until something like 2018, but if the employer modifies the health plan before then, that the grandfathering is lost and that the plan must comply with Obamacare around 2014.

We'd like to change our deductibles, but not if that would cause an earlier application of having to comply with Obamacare than if we don't make the change.

Does anyone know details about this?

Hello all -- My first post to this forum, though I've been a reader for a little while. The following question has come up with a potential client that I hope to hear some opinions on.

They had an small, old, deferral-only 403(b) with one mutual fund company (that no longer works with 403b plans, of course) that they stopped allowing deferrals to before 1/1/09. A new 401(k) was created. They don't have a plan document for the 403(b). I believe that some current staff have directly rolled their old 403(b) into the new 401(k).

My question is this: What's the best and most cost-effective way to get their situation up to speed. My sense is that they'd be able to adopt a model non-ERISA 403(b) plan doc and terminate it all at once, right? Is there a model doc around that non-profits might use? And the doc should includes language on termination options for staff to roll their 403(b) accounts over to a new 401(k). What would a corrective fee be for this late adoption? I believe they've tried to contact all individuals to let them know about the prior 403(b) ending, though they couldn't require a rollover to the new 401(k).

Thanks for any thoughts or for pointing me to any other posts on this site that address this issue.

Company contracts for employee's services for a one year period of time. At the end of one year, the employee is not offered any other position. The employment comes to an end.

Is the employee entitled to the subsidized COBRA premium?

If the ex-spouse awarded benefits per a QDRO begins payment before the employee quits and becomes entitled to an early retirement subsidy, the ex-spouse gets no part of the subsidy later earned by the employee. The question is how much does the employee get by way of the early retirement subsidy?

Suppose A is the employee, A is age 50 as of the date of divorce when he had accrued benefits of $2,000/month at age 65. The QDRO awarded 1/2 of that to B, the ex-spouse. When A reaches age 55 and could then quit and qualify for early retirement, A continues working. When A turns age 55, B chooses to being taking her awarded $1,000/month at EE's age 65. The actuarial equivalent for taking 10 years early nets B a $620/month payout.

A year later, A takes early retirement and earns a 25% subsidy. From the time of divorce to retirement, A had accrued another $600/month at age 65. With the $1,000/month at age 65 that accrued to time of divorce and A was allowed to keep, A's total benefit when he quits (age 56) is $1,600/month at age 65. Obviously, the 25% subsidy applies to the $1,600/month at age 65, and A is entitled to that $400 early subsidy.

The question is whether A should also get additional early subsidy of $250/month (25% of the $1,000/per month at age 65 awarded to B)? This $250 is part of A's total benefits, and it was not awarded to B by the QDRO because B began withdrawal of her awarded benefits before A became entitled to the early retirement subsidy.

Should A's benefits be the total, less just what was awarded to B by the QDRO? Or does the plan save that $250/month subsidy, as a windfall to the plan, not having to pay it to A since that $250/month relates to benefits that have been awarded to someone other than A?

How definite must a deferral election be? Partners have until 12/31 each year to make a deferral election w/respect to self-earned income, the amount of which won't be final in amount until after the end of the year; as ADP testing will be performed by the time the contribution must be funded (i.e., deadline for 1040) is there any reason the partner's annual deferral election can't be defined as "the maximum dollar amount permitted for an HCE under final ADP testing"?

What about a deferral election stated as a flat dollar amount equal to the annual 402(g) limit, or, "if lesser, the maximum permitted under ADP testing"?

Or is this just too "cute" an end-run around maintaining a safe-harbor plan?

I am looking for an extensive list of issues when a public sector utility, airport authority, or insurance authority goes private. For example, as private sector employees, what happens with those who are vested in their public sector pension system, but are not yet retired? I am guessing that even if there was a single employer pension system, it can't/won't transform into a private sector system, but a new private sector system might be created.

Can a rehab plan change vesting from 5 years to 10 years ? Would changing the vesting improve the liability outlook for the plan?

There are lots of references to "church plans" out there, but am I right in thinking that they must all be set up under some section of the code, such as a 403(b) church plan, 401(a) church plan, etc? So, that if someone starts talking about a church plan, it's important to determine what type of church plan we're discussing because 403(b) regs aren't the same as those under 401(a). Can there be a 457 church plan? I know that churches can be electing or non-electing when it comes to ERISA, and that in many cases they don't even need to have a plan document, but doesn't there have to be some set of rules to go by other than saying they have a church plan?

I continue to struggle with the differences between 401(k) and 403(b) plans. I would think that there has to be a compensation cap, but I've put my foot in my mouth enough times when it comes to 403(b) plans because I keep applying 401(k) logic. Thanks to anybody who chimes in.

An employer maintains a medical plan as one of the options available under a cafeteria plan. Under the plan, the children of a domestic partner are considered eligible dependents under the plan. Under pre HCERA law, there were many hurdles which made it difficult (if not impossible) for a child of a domestic partner to qualify as a dependent for purposes of Code Sections 105 and 106. Under the law as amended by HCERA, a dependent includes any child (as defined in Code Section 152(f)(1)) who has not attained the age of 27 as of the end of the taxable year. The child definition includes a stephchild. Since it is likely that the child of a domestic partner will be a stepchild to the employee, would the employee's coverage of such individual be tax-free?

We have not been able to get a satisfactory answer from Relius as to whether Relius Administration 15.0 works under the Microsoft Windows 7 operating system. Any input would be helpful.

Is anyone currently running Relius Administration 15 standalone version on a computer with MS Windows 7 as its operating system?

A client has a 457 Plan with Employer contributions. The client is a governmental agency (local township office). The contribution is a Matching contribution that is given as a flat percentage of compensation (4%) to any one who is making salary deferral contributions, regardless of their rate of participation.

Does a 457 plan have to perform ACP Testing for this match?

Is anybody else involved in the submitting for approval letter from the IRS on IRAs/SEP/SIMPLE documents? I currently have applications that are over a year old and I can't even get somebody to answer my calls/emails. I am just wondering if this is a wide spread problem?

Thanks

Plan has a termination date of 3/31/10. It is considered Top Heavy for 2010. The company has not closed down, so, most everyone was still employed on the Plan Term Date.

Do I use comp through 3/31 for all those employed on that date? (There were a few people who left the company in Jan & Feb.)