Lead Plan Sponsor in a Multiple Employer Plan is terminiating the plan. Several participating employers (who just happen to be "owner only" plans) are not responding to requests to complete the associated documents to properly close out their individual plans and distribute funds as specified under the plan document.

Plan document provides for an "involuntary spin-off" in the event a participating employer does not comply with requirements.

So no problem so far.

But here's the catch. We can't find anyone to act as custodian for these spin off plans. (Would be easy if it was a rollover to an IRA)

Anyone know of a custodian that will accept the assets based on the signature of the lead plan sponsor's signature instead of the participating employer? (or other solution that seems to be escaping us currently)

Here is the link to the EBSA's fact sheet DOL

I have a large plan that matches 50% of the first 6%. They calculate the match annually and it is discretionary. They want me to give the match rate to the NHCEs and then give the HCE's the rate that will pass the test. So, they would be giving the HCEs less match than the NHCEs. Can this be done?

Are you allowed to add a loan provision to a cash balance plan?

Employer sponsors 401(k) plan that uses W-2 definition of compensation.

Employer permits employees to extend group health and other insurance coverages to domestic partners, both "registered" domestic partners who have the same status as spouses under state law, and unregistered domestic partners (e.g., opposite sex) who have no special status under state law.

Presume 100% of all domestic partners receiving coverage DO NOT qualify as the employees' dependents under IRC Section 152.

For federal tax purposes, employer reports imputed income equal to the value of the coverage provided to the domestic partners, on the employees' Form W-2s, in boxes 1, 3, 5, and 12.

Will the "phantom" income be included in compensation for plan purposes unless the employer expressly excludes it from the definition of compensation in the plan document? Or is it a non-issue, in most instances, because salary deferrals and matching contributions are based on payroll period income and the imputed income from domestic partner benefits is only tracked for W-2 purposes on an annual basis, and not reflected payroll period to payroll period???

Have others had this issue come up?

A profit sharing plan is originally set up with a new comparability allocation method and works fine for a few years until the employer's demographics change drastically - many of the younger employees were replaced with workers who are older than the owner. The plan now cannot pass the cross-testing even when everyone (including the owner) receives the same percentage of compensation as an allocation. I remember hearing a while back that in a scenario like this you can always "default" to a pro-rata allocation and not have to worry about cross-testing, even if the document does not specifically state this - has anyone else heard of this?

Does anyone know how to export into an excel format a report that reports employee name and SSN, and ending balance per participant per source of money? We want the sources in columns and then each row represents a participant.

thanks.

Testing a DB plan for 410(b) using the Average Benefits Test which for the ABT is combined with profit sharing allocations. Want to impute permitted disparity. Happen to be testing on an allocations basis (but that should not matter for this question).

The Plan years differ so the allocation rates are being separately computed and added together. Is permitted disparity imputed on one of the plans and then the two are added together, or are the allocation rates first combined, then permitted disparity imputed?

I thought it could be done either way but 1.401(a)(4)-9(b)(2)(iii) seems to say that if you choose to impute, you must impute on the aggregate allocation (or accrual) rate. That does not make sense to me. It seems like you're integrating two plans. Plus, how do you inpute one aggregated allocation rate if you have two sets of testing comp?

Opinions?

P.S. Said another way, what does 1.401(a)(4)-9(b)(2)(iii) say, and why?

I really thought this would be an easier issue than it's turning out to be, but here are some generic facts for an issue being faced by a few of my clients:

Assume a fully-funded cash balance pension plan is being terminated for the appropriate business reasons. Can the cost of the distribution process only (not the valuation process) be allocated among the individual participants' hyponthetical accounts? I have one TPA who is taking this approach and an unrelated TPA (for an unrelated client) who is questioning this approach.

Does it matter whether the Plan is subject to the PBGC?

Does it matter whether the allocation of cost is pro rata among all partiicipants or in proportion to each participant's hypothetical account balance?

I would appreciate any type of guidance anyone might have.

What is the most typical method for correcting a plan's failure to list recently acquired subsidiaries among the list of predecessor employers for which service is credited for vesting purposes? For example, company forgot to timely amend its plan to list a company acquired in 2006 among predecessor companies for which the plan recognizes years of service. Can the plan simply amend the plan retroactively to recognize this past years of service since this is all for the benefit of participants (and actually consistent with the plan's administration) or does this have to be done as a restroactive amendment through EPCRS?

Plan has a pay-period match and for wahtever reason does not want to be bothered with setting it up on payroll the right way to get the match to calculate including Roth.

So they want to NOT match on Roth 401(k). I know, I know, it's ridiculous, but that's what they want to do. Note also that based on who is deferring Roth, benefits rights and features are passed with no problem at all.

Is there any sort of rule that requires Roth and traditional 401k to be treated the same way under the Plan?

From 402A (is this expansive enough to mean that Roth must always be treated just like elective deferrals?)

(a) General rule

If an applicable retirement plan includes a qualified Roth contribution program—

(1) any designated Roth contribution made by an employee pursuant to the program shall be treated as an elective deferral for purposes of this chapter, except that such contribution shall not be excludable from gross income, and

An employee being laid off wants to reimburse the company for a large claim(s). Sounds suspicious to me, as if the company might not be communicating her rights. So I will probe a little further. However, are there procedures or rules to handle such things? What if the employee truly wants to reimburse because she doesn't feel good about taking more money than she's contributed? Should I simply recommend to the company that they tell her to keep it? What if the claims turned out to not be legit and the money is already reminbursed? Can the company expect to be reimbursed?

Group of employees is eligible for a profit sharing contribution. It is a new comp plan with each participant in his/her own class. Can the employer allocate the PS contribution based on each participant's deferrals? Seems like no since this would "coincidentally" basically be a match. Anyone have a regulation citation forbidding this? Thanks.

Our plan was amended to permit deferrals prior to statuatory entry. 2008 was the first year. We elected to separately test OEs (under age 21, less than one year at the immediately prior entry date or covered by a collective bargaining agreement).

I remember learning that "no one is an HCE in the first year of employment except 5%+ owners."

I don't think that will prevent us from having OEs who are HCEs. An employee hired in Sept. 2008 and earned $150K in 2008, has a statuatory entry date of 1/1/2010, and will be an OE NHCE in 2008 and an OE HCE in 2009. Right?

Based on other threads and comments I believe my options are to test the OE HCE with the OEs or include the OE HCE in the regular testing group. Is that still correct under current regs.?

Thanks!

My issue is that I have two terminated participants that received a 5% QNEC in order for the plan to pass the ADP Test. The plan is also cross-tested, has individual allocation groups, and requires a participant to be actively employed on the last day of the plan year (no hours requirement). Assume the Gateway minimum is 5%. Must these participants receive an additional 5% under the plan's non-elective provision, or does the 5% QNEC cover the Gateway? Does it matter if one of the terminated participants has less than 500 hours of service (if I exclude from the General Test do they receive the Gateway).

I've read several threads on this topic (the more recent ones differ from the earlier answers), but besides the IRS Q&A comment at the 2006 ASPPA Conference I could not find anything definitive. The issue has arisen because I just read a newly restated EGTRRA VS document and there is a paragraph under the Gateway definition which clearly states that QNECs can be used to offset the Gateway minimum requirements.

Any thoughts would be appreciated.

I know you cannot have an HSA and FSA at the same time, but can you have one and then the other within the same calendar year?

For instance, say you start an FSA toward the begining of the year and then stop it at say September. Then, during an October HDHP renewal date you enroll in and fund an HSA. Seems like this should be possible.

I appreciate any opinions.

If a plan includes all employees, and then later wants to exclude a class, say per diem, is there any problem? Plan can be amended, but since eligibility and job class is not a protected benefit I do not see a problem?

What happens if an individual works for City A for X years and does not defer the maximum, then terminates with CIty A and goes to work for City B. CIty B has a 457b plan and the employee who is age 62 and 3 years before NRA under this plan wants to participate and defer the maximum - $16,500 plus unused limits - unsused limits from the prior employer plan or just this new plan (obviously there are no unsused limits as he was just hired)

Thanks!

Ok, here's the situation...

A law firm has 2 owners. 1 owns 99% and the other 1%. The 1% owner of the law firm is now starting his own law firm (100% owner). Obviously, not a controlled group issue. However, he will work for both law firms. His own law firm will have his own clients and not be doing business exclusively for the other law firm (so no affiliated service group as far as I can tell). Suggest a multiple employer plan, right?

The question came up as to who has to make the employer contribution? Can it come from either? A combination of both? Or does it have to be attributable to the participants under each company (i.e., each company pays their own)?

Any help you give me would be greatly appreciated!

THANKS!

My father passed away in 2008 and my brother and I were both 50/50 beneficiaries. We both opted to rollover the accounts rather then take a distribution.

As it turns out my advisor (Morgan Stanley) did not roll it over to a Death Benefit IRA but into a new IRA with my name. They then rolled over an old 401k plan into that same account in 2009. Well, i know in 2009 I did not have to take a RMD but would in 2010.

They are looking into seeing if the can separate the two accounts and re-setup the original account as a Death Benefit account that is not in my name but reflects that it is a death benefit rollover. They said it was some sort of back office coding problem.

I am a bit nervous that the IRS will see this a distribution and I will not only have to pay taxes on the distribution but also pay income taxes even though I have not touched a dime.

Any help is appreciated.

Thanks,

Mark