An employee would like to enroll on the company medical plan though open enrollment closed effective December 31, 2009. She waived enrollment at that time because she had decided to stay on her husband's employer plan. She has now found out that her husband's employer provided him with outdated benefits information upon which they relied when evaluating his plan against our plan. Her medications on his plan have now become significantly more expensive than they would have been on our plan.

Assuming our insurer will not allow her late enrollment -- and I doubt they will; she has a serious health condition -- what is her recourse against her husband's plan administrator? I believe the other plan violated its ERISA obligations?

Does anyone have any input they can offer?

A client takes a distribution but then returns the funds to the plan (including the tax withholding) within 60-days to avoid it being a taxable distribution. I am not quite sure how the 1099-R should report the distribution. To compound things, the money wasn't returned until January 2010.

Has anyone researched this?

I have a client that sponsors a 401(k) PSP with segregated investment accounts. The trustee wants to use funds from his own 401(k) account to invest in an LLC which would lease equipment to the company sponsoring the plan in an arms-length transaction.

I see an exception in the prohibited transaction rules for a lease transaction which is for 1) adequate consideration, 2) does not pay a commission, and 3) does not violate ERISA 407.

I wondered if anyone else had seen a similiar transaction. Thanks!

an ERISA 403(b) plan is term in 2010. If the participants own the contracts, then how do you report distributions paid on the Schedule I of Form 5500?

I feel a little stupid asking this question. A US citizen working for a US subsidiary of a non-US company is transferring to a UK subsidiary of the same corporation. Can this be treated as a termination of employment for purposes of the US 401k plan?

Is there any good books out there that describe governmental db plans and required administration/notification/compliance?

My document says I can do a targeted QNEC, wherein I can do a QNEC the greater of 5% or twice the "representative contribution rate."

That rate is defined as the lowest rate of the group that consists of half the NHCE's still employed at the end of the year.

I have 21 of those NHCE's. When I rank them by ADR, my 10th participant has 2.60, and the eleventh has 2.30. So, is half my population 10 or 11 participants? If its the former, I can get a QNEC of up to 5.2% to select participants; if the latter I can use 5%.

Your thoughts are appreciated.

A plan is being terminated. Several participants are still employed past NRA. Can the termination date be used as retirement date in calculating benefits and lump sums?

Concerning 403(b) contracts that are de-admitted from a plan after 2008 and meet the conditions stated by the Bulletin, EBSA's Field Assistance Bulletin 2009-02 states some relief from some reporting requirements of ERISA's Part 1 (and relieves a Part 5 civil penalty to that extent).

But the FAB does not state any relief concerning an Internal Revenue Code reporting requirement. Moreover, it seems doubtful that EBSA's Robert J. Doyle has authority to state relief from such an Internal Revenue Code requirement.

What Treasury department guidance allows an employer or plan administrator to omit de-admitted 403(b) contracts from a Form 5500 filed under the Internal Revenue Code's annual report requirement?

One of our affiliates, a medium-sized non-regulated utility, determines additional monies that will be contributed into our 401(k) by use of a profit sharing formula. Currently, this determination is made upon achievement of certain corporate goals which are published early in the calendar year for which they will be applicable. Some of these goals are financial but others are non-financial. (This is the same basis they use for determining their incentive awards/bonuses.) Profit sharing is determined and contributed by March of the following year.

Someone within their management chain has suggested that the firm use separate formulas for determining 401(k) profit sharing contributions and their incentive programs. For the former, they are looking for a type of financial metric that they can use to base the contribution on.

Based on the research I have done to-date, I have collected the following:

[*]Most companies base profit-sharing on a hybrid formula, like the affiliate uses now.

[*]If financial measures are used, they are generally EPS or EBIT/DA

[*]Most companies that have profit sharing do not publish an up-front formula like the affiliate does each year--the contribution is discretionary and is determined by management or the Board of Directors.

Just wanted to check with everyone here. Does your company use a profit sharing formula, if so, what is that? Anything else you might have seen from other clients (preferably larger clients) or in your research on this issue? Other comments?

Thanks, as always, for your help!

Is anyone aware of any state that requires the filing of a VEBA's Form 990, or is anyone aware of a good survey of each state's filing requirements for VEBAs? Thank you.

An NHCE is beyond NRA of 62 but under age 70 1/2. He will continue to work indefinitely. He requests a lump sum distribution of his entire accrued benefit now.

Plan document allows for distribution after attaining NRA.

Is his PVAB based on the greater benefit resulting from application of 417(e) and plan AE assumptions, or is he limited to PVAB based on AE assumptions now?

Hi. We had an error in our payroll department and salary deferrals for a few employees were messed up. Most of them involved employees that were over 50. They wanted to maximize their deferrals with the catch-up contribution. Mistakenly, they were capped at $16,500 and the extra $5,500 was not deferred, but rather was paid out in wages. What are we required to do in this situation? Can we have the employees return the $5,500 to us, make the contribution to their accounts for 2009, and issue revised W-2s? Or since it is already 2010, is it too late?

The second situation we have is where an employee wanted to max out her deferrals at $16,500 by making a $1,000 deferral at the end of 2009. She submitted the proper paperwork, but due to our error, the $1,000 didn't come out of her last paycheck in 2009. It came out of her first paycheck of 2010. Again, can we have her refund the $1,000 to us, make the contribution to her plan account, and issue a revised W-2? Or is there another solution?

Have a participant in a plan that was injured on job. He has filed for a hardship distribution from the 401k Plan for the medical bills that resulted from this injury. Foresee that the bills will be paid, but the case is in review right now. Insurance company being especially careful since he has obtained a lawyer. (Don't know all the details of that, don't really want to know. )

Plan uses safe harbor definition of expenses and the safe harbor test for establishing financial need.

Safe Harbor Test for financial need says that if ALL the following requirements met that we do not need to consider factors like you would in the facts and circumstances test or obtain the employee's written representation that no other sources available to pay expenses

1. Distribution does not exceed the amount of financial need.

2. EE received all other distribution from all other plans maintained.

3. EE will suspend deferrals for 6 months.

So, normally I don't even consider whether they have other funds available other than looking at documenation to determine what portion insurance is expected to cover (or is covering).

Since employer has knowledge that there is a pending workmans comp claim, can we still make a distribution on the medical bills presented?

I've talked myself in a circle here. Any help or thoughts would be greatly appreciated!

Does anyone have the phone number that you can call to find out if a particular Form 5500 has been filed? I have used this several times in the past, but have misplaced the number. It is an automated line; you enter the EIN and PN and they tell you when the filing was received.

Our client (a takeover plan) is terminating their cash balance plan. The plan was effective 1-1-07. The plan provides for annual hypothetical interest credits based on a fixed interest rate of 5%. Actuarial equivalence in the plan is 5.50% pre and post retirement interest with 1994 GAR post retirement mortality. 417(e) distributions are defined in the document as being based on applicable interest and mortality.

It’s my understanding that the proposed regulations provide in 411(a)(13) that a cash balance plan can pay out lump sums based on the hypothetical accounts without violating 411© or 417(e). Separately, 411(b)(5) provides that the accrual rules of 411(b) are not violated as long as, among other things, the guaranteed rate of return does not exceed a market rate. I realize the regs caution against adopting interest rates other than those specifically named, but unfortunately, I’m stuck with the design dropped in my lap.

Based on my reading of the regs, the fixed rate of 5% may cause the plan to violate the 411(b), depending on future guidance, but the issue of paying out the lump sum should not be affected by the fixed rate and is not a “market rate of return” issue.

Am I correct in my understanding? Can I pay out the hypothetical balances rather than the 417(e) equivalent? If not, won’t I still have a potential 411(b) issue? Or does the 417(e) distribution language in the document overrule all of this and require lump sums to be based on the applicable interest and mortality? Is anyone else designing new cb plans using fixed interest rates?

I have a client who has his own small business with about 20 employees. I believe it is in the biotech industry.

He sent a note saying he has a household employee and will want to discuss how this employee s hould be treated for purposes of his pension plan.

The first thing I need to determine is is the employee is an includable or excludable employee for coverage purposes.

My initial reaction (before I revisit and research this subject matter) is as follows:

1. if it is a 1099 employee than she would be excludable

2. if it is a W-2 employee than she might be non-excudanble, depending if she met the 21 & 1 and 1000 hours

3. if it is a leased employee than again it may potentially be non excludable, though I believe such an individual does not even become an employee until she completes one year of service as a leased employee.

What comments are out there on this matter?

Thank you.

Office Manager took out max loan from plan in early 2009, then resigned before any payments were made. Plan does state that loan is in payable in full upon termination of employ. He has not requested distribution, but I am guessing that he still needs 1099-R on defaulted loan. Or, does the loan continue to accrue interest until he takes a distribution?

Thanks

Hi,

We have a money purchase plan that amended their document and changed to a 401k mid year. Question is do I have to complete two 5500, one for the Money Purchase to the date of change, then one for the 401k. The plan sponsor did not change, the plan name did change but I don't think that is of any importance.....

Thanks,

Participant in a Safe Harbor 401k is refusing to receive a Safe Harbor Non-Elective contribution as he believes the 'government will take it from him'. He is being adamant that no monies be placed into an account for him and is causing trouble with the employer. He is asking for a citation to prove he must receive these monies. Can he deny receiving the contribution without implications on the Plan's Safe Harbor status? Where would I find the citation regarding this? Thank you!