Ok so I have this client with some interesting technical questions that I'm not sure of the answers on. The 401(k) plan allows for in-service distributions at age 59 1/2 so a participant (of age) can elect an in-service rollover to an IRA.

The questions I have are can they roll directly to ROTH-IRA now? I'm pretty sure that is now a simple yes under current law.

If they do roll directly to ROTH-IRA, can they elect to defer the taxes to 2011 & 2012 as they can under conversions? or is it all taxable in 2010?

If all taxable in 2010 under 1st option, can they roll directly to Traditional-IRA (in 2010) then convert to ROTH-IRA (also in 2010) and take advantage of the 2 year tax spread?

On a somewhat related note, since the conversion limits no longer apply after 2009, does that mean there is a loophole in the contribution limits for ROTH-IRA contributons? Effectively you can make a non-deductible IRA contribution for 2009 (on say 4/15/2010) and the immediately (say on 4/15/2010) convert your "2009 non-deductible traditional IRA contribution" to a ROTH-IRA. And you could keep doing this annually until the law changes. Am I missing something?

What do you do when a new client comes along asking for a 403(b) document now, January 4, 2010? We kinda knew this would happen, and I'm wondering if we should go through a correction program, or have them sign it late or what.

We've decided to offer to help them with the VCP program. Part of that includes creating the new document, having it signed currently, and then submitting under VCP to get the correction approved. I'm hoping there will be a lot of understanding on the part of the DOL. This is a nonERISA plan.

I have been looking at the final regs regarding the fact that QNECs used in the ADP test have to be limited to the greater of 5% of pay or 2 times the representative rate. (Reg 1.401(k)-2(a)(6)(iv))

The regulations read that “notwithstanding” the paragraph that provides for the 5%/2X representative rate limit, contributions made for Davis Bacon can be taken into account if they don’t exceed 10% of pay. I can’t tell if the 10% is meant to replace the 5% in the 5%/2X rule OR if the 10% is the absolute maximum and the 2X rule does not apply.

Has anyone done any research on this?

I did see an article from Sungard where they indicate that the 10% just replaces the 5%, so effectively the overall limit for DB is higher. I think this is probably the intent of the Regs but I just can't come to that conclusion when I look closely at them. Maybe it is just a matter of semantics...

I'm posting this on the chance that I'm not the only one who has looked over an unidentified VS document for a prospective client and wondered which document it is.

Does the list include something that indicates which document provider is being used? I think it does, in digits 8 and 9 of the FFN. The FFN is also listed on the Opinion letter, if you actually get a copy.

Here is the list.

http://www.irs.gov/pub/irs-tege/egtrra_listdc.pdf

If I'm on the right track, Accudraft will be the digits "BE",

ASC is "BH"

Datair is "85"

Fort William is "FT"

McKay Hochman is "19" or "BG"

Sunguard Corbel is "07"

If your firm uses one of these document providers and you have a couple of minutes to look your firm up on the list to confirm this, I would appreciate it. If your document provider is not listed above, look them up on the list, note digits 8 & 9 of their documents' FFN's and compare those to your firm's FFN's on the list.

Please forgive my ignorance in this area. Large multi-employer plan - from the quick view of the financials, it appears the the plan is fully funded. Company is considering selling. Attorneys for the other side are talking about the large withdrawal liability. Disregarding the rules under Section 4024, can a company be subject to withdrawal liability if the current Fund's status show it as fully funded and none of the employees are even partially vested at this point?

Thank you!

The employer had a year-end bonus run and did not withhold 401(k). Since there is no more time to remove it from future checks (paid in 2009), what can be done?

Definition of comp in plan is full-year W2 comp, with no mention of either excluding bonuses or even having a separate election for the.

Does the Employer have to pony up 50% of the deferrals as a QNEC?

Has anyone heard anything about plans having to adopt an amendment stating/outlining the requirements of IRC Section 432 and its regulations?

I finally got the 2008 census data I needed from a client today (yes, I said 2008). As it turns out, the owner made less than the broker estimated on 9/15/09, so the safe harbor match that was reported on the 2008 Sch I was overstated. We'll need to amend the return - can we still do that on paper?

I know that, before we send in our determination letter application, we are to provide notice to interested parties no less than 10 and no more than 24 days before we send in the application.

I know the attorney and administrator who worked on the plan before simply posted the notice at the union hall.

Reading Rev. Proc. 2009-6, I believe that we actually have to send out the notice to the participants, not simply post it at the hall.

Does anyone have thoughts confirming my belief or proof that simply posting it at the union hall would suffice?

Thank you.

does anyone know of an online source for codes for old 5500s? (1997-current)

My sister was dropped from her health insurance under COBRA. She misunderstood the payment plan, and thought she was a month ahead on her payments, and so didn't pay for a month. She called the insurance company during the grace period because a bill had come back, which looked like they had refused to cover a procedure. They told her over the phone that everything was fine with her plan, and that the bill was a mistake, and they would fix it. She called her previous employer a week and a half later just to make sure there were no problems, and they told her that she had been dropped and could not be reinstated.

She never received any kind of notification that her payments were late, or that her coverage had been terminated. I have read in other places that no one is required to send such notifications, although many employers or administrators do. But I also saw that some proposed IRS regulations from 2003 would, if passed, have added a notification requirement.

My question is, does anyone know if these regulations were passed, or where I could find them? I would also appreciate any directions to information regarding this topic. Thanks in advance.

This is strictly hypothetical.

Actuary B takes over the Widget Company Penison Plan in 2010 on this very morning 1/2/2010. The prior actuary, Actuary A, had timely certified the AFTAP to be 81% in 2008 and again 81% in 2009, and all the numbers look in order. The Pension Plan had distruted full lump sums in both 2008 and 2009 to several employees. Actuary B compares the 1/1/2010 census to census provided by Actuary A. The Plan has an age 65 NRA with full actuarial increase granted for working beyond age 65. No credit balances.

Oy!

Actuary A had reported Mr. Widget has having been born on 1/1/1944 but low an behold, Widget Company HR has now reported Mr. Widget as having been born 1/1/1940. Had we valued Mr. Widget's benefit using the actuarially increased beneft -- at age 68 in 2008 and at age 69 in 2009 -- the AFTAP would have been 79% as of 1/1/2008 and 78% as of 1/1/2009. Benefits would have been restricted.

Any suggestions?

My initial thoughts (other than contacting an attorney) would be to contribute enough now interest adjusted according to the credit balance actual return interest crediting rates to make the Plan have an AFTAP of 80% on 1/1/2008 and 1/1/2009. These contributons would not be counted as excess contributions for 2009. We can't go back and amend the 2008 schedule SB owing to the 8 1/2 month rule. Then, I would face Mecca and pray.

Hi all,

Happy New Year! I was wondering if anyone has any advice on my situation. It's been stressing me out!

Here's the situation:

After 39 years, I have finally retired from my company this past October, in California. I submitted for my one time lump sum payment and was ready to enjoy my retirement. However, to my dismay, I received a letter basically stating that no payments will be made till I send them a copy of a QDRO dictating the terms of how my pension should be paid out to myself and my ex-wife. I was married for 15 years, divorcing in 1988. The thing is, there was never a QDRO signed. All that was submitted, was a letter from our divorce lawyer stating that my ex-wife had rights to any future pension. There was no stipulation on how much she was to receive or what percentage she's entitled to. All that was stated was she had rights to the pension. The plan adminstator stated that since this letter is on file, I need to send in a QDRO. Again, I told him no QDRO has been filed. He replied, If no QDRO has been filed, I need to send in a Joinder Release form. The thing is, I have no idea where to find a generalized Joinder Release Form. He didn't know either but directed me to the California Superior Court Website. I found a form stating Pleading on Joinder Employee Pension Plan among others:

http://www.courtinfo.ca.gov/forms/documents/fl318info.pdf

http://www.courtinfo.ca.gov/forms/documents/fl370.pdf

i think this is the form:

http://www.courtinfo.ca.gov/forms/documents/fl370.pdf

http://www.courtinfo.ca.gov/forms/documents/fl372.pdf

I have no idea what this Joinder Release form will do for all these forms are generalized and none specify waiving one's rights to their ex's pension.

The thing is, my ex-wife doesn't even want a portion to pension. She is willing to waive all her rights. Since I am dealing with Fidelity investments, I was told that everything has to be done over snail mail. I have tried to speak to numerous customer representatives and they all say they cannot give law advice over the phone. My plan administrator is of no help. I am quite stressed with all this. I am trying to avoid the costs of a lawyer; however, if necessary, I will obtain one. I was just wondering if anyone had any advice or tips. Thank you so much!

Help. I am having a difficult time parsing some of the language in the legislation amending the ARRA subsidy provisions, particularly the definition of a "transition period" contained in the amendment. I do not understand how the notice and retroactive reinstatement provisions apply to individuals who lose their 9 months of coverage today (December 31, 2009) and thus would have to pay the full COBRA premium to continue coverage if not for the amendment.

Assume for, example, that an individual was fired at the end of March 2009 and lost coverage April 1, 2009. The individual signs up for COBRA and qualifies for the ARRA subsidy and has been receiving the premium subsidies for the last 9 months (April thru Dec. 2009). The original 9 month subsidy period ends today. Also assume the individual is not aware of the change in law but knows the COBRA premium was supposed to jump to the unsubsidized COBRA rate beginning January 2010. The January 2010 premiums are due the first of Jan but there is a standard 30-day grace period. Thinking he has to pay the full COBRA premium which he cannot afford, the indivdual does not pay COBRA premiums during January and thus loses COBRA coverage for failure to pay the premium during the applicable grace period.

Although the individual is entitled to notice of the change in the COBRA subsidy provisions (including the right to receive 6 more months of subsidized premiums), as I read the law, the employer does not have to provide that notice until February 17, 2010. By that time, the individual described above would have failed to pay COBRA premiums for January 2010 and thus lost COBRA coverage by the time he learns of the 6-month subsidy extension.

Although the amendment permits certain AEIs who exhaust their 9 months of coverage and fail to elect continued COBRA to have that coverage retroactively reinstated under certain circumstances, my reading of the legislation is that such rights only apply with respect to coverage periods / transition periods beginning prior to enactment of the amendment (i.e., prior to Dec. 19, 2009). To me, that generally means retroactive reinstatement would generally only be available for the December 2009 coverage period (assuming monthly COBRA administration). As such, the definition of "transition period" in the legislation seems to limit rights to retroactively reinstate COBRA coverage to coverage for December 2009--the first month the initial 9-month COBRA subsidy period would expire.

Because the January 2010 coverage period begins after enactment of the amendment (i.e., it begins on January 1, 2010 so after the December 19, 2009 enactment date), that coverage period does not appear to be within an AEI's "transition period" as defined in the legilslation. As a result, the retroactive reinstatement rules in the legislation would not appear to expressly apply to January 2010 coverage that lapses before individuals are officially notified that they can pay a reduced premium.

That result does not seem correct to me. I fear I must be misinterpreting the transition period definition or missing something else. Could someone please help clarify? Thanks.

I have been working on some prelim calculations for a client, and we are having a problem with a terminated participant. This guy requested that 5% of his pay be withheld as Roth deferrals. The client provided his annual gross comp and the deferral amount; when I do the math, it come to about 4.13%. The participant's weekly gross was $1000, so 5% would have been $50. The weekly Roth deposits that were made were $41.38. Is she doing this incorrectly? We think she should have withheld all taxes off the top (the $1000), but then withheld $50 from the remainder, since he requested 5% of comp to be deferred.

the bottom line is that they made too many safe harbor match deposits, because they assumed that he was deferring 5%....

To all here at the BL boards:

Have a Happy, Safe and Successful 2010!

In most cases, we see participants wanting to maximize their 401(k) contributions by contributing equal amounts per paycheck through the year. However, are there any issues with Highly Compensated Employees fully frontloading their $16,500 401(k) deferral in the first pay period of the year? I seem to recall the IRS having an issue with this years ago(perhaps during an audit), but haven't seen anything specifically prohibiting it. Thanks!

My burning question for today...I must've accidentally hit some combination of keystrokes that has made everything bigger - fonts, icons, etc. It's making me feel old; anyone know how to change it back? (It's just this site, not my browser.)

We're using a prototype document and we are limited to selecting the options available for a -11(g) amendment. For example, we would have to reduce the hours requirement or eliminate the last day rule.

Can we do an -11(g) amendment to select the fail-safe provisions? The logic is that we would be able to run the average benefits test; if that fails, then we do a -11(g) amendment to elect fail-safe, which allows us to bring in one participant at a time until coverage is passed.

I have an actress who has a defined benefit plan. Her salary is off the charts high so we are capped at $245,000 for 2009.

I have a 55 retirement age (I have studies that actresses of her caliber retire at 55) and actuarial equivalence is defined in this plan as using the 1983 IAM with a 6 year setback (since she's a girl)...lol.

What is the maximum $$$ limit pension at age 55 for 2009?

I come up with $10,073 per month or $120,876.

Am I off here?

Doug