We are the TPA & recordkeeper for a 401(k) plan for which the employer has gone into receivership. We have been trying to terminate this plan for quite some time.. 8-10 months however, there is about $1700 of late deposits & lost earnings due to the plan. The receivership attorney has authorization from the IRS to deposit into the trust however is now claiming there may be other "expenses" that will deplete the funds of the "estate" and he is not sure if he will be able to fund the late deposit amount.

I am at a loss .. I explained that the $1700 represents pre-tax deferrals - and failure to remit is tantamount to stealing wages .. These funds do not represent corporate assets and that there are plan assets...Hence the prohibitted transaction etc.

A suggestion to proceed with the plan termination & distributions now.. and let the receiver attorney deal with any future deposits etc. on their own... I am not in agreement - I would like to see the plan compliant before distributing all assets.

Any ideas/suggestions would be greatly appreciated.

In the past, if an employee has gone through a weight loss medical proceedure or weight loss program because a doctor diagnosed a medical condition such as hypertension or diabetes or heart trouble etc., we have allowed "tummy tucks" and other skin tightening procedures to be reimbursed because the need ultimately resulted from a medical condition. Is this allowable?

In a current case, there is a woman who has on her own as far as we can tell, through diet and exercise, lost a lot of weight and now desires a tummy tuck to take in all the loose skin. Her doctor is telling her this can be reimbursed but we don't think so unless the weight loss portion came about because a doctor said there was a medical condition requiring it and prescribed it. They are also trying to separate out the anesthesthetics for the proceedure, saying that it should be reimbursed anyway regardless.

What is the rule here?

Thanks

We have a 403(b) plan with < 100 ee's, that is marked code 2L for 403(b)(1) arrangement. Looking at 2009 SF instructions, it almost seems like no 5500 is required for 2009? previously, we attached a letter to ebsa indicating that as a 403(b)(1) plan, not all items needed to be filled out. there was also a very abbreviated SAR sent to ee's with next to no info in it. do we do nothing now?

What kind of time frame do you usually allow to go through the FAB 2004-02 steps during a plan termination?

Let's say the initial forms go out certified mail, so that doesn't have to be repeated. And the plan sponsor also attempts to contact the participants using beneficiaries to no avail. What's a "reasonable" time before sending something to the IRS or SSA letter-forwarding services? And, more importantly, what's "reasonable" before just sending the money to a Penchecks or Millennium Trust or someplace like that? I would think you'd want to have that decided up-front so you can put it in the initial letter: "If you don't respond by X, your money will be sent to Y."

Thanks!

Anyone able to illustrate the general structure of building the annuity factor (in general) for a 100% Joint and Survivor Annuity with a 10-year certain feature. Either with first principles or commutation functions. I've never run across this annuity combination before.

Client maintains a safe harbor 401(k) profit sharing plan.

Client maintains a Section 125 deferral plan.

Client offers an HSA that is not part of the Section 125 plan.

HSA contributions are excluded from considered compensation for 401(k) plan purposes.

Correct or incorrect?

Thanks.

In a standard 401k/Profit Sharing Plan, do the partner's employer contributions have to be made by 4/15, if the Form 1065 (Partnership Return) is not extended. If the partner's put their 1040's on extension, can they fund their by the 1040 extended due date, or is it by the due date of the partnership return (4/15 if not extended). Since the employees' profit sharing contribution goes onto the the 1065, that would need to be deposited by the 1065 due date, correct?

We process unforseeable emergency requests based on participant's application asserting that unforeseeable emergency is a result of a sudden and unexpected accident. The accident often results in the particiapnt being unable to work and thus has fallen behind in paying utility bills, car payments, credit card expenses, etc. Generally, these expenese would not qualify as a severe financial hardship because, standing on their own, ordianrily would not qualify as a unforeseeable emergency involved. However, due to the fact that the participant had no significant control over the event that caused the participant to be caught in a financial bind, it appears that these expenses could be considered for an unforseeable emergency distribution. The question is for how long can the particiapnt continue to have distributions be made from his/her account to cover these ordinary expenses, including credit card payments?

Let's say you just want to make a plain vanilla plan amendment to (let's say) add hardship distriubtions, or change the plan's eligibility?

When does such an amendment need to be signed? Or perhaps more to what I'm looking for, is there a good write-up somewhere that goes into when various amendments need to be signed? Before implented, by the last day of the plan year, etc., etc.

Has Corbel done this??

What happens if someone has already filed their 2009 tax return, then decides to make a nondeductible Traditional IRA contribution for 2009 before April 15? They need to document this contribution on Form 8606; I'm wondering how to accomplish this.

I searched this forum and the Fairmark.com forum. I am finding two different answers: File a Form 1040X with an 8606, or just send the 8606 in by itself.

The instructions for Form 8606 only mention submitting an 8606 by itself if the person is not otherwise required to file a tax return, but needs to file an 8606. I know doing a Form 1040X isn't that hard, but for clients who do their own taxes, submitting an 8606 by itself would be preferable to doing a 1040X.

Have a small take-over DB plan with a volume submitter document.

The plan has a provision that places a maximum on accrued benefits of $5,000 per month. The prior administrator limited accrued benefits of the two owner employees to $5,000. However, one of the owners is two years past NRA and it appears no actuarial adjustment was made. In this case the owner who is past NRA does not care. Is it permissible to limit accrued benefits and not provide an actuarial adjustment?

Rev. Proc. 2002-32 provides options when a seller sells some of its assets to a buyer and seller continues to maintain an FSA. COBRA does not apply to the FSA in such case, because the FSA elections and coverage continue.

What is the COBRA rule if the seller sells substantially all assets, terminates its FSA, and 2002-32 does not apply? It seems that buyer would be required to offer COBRA to the seller M&A qualified beneficiaries, in accordance with §54.4980B-9 (since the seller’s FSA is a group health plan).

However, perhaps the limits on COBRA for FSA participants protect the buyer? Specifically, §54.4980B-2 Q/A-8(d) states that an FSA “is not obligated to make COBRA continuation coverage available for any subsequent plan year to any qualified beneficiary who experiences a qualifying event during that plan year.”

If the seller terminates the FSA as of the date of the transaction, wouldn't that end the plan year (a short plan year), thereby cutting off the right to COBRA under the buyer’s plan?

If not, and if the M&A beneficiaries can elect COBRA under buyer’s plan, then they could elect COBRA under buyer’s plan, pay one month of premiums, submit claims and collect the maximum under the buyer’s plan (even if they had already collected under seller’s plan), then drop COBRA with buyer a month later. This seems to be what the quoted language above was designed to prevent – a second year’s worth of reimbursements at little cost, but we cannot find comfort that the “plan year” exception for FSAs would apply in a mid-year asset sale situation. It's only a subsequent plan year as to the seller.

Bottom line question is can a buyer avoid offering COBRA under its FSA in an asset purchase?

Thanks in advance for any thoughts.

I was always under the impression that the plan document in effect on the participant's last hour of covered service (usually when they terminate employment) is the version of the plan that governs the participant. Recently, I was challenged on this. Other party says its the document that was in effect when the employee started...and the more favorable one that was instituted while employee was working at company does not apply. I disagree, but can't find the statutory provision to justify my position...after citing that many many times. Anyone know?

One of my clients is a law firm. They have two plans set up, one for the partners and staff and another plan for the associate attorneys. The partners and staff plan receive an employer non-elective contribution, cross tested, every participant is in their own group. The associates do not receive an employer contribution. The plans pass coverage using the ABPT. I restated their plans for EGTRRA on a VS document, no change to the standard language.

My question, is 1) should I submit both their plans for a favorable determination letter? and 2) should I include a Schedule Q with the applicable demos? and 3) which demos should be included 5 and/or 6. I've never submitted a 5307 with a Sch. Q and I was wondering what everyone's experience is with the Sch. Q and demos. thank you

I read 4205(b)(1)(A) as applying to the employer and not each separate facility for which the employer makes contributions to the plan. Does anyone know otherwise?

We have a few clients that were late in filing, both health and welfare plans and one 401a plan. (Not our fault!)

In the past we could explain that the delay was due to ....whatever.... and have penaties waived. Dog ate the homework answer etc.

With EFAST it demands a penalty.

Any thoughts?

Thanks

I'm performing CT calcs for a plan that does not require last day employment or any minimum hours in order to receive a non-elective P/S alloc. Plan is top heavy and does not allow 401(k).

Long-standing EE had cancer and rendered zero services in 2009. ER kept him on payroll until death in April.

Does he get an alloc.?

More importantly, is he included in my c-t testing?

Thanks.

My understanding is that under the proposed cafeteria plan regulations which can be relied upon until made final provide that no retroactive amendments can be made. I do not believe the current final regulations say this, but once proposed are final they will replace and be effective 1/1/2009. Anyway, we have a situation where the TPA said our client needed to amend and restate their plan for changes that include Michelle's Law, etc. We just received an amended and restated document effective 4/1/2010. Nothing in the document references a separate effective date for Michelles. I thought Michelle's, etc. went into effect for plan years on or after October 2009? Therefore, shouldn't the restatement date say 1/1/2010? I know there are no retroactive amendments permitted under the proposed regs, but if client signs with restatement date of 4/1/2010, then late for Michelle's Law. If retroactive, in violation of proposed regs, even though final I believe permits retroactive to the beginning of the yar.

Any suggestions on what to do?

We have a 3/31/10 plan year end which terminated, and all assets will probably be distributed in April or May 2010. We'll file the 2009 Form 5500-SF (4/1/09-3/31/10) normally. Any ideas on how to file the final 2010 Form 5500-SF (4/1/10 to whenever assets zero out). Any thoughts on if we can use the 2009 Form 5500-SF and change the dates, similar to what we would do for prior year filings?

The employer terminated their 401(k) as of 12/31/09 and implemented a Simple beginning 1/1/10. Do they need to restate the 401(k)?

Thanks,

Rene