We took over a plan a few months ago that had outstanding loans. We posted the loans to our system and participants have since been making loan repayments to their new accounts.

Now the participants with loans have received invoices from the previous provider for loan payments (loans were repaid quarterly). I contacted the previous provider who stated that "Loans for clients do not transfer to new carriers." I've only been doing this a few years, but I have never heard of that and can't find any information on it.

It's my assumption that loans are part of the plan, and if the plan transfers then the loans come with it. How could we accurately keep records (top-heavy test, vested account balances, keeping participants under max loans outstanding, etc.) without this information?

Maybe this is totally normal and I've just never dealt with it...I sure hope that's not the case.

We have a 403b plan that intended to use the 3% SHNEC for 2010 and gave the safe harbor notice timely. However they did not sign the restated 2010 plan document which implemented the safe harbor formula, so the plan will not have to run ACP testing. However the client now does not want to implement the 3% safe harbor and claims they do not have to since they have not signed the plan yet. I am thinking that the participants could have a cause of action against employer for promising a 3% nonelective, however their deferral elections were not impacted by the safe harbor notice. How do we correct?

We have a plan with plan year of 10/01/08 to 09/30/09, the owner received $49,000 in total contributions. Now the plan has been restated to a calendar year with a short plan of 10/01/09 to 12/31/09. Client wants to make a Profit Sharing contribution for the short plan year. We used the 415 limitation for 2009 of $49,000 for the plan year ended 09/30/09.

can we allocate a pro rated 415 limit of $12,250 for the short plan year?

I'm embarrassed to admit I'm a newbie to demos. How do I do it? Do I just have an attachment labled "Demo 3, 6, and 9", attach schedule Q, and the Non-discrimination report from the TPA?

A participant with Roth 401(k) deferrals terminated employment. She was 40 years old and her first deferral was in 2006. She rolled the Roth 401(k) money into a new Roth IRA in 2009.

1) Is this considered a nonqualified distribution, since she was under 59.5?

-or-

2) Since she rolled the money over to the Roth IRA, it is still qualified. The 5 year clock would be January 1, 2009, for the new Roth IRA. The code on the 1099R is H. Box one on the 1099R would be the rollover amount. Box 2a on the 1099R would be zero. Box 5 on the 1099R would be zero.

I have been told that minor deviations from a master volume submitter do not prevent an adopting employer from relying on the volume submitter advisory letter. (I disagree) This was told to me by someone who ususally knows what she is talking about so I am curious as to other's views.

Also, if there are minor deviations from a master volume submitter, does one use a 5307 or a 5300 in requesting an individual determination letter? I suspect 5307 but would like to know if anyoneknows for sure.

Thanks for any assistance.

We have a client who failed the ADP test in 2008. The correction distribution was calculated at the end of 2009 and, as we understand it, the amounts were taken out of the trust in 2009 and the checks are dated in 2009. However, the checks were not mailed to the recipients until 2010. My question then is, has the plan satisfied the requirement that distributions be made within 12 months of the ADP failure?

Any guidance you could give on this matter would be much appreciated. Thanks.

When you are performing the adp/acp testing required once Safe Harbor Match is removed mid year, do you test on full year compensation or do you have to pro-rate the compensation to the point of supsension of the SH Match? The concern I heard is that someone (owners)would front end their contributions prior to the suspension in order to receive the maximum benefit.

I realize Governmental plans are not subject to minimum funding rules and the timing requirements. However, I can not find anything that indicates when Gov't organizations are required to make a contribution to a 401(a) plan. I have always understood it to be within 12 months following the plan year. Any thoughts and sites that would support the timing requirement?

I am a newbie with this and need an answer to the following question:

Scenario 1

If I open a Roth IRA and decide to put $5000 into a mutual fund inside the Roth. A month goes by and something happens where I need to withdraw my money. It is my understanding that I can withdraw the original $5000 tax and penalty free. What has to stay is the earnings made off the $5000 (which should be minimal considering I didn’t have it in that long). The bank may charge me some cancellation fee of some kind But as far as the IRS is concerned, I am in the clear.

Scenario 2

I rollover $5000 from an employers Simple IRA into a Roth IRA. As before, one month later I need the money. Can I withdraw it without a penalty? How about a year later? Five years?

The way I understand Roth is that the contributions are after tax. When I perform the rollover, those taxes will not come out until the next tax year. So after I am taxed, would the rollover contribution be considered just like a regular cash contribution?

Have a participant with a kid in college. Just paid spring tuition with CC and requesting hardship. No problem with the spring 2010 tuition. However, particpant is sending in estimates for Summer 2010 and Fall 2010 based on language that says "tuition, related eductional fees, room and board expenses for the next twelve (12) months."

I have always read this that if you have to make a payment now then the portion of the payment that would be considered hardship would not exceed 12 months of expense. Participant is interpreting that he can estimate the next 12 months and get h'ship on the entire year at this time. I don't see how you can have an immeidate and heavy finanicial need for an expense that you have not incurred OR been billed for yet.

The argument is coming up because the participant does not want to be doing multiple h'ship distributions throughout the year and restarting his 6 month deferral suspension. He wants to be able to defer for at least a portion of the year and receive the company match. Which goes back to my argument of there being an immediate and heavy financial need?

Plan uses safe harbor hardship definition and safe harbor test for need.

Am I being too strict here?

my divorce was final in june of 2008. my ex husband did not have me removed from his policy. i called the health plan administrator to see how i could be removed to get a certificate of credible coverage to start coverage with my employer. i was told that only ex husband could remove me during open enrollment and that i could not get certificate of credible coverage until then. i was told i was still covered until he did this. i spoke with my human resource administrator who stated that i could only be enrolled in new plan with certificate of credible coverage and since i was changing from one blue cross plan to another, there should not be a problem.

i reminded ex husband on many occasions to have me removed and spoke with his employers health plan administrator explaining the divorce and i needed certificate of credible coverage to get on my own plan. he did not make changes until may 2009 when he remarried and then i finally got certificate of credible coverage on june 3 2009 effective back to june 2008. i was placed on my emplyers health plan same week. now ex husbands insurance carrier wants him to pay back for claims submitted during that time i was ineligible.

i am so confused because i could not get my own coverage until i was off his policy and i was unable to remove myself from the policy according to his plan administrator stating " only policy holder can have dependent removed and only during open enrollment" which he missed.

his insurance carrier has put a hold on all claims after he did not start making payments. so my four children basically do not have coverage now under that policy . i have added my four children to my employers health care plan which is more expensive and he has a court order to cover the children. ex husband is sueing me for processed claims.

i do not know what to do or what i could have done differently to avoid all of this. i could have been covered immediately if he had removed me. all i needed was the certificate of credible coverage and i could not get that until he had me removed and now he is sueing me for this money. anybody with any ideas or knowledge of this matter, please help.

Are folks seeing plans eliminate substance abuse and/or mental health benefits, or restrict the types of benefits payable, in response to the MHPAEA of 2008? It seems to me that this is not what Congress intended, but may be an unintended consequence. At least one TPA has claimed that this is how plans are handling this, by eliminating any substance abuse or mental health coverage before the law becomes effective for the particular plan, but I have yet to see that and would like to know if others are seeing such a move. I am not finding that the law contains a provision that plans offering such benefits as of the law's enactment date must comply, so it would appear that only plans offering such benefits as of the date the law is effective must comply, which does appear to leave time for plans to eliminate or reduce benefits before the effective date.

Thank you.

The Union who works for my company has been requesting the right to see the Form 5500. We are in the process of revising it. Is there any code that allows us to delay the Union's right to see the Form 5500 without divulging that we are revising it?

We will give it to the Union after it has been revised, but we need time to process it.

The lawyers that are partners in a law firm also own a title insurance company. That has to fall under the A-Org affiliated service group rules. Clients use the law firm for their real estate closings and get the title insurance for the property from the title company. However, the title company does not have employees. Rather, the employees of the law firm are subcontractors for the title insurance company. They get 1099s for the work they do for the title company. Maybe because the law firm employees are NOT employees of the title company, their 1099 income does not need to be considered for the law firm's retirement plan?

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?