It is clear from the regs that to use this catchup the employer must be a qualifying organization, for example a school, and the employee must have 15 Years of Service with that employer (although there are special rules for churches). Assuming all of this applies, when applying the calculation, does the 403b plan have to have been in effect for 15 years (or any other deferral plan)? So if the plan has only been around for 5 years but the employee has 15 years of service, can the catchup be used? Also, do you only look at prior plans of that same employer, or do you look back at ANY prior plan that a participant has deferred to, even if with a different employer.

Example - employee contributes $1000 for each of the 5 years that the 403b was in existence, therefore maximum average is 15 years x $5000 = $75,000, less $5000 used = $70,000 available, therefore $3000 catchup can be made for this year?

I have a 30 life DB plan recently submitted to the PBGC for termination. About 18 months ago, two participants who were eligible to receive distributions (NRA) elected to retire and take their money as a life annuity. Now it comes time to liquidate the assets. What happens to these two? Are we forced to purchase an annuity for them or can the "re-elect" and take the "balance" as a lum sum.

Our doc is a Non-standardized Corbel Prototype.

Any thoughts?

Doug

Hi,

If the ACP test is failing, is there a "borrowing method" where you can apply any excess from the ADP test to help pass the ACP test.

I know we have used in past years and I'm trying to understand how it is performed and calculated. I have found the term Multiple Use Test in articles, and this piece of info:

"The annual contribution percentage (ACP) test is similarly performed but also includes employer matching and employee after-tax contributions. ACPs do not use the simple 2% threshold, and include other provisions which can allow the plan to "shift" excess passing rates from the ADP over to the ACP. A failed ACP test is likewise addressed through return of excess, or a QNEC or qualified match (QMAC)."

Also, I see a prior thread about ACP Failing, and not sure I clearly followed if the refund is only ER Match contributions, is this taxable to the HCE?

Thanks!

Chris

Please give me suggestions for the best bank to use for HSA accounts?

I am thinking of my credit union; no fees to open the account, I think. But I would like to get some more recommendations from your experiences

"Bob" is a sole proprietor with no employees. He is 50+ years old. He has a Solo K plan. His earned income before contributions is $100K. He has already contributed $22000 for 2009, designated as salary deferral.

Just to be sure I'm doing this right, he cannot put any additional employer contribution in because he already exceeds 404 limit.

Does somebody have a simple spreadsheet that would help with calculating maximum deductible for above type situations?

Thanks!

While on vacation last week, I attempted to use my Bank of America VISA and it was rejected. Since I hadn't made many purchases, I decided to call BOA. A few days before, some hacker (or some hacker's system) has opened a new checking account in my name but with a Connecticut address. (I've lived in St. Louis forever and this anommoly in itself did not stop the train. A couple days later, an attempt was made to transfer my lines of credit (nontrivial sums) to this checking account and that transfer was thwarted. Bottom line is all our banking is with BOA, I use billpay to pay bills, I have direct debits of certain insurances and mortgage, and certain direct deposits, and of course, multiple BOA credit cards. I spent 5 hours at BOA (in Naples, FL) closing accounts and opening new ones. I will likely spend appreciable time over the next couple months totally unravelling the mess. Worst part is that it is unlikely I will ever know how the gates were compromised. While I lost no money, I suffered loss of time and aggravation. All this sad story told, this is not quite the same as living (or dying) with ALS, it's not the Tsunami or Katrina, the Hindenburg, or Chicago Fire.

I tell this story for those who do on-line banking with BOA, though it likely applies to other major banks as well. I presume for marketing reasons, BOA allows users to open on-line checking accounts. You cannot elect out of this option. Therefore, besides practicing safety (don't store passwords on your hard drive even though this is convenient), check your banking positions regularly. This is particularly an issue for someone who is an infrequent on-line user to whom my advice would be, don't take the risk at all and close down your on-line banking.

BOA has been wonderful in assisting with the recovery from the identity compromise but I nonetheless blame them 100% for affording the opportunity for this to have happened.

Has anyone seen a good discussion or any guidance on what makes a business associate an agent vs. an independent contractor under the HIPAA breach notification rules? I know that the preamble is replete with references to the federal common law of agency, but that is a huge field. The Restatement of Agency focuses on the right to control the actions of the business associate, which in the agreements I have seen is almost never present. I mostly work with group health plans, and the last thing they want is control over the business associate--performance standards, yes, but not control over performance of services.

On the other hand, many of these business associates are held out to participants and beneficiares as authorized to act on behalf of the plan, e.g., EAP provider, third party claims administrator, COBRA administrator. Is that sufficient to make them an "agent?" That's different from the control test--they are acting on behalf of a disclosed entity, but does not fact make them an agent?

I'm interested in other views on this question. Thanks.

Can someone please help and confirm the required 1099-R code for Excess Contributions?

I have a plan that failed the 2009 ADP test and is making refunds today (i.e., prior to March 15th ), should we be reporting it as a Code P or Code 8. I am assuming Code 8, since it is now taxable in 2010 (our software is still insisting its Code P).

Also, is there any reporting difference if the refund takes place after March 15th?

Any comments are appreciated.

I am working on a ADP test and I have two owners of a company who deferred $16,500 each and now they are reporting to me what their K-1 will show zero earned income.

What are the conseqeunces of this and what has to be done?

Do I include the owners in the ADP test?

To help me understand this process, can anyone tell me the paper trail (i.e.…tax reporting) that occurs when an individual rolls over pretax 401(kl) monies to a Roth IRA? In other words, what is the paper trail that shows these funds converting from pre-tax to after-tax money? How is the fact that this money is converting from pretax to aftertax via a direct rollover to a ROTH IRA reflected on both the 1099R and the 5498? Is there other tax documents that would be produced as part of this paper trail?

Hi,

I have a plan that has Schedule A data, in reading the instructions for the 5500 SF I believe I can use the SF even when a plan has Sch. A info provided from insurance companies. I just enter commisions paid on line 10(e). Any thoughts or do I need to complete 5500 and schedules?

Thanks,

Jason

Is a DC plan that is not otherwise subject to the QJSA rules required to offer a QOSA when participants elect a form of life annuity under IRC § 401(a)(11)(B)(iii)(II)? If not, is the plan required to offer a QOSA if such participants change the form of life annniuty perviously elected? Does it matter wether the life annity is paid under a qualifed plan distributed annuity (QPDA)?

Small DB plan with unusual situation of 3 NHCEs leaving employment (not employer initiated). They have 2 employees already excluded by class. To pass 401(a)(4) for 2010, they will need to provide benefits to 2 of the 3 with an 11(g) amendment as neither will work enough to accrue a benefit. The employer will be replacing the 3 employees.

The plan has a 1 yr eligibility period.

This is not likely to happen, but suppose the new employees (all of whom would enter 7/1/11) terminated employment before that date. Could they be brought into the plan and provided a benefit with an 11(g) amendment? I know this can be done in a DC plan.

Thanks.

My first Roth distribution!

Participant became eligible to enter the plan on 1/1/2009 and elected to make Roth deferrals which totaled $210. Needless to say, she terminated in 2009, and is now requesting a lump sum distribution. She is 42 years old. Her earnings on the Roth deferrals are $30.72. Am I taxing the whole thing or just the earnings, or nothing, since the earnings are so small (assuming that only the earnings should be taxed). She does have a profit sharing allocation that will get taxed, but I wasn't sure about the Roth part, since she has not met the 5 year requirement.

I am thikning that the earnings are what's to be taxed; since she has $2082.23 vested balance in the P/S, do I lump the earnings in with that and take the 20%?

ok - this has come up a lot lately in plans we have recently taken over and I'm starting to doubt my own memory! For a failing ACP test our plans all forfeit the match to the match forf. acct and it is then used to reduce future matching contributions.

I have a takeover plan, however, where the ACP failure matching contribution was paid out to the participant (and has been for quite some time throughout past years). (Let's assume for argument sake that the ADP test passes.) Is this acceptable? How can this be paid out to the participant? Why would the participant receive a 1099-R form for Employer match and pay tax on something that was not part of their payroll? I'm trying to get my arms around the logic of this procedure that was in place.

thanks in advance...

I have a client who puts $7,500 into a 403(b) plan at the medical school here.

He also has a SIMPLE in his medical practice to which he defers $14,000 ( he is over age 50).

He also receives a matching contribution of about $8,000.

His CPA's tax software is not allowing the full deduction for the deferrals for the 2 plans.

Are we missing something here ???

Thanks.

i can't, for the life of me, understand why the big PEO, administaff, won't offer to run emplyee's HSA contributions through their cafeteria plan. does anyone know? they already offer pre-tax deductions for 401k and FSA, so why not HSA? is there any downside for administaff to amend and restate their section 125 to include an HSA module?

do you know of a PEO (like administaff) that does offer to pre-tax deduct HSA contributions? our small business will switch to that PEO!

administaff currently runs payroll and also is the interface for the insurance carrier unitedhealthcare

An avatar of this question has been asked on this board previously but every case has a slight unique twist to it, so it merits my asking, I think!

My enrollment periods for health insurance and for FSA election are not co-terminus. My sequence of events:

• My current traditional (not an HD plan) health insurance policy will end soon. It ran from March 15 2009 up to March 15 2010. So open enrolment is coming up on March 14 2010. I would like to consider enrolling in an HSA-qualified HD plan, and it will be in effect from March 15 2010 to March 14 2011. However, I made one uniformed decision earlier:

•I enrolled in FSA for 2010, and it runs from Jan 1 2010 to Dec 31 2010. The FSA 2010 enrollment period was in Dec 2009, which is much earlier than the medical insurance open enrolment period. Why did I enrol in FSA? because I was ignorant of the FSA/HSA interaction

I elected $720 for the entire FSA 2010 year, so I am paying $60 per month to fund my FSA. Till date, I have contributed $ 180 dollars , but have used up about $200 dollars.

It is not a limited purpose FSA

•My employer (actually it is the PEO Administaff, who is the 'employer' for our small start-up company) allows me to pre-tax deduct my FSA amount, but DOES NOT offer this pre-tax deduction for HSA amount. Also the employer does not offer HSA a/c trustee service. Forget about matching HSA!!

•A HD health plan is not as attractive to me without an HSA. But I can't have both an HSA and an FSA, can I?

•So can I switch my 3-month old FSA (2010) to an HSA, without the employer facilitating the switch?

Can I convert my FSA to a limited FSA?

If not, can I stop my FSA?

If I can't get out of FSA and just cannot establish an HSA, then can I just use my FSA along with my new HDHP?

Thank you

Really stuck on this benefit calculation for a while.

The plan sponsor has decided to pay an involuntary cashout to a terminated participant aged 60 years with 5 years of service who is 100% vested.

The plan document says that early retirement eligibility is completion of 55 years of age with 10 years of service. The early retirement reductions are stated age-wise. No separate information(reduction) for TV's who start collecting annuities before age 65 mentioned in the plan document

So do I reduce the accrued benefit for this particular TV based on early retirement factors or is he not eligible for early retirement(due to insufficient service)? Or should the accrued benefit not be reduced at all since it is a forced cash-out?

If he had completed 10 years of service would he then be eligible for early retirement?

Alternatively if he was currently aged 40 years then would his accrued benefit be reduced actuarially?

Sorry for the numerous queries, just want some basics clarified.

Thanks a lot in advance

A cash balance plan is newly effective 1/1/2009. The vesting service is credited from the plan's effective date forward, and the vesting schedule is 3-year cliff.

The plan sponsor wants to amend the vesting schedule for 2010 to include all years of employment. The question is, does this affect the participants that terminated non-vested in 2009? Would they have to go back and pay those participants their vested accrued benefit assuming they had 3 or more years of total service? Or would it only affect the participants in 2010 and going forward?