I'm advising a terminating money purchase plan. There are missing participants and all of the methods for finding them (using the DOL's FAB 2004-02 list) have been used. The next step would seem to be to set up IRAs for them and do rollovers.

But how do we deal with the spousal consent requirement? I see that the FAB has a footnote that makes the assumption that the DC plan does not provide an annuity option which, of course, the money purchase plan does.

Does anyone know of DOL or other guidance on how to deal with this situation? We obviously need to get the money out of the plan in order to terminate it, but I'm not seeing how we have a valid distribution without the spousal consent.

I have HSA questions I am hoping people can assist me with:

1) If an employee is actively at work, age 65 and enrolled in Medicare Part A, can they participate in the Employer Sponsored HSA? If so, is the contributions tax qualified?

2) In an employee has and HSA with an Employer Sponsored HDHP, and is covered through their Spouses Traditional HMO type plan, can the employee who is primary with the HSA, still submit to their spouses plan as the secondary payor? Or is the HSA participant precluded from being covered under their spouse's plan?

3) Dependent children who are coved under both parents plan (One spouse with HSA w/ HDHP, one with Traditional HMO), using the birthday rule and the HSA parent is prime, will it coordinate as normal?

I sure hope someone can help me out this!!!

I have a client who is obsessed with "employment agreements", several of which include a stipulation that the employee will elect out of the 401(k) plan. There is one particular employee who was hired in May 2006 and elected out of the plan. At the end of 2008, the employee terminated employment. He was then rehired on April 1, 2009. At this point the employee will not be electing out of participation. Can he do this? If so, the next big question is the entry date. The plan dictates that any former participant shall become a participant as of the rehire date. Is this employee considered a former participant because he was eligible to be? Was he considered a non-benefitting participant? AND if he wasn't a participant, can they use his prior service to satisfy the eligibility requirements??

I have just run into a situation in which a DRO was approved as a QDRO, with a retroactive assignment/benefit split date of six years ago, which is fairly common for this particular plan. However, the 401(k) plan recordkeeper refuses to administer, stating that it is not legally required to maintain records further back than six years, and there was a change in recordkeeper five years ago, and thus, there are no Plan records to use for an assignment date earlier than the date of takeover. (Just as an aside, when the QDRO was approved, this information about recordkeeper administration was not known to legal counsel or the TPA.)

A couple of questions - (1) can a DRO be denied because the Plan has inadequate records related to the account balance as of the assignment or split date; and (2) is this common for recordkeeper's to not maintain adequate information beyond six years or due to taking over an account from a former recordkeeper?

I would also appreciate any comments regarding whether, going forward, the plan or QDRO procedures may be amended to refuse to approve DROs with retroactive benefit split dates. There may be a legal answer to that and I have not researched it yet. Even that change would not appear to address a situation in which a youngish participant has a QDRO for which a distribution is not available for more than six years because of no distribution event, such as severance of employment and or early retirement age. Comments about how to avoid this issue would be appreciated.

Thank you!

In 2011, we are redesigning our health plan options and will be adding/deleting some health care plans. We are planning on having an active enrollment for the first time in many, many years and we thought that we could say that the "failure to make an election will result in defaulting into one particular plan". This was something that I had been involved in about 10 years ago with another employer. A co-worker recently said that unless the current plan of an employee did not make the redesign cut, we could not simply default them into one plan because salary withdrawals are required. Comments? Thanks.

I have a plan that is terminating that is a wait-and-see Safe Harbor plan. They dutifully gave the notice in November that they MIGHT make the 3% non-elective.

I'm pretty sure they have to follow up with one that states that they won't be doing it for 2010.

Does it have to be a stand alone notice? Or can they just put it in the notice they are giving everyone that the plan is terminating?

I have a plan that is terminating. And I understand that a successor plan cannot be in place for at least a year after the assets of the first plan have been distributed.

However, what type(s) of plan might a successor plan be? Just a 401(k)? Could they put in place a PS plan? SIMPLE? SEP? SEP IRA?

Hi,

Participant received an ineligible profit sharing contribution, terminated and received distribution that included ineligible ps contribution amount. The ps account had a loss by the time money was withdrawn.

I can try and get the money back from participant (it was a rollover, which might make it somewhat easier...) and if that fails the employer, I believe has to 'make the plan whole'.

However, at which amount to must I try and return to the plan? Say the ineligible contribution was $1,000 and the loss was $200, do I return the original $1,000 from participant or the $800 from the participant then the ER makes up the $200 loss amount so that the total is returned? Or perhaps only the $800, since that what would have been forfeited at the time of the distribution?

Thanks,

Jason

I'm hoping someone here has done something like what I'm facing, or can give me some good suggestions at least.

A small bank has a 401k plan for its employees. It also has IRAs of customers. Some of the customers' IRAs hold stock in the bank. The bank converted to be an S corporation. That caused UBTI to the IRAs. So the bank's 401k plan purchases the bank stock from the customers' IRAs. To do so, the bank lent its 401k plan $2,100,000 without taking any security. The TPA is telling the bank that the loan needs to be secured to be exempt from prohibited transaction rules. According to the TPA, the loan can be securitized now and 'cure' the problematic loan.

This is outside my experience, and am hoping for any direction that anyone can give me.

The employer withheld too much from an employee's pay and deposited it into the trust. Do we refund from the trust or do we forfeit and tell the employer to make this up in the employee's pay?

Can anyone recommend a firm that can review and monitor plan investment performance on a periodic basis, charges reasonable fees and doesn't want to be plan co-fiduciary or adviser to the plan?

So far I've heard that the new form 8955-SSA will be available in Spring or Summer 2010. I've also heard that there has been talk of making it an optional filing for the 2009 plan year since they aren't ready for it to be filed electronically yet. If it isn't going to be optional, i'd like to start thinking about how we are going to handle it. Once we get past 3/15, people will want to start preparing 5500's relatively soon. But I don't want to have to go back and do an SSA for clients that we've already prepared and filed the 5500 for. It makes more sense to do the SSA at the same time. Has anyone heard anything more definitive on this?

I heard a rumor that for a 2009 calendar year plan (not a terminated plan or a plan that is a short plan year), we can file the 2009 Form 5500-EZ with the IRS on the old 2008 form until the 2009 forms are released. Has anyone else heard anything about this?

We have a member on a non-embedded HSA plan and has family coverage. The spouse has met the entire $4000 deductible. The spouse is coming off the plan to go onto his employers plan. The employee will have a change in status and will move to a single plan with a $2000 deductible. Would this employee need to still satisfy her $2000 deductible since it was the spouse that met the entire family deductible and he will no longer be on the policy?

If two parachute payments will be made in the same year, one in January and another in June, can an employer delay withholding the excess parachute tax (20%) until the June payment or must it withhold the 20% for both payments. IRC section 4999 indicates that parachute taxes are subject to withholding just like ordinary income under IRC section 3402. I was wondering if there was any type of exception that would allow a company to avoid withholding the parachute tax on the first payment and withhold instead the entire 20% when the june payment comes due. i.e. if payment of $1,000 were made on January 31, and a second payment of $1,000 were made on June 31, and there is a $400 parachute tax, can you withhold the entire $400 from the second payment, rather than deducting $200 from the January payment and $200 from the June payment? Thanks.

Yikes! I was just told by a client's attorney that the Plan Sponsor, formerly a 9/30 FYE changed to calendar year as of 12/31/09, thus creating a Short Plan Year for 10/1/09-12/31/09... Another entity that also adopted this plan still has a 9/30 FYE. Is this a problem? Further, this Plan is Safe-Harbor but since we, as the TPA, were not told of this change to the year-end until today, no Safe Harbor Notice for the short PY Ending 12/31/09 or the new PY 1/1/10-12/31/10 was drafted. What do we do now? And finally, I know a pro-rated PS contribution can be made for the SPY, but what about deferrals?

Company A has union and nonunion employees and is owned by Mr. A. Company B is established by Mr. A's wife (Mrs.A) however, Mr. A runs Company B (so spousal exception does not apply, and its one controlled group). Company B was established solely to get non-union work (I'm not 100% sure of the business purpose, but it was something like this). So some of the union employees are also doing non-union work under Company B. Enough of them are doing this so that I am concerned that I will not be able to pass coverage treating those employees as not benefitting following the end of my 410b6c grace period (fortunately, not until 1/1/2011).

Is there any issue with treating people both as union and nonunion on the same test?

I was informed that a one participant plan sponsor has a private investment in a REIT.

The owner/participant terminated plan and wants to receive distribution in-kind so as not to sell investment at a low price.

He is being todl that since it is a private investment it must be liquidated.

Anyone know that to be accurate statement?

Thanks.

We have a client who failed the ADP test. Refunds are due, however one of the HCEs has passed away. Would we calculate the refund due and distribute to the participants beneficiary(s)?

I have been looking everywhere and can not find anything relating to this.

Thanks for any help!

I am new to benefits administration, so I apologize in advance for my ignorance. We are a small company with only 80 poeple and I am fairly certain that we have some shortcomings when it comes to "plan documents" and employee communication. I am in the process of cleaning this area and have a few questions.

- Do I need an SPD for a POP and can I do my own year end testing? IF yes on the testing, what do I need to do?

As I research the requirements regarding Sect. 125 and Preimum Only Plans, I've been getting different answers. I've had some say that I need a plan document for a POP. I've had others tell me no plan doc is needed because it is for tax savings only. Which is it? Our company has also has an FSA (both medical and dependent care), so I believe my year end testing might be different than if I simply had POP. Can someome please help me deteremine what I need to have in order to be in compliance?

Thanks.