I have studied the hours-counting requirements of Reg. Section 2530.200b.

Scenario is this. Employee terminates employment. Immediately or thereafter he is paid for unused vacation. Does the payment for unused vacation pay give him additional hours of service for the computation period in which paid?

I am aware of the general rule that you count hours for services not performed "irrespective of whether the employment relationship" has terminated. However, there is also a rule against "double counting" of hours to the same period of time.

Based on these two rules, is this the answer: To the extent that the unpaid vacation represented hours earned in a prior computation period, the corresponding hours are not counted, but hours earned in the current computation period are counted.

If this is not the answer, the only other answer, I think, is that that you count all the hours, and the double counting prohibition really has no application. A third answer is that you don't count any of the hours, but that would seem to make the "irrespective of" language in the regulation completely meaningless.

Any takers?

The DOL and Treasury have jointly issued a request for responses regarding whether and how ERISA and tax regulations could enhance the offering and use of DC retirement lifetime income distribution options.

http://www.dol.gov/federalregister/HtmlDis...&AgencyId=8

Do we really need this? Will this really provide DC plan participants with guaranteed lifetime income or is it a special interest motivated effort to force participants into insurance company annuities. I thought that social security was intended to satisfy guaranteed lifetime income needs and DC plan participants who want to can lock-in lifetime income payments by rolling over their DC plan accounts into annuity IRAs. I know that DC plan participants often make the worst retirement plan investment decisions, but are annuity contracts a better idea? Annuity contracts are popular in 403(b) plans plans, so maybe they can work well in 401(k) plans as well. Does anyone have have an opinion?

My wife and I both have size-able traditional IRAs. Depending upon what congress does regarding the inheritance tax our combined assets including the IRAs will exceed the minimum. I do not need my IRA, and therefore am considering taking the total as a distribution, and use it to pay the taxes, and then convert that same amount of her IRA to a Roth. I think this will accomplish to goals. It will reduce the size of the estate, and it will allow that amount to grow tax free in the future. Am not sure who to ask for advice. A tax lawyer or accountant.

I thought this was an easy question.

A client makes a non-elective 3% safe harbor 401k contribution. He hired an employee in October 2008 who was eligible for deferrals on November 1st, 2009 as entry dates are the first of the following month. The SPD states "you will be eligible to participate for purposes of salary deferrals and safe harbor contributions when you have completed one year of service and attained age 21."

It was my understanding that the employer's 3% non-elective contribution would be made on compensation earned by the participant in November and December. Others are saying that the employer must contribute 3% of the entire year's compensation since she became eligible in 2009.

Can anyone clarify/settle this for me?

Thank you.

A company maintains a profit sharing plan that permits the investment of up to 50% in qualified employer securities. The assets are pooled with no participant direction. The individual trustees invested 70% of the plan assets in qualified employer securities. The company got caught in the economic downturn, things turned south and several HCEs we either laid off or fired, including the plan trustees.

Assets other than the company stock were liquidated to make the distributions to the HCEs, driving the percentage of company stock even higher. You guessed it, the company goes bankrupt. The bankruptcy trustee as plan administrator now brings a lawsuit against the departed trustees. The plan has few assets, but it looks like a substantial recovery is possible. The company has little or no assets.

1) Can the expenses of the bankruptcy trustee be paid from the judgment recovery, which I assume are plan assets. My research has found no definitive answer. Routine administration expenses yes, but nothing about litigation expenses.

2) If the answer remains unclear, can the trustee in bankruptcy make a application to the DOL (which is watching this case) to permit the payment.

Thanks for any insight you might have.

I am largely unfamiliar with EPCRS (I never ever make mistakes ), so let me know if you think this is correct. All those affected are NHCEs, so no discrimination issues.

Takeover profit sharing plan has the following issues:

1) The prior TPA failed to include some eligible employees. This seems like an easy correction under SCP: just give contributions plus earnings. Note I specifically did not say to adjust for losses as I don't think that is required and I don't want to do that.)

2) They allowed participants into the plan too early. Seems like the SCP correction can be to amend the plan under 2.07 of Appendix B to retroactively allow entry.

3) There is a last day requirement to receive a profit sharing contribution, yet too much was given to terminated participants. They just needed to get the gateway, but instead received amounts over and above it. I don't see how this is eligible to be corrected under SCP and allow the employees to keep the allocations. The correction would require an amendment to remove the last day requirement. I don't see this as one of the operation failures eligible for correction under SCP under 2.07 of Appendix B. So, it seems to me a VCP submission is required.

4) Their EGTRRA restatement was effective 1/1/2008 yet signed 11/2009. It did amend eligibility entry dates. It would be best if the effective date was changed to 1/1/2009. Anyone know what the IRS would say about this?

When making the VCP submission should all failures be disclosed, even the ones that can be corrected via SCP?

Thanks.

Please forgive me if this already has a thread (or if I have previously raised the topic!)

Valuation Date: 1/1/2010

Benefit is considerably less than 415 limits.

Regular funding segment rates for a monthly life annuity are 4.92%, 6.71%, and 6.80% (October 2009).

There is "100% probability" of the benefit being paid as a lump sum, on 1/1/2020 (10 years from valuation date).

The current 417(e) segment rates are 3.31%, 5.05%, and 5.32% (September 2009).

Questions:

1. Under 430(h)(4), is the actuary required to use any of the above segment rates in calculating the FT for this benefit?

2. If not, and the actuary uses "reasonable assumptions," how is line 21 of the SB completed?

Can anyone please share their experience with ongoing dependent verification for new hires and permitted election changes?

As sponsor and administrator of a self-funded welfare plan, we have conducted several periodic dependent audits. We are now implementing a process to verify eligibility of a dependent upon request for enrollment in the Plan. Our TPA has indicated that to pend elections until the proof is furnished would be very costly. So, instead we are opting to permit enrollment in the Plan, then request that the employee send documentation to verify eligibility for coverage.

The questions are:

1) if documentation is not provided timely, should we terminate coverage retroactively since the individual is considered ineligible for coverage, or should we drop coverage prospectively.

2) if we term coverage retroactively, must it be done within a prescribed period of time? (is there a duration after which they could be "deemed" acceptable for coverage under the Plan?) And, if retro term'd, I assume COBRA should not be offered?

3) if we just drop coverage prospectively, which means we allowed the person to be covered under the plan for a period, would we then have to offer COBRA?

Any input is appreciated.

Is there any concensus on how to apply 436(d) restrictions to nonspouse beneficiaries? If a plan has only lump sums for nonspouse beneficiaries, it would need to be amended to allow for an annuity during restrictions to permit bifurcation. If we are limited to a straight life annuity for 50%, we can't fit that into the 5-year 401(a)(9) window. It wasn't clear to me how that should work under final regs. Any thoughts?

I am looking for a report to Print Roth Contributions. Does anyone know if Relius Admin has one?

First, the plan document requires it, so whether or not the Code or Regs require it is really moot. Someone is asking (a sole prop) because they did not sign a deferral election prior to the end of 2009. I'm curious as to whether there is a such a requirement in the Code or Regs that I'm missing?

Has anyone ever seen a document that does NOT require a signed election, other than automatic enrollment, of course? I mean, the "election requirement" in the regs is rendered utterly meaningless unless there is a written election, so I wonder if the IRS would even approve it.

Just curious to see if anyone else has ever considered this.

is there any instance where a participant who makes in excess of 245,000 can receive a safe harbor (non enhanced) match over $9800?

I don't do movies, but maybe someone out there can identify all these movie scenes with explosions in them.

ok, don't post answers, just comments as to which ones you have solved.

give other people a chance to be frustrated

Our recordkeeper will not provide an annual Trust statement until May of this year. Is there any deadline the recordkeeper has to follow? This seems like to long a time to wait. We have contacted our recordkeeper and they are not responsive. Other than contacting a government agency, what are our options?

I am working on a plan to plan merger for a client.

In their prior plan, the client suspended their safe harbor match in March, 2009. They provided proper notice to the participants.

The client reinstated the safe harbor match in September after holding a company meeting and informing their employees.

The safe harbor match is funded annually.

No particpnats stopped deferring or reduced their deferrals because of the notice to suspend.

Does this client still meet safe harbor requirements, or can you not reinstate in same plan year?

Here's a new twist -

Client received the official "Your request was approved." letter from IRS for a timely submitted Form 5558 filed extending Form 5500 due date on a 12/31/2008 plan year end to 10/15/2009.

However, the IRS letter was dated 02/08/2010! Our tax dollars at work, eh?!

Can a 401(k) plan exclude 1 HCE but allow all others to participate?

We've started using AF's PlanPremier TPA platform and I need a reality check - after using Nationwide, John Hancock, MFS, and AF Recordkeeper Direct with few problems, we've run into a lot of minor irritations and now, one preposterously stupid thing that has me shaking my head. I need to know if this is just a very powerful system (I guess it is FAScore behind the scenes) that gives us enough rope to hang ourselves, or if it really is not ready for prime time (or decrepit and over-the-hill).

The irritations are: after money is transferred in to a plan, it doesn't show up on the main screen showing total assets until some time later; maybe each month or so that gets updated, but in order to see transferred money you have to drill down to the participant level. That seems dumb. And, to look at a contribution roster that has been submitted, you can't just go to a list of rosters and view one; you have to go to extra trouble to run a report. And, to refresh your memory on how to do something, like run year-end report, there is no printed documentation, so you have to listen to a dumb audio training session for up to 20 minutes to get information that should take a minute to find.

The stupid thing is that if the plan uses a stable value fund instead of a money market, you are screwed in terms of handling forfeitures. There is no "cash" account; forfeitures must be held in one of the plan investments. So we had them go to the stable value fund because it was the most conservative of all the investments. Well, after carefully calculating and allocating the 2009 PS contribution plus forfeitures, we find that not only has there been a slight loss in the stable value fund in the two weeks since it went in, but we're only allowed to use 95% of the money in that fund since it is subject to fluctuation (ahem - "stable value"?!). So now we have to waste a lot of time either recalculating the contribution, or telling the employer to come up with more money (how much? who knows, it is now a moving target). We've certainly learned to insist that plans have a MM fund when using this system in the future, but it seems rather "unfortunate" (mild understatement) that a relatively innocent decision by a broker (it's worth noting that brokers can mess things up, even when they're not trying) can lead to this situation - it's only a few hundred bucks but I resent having to spend even an extra minute dealing with it, and it's going to turn into hours.

Sorry for the long-winded rant (yeah I feel a little better) - any thoughts on just how good this system is?

Taxpayer has a SEP IRA. Can he convert it into a Roth, taking advantage of the no AGI limitation rules? Also, if he does this, can contributions continue into his SEP IRA going forward? And then, each year, convert it to Roth?

Based on everything I see, it appears so - just looking for confirmation from the wise ones on this board.

Thanks in advance.

A former client has a medical practice, which terminated their defined benefit plan (sole participant) in 2006, distributed lump sum benefits and filed final forms for 2007.

Upon advice from another TPA, the business sponsored another defined benefit plan with an effective date of 01/01/2006. This plan covered the doctor and some other newly hired employees. However, the actuary of new plan did not consider the benefits accrued by the owner in the prior plan for their valuation. Maybe, the new actuary was not informed of the prior DB plan. Now, this client wants to come back to our firm.

I am at my wit's end as to how to deal with this situation and seek advice as to our approach with such a situation.