We are a recordkeeping firm using a daily open architecture mutual fund platform. We charge clients a base and per participant flat fee (no asset based fees). I have a schedule C to complete. Our fees are over $5k annually. However, we reduce our fees by all subTA fees received from the mutual funds. The remainder due is pulled from assets at the custodian.

I cannot figure out how to report this...is the amount we get paid from the plan "direct compensation"? Or "indirect"? I have read the instructions, FAQ's, and called the DOL, who told me to call the CPA auditing the plan, who says "no clue!".

Also, the custodian emailed me back and said they do not provide any schedule C reporting for custodial services. But there are areas here where it appears I need to report float, custodial fees, over $5k...if the custodian has no reporting for the schedule C, how would I know what to report? And I cant figure out if that is direct or indirect either...they pull thier custodial fees from assets, but first use the revenue in the ERISA fee bucket which is paid from a Stable Value fund and also the plan money market fund.

This is so confusing. My return is due on Monday, this is a short plan year for a plan year ending April 2009 and already extended, so I am out of time...they could have used the paper forms on an 08 return if they filed by 12/31/09 but they didnt....

If a governmental plan (who currently has 5 year cliff vesting) changes their plan to be a hybrid plan, do they have to change their vesting to a 3 year cliff?

Hello,

Hoping for some feedback.

Client performed ADP testing for PY2007 (calendar year) and due to a failed testing result, made corrective distributions before March 15, 2008. Late in 2008 client discovered an error in the testing information which when corrected resulted in the need for additional corrective distribution to certain HCEs.

The correction was not actually distributed until January 2009.

Had the correction been made in late 2008, the corrective distributions and the applicable Excise Tax under Form 5330 would have been the only steps to be taken.

However, given that it took until early 2009, under EPCRS, it looks like a test not ever completed would require a one-to-one QNEC as well for the amount that was not timely distributed by end of 2008.

Does anyone see a potential argument in favor of not needing to make the one-to-one QNECs as part of this additional correction due to the test originally being completed in good faith and corrected in early 2008 and the later amounts that needed to be corrected due to the participant information error could be viewed as an Operational Error, rather than a testing error at that point?

Thanks for any insight.

Andmik

We have a 401(k) sponsor who added a cash balance plan for the 2009 py. The actuary wants us to amend the plan effective 1/1/09 to change the non-elective formula from discretionary age weighted to individual groups, add j&s, lower nra, take out the last day accrual requirement and allow for the top heavy minimum to be made in the 401(k). I looked in the ERISA Outline book and it appears there isn't a definitive answer regarding whether it's permissible or not. Cites from Izzarelli v. Rexene Products (5th Cir. 1994) and TAM97350 regarding the change in allocation formula differ in opinion. Should I question this or just follow the actuaries request?

Client company only offers health insurance coverage to its Management Team. Employee in question was demoted from the management team for poor performance. There was no gross misconduct.

Employee lost eligibility for the health insurance because he is no longer in management. There was not a resulting loss of hours.

Is the employer required to offer COBRA to this employee?

Thanks for your thoughts.

Can a governmental 401(a) plan define a year of service for vesting purposes to be more than 1,000 hours in a 12-consecutive moth period? If yes, is there a limit to how many hours can be required in order to be credited with a year of service?

Plan A merged into Plan B on 1/1/09, the first day of the plan year. Plan A used current year testing. Plan B uses prior. How do I run 2009's ADP test? Using just Plan B's NHCE's prior yr %? Do I combine the 2008 NHCEs for both plans to determine the 2008 NHCE ADP?

If a son/daughter receives compensation from the company but does not ever meet the eligibility criteria (1,000 hours), they would not factor into any of the testing for a DB/DC combination, correct? So as long as they do not defer anything or work 1,000 hours or more they are okay to take a small amount of compensation.

Just curious to know whether anyone has received a determination letter on their EGTRRA restatement ESOP document. We received a favorable letter on a cycle A plan, but not a word on cycle B filers or later. Anyone have any info on when these will shake loose?

Hello - I am an attorney conducting some preliminary research to find the statutory, regulatory or judicial precedent which would confirm that a Heath and Welfare Fund formed as a Multiemployer Plan can extend Fund benefits (for a fee) to non union member individuals, when the individuals do not have any employment relationship with any of the employers who do participate in the Plan. It is contemplated that the non union member individuals will be members of a business association that will have a relationship with the Fund.

Any information on this topic would be greatly appreciated. Thanks in advance for your assistance.

Adam

monthly premiums paid for all employees. When ee gets sick, the insurance company pays insurance beefnits for up to 6 months. Amounts are then reported on the employees form W-2. Are these wages included for Plan purposes? Plan uses W-2 definition, but these are not wages paid by the employer. I've always been told that they should NOT be included but I've read all the guiadnace and my head is spinning. Is ther something that clearly states whether or not insruance benefits (i.e insurance premiums are paid, NOT paid on a cost + fee basis) are included in wages for plan purposes? There's a lot onw orkers comp but not this...

Most of my clients have an end of year val date so I am just starting the 2009 valuations. Regarding adding plan expenses or fees to the TNC, my understanding is that right now there is no formal written guidance on exactly what type of fees or expenses must be included. Most of the plans I work on do not pay expenses from the trust. The trust will have some small amount of investment fees though. I was looking at some seminar notes and they seemed to say that if I netted the investment fees with the asset G/L for the ROR calc then it would not be necessary to add them to the TNC. Maybe I have that wrong, I'm not sure that makes sense to me, I am wondering what others are doing?

How long after issuing the SMM to participant can the plan start actually deducting the fees?

Is it permissible for a 403(b) plan to have an age 21 requirement for elective deferral eligibility with respect to employees working less than 20 hours per week? Treas. Reg. Section 1.403(b)-5(b)(4)(i) provides that "if any employee listed in paragraph (b)(4)(ii)(E) of this section [referring to excluding employees who normally work fewer than 20 hours per week] has the right to have section 403(b) elective deferrals made on his or her behalf, then no employee listed in that paragraph (b)(4)(ii)(E) of this section may be excluded under this paragraph (b)(4)." Does this prohibit a 403(b) from requiring an employee who normally works fewer than 20 hours per week from making elective deferrals, merely because the employee has not satisfied an age 21 requirement?

I was wondering if anyone else has ever run across this situation.

Client firm is sold to a big firm. During the year the big firm revised the plan documents and moved the money to a different investment platform, shortly before the close of the year. Big firm refuses to provide us with new plan documents, and information about accounts on new platform. Problem is they demand that we do an annual valuation and prepare 5500. Requests for missing data are outright denied in writing, with person actually saying that since plan moved to a new platform we have no need of that information!

Anyway, we are intending to simply do work with data held. Of course, "product" will be heavily caveated, and our file includes the numerous written requests and denials. Our written service agreement does say work is based on data submitted and the client is responsible to provide us with all data.

I find this situation too surreal. Is this something we should report to the feds? Anyone have any suggestions?

Thanks!

I understand that I am newly eligible to convert my traditional IRA to a Roth IRA because the magnitude of my earnings doesn't matter like it did through 2009. (I've done the math and determined that it makes no sense to do so under my particular circumstances.)

But what about setting up a brand new Roth IRA to receive contributions beginning in 2010. Am I eligible to do that?

Client had both a PS plan and a separate 401(k) plan, and merged the 2 effective 1/1/10. Unfortunately, we now discover that the owner had a loan outstanding from the PS Plan at the time of the merger. The 401(k) Plan has not, does not, and has no desire to permit participant loans. Do we:

a) need to amend the 401(k) to permit participant loans,

b) need to default the loan since it is not permitted in the 401(k),

c) not have a problem since the loan is from a prior plan arrangement.

I'm hoping for c), but would be ok with a). Opinions?

I have a Top Heavy 401(k) Plan with safe harbor matching contributions. Client wants to make $20,000 discretionary profit sharing contribution. Does safe harbor matching contribution already made to participants count toward top heavy requirements enabling me to alllocate $20,000 to key and non key employees alike? I have found 2 different citings which appear to conflict. First is Sal's ERISA Outline Book in chapter 3b.58 seems to say that it does, while the 2009 Pension Answer Book Q 26.47 appears to say that it doesn't. AAARGHHHH Thank you for your anticipated help, I really appreciate your insights.

Hi,

If a participant in a 457(b) went over the "individual limitation" for 2009 (i.e., contributed to two unrelated employer 457(b) plans) and the plan allows participants to request this type of distribution, how does this get tax reported?

I assume that the excess contributions are not tax reported at all since the taxpayer would have included the excess amount in their 2009 1040. If the excess has earnings, I assume the employer will include that amount in W-2 for the year distributed?

I have looked every where for earnings tax reporting instructions and have come up dry.

Thanks!!!

thanks anyway.