We are looking to merge two 401(k) plans and want to make certain I'm not missing anything... We satisfy the exception for filing a 5310-A and other than resolutions to document the merger, what other things do we need to think about? Are we required to provide notice to participants? The two plans are identical in design (same sponsor, same vesting schedule, etc), and the non-surviving plan has no active employees. I just don't see what else we need to do other than the resolutions and letting the recordkeeper know.

Thanks

A participant terminates employment 12/10/08. The client pays her severance until 1/10/10. The participant passes away at the end of 2009. Based on the Plan Document if she dies hours are not required for the Profit sharing contribution. My guess is that she is entitled to the PS contribution for 2009. If she would have received the severance within 2 1/2 months after termination it could have been avoided.

Any thoughts? Am I correct?

The plan sponsor forgot to make their SH contribution within the 12 months after the plan year end.

They made proper notice before the 2008 year began that a 3% SH NEC would be made.

Now we are in 2010 and the plan failed to make the payment by 12-31-2009.

My read is that you cannot go back to ADP testing for this. Further, you cannot correct a failed ADP.

Does this become a DOL issue? Qualification issue? Fiduciary breach?

I don't know where we would even report this failure on either the 2008 or 2009 5500 forms.

I am thinking of proposing that this be a voluntary correction with interest from 12-31-09 to date of deposit.

Ideas?

For a DB plan with mandatory employee contributions, USERRA permits an employer to require the contributions to be made up before crediting service. It also requires that the employee be permitted to contribute makeup contributions during the period starting with the date of reemployment and continuing for up to three times the length of the employee's immediate past period of uniformed service, not to exceed five years.

Is anyone aware of any guidance on whether this period is tolled if an employee is redeployed while making up payments for a previous period of qualified military service? Seems to me that it should be, but I haven't seen anything on it.

What is the consequence of not having a balance election timely in place for a plan for the 2008 calendar year? Is this a qualification issue or would it cause any balance that would have existed to either be erased or not established, or in the case of a plan that intended to use a credit to meet minimum funding, would the plan be considered as not meeting its MRC?

Is there any correction available?

I don't suppose that maintaining these elections beginning with the 2009 year would be considered a good-faith interpretation of the proposed regs?

Our members are approaching the 180 day mark to have a alternate schedule in place, however the parties cannot come to a agreement, therfore we are scheduled for arbitration Feb 23-24. We have a tenative plan over 13 years to address the underfunding issues with the plan. One major group with more members in this union multi employer group has accepted a $30 dollar accural rate per year regards to Pension benefits, we are being told that even if we win the arbitration we will have to accept the base level1% or $20 accural rate. Our position is we have the right to continue to bargain and address our differences regards to this, we currently have three proposals which have been denied by the employers. Our position is that if we win the arbitration that the arbitrator can award the same as the other group or accept one of the higher alternate schedules we have offered. The real issue is if we reach the 180 day bench mark we are being told that the a default schedule would be implemented and would be worse than any schedules currently presented. What are our best options if any?? Does the IRS or government then make the decision to implement default schedules, and if so is it based on the default schedules presented by the corporations and how much time would be allowed or will we be given more options to try and resolve the issue. Any help would be appreciated.

PJMARQ

In an end of year valuation, if a participant has an accrued benefit limited by 415 and the prior end of year benefit increases on the first day of the current year due to the COLA increase, is the increase from prior benefit to beginning of year benefit included in the funding target or the target normal cost?

Example:

Participant with 6 years of service/participation and average comp/plan formula benefit in excess of the 415(b) dollar limit.

at 12/31/2008 benefit is $9,250

at 1/1/2009 benefit is $9,750

at 12/31/2009 benefit is $11,375

Am I correct that the funding target be based on $9,750 because it represents benefits that "have been accrued, earned, or otherwise allocated to years of service prior to the first day of the plan year" and the accrual for Target Normal Cost would be based on $1,625 ($11,375 - $9,750)?

Can a DRO that directs loan payments from an ESOP to a participant be a QDRO? SH-participant sold ER stock to ESOP, and order requires that the loan repayments be split. I don't know that this is subject to a QDRO, as the "benefits" are the underlying stock.

Just heard from the grapevine that the 5500-EZ wont be ready until late Summer. Is this true? If so, I wonder when the due date will be.

Also, a friend of mine told me that the 5500 and the 5500-SF have not officially been released. Yet FT William says that they have been submitting forms to the DOL. Anyone got a clue??

Thanks.

In 2009 I maxed out my HSA. This is reflected accurately on my 2009 W-2. My final contribution for 2009 arrived at the custodian in 2010 and they are attributing it to 2010. As such, my Form 5498-SA from the custodian shows my 2009 contributions to be less than the amount on my W-2.

I plan to max out again in 2010 and am concerned that this will throw me over the 2010 contribution limit due to 2009's final contribution which has been misapplied to 2010.

Am I worrying unnecessarily? Which of the two forms does IRS use to determine my 2009 contribution amount?

Thanks,

Michael

Does anyone have links to good articles on steps necessary to terminate a DC plan? We just received a determination letter following correction through VCP for some operational errors. We want to now terminate the plan. I want to make sure we follow all necessary steps, thus, I am looking for some good articles to follow.

Thanks.

Plan is a safe harbor plan but due to some incorrect system coding a 2007 ADP test was run, test failed and what otherwise would have been excess contributions were returned to 2 HCEEs in 2008 resulting in improper distributions.

The affected HCEEs have been contacted to try and get a return of the excesses but not successful so far.

If they don't return the excesses, are these amounts (and earnings) still required to be put back into these 2 participants accounts?

If these HCEEs have since terminated are they due any additional amounts other than perhaps earnings from the time of the incorrect distribution to their date of termination?

Can a DRO that directs loan payments from an ESOP to a participant be a QDRO? SH-participant sold ER stock to ESOP, and order requires that the loan repayments be split. I don't know that this is subject to a QDRO, as the "benefits" are the underlying stock.

Participant was hired 1/27/2005, met the eligibility requirements of 21 and 1 year of service for the 401(k) PSP. Terminated 10/1/2008. Rehired 7/14/2009. New DB plan was adopted 12/30/2009 and effective January 1, 2009 with same eligibility of 21 and 1, semi-annual entry. Since the employee had already met the eligibility requirement upon their date of rehire would they enter immediately at 7/14/2009?

An employer has a TDA 403(b) plan and also has a DC 403(b) plan. The DC plan offers a new investment option that the TDA does not offer. Many of the participants wanted to move their TDA accounts to the DC to take advantage of this new investment option.

My question is, can the participants move their money as a transfer from one plan to another? My concern is that there is not a distributable event for most participants.

Does anybody have a template or example to help prepare this new required statement for multiple sources?

Thanks!

If a participant is enrolled in Cobra (not through a ARRA subsidy) and they have other coverage available to them, either through their employer or their spouse's employer can the cobra employer drop them from coverage? How do you monitor whether or not your cobra particpants have other coverage?

For the mavens who are digging into new Schedule C questions:

Assuming no other relationship to the retirement plan, which of the service providers to a mutual fund (manager, underwriter, transfer agent) becomes a service provider to be reported (assuming enough $) on Schedule C because of the plan's investment in the fund's shares?

401(k) plan is defined to use section 3401(a) wages as their definition of compensation.

The employer awards 500 shares of restricted (a.k.a. contingent) stock to an employee after 1 year of service. The stock is subject to a 5 year vesting schedule. It has no value until it is vested.

The value of the stock is reported on the W2 in the year it is awarded (1 year of service). The employee can pay taxes on it the year it's awarded (taxed as ordinary income), or they can file a section 83(b) form and pay taxes in the year it is vested.

The stock is not part of stock option program. It is not publicly traded, not registered with the SEC, is not subject to payroll tax, is not used in the determination of 401(k) benefits, cannot be used for collateral, and cannot be sold other than when the employee terminates.

So, should the value of the stock be included in the plan's definition of 3401(a) compensation - and be included in 415 compensation for purposes of the IRC §415 limit and determination of HCE status?

Any thoughts?

I am working on a New Comparabilty Plan with a Last Day & 1,000 hours rule.

If a employee is terminated in the year, but works more than 500 hours, and does not get the Profit Sharing Contribution, do they have to be included in the New Comparabilty calculation with a zero EBAR?