Multiemployer plan is still green (for 2009). Would have been red but for the election to continue with the 2008 status. Trustees have amended the plan "unilaterally" to require a minimum contribution rate, regardless of what the employer's collective bargaining agreement with the union says. Is anyone else experiencing this?

Can a plan sponsor of a top heavy plan amend the plan effective in a later year to exclude certain job classifications (non-union) and avoid future top heavy accruals for such "excluded" people? Assume they had accrued benefits that had not been distributed (or account balances in a DC plan).

We have differing opinions and cannot find this addressed. I say no. Anybody disagree?

Hello,

I have a would be client who had a 401(k) plan he terminated effective 10/15/08, all the distributions were completed by 1/31/09 and the final 5500 was filed. The client is now having a better year and would like to start a new 401(k) plan. From what I understand, the business never closed, so he would like to have something in place for 2009. I thought there was a 1 year wait period or is this with a Simple plan? I haven't been able to find any guidance on a wait time between establishing 401(k) plans. Thanks for your help!

Much of my time with small plans has been spent determining funding requirements, performing non discrimination testing and plan design for defined benefit plans and defined contribution plans. It also includes plan admin work for defined benefit plans. However, it hasn't consisted of the day to day operation and administration of small 401k profit sharing plans.

With that said, I intend to present what I see as a practical approach to handle the implementation of a new 401k profit sharing plan. Of course, in addition to information I receive at this web site I will do my own independant research.

I have a client who is a (S Corp) business owner with about 20 or so eligible employees. The client has just adopted a 401k profit sharing plan effective 1/1/09.

Below is what I consider a potential way to handle some of the plan implementation aspects.

1. Assistiing client with setting up a master account and participant sub accounts at Schwab.

2. Will provide the eligible employees with i) SPD, ii) salary deferral forms, iii) beneficiary designation forms, iv) Schwab participant account appplications and v) notice to employees for det letter filing

3. For the owner, other than choosing to receive cash or deferring it, are there other methods used to enable the owner to make a deferral? That is, say the owner is scheduled to receive $5k in compensation for the remainder of 2009, this means that she can only defer up to 5k. Given it is a small closely held business I am wondering if there is any flexibility from a practical perspective.

Curious to hear observations of the above mehods of implementing the new plan from an operational and practical perspective.

Thanks.

I own 100% of law firm A. My father owns 100% of law firm B.

Now, for affiliated service group determination, we each own 100% of each other's practice, because there is attribution from family, and age is no object. BUT, if we are truly independent, then there's no ASG, because we don't meet the other requirements for ASG status - no regularly performing services for each other or third parties, no financial flow, etc...

If we refer clients to each other, then this could throw us into ASG status, right - it it's regular and not just occasional?

I hate ASG questions.

and now you know.

Am I correct to say that in order for LLC Partners in a company to contribute to a 401(k) Plan they must have earned income on their K-1?

Eleven employees invested money into our company and therefore changed their status from employee to LLC member. Those members now rather than getting a salary or income from the company are receiving guaranteed payments. Rather than receiving W-2’s they will receive K-1’s. The company will have a net loss this year so on their K-1’s for this year they will show their portion of the companies loss (which will be nominal) and it will also have their guaranteed payments. Just to be clear the guaranteed payments will far exceed the apportioned company loss on their K-1’s.

All this being said I just wanted to confirm that it is okay for both the employees as well as the LLC members to participate in the 401K plan.

There will be no profit though as the company will lose money this year. Is their Guaranteed Payments considered profit?

Plan is a non calendar plan ending 9/30. For purposes of payroll cutoff dates, do you use the pay period ending or the date check issued? Example: Pay period endins 9/27 but check is issued on 10/4. Is this period included in the just ended plan year end or is it the first pay period for the new plan year end?

A calendar year DB plan is terminating 12/31/09, proposed distribution date is 3/1/09. We are in process of issuing Notice of Plan Benefits. Are PPA compliant benefit statements required to be issued also or would the NOPB be sufficient? Thanks.

Why do I get some spam e-mail messagesin benefits link? Just the other day I got one in benefits link about viagra.

I know I dont need viagra - I am a girl and hopefully Im not that old yet, ha!

My client's defined benefit plan extended an unsecured $150,000 loan to an unrelated person. That debt has become uncollectable, and as the plan is terminating, the client's intent is to write it off.

My question - is there any 1099 reporting requirement for a bad debt write-off? Again, this is not a participant loan, just a general note receivable.

Thanks!

Dog

Be sure to read your estimated Social Security letter. It contains:

Will Social Security still be around when I retire?

Yes. The Social Security taxes you now pay go into the Social Security Trust Funds and are used to pay benefits to current beneficiaries. The Social Security Board of Trustees now estimates that based on current law, in 2037, the Trust Funds will be depleted. Because people are living longer and the birth rate is low, the ratio of workers to beneficiaries is falling. Therefore, the taxes that are paid by workers will not be enough to pay the full benefit amounts scheduled.

However, this does not mean that Social Security benefit payments would disappear. Even if modifications to the program are not made, there would still be enough funds in 2037 from taxes paid by workers to pay about $760 for every $1,000 in benefits scheduled.

Is it no earlier than 90 days and no later than 30 days before the beginning of the plan year on an annual basis? If a plan has QDIA's, the notice MUST be sent to the participants, similar to safe harbor notice, yes?

And if the plan does not have QDIA then they do not have to issue a notice of something like "the plan does not have a QDIA"?

I have a plan that excludes a group of hourly people-they are not part of a union. With these exclusions, they do not pass the ratio test. This group of ees participate in SEP IRAs. Under normal circumstances, I would perform an Average Benefits test. How would that work with the SEP IRAs? If I can't run an ABT test, what are my correction options. Any help would be greatly appreciated!

Ok - plan ADP failed in 2007. Refund was done correctly prior to 03/15/2008. Participant reported refund on 2007 individual return as was policy then. January of 2009 a 1099-R was not completed for the refund as it should have been (with a code "P" for taxable in 2007).

Should a 1099-R be done this coming January (2010) and the code "D" (refund taxable in 2007) be completed so that the actual records coincide with the participant's '07 return and the plan records? Does this raise any flags?

One unon fund (call it Widget Workers) wants to make a loan to another fund (call it Widget apprenticeship) for purposes of purchasing land to build new building for training. Funds have some, but not all, common trustees....ignoring the issue of this being a prudent investment, is this a PT? Anyone aware of similar situations with PTEs obtained?

What are the fiduciary duties of an employer/plan sponsor in regards to beneficiary designations? In terms of keeping track of them, making sure they are completed, etc. Maybe fiduciary isn't even the right term, but how much effort do we need to put into them to best look out for the plan and its participants?

Thank you.

The regs seem to indicate that a change in assumptions will put my plan out of compliance:

1/1/2008 AFTAP - > 100%

1/1/2009 AFTAP certified on 5/15/2009 <60%

No COB or PFB

I have been operating as if the plan has frozen accruals and cannot pay lump sums. There has been one person that terminated employment and could have taken a lump sum if the plan was not certified.

Plan sponsor decides to move to asset smoothing and actuary decides to change other non-mandated assumptions (ret age). 2009 AFTAP > 80%

This would be a material change since the plan operation would be impacted. In addition, it appears that if I recertify, I should have applied my new certification from 5/15. Then my plan would be out of compliance with the terms of the plan.

Does anyone see a way out of this?

ERISA 403(b) Plan has several TIAA-CREF contracts used by participants. All elective 403(b) contributions up to 6% go to the RA account and the match contributions (match is 100% up to 6%) go to the RA account established for each participant. Amounts deferred above 6% go to a GSRA or SRA account.

Loans are not permitted from the RA account but are permitted from the GSRA account. How can this plan comply with the DOL requirement that the loan program be available on a reasonably equivalent basis to all participants and beneficiarires?

Thanks

A plan that is not covered by the PBGC can make a maximum deductible contribution to the DB plan and a 6% of comp contribution to DC plan.

However, if the DB plan is covered by the PBGC the combined plan limit does not apply and then the employer can contribute up to 25% to the DC plan.

Can an employer that would be eligible for the PBGC coverage exemption, choose to be covered by PBGC in order to obtain the higher DC plan deduction limit?

Eg prof employer w less than 25 participants.

Thanks.