An NHCE is beyond NRA of 62 but under age 70 1/2. He will continue to work indefinitely. He requests a lump sum distribution of his entire accrued benefit now.

Plan document allows for distribution after attaining NRA.

Is his PVAB based on the greater benefit resulting from application of 417(e) and plan AE assumptions, or is he limited to PVAB based on AE assumptions now?

Hi. We had an error in our payroll department and salary deferrals for a few employees were messed up. Most of them involved employees that were over 50. They wanted to maximize their deferrals with the catch-up contribution. Mistakenly, they were capped at $16,500 and the extra $5,500 was not deferred, but rather was paid out in wages. What are we required to do in this situation? Can we have the employees return the $5,500 to us, make the contribution to their accounts for 2009, and issue revised W-2s? Or since it is already 2010, is it too late?

The second situation we have is where an employee wanted to max out her deferrals at $16,500 by making a $1,000 deferral at the end of 2009. She submitted the proper paperwork, but due to our error, the $1,000 didn't come out of her last paycheck in 2009. It came out of her first paycheck of 2010. Again, can we have her refund the $1,000 to us, make the contribution to her plan account, and issue a revised W-2? Or is there another solution?

Have a participant in a plan that was injured on job. He has filed for a hardship distribution from the 401k Plan for the medical bills that resulted from this injury. Foresee that the bills will be paid, but the case is in review right now. Insurance company being especially careful since he has obtained a lawyer. (Don't know all the details of that, don't really want to know. )

Plan uses safe harbor definition of expenses and the safe harbor test for establishing financial need.

Safe Harbor Test for financial need says that if ALL the following requirements met that we do not need to consider factors like you would in the facts and circumstances test or obtain the employee's written representation that no other sources available to pay expenses

1. Distribution does not exceed the amount of financial need.

2. EE received all other distribution from all other plans maintained.

3. EE will suspend deferrals for 6 months.

So, normally I don't even consider whether they have other funds available other than looking at documenation to determine what portion insurance is expected to cover (or is covering).

Since employer has knowledge that there is a pending workmans comp claim, can we still make a distribution on the medical bills presented?

I've talked myself in a circle here. Any help or thoughts would be greatly appreciated!

Does anyone have the phone number that you can call to find out if a particular Form 5500 has been filed? I have used this several times in the past, but have misplaced the number. It is an automated line; you enter the EIN and PN and they tell you when the filing was received.

Our client (a takeover plan) is terminating their cash balance plan. The plan was effective 1-1-07. The plan provides for annual hypothetical interest credits based on a fixed interest rate of 5%. Actuarial equivalence in the plan is 5.50% pre and post retirement interest with 1994 GAR post retirement mortality. 417(e) distributions are defined in the document as being based on applicable interest and mortality.

It’s my understanding that the proposed regulations provide in 411(a)(13) that a cash balance plan can pay out lump sums based on the hypothetical accounts without violating 411© or 417(e). Separately, 411(b)(5) provides that the accrual rules of 411(b) are not violated as long as, among other things, the guaranteed rate of return does not exceed a market rate. I realize the regs caution against adopting interest rates other than those specifically named, but unfortunately, I’m stuck with the design dropped in my lap.

Based on my reading of the regs, the fixed rate of 5% may cause the plan to violate the 411(b), depending on future guidance, but the issue of paying out the lump sum should not be affected by the fixed rate and is not a “market rate of return” issue.

Am I correct in my understanding? Can I pay out the hypothetical balances rather than the 417(e) equivalent? If not, won’t I still have a potential 411(b) issue? Or does the 417(e) distribution language in the document overrule all of this and require lump sums to be based on the applicable interest and mortality? Is anyone else designing new cb plans using fixed interest rates?

I have a client who has his own small business with about 20 employees. I believe it is in the biotech industry.

He sent a note saying he has a household employee and will want to discuss how this employee s hould be treated for purposes of his pension plan.

The first thing I need to determine is is the employee is an includable or excludable employee for coverage purposes.

My initial reaction (before I revisit and research this subject matter) is as follows:

1. if it is a 1099 employee than she would be excludable

2. if it is a W-2 employee than she might be non-excudanble, depending if she met the 21 & 1 and 1000 hours

3. if it is a leased employee than again it may potentially be non excludable, though I believe such an individual does not even become an employee until she completes one year of service as a leased employee.

What comments are out there on this matter?

Thank you.

Office Manager took out max loan from plan in early 2009, then resigned before any payments were made. Plan does state that loan is in payable in full upon termination of employ. He has not requested distribution, but I am guessing that he still needs 1099-R on defaulted loan. Or, does the loan continue to accrue interest until he takes a distribution?

Thanks

Hi,

We have a money purchase plan that amended their document and changed to a 401k mid year. Question is do I have to complete two 5500, one for the Money Purchase to the date of change, then one for the 401k. The plan sponsor did not change, the plan name did change but I don't think that is of any importance.....

Thanks,

Participant in a Safe Harbor 401k is refusing to receive a Safe Harbor Non-Elective contribution as he believes the 'government will take it from him'. He is being adamant that no monies be placed into an account for him and is causing trouble with the employer. He is asking for a citation to prove he must receive these monies. Can he deny receiving the contribution without implications on the Plan's Safe Harbor status? Where would I find the citation regarding this? Thank you!

I know this was talked about before, but i couldn't find the post.

I have a Eoy CB plan where I allocate 100k, but because of PPA, I can only contribute 68k. How are people getting the funding close to the allocation amount?

Where can I find annuity purchase rates for New Comp Xtesting for various mortality tables? I'm trying to build a model that will make it easier to find the best testing solution?

I have kleptomania, and when it gets bad, I take something for it.

Suicidal twin kills sister by mistake.

My short-term memory is not as sharp as it used to be. Also, my short-term memory's not as sharp as it used to be.

I may be schizophrenic, but at least I have each other.

Kentucky: Five million people, fifteen last names.

Nobody is perfect. I am a Nobody. Therefore I am perfect

Money isn't everything, but it sure keeps the kids in touch.

Corduroy pillows are making headlines!

I want to die while asleep like my grandfather, not screaming in terror like the passengers in his car.

An ER has a 401k plan that has received both elective deferrals and profit sharing contributions. The plan only permits in-service distributions once an EE reaches NRA. The plan documentation is by way of the ER's adoption of a pre-approved prototype.

ER would like to adopt an amendment that will allow in-service distributions of profit sharing for the rest of 2010, but not thereafter, and then only for those who would be having the payout rolled into a Roth IRA. The amendment would 'sunset' the in-service distribution opportunity at the end of 2010.

1) May an ER restrict the types of in-service distributions it decides to permit to just Roth IRA rollovers?

2) Is the sunset at the end of 2010 a prohibited cutback of a protected benefit? or since it was an aspect written into the very amendment by which in-service distributions is allowed, is it okay?

3) Would the prototype plan be considered a individually designed plan for just 2010, and return to prototype status come 1/1/2011?

4) Any other problems?

I know it's late on a Friday night, but can anyone point me to a Code section or Regulation section that dictates how long must retirement account historical data be maintained?

My husband’s employer has an FSA plan with a plan year from 7/1/2009 to 6/30/2010. Last July he requested $1,200 be deducted from his pay for FSA. To date we've only used $400 of the $1,200. I do not believe his FSA plan is defined as limited or special purpose.

Just recently my company converted from a PPO plan to an HSA plan for a 1/1/2010 to 12/31/2010 plan year, so it overlaps my husband's FSA plan. In this situation, what do we do? Can we continue to use the FSA funds even though they are not defined as limited/special purpose? Am I free to make contributions to my new HSA plan? Would we be okay if we just make sure the total of pre-tax dollars in the 2 plans don’t exceed the $6,150 HSA limit for 2010? Or are limits different for HSA's and FSA's.

When asked this question, the medical insurance broker for our company suggested:

"You cannot contribute to both FSA and H.S.A accounts. Because you and your spouse elected the FSA and it is in the middle of the plan year you have to use that money first. Once that plan ends then you can start putting funds into your H.S.A account. Example: medical and pharmacy bills will need to be paid with the money from your FSA. After July 1st you can start using your H.S.A."

If that's correct, what happens if I run out of funds in the FSA account prior to July 1. Can I start contributing to my HSA before July 1?

If I can’t contribute to the HSA until July 1, how does that affect the maximum limit I can contribute to the HSA for the year? The annual cap for 2010 is $16,500. Does that mean if I can’t start until July 1 I can only contribute 50% of the limit, or $8,250? Or can I still contribute $16,500 for the calendar year, but it would just all be in the second half of the year?

Any help you can offer would be greatly appreciated!!

The rules seem clear that when a highly compensated employee is eligible to participate in 2 plans of an employer that the elective contributions are aggregated in determining the actual deferral rate for the employee in both plans. This rule is in both plan documents.

OK - so if a corrective distribution is required from plan but the elective contributions in plan 1 are NOT sufficient to correct, can payment be made from the 2d plan? Neither plan document contemplates this possibility.

It's really complicated because the plans have different plan years.

Can anyone provide a specific ruling, etc. that permits matching contributions to be stopped? I know you can do it on a prospective basis, but nothing to back it up. Any help would be appreciated.

An accountant asks if he must include accrued interest - shown on the IRA statement - in calculating a Required Minimum Distribution.

Any ideas?

I see they gave small Plans 7 business days to remit deferrals. What is the rule for large Plans? Is it 2 business days or just the vague DOL reg of ASAP but not later then the 15th day of the month following?

My employer has lost a large number of clients in the past year. In an effort to avoid lay offs, document work for another company has been brought in. As I've been training on how the new company does things, I've learned that they routinely back date their amendments. Although I don't agree with that practice, when the amendment is to change trustees or plan name, I'm not terribly concerned about it. However, in the first 10 amendments they sent us, one of the amendments is to remove a safe harbor non-elective contribution effective 1-1-10 and another is to remove a fixed non safe harbor match with no accrual requirement effective 1-1-10.

My manager, whose background is mutual fund recordkeeping,, not qualified plans, is struggling to understand why this is a problem. If we are ultimately directed to write the amendments according to the direction of the other company, what sort of problems might I create for myself, personally? (I'm reminded of the Nazis who claimed innocence of war crimes because they were following orders....)