The third party administrator of a 401(k) plan had a system error such that participants were overpaid benefit payments. In order to correct their mistake, the third party administrator agreed to make a contribution to the plan equal to the overpayments (rather than settle their mistake with the plan sponsor outside of the plan). I think this is definitely an operational error because I don't think a non-participating employer of the Plan can make employer contributions to the plan. Practically speaking, though I think the correction would be for the contribution made by the 3rd party administrator be pulled out and the employer to put that money back in. I guess in the end, the result is no net difference. So, maybe no corrective action is required? Any thoughts on other correction ideas? Also, would there be any prohibited transaction issue with the third party administrator having made a contribution to the Plan, rather than the employer?

I am calculating the benefit options for a plan that offers a ten year installment payment option. The normal form is a life annuity. I see that a term certain annuity is subject to 417(e). How do I calculate that installment payment? BTW, the plan has switched to PPA for 417(e). Do I amortize the 417(e) lump sum value of the life annuity over the 10 year certain period using the first two segment rates?

I just received word from our insurance company on their plan design change for 2010 and mental health parity. Our mental health benefits go from the regular percentage coverage up to $50 reimbursement per visit to: regular percentage coverage and after 12 visits, the provider has to send in a pre-certification for insurance company review.

Have you had your mental health benefits changed for 2010 to meet the mental health parity rules?

Husband wife small pension plan so no Annual Funding Notice, but is a Summary Annual Report still required (being husband/wife as opposed to just a small plan)?

I'm preparing a final 5500 for a Master Trust. The MT was set up for two plans of the same employer. The plans have merged so there is no need for the MT. How do I prepare the final? Do they assets have to show as being transferred out? The assets aren't really going anywhere since they were also reported on the 5500s for the two separate plans.

Thanks

Wow! Would appreciate any thoughts on proper analysis under these remarkable facts:

1. Participant and second wife take steps toward divorce

2. Wife dies shortly after divorce action starts and before divorce is final

3. The Participant, a month after second wife's death, files new 401(k) beneficiary designation indicating he is single and names his son as the 401(k) beneficiary.

4. 5 months later, participant dies without any final action on the prior divorce proceedings

5. 2 months after participant's death, plan distributes 401(k) account to son named as beneficiary

6. 4 months after participant's death and 10 months or so after deceased second wife's death, the court enters an Equitable Distribution Judgment dividing participant's rights in the 401(k) 50/50 with deceased second wife. (Equitable Distribution was in response to continued efforts to prosecute the divorce by the estates of both the wife and the participant).

7. Plan is being pressured to provide deceased wife's estate 50% of the participant's 401(k) account.

8. Plan requests QDRO in addition to provisions in equitable distribution judgment.

So, we have not only a possible post-death QDRO but a post-death divorce. Plan presumably had no reason to know of pending divorce at time of participant's death since there was no divorce or draft QDRO, etc. at that point. Plan knows participant was a widower and has what it assumes to be a fully valid and recent beneficiary designation naming son as beneficiary of 401(k) and so pays that out in ordinary course. Does deceased wife's estate have any interest in the 401(k) plan by time divorce and QDRO are provided? Can Plan even accept QDRO under these facts?

What 409A practice guides are out there and what are you using/finding helpful?

I am looking for a secondary source in this practice area.

Thanks.

New York has adopted a law requiring insurers to permit children of policyholders the ability to continue coverage under the group health plan of the policyholder through age 29. The law has a number of nuances and inconsistencies but I am stumped by one of them:

The law provides that eligible children may elect the continuation option "during the annual 30-day open enrollment period described in the group health insurance policy or contract."

What does that mean? I have found no discussion of this.

Most employers' open enrollment periods are shorter than 30 days. Does that mean that employers must have a longer period for dependents to enroll? Wouldn't that be preempted by ERISA? Do New York insurance contracts require a 30-day open enrollment period?

Any help would be appreciated.

Company C maintains 401(k) plan X for its employees. Under Plan X, C makes matching contributions on a payroll-by-payroll basis. Plan X provides matching contribuitions on any combination of before-tax 401(k), Roth 401(k) and after-tax contributions provided that contributions in excess of a specified percentage are not matched. When participants' before-tax and Roth 401(k) contributions reach the 402(g) limit, the participant is treated as having elected to contribute an equal percentage of after-tax contributions for the remainder of the year so that matching contributions can continue to be allocated to his/her account. C is considering making an amendment to X which eliminates this automatic after-tax contribution rule and instead permits matching contributions to be paid after the participant's elective deferrals reach the 402(g) limit. If X is amended in such a way, would this feature be subject to benefits, rights and features nondiscrimination testing? I also recall that the coverage regulations provide that if a plan imposes a last day of the plan year requirement as a condition to eligibility to share in an employer contribution, that the employees who fail to meet the requirement would have to be included in the test as nonexcludable employees.

What if X instead were amended to provide a true-up match by comparing employee contributions as a percentage of compensation?

Another question I have come across. Does the AARA premium reduction apply to Medical, Vision, and Dental? Or, does that reduction apply toward medical insurance premiums only?

Thanks!

Has anyone had the experience in the past few days of being added to the "friends" list of a board subscriber who definitely is NOT a friend? This came completely out of the blue and it bothers me that people may view my profile and think that I have any connection at all to this particular poster.

A 401(k) plan allows Rollovers in before meeting eligibility (limited participant) as well as after someone is a Participant. My question is: In a 401(K) Plan, once someone has met eligibility (therefore, they have "moved" from being an Employee to being a participant) is it permissible to allow Rollover Contributions to be withdrawan at any time (without a distributible event)?

Tagdata has said no but I saw it in a document on a tranferring in client.

If the Plan Document is ambiguous as to whether a 401k contribution is deducted from the bonus check, can the company not deduct the contribution from the bonus check? The Plan Document just states the employee may contribute up to a certain % of all applicable compensation. Compensation refers to all W-2 wages. Does that include the bonus? Is there a violation if the 401k deduction has not been made from the bonus checks. If so, how could this be corrected?

Hi,

Is it 404© compliant to contain opinionated information such as classification of a mutual fund manager on the election form?

Here's an example:

Janus Orion (JORNX) is classified as "Aggressive Growth". What are the limits that "aggressive growth" can be construed as information that might influence a participant's investment decisions?

FWIW, if any of your clients jumped on the yield curve after the IRS released the 9/25 newsletter, don't forget that you can use the alternative method for PBGC premiums as well. This can dramatically reduce their premiums.

However, you need to do this before the due date of the comprehensive filing date, or you have missed your chance. If your client has already paid their premium, as long as they amend their filing before 10/15, they can still take advantage of the alternative method.

402(e)(4)(D)(ii) explains that for Net Unrealized Appreciation purposes certain plans "maintained by the employer" are aggregated together to determine whether participant has taken a lump sum distribution.

What is the definition of employer here? Would it include all control group members?

The definition in 414(b) does not list 402 as a section to which it applies.

Any help is appreciated.

Ahoy, gang:

I propose the following policy re the use of biographical (advertising) text in signature lines (the stuff at the end of a posted message):

Your signature line may contain your name, the name of your firm and contact information (e.g., a web address, an email address, a street address, a phone number). No other text concerning your services is permitted (because this generally would constitute a commercial advertisement, which is not permitted on the message boards in the text of messages). Use of such text after being notified by an administrator is grounds for suspension of posting privileges.

A participant's former spouse has obtained a court order directing the employer's 401(k) plan to pay a specific sum of money, the vast majority of which will be applied toward attorney's fees for the parties and a small portion of which would be applied to the former spouse for rent, security and moving expenses. While the very small portion of the amount of money could be considered to relate to alimony, can the order qualify if a vast majority of the money is applied toward attorney's fees?

I am a participant in a governmental 457(b). May I, at age 59 1/2 rollover my 457(b) into an IRA while still employed by the city?

If so, can you point me to the guidance that indicates this?

Thanks

In preparation to revise our employee handbook a questions has been raised regarding the offering of employer-provided health insurance.

We want to say,

"Full time employees are those who work no less than 40 hours per week. Full time employees are eligible for employer-provided Health insurance, which currently pays 75% of the premium costs for employees and 50% of the premium costs for dependents. -- Part time employees are those who work less than 40 hours per week. Part time employees are nopt eligible for employer-paid health insurance."

So, both FT and PT employees can enroll in our health insr. plan... but, only those who work at least 40 hrs. per week are eligible for employer-paid premium portions. This should be legal, right? We are discriminating not on the eligibility of health insr. enrollment, but instead on the eligibility of employer-paid portions.

Thanks.