As it's audit season again, the issue has again arose regarding the footnote regarding assets representing 5% or more of current assets. For years, we have used the asset figure as of the beginning of the year; now, there are those who feel it should be as of the end of the year. There is nothing in the audit guide or Form 5500 instructions as to whether or not to use BOY or EOY assets to determine the 5% level.

Opinions? Or, if there is a thread to previous conversations on this topic, it would appreciated. Thanks much!

Does the beneficiary of a life insurance policy held in a 401(k) plan have to be the plan? Can the participant name an individual on the life insurance beneficiary form?

Section 415 regulations require a plan to include as compensation any payments made by the later of 2 ½ months after severance from employment or the end of the limitation year that includes the date of severance from employment if such payment would have been paid to the employee prior to a severance from employment if the employee had continued employment with the employer and are regular compensation for services during the employee’s regular working hours, compensation for services outside the employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments.

If our plan excludes bonuses, commissions, shift premiums, allowances, fringe benefits and all other types of remuneration from regular compensation, do we have to include it if it fits within the 415 language above? I’m having a difficult time reconciling the two.

An employer that maintains a one-participant retirement plan will file its Form 5500EZ reports for calendar plan years 2008 (on extension), 2007 (a slight amendment of a timely filed report), and 2006 (seeking delinquent-filer relief). For the 2007 and 2006 reports, is it okay to use the current forms? These will be handwritten, not electronic.

Does an 11(g) amendment need all the same disclosures as ordinary amendments (such as a summary of material modifications)?

Company was destroyed, trustee died, the rest of the company execs now live in another country. Assets have been distributed to the participants, but we don't know who should sign the final form 5500. Ideas? I have searched the DOL and IRS sites and it doesn't seem to address this exactly. We are the TPA only.

Assume for a moment I have statistics to prove a 58 or 55 retirement age is "reasonable"...

How do you calculate the Max 415 pension at say 58 or dare I say 55?

My plan uses for actuarial equivalence....

5.5 Pre (no mortality)

5% Post 83 GAM

Thanks in advance!

The 5-year cycles for IDPs seem fairly straight forward. However, the 6-year cycle for prototypes and volume submitters has me hopelessly confused. I am lost in Rev. Proc. 2007-44 land right now. The way I read it, the EGTRRA remedial amendment period ends on January 31, 2011. However, I have read in numerous other places that the plans must be amended/restated and (if necessary) filed with the IRS by April 30, 2010. However, I can't find the April 30 date in any of the guidance, including Rev. Proc. 2008-56 (unless I am blind). Can somebody help me nail this down once and for all? It would be most appreciated!

I would like to combine two plans for coverage and non-discrim. One is the existing cash balance plan that runs for the full calendar year. The other is a new 401(k) profit sharing plan which also uses the calendar year, but because it is a new plan, there is a short plan year.

2 questions:

1. I know that in order to permissively aggregate, plans must have the same plan year. Does the short year in the 401k mean that I cannot combine the two plans?

2. If I can combine the two plans, what period is the compensation measured over? The cash balance plan uses the full year's comp, and the 401(k) uses the short year's comp.

This was just forwarded to me...

"Like many recent college graduates, Raechel Holtgrave was planning to accept her first full-time job this year — a position with State Farm Insurance. But now that she’s been crowned Miss Hooters International, those plans will have to wait.

she majored in mathematics and actuarial science"

huh. what's the world of actuaries becoming?

gotta love her quote

“You’ll never find an easier job, and you’ll never find a job where you have this much fun,” she said. “That’s why I’m worried about my next job that I’ll be bummed it’s not as much fun.”

http://www.columbiatribune.com/news/2009/j...-spreads-wings/

We recently discovered that a broker surrendered a participant's insurance policy during 2008 and placed the proceeds into the participant's personal account. Therefore, the participant had a taxable distribution from the plan in 2008 for the amount of the cash surrender. Federal withholding was not done and the particiant was never issued a 1099R.

What is the best way to fix this? Issue a 2008 form 1099R now and pay late penalties? Does the employer need to pay the federal withholding? What about the 945 filing for 2008?

Any suggestions would be greatly appreciated.

If a Gov't employer realizes they have made contributions in excess of $49,000 this year to a 401(a) plan, can a 415(m) plan be set up by the end of this year to receive the excess contribution, or is it too late and the excess needs to go into a suspense account to be used as a credit next year? I have been told that once the money actually "touches" the plan, any determined excess can not go into the 415(m) plan. They would actually need to have stops in place so that no more than the dollar limit will ever go into the 401(a) and the calculated "excess" goes into the 415(m) directly.

I have a plan that has a 2008 AFTAP of 70%, 2007 Funded Ratio of 74%. The 2008 minimum required contribution was $300,000. The plan was subject to quarterlies in 2008.

There was a carryover balance as of 1/1/2008 of $5000. The plan will not be putting in any contribution for 2008. Which would be the correct way to look at this:

(a) Since, the plan’s 2007 Funded Ratio is less than 80%, we cannot use any balances to offset part of the 2008 min reqd contribution.

(b) Since the plan’s first quarterly was due on 4/15/2008 (and was not made), the entire credit balance gets automatically adjusted against part of the required quarterly.

Based on one of the choices above, funding deficiency is calculated accordingly.

I think (a) is the correct way to look at it. Any help appreciated.

Can the sponsor of a multiple employer plan terminate the participation of an adopting employer who the sponsor feels is jeopardizing the tax qualifed status? I assume so since the sponsor's consent is needed to allow an employer to adopt in the first place.

I am preparing a 1/1/2009 valuation and calculate an FTAP/AFTAP of about 53.0% A deemed election will not bring it up to 60% so I'm stuck at 53.0%.

Since < 60%, benefits are frozen and no lump sums are allowed. How is this reflected in the valuation? Do I just do the valuation as in the past. It doesn't make sense that there would be no accrual (no TNC) for the 2009 year. How about showing benefits to participant?

We are a small company with 7 total people. The partners have not historically drawn a salary and would like to participate in our safe harbor 401k plan. Can they do this without drawing a salary and getting a W-2?

Any comments would be appreciated as to whether this makes sense

Facts:

NRA=62

AA=50

Accrued Benefit $195,000 (10+ years of participation)

Lump sum available as deferred annuity at NRA

Suppose terminating employment.

Then, contend lump sum is computed as $195,000 x (f)

(a) N62/D50 using plan rates

(b) N62/D50 using 417(e) rates

© Greater of (a) and (b)

(d) 105% x (b)

(e) N62/D50 computed using applicable mortality table and 5.50%

(f) Least of ©, (d), and (e)

Suppose funding (assume no pre-retirement mortality). Then, FT computed as $195,000 x (f) / (1+second segment rate)^12

(a) N62/D62 using plan rates

(b) N62/D62 using funding segment rate 2 for the first 8 payments and funding segment rate 3 therafter

© Greater of (a) and (b)

(d) 105% x (b)

(e) N62/D62 computed using applicable mortality table and 5.50%

(f) Least of ©, (d), and (e)

It is my understanding that RMDs are waived for individuals turning age 70-1/2 during 2009. The waiver applies to the payment due by April 1, 2010, but NOT to the payment due by December 31, 2010, which is considered a 2010 RMD.

Is anybody aware of an extension of this waiver to 2010 or beyond? I believe this waiver is limited to 2009 only.

Thank you.

Company A (previously a subsidiary) was a participating employer in a 401k plan (Plan X), was later sold and set up its own Plan (Plan Y) and is now to be merged into its Parent Co.'s plan (Plan Z). It has been discovered plan X has qualification issues (non-amenders, etc.)....Is it possible (i.e., does Company A have the legal authority) to submit an EPCRS submission for itself regarding Plan X qualification failures? If not, how does Company A get rid of the nonqualification "taint" of Plan X?

In January we received most of the funds for a conversion plan, along with an explanation from the prior investment company that there was not sufficient cash in their real estate fund to honor any redemption requests at that time. This is an individually directed plan where the affected participants had chosen to invest some or all of their balances in this fund. Nine months later they are still unable (unwilling?) to transfer the remaining funds and have no estimate of when they might be able to do so.

Clearly the blackout period has long since expired. And it is only a matter of time until the plan needs to make a distribution to a terminated participant who has chosen that fund.

Is there any sort of enforcement mechanism that the plan fiduciaries could use against this investment provider in this type of situation?