I was always under the impression that if you bought or sold vacation days under a Cafeteria plan, that those days were bought or sold with after tax dollars. I have been given a plan document by a client that shows a BeneFlex plan saying that the vacation days are pretax.

Does anyone know about this?

Ok - I thought perhaps there was a thread regarding this, but cannot seem to find one exactly on point...

I have a client here in NY who has an employee residing in MA. Said employee was married under MA law to a partner of the same gender. Said marriage is now dissolved. Employee's partner's attorney has prepared a DRO and forwarded it to the Plan Administrator for review. The DRO seems to be in order as far as the necessary information required by the client's plan.

This specific issue is NOT addressed in the Plan QDRO procedural section nor any other section of the Plan.

Can/should/must the plan recognize the marriage and therefore the DRO? Are there any other special issues that the client needs to be aware of?

all opinions appreciated.

A & B each is a 50% partner in P'ship X & P'ship Y. A also has a sole proprietorship, Z. From what I can tell, X, Y & Z are under common control. (Treas. Reg. 1.414©-2©(2)(iv).) Agreed?

Does it make a difference if X & Y are corporations?--i.e., if A & B each owns 50% of the stock of Corp. X & Corp. Y, and A also has sole proprietorship Z, are X, Y & Z under common control?

Looking for confirmation ---

I have a 401(k) plan sponsored by Company B which was established in 2003 by 3 individuals who left Company A. The plan recognizes service with Company A for eligibility and vesting. The Companies were never in a controlled group together.

John Doe worked for Company A and had a nonforfeitable interest in their 401(k) plan. When Company A dissolved in 2003, he went and worked for a Company C.

Life goes on and on and John left Company C in 2003 and went who knows where.

On 8/3/2009, Mr. Doe shows up at Company B, where he has never worked a day. But, Company B recognizes service with Company A and in 2003, Mr. Doe had a nonforefeitable interest in their plan. The document has the rule of parity (Corbel volume submitter), but I am concerned about the nonforfeitable interest issue. The language says "In the case of a Participant who under the Plan does not have a nonforfeitable right ...."

Well, he never had a nonforfeitable right in Company B's plan, although he would have had he started with them within 5 years of leaving Company A.

Do you think I need to bring him in on 8/3/2009???

Thanks.

James

A client has a profit sharing plan to which no new contributions have been made for several years. One account remains in the plan, for a retired employee who has been receiving annual RMDs. (She is 78). What, if any, PPA amendments are needed for this plan by 12/31/09?

I know the client should terminate the plan, and they will do that next year.

Is it a statutory requirement to make the direct rollover option available to the plan participant? Please furnish the citation.

I understand that if a participant has gone over the compensation limit before the end of the plan year, but has not reached any other limit (402(g), plan limit, 415 or ADP limit), that participant may defer additional amounts up to the lower of the 402(g), plan limit, 415 or ADP limit. Are there any limitations on the match? Or, is it that whenever there's a deferral, there must be a match?

The economy is so bad that:

... I got a pre-declined credit card in the mail.

... I ordered a burger at McDonalds and the kid behind the

counter asked, "Can you afford fries with that?"

... CEO's are now playing miniature golf.

... If the bank returns your check marked "Insufficient Funds"

you have to call them and ask if they meant you or them.

... Hot Wheels and Matchbox stocks are trading higher than GM.

... McDonald's is thinking of selling a new 1/4 ouncer.

... Parents in Beverly Hills have fired their nannies and

actually learned their children's names.

... Motel Six won't leave the light on anymore.

... The Mafia is laying off judges.

.. Blue Cross/Blue Shield laid off 25 Congressmen.

And finally ...a truckload of Americans was caught sneaking into Mexico.

2-physician practice has a profit sharing plan.

One doctor took out a loan in excess of $50K.

So the excess on the loan has to be reported as a distribution, plus he has to pay it back.

That creates basis in the plan.

If the doctor takes an inservice distribution as allowed (now) by the plan, how is the basis allocated?

Can he choose to take out the basis money first?

Does it have to be prorated?

Thanks!

I have a takeover one person DB plan that has an end of year valuation date. The owner would like to terminate the DB plan (termination date of 12/01/2009)...but wishes to minimize the procedure as much as possible. The owner would like to make a minimum contribution for the 2009 plan year on 12/30/2009 (we plan to change the valuation date to beginning of year to accomplish this). Then all assets would be liquidated on 12/31/2009.

The 5500-EZ would reflect the contribution for the plan year and would also show the trust value of zero on 12/31/2009. However, the Schedule SB would show the valuation date and results as of 1/1/2009.

Can anyone see a problem with this approach? Does the mehod seem do-able?

Any and all help would be appreciated.

Thanks.

I work for a nonunion company that has recently been doing alot of work for the State of Ohio. PW laws require the employer to match wages and benefit dollar amounts. Currently we recieve our hour wage, benefits, and a hourly amount to cover the additional amount in benefits, ($7 to $13 an hour). We just received notice, as of 1/1/10, the company is creating a new 401(k) that all employees will be enrolled in. This is so whenever we are working a prevailing wage job they can contribute this additional money into it and avoid paying taxes on that amount.

First: can a 401(K) be a mandatory contribution?

Second: Can the contribution be tied only to the people working certain jobs?

Third: Can the contribution amount change depending on the job being worked?

Fourth: Can an employer determine the amount of contribution?

Hi,

Question regarding ADP: plan end 5/31, HCE, over 50, defers only $1,200 for plan year. ADP test fails, can the $1,200 be 'recharacterized' as catch up (or the failure amount)? There are only deferral contributions for this year so did not exceed any limit....

Thanks,

Jason

Our small company (less than 20 employees) administers our own 401k plan. The original provisions of the plan did not allow for participants to take a loan or borrow from their account. We are now considering changing this to allow for borrowing.

Could this be done by just amending the original plan?

Carl C.

Little trouble understanding the part-time/temporary exclusion -

Plan has a 6 month eligibility requirement (no specified # of hours required). The Plan also wants to exclude part-time employees and includes the QAB wording if complete 1000 hours within eligibility computation period will be included.

1. Is it correct to assume that if a p-t employee does complete 1000 hours they also have to be employed on the last day of the eligibility computation period - the way a typical year of service works?

2. Since "regular" non part-time employees only have to complete 6 months of service and yet those considered to be part-time employees must essentially complete a year of service, are there any compliance/coverage issues with that?

We have a 401(k) plan that failed their ADP test for 2008 and has only now elected to make the refunds to select HCEs to correct. The problem is that some of the HCEs were paid out during the 2008 calendar year.

How are 1099R's handled for participants that fully cashed out in 2008? Assuming they rolled over their accounts, I understand that distributions from their IRAs will be required, but do the IRAs issue the 2009 1099 or should the plan issue a 2009 1099?

Any input would be appreciated.

A client just notified us that 2 of her employees dropped their health insurance coverage because they couldn't afford the premiums anymore. They have a calendar year Cafeteria Plan and the change in elections were allowed in August.

How do we correct this mistake?? The employees no longer have the insurance and the withholdings were stopped in August.

A one-participant retirement plan intended as a 401-qualified plan has been in operation for 33 years. The employer filed a Form 5500 every year. Each year's contribution was within the 404 and 415© limits. No distribution. Every fact we can see shows that the employer operated the plan according to provisions that, had they been written, would have been a tax-qualified plan. But after a thorough search of the employer's records and the investment guy's records, we can find nothing that even suggests that the plan ever was committed to writing. What IRS correction program could one use to fix this? If none, is there any other hope?

The current owners of a firm purchased the firm about 5 years ago. At the time of purchase they took over and continued to maintain the firm’s existing PS/401 plan. The plan was originally established in the mid-70’s and maintains a single “pooled” investment account.

The current owners just received a call from the prior owner’s son who just “discovered” an investment account in the name of the plan which apparently has not been known about since the late 70’s. The “discovered” investment account only has about $14,000.

We’ve been administering the plan for roughly 10 years and have never accounted for the account.

The forensic accounting costs alone would significantly exceed the balance in this discovered account, and I don’t believe any records exist going back earlier than the mid-90’s.

Can we just allocate it as a gain today? The only problem is that the prior owner’s son is asking how much of this balance belongs to his father (the prior owner was fully paid out several years ago).

Any thoughts or ideas on how the client should proceed would be appreciated?

Background; employer who was not subject to federal COBRA in 2009 is now going to be subject to Federal COBRA beginning 2010 because they are now above 20ee's on over 50% of the business days in 2009.

An employee terminated in 2009 when the carrier is still responsible for administering mini-COBRA, and elected under the Mimi-COBRA during 2009.

Once 2010 rolls around, does this COBRA participant stay with the carrier under mini-COBRA or would they now become the responsibility of the employer under the Federal COBRA regs?

Thanks very much!

Jeremy Davis

We took over the administration of a 401(k) profit sharing plan with a 3% non-elective contribution for all eligibles. They also have a fixed match (50% up to 4% of pay) that has a last day & 1,000 hour requirement. Does the match have to be ACP tested because of the accrual requirements or is there some exception for a plan with a fixed match? I've seen different answers so now I'm confused. I was under the impression that you had to ACP test it because it imposes accrual requirements.

Any input would be greatly appreciated.

Thanks!