Payroll company stopped withholding deferrals for an HCE who hit the compensation limit before he got to the 402g limit. What is the correction process? do you have to go back to prior years to fix and if so how far back?

thanks

Hey Everyone,

I just wanted to check to see if I understand something correctly. If an employer does not have an existing 401K plan and wants to set up a Safe Harbor 401K with an effective date of 1-01-2010 what is the latest the plan can be set up?

As long as it is a NEW 401K would be alright to have everything set up and plan docs signed by 12-31-09? Since the SH notice timing rule for a new plan would be the same as the timing rule for a newly eligible employee wouldn't we have until the date the participants would be eligible to participate which would be the effective date of the plan, 1-01-2010, to give out the Safe Harbor notice?

Thanks for your help!

I prepared a determination letter application for a client. I prepared the Notice to Interested Parties and sent it to the client. I instructed them to send it to participants on the date I was filing the application.

Well, the client forgot to send the Notice. It should have been sent 2 1/2 weeks ago. Does anyone know what the proper procedure is for this?

I am trying to determine whether the right to receive MRDs in annual payments, as opposed to a plan provision that requires a lump sum distribution of the participant's entire account balance upon the first MRD date, is a 411(d)(6) protected benefit. In other words, if a plan used to allow participants to make the minimum payments each year, but now requires a lump sum distribution of the participant's entire account balance upon the first MRD due date, is there a cut-back?

Everything I have read and seen regarding Cash Balance contributions is that they are strictly age-dependent. I've come across a couple of different maximum calculators that tell me a person born in 1956 could put away about $135,000 per year and a person born in 1963 could put away approximately $80,000 per year. Is this true regardless of their compensation? For example, if you had a 2 person plan (both owners), at the ages above, could the credits be $135k and $80k, respectively, even if they are making only $50,000 each?

Two employers own another employer 50/50. All three of them combined, they must comply with FMLA. Any one of them separately viewed, none is subject to FMLA.

Are the employers combined for the purpose of FMLA?

Thank you.

MFJ

I think I'm ok with this but just want to make sure.

1 man plan is only 70% funded. He's past NRA and wants to take in-service distribution (assume final regs on in-service distributions are met). I believe the 1.401(a)(4)-5 restrictions on pre-termation distributions (110% funded rule) would not be required here as with no NHCE or even other HCE to be concerned about he can essentially waive that rule, correct ? If so, then he'd be left with only the AFTAP restriction in which case he could only distribution 50% of his lump sum (up to the PBGC max benefit).

Any disagreement ?

Can a participant -- sole participant in a money purchase pension plan -- convert his account balance under the money purchase pension plan directly to a Roth 401(k) plan? In other words, can he terminate his money purchase pension plan and transfer his account directly to a Roth 401(k) plan?

I am looking at an ESOP and need some thoughts. The ESOP previously held other securites prior to becoming an ESOP and as a result has the oldest participant accounts including various other investments such as stock. The question has arisen whether the benefits can be bifurcated and distributed under different rules depending on the type of benefit. The goal would allow for an earlier distribution for the non-employer stock and a later distribution time for the ESOP employer stock.

It would pass my first smell test-- those participants who have the old stock are getting improved benefit (the ability to get there benefit earlier) and those who only have ESOP benefits aren't losing anything (they never had the old stock). I know that there are plenty of plans that have bifurcated benefits, but usually this develops because anti-cutback rules are keeping an old benefit. This is different, because the bifurcation is being given to create a new benefit (the earlier distribution timing).

Are there any rules that would prevent this? The reasoning is mostly a matter of money-- there are only a small handful (less than 5) who have any interest in this old non-employer stock, but it is being managed by a company and management fees are being paid. The hope is that people will take it out and allow that part of the plan benefits to be distributed (or rolled over into an IRA or whatever).

Any thoughts would be welcomed!

Does anyone know if maintaining a 403(b) plan makes the employer ineligible to use the Form 5305 for a SEP? In other words, does the Service consider a 403(b) plan to be a "qualified retirement plan" for purposes of using a Form 5305?

Thanks

When plan was converted in 2005, the document was restated and the definition of compensation excluded deferrals from bonuses in error. The plan was restated in 2005 and the error was just discovered. What needs to be done...is there a VCP to fix a scriveners error?

Private corporation wants to issue $0.01 options to its CEO. If the options vest immediately but may only be exercised during the 60 day period following a change in control (meeting the regulatory definition) or separation from service, do you think this award would be 409A compliant? It seems to me it would be deferred compensation but that payment triggers would comply with 1.409A-3. Just wanted to get other people's impressions.

Thanks.

Aaron

I'm not clear on when a partial withdrawal liability arises. I hope there's a multiemployer w/d liability expert who can help.

Assume an employer closes a plant in late 2010, so that the "3-year testing period" is 2008, 2009 & 2010, and the "high base year" is calculated based on 2003 through 2007. Because 2008 through 2010 were years with a full complement of employees, there is no 70% reduction under the partial withdrawal liability rules for as long as 2010 is part of the 3-yr. testing period.

In 2013, however, the 3-yr. testing period is 2011 through 2013 (2010 having dropped off). If each of those years--2011, 2012, & 2013--has more than a 70% reduction from the high base year (based on 2006 through 2010), does that mean that 2013 is the first partial withdrawal year, or are each of the years in the 3-yr. testing period (i.e., 2011, 2012 & 2013) partial w/d liability years, or is only the 1st year in the testing period (i.e., 2011) a partial w/d liability year?

Has anyone heard whether the IRS will take the same position they took with GUST that if you have two plans merging that only one needs to be restated for EGTRRA? I have two companies who are merging and each sponsor a 401(k) plan. They will merge the companies and the plans on 1/1/2010. So, I am wanting to just restate the surviving plan and prepare a merger and transfer agreement. If I have the new plan executed by 12/31/09 with an effective date of 1/1/2010, the simultaneously executed PPA/HEART amendment will therefore be signed before 12/31/09 meaning I have that taken care of as well. [Or, should I have the plan being eliminated execute its own PPA amendment by 12/31/09???]

Are there any provisions for participant who does not want a deferred annuity option in a terminating plan yet the spouse is unavailable to provide consent to waive the normal form of benefit prior to distribution of assets. The terminiating plan is a Money Purchase and the account balance is over $5k.

Assuming the plan's trust is a domestic trust, can a foreign corporation sponsor a 401(k)?

Employee is not enrolled in employer's cafeteria plan. Under employer's plan, dependents can only participate if the employee is enrolled. Employee presents QMCSO requiring his child to be added to plan. Accordingly, to meet the plan requirements and the QMCSO, Employee and child are added to plan pursuant to Prop. Treas. Reg. 1.125-4(d)

Employee obtains QMCSO requiring former spouse to add the child and wants to disenroll the child and himself from the Plan. Under Prop. Treas. Reg. 1.125-4(d)(ii), as long as the child is actually enrolled in the spouse's plan, coverage for the child can be dropped mid-year. But under what 125 provision can the employee drop his coverage?

This has to come up occasionally.

Thanks.

BACKGROUND: I am a California employee - I have a work injury (shoulder), dating back to October, 2007, which was accepted/covered by Work Comp, for future medical/surgery. I returned to work initially, trying to work with the injury, when the pain came back with a vengence on 9/9/09, and I have been off work, waiting for surgery ever since. No, I did NOT take any additional time off for this injury other than the initial week after the injury until 9/9/09. The doctor, MRI, CT Scan, and all tests and documents have proven I need surgery to fix this problem.

PROBLEM: This is at the end of the initial 2-year coverage from Work Comp, when my time off work would be covered/compensated by Work Comp, so I need to transition to State Disibility to compensate for my time off while I wait for all the 'red-tape' to be processed for the surgery.

First Question: Should I back-date my request to State Disibility to 9/9/09, or should I date it for when the Work Comp initial 2-year work-time coverage expired (10/15/09)?

Second Question: How long does it take for the State Disibility benefits to be processed - in other words, when should I expect a check? (assuming all paperwork is in order and approved).

Any answers, suggestions or website link referrals would be GREATLY appreciated!

The plan document (Sungard) requires participating employers to give written approval for all amendments. This has not been done. Only the primary employer and trustee have been executing amendments. The plan has terminated and will be submitted for a letter of determination. How big of an issue will this be? Should some type of corrective action be taken in advance of the submission?

Acronymns: someone has a sense of humor.