An employee is taking an unpaid leave of absence which qualifies as a change in status. Normally, we would change the election upon commencment and change it again upon return. However, in this case, the employee is taking leave until the end of the plan year. There are still some unreimbursed funds in the Medical account and she has not yet made contributions equal to the total election.

Do we simply change the election and try to have her find some reciepts to cover the unreimbursed portion or hurry and get some work done or buy something? Is there a way she can "prepay" to remaining election? Can she somehow incur expenses during the leave and have them reimbursed?

Does anyone know where to find unrounded plan limits for 2009?

Can you make the shareholders pay for the employer match in a 401k Plan? The company does not have enough money to fund the employer match. Is there a way to make the shareholders pay for it?

It seems that an additional Distribution Notice is required to be provided to a participant in addition to the "Special Tax Notice" and the Distribution Form (which we prefill with vesting and fee information) from (John Hancock, ING, etc.). It also seems that if the participant's distribution amount is less than $5,000 ... then this extra notice is not required - is that correct? Are any of your firms preparing this "additional" notice that seems redundant? If so, are you preparing them for all distributions or just for those with less than $5,000? Any responses or thoughts would be greatly appreciated. Thank You!

I have recently learned that if I amend my eligibly of my SEP from a 2 year to a 3 year, any employees that now qualify in the 2 year eligibility will be grand fathered in.

I plan on giving my employees a nice bonus at the end of the year, and would prefer not to be forced to contribute to them via the SEP. So instead of amending the SEP, can I just create a second SEP? I did find research from the IRS and other sources that a business can have multiple SEP accounts.

IE: One with Schwab and one with Fidelity for example. <-- I assume both are prototype SEP agreements

Is the SEP agreement specific to each broker? If so, it would make sense that each SEP account will carry its own eligibility agreement.

Then I am guessing, I can decide which SEP account to fund at the end of the year. So for my favor, this year I will fund the Fidelity SEP with a 3 year eligibility and not fund the Schwab SEP with only a 2 year eligibility.

Does this seem correct? Please help.

And finally, if the above does not work? Can I terminate my Schwab 2 year eligibility SEP IRA and start a new Fidelity 3 year eligibility SEP IRA. I would think that each plan is independent of each other. If I am not happy with the Schwab SEP IRA, why not cancel and start over?

HCE took a loan from his profit sharing plan in prior year.

Now he wants to repay the loan in part by transferring an investment into the plan.

Is that allowed?

He wants to use an investment in a limited partnership.

Thanks for any guidance on this!

Group Life plan on a calendar year basis changed carriers midyear in 2008 on 4/1. The Sched A for the old policy will reflect zero participants at eoy. The new policy is a 2 yr policy through 3/31/10. So the 1st policy yr ends 3/31/09 which would be included in the 2009 5500 filing. The 2008 form therefore will show zero participants at eoy since only the Sched A for the old policy will be included. Does that sound correct?

With regard to a Profit Sharing Plan that is combined with a Cash Balance Plan - does the vesting schedule under the Profit Sharing Plan have to be a 3-year 100% vested schedule because it is combined with the Cash Balance Plan or can the Profit Sharing Plan keep its 6 year graded vesting schedule?

I'm getting conflicting information and need some help.

Thanks.

I am divorcing my retired spouse, who is collecting benefits (we are in California) from a university defined benefit plan. He is taking a reduced benefit now so that I can continue to receive payments after he dies. The university plan has two categories for those who can receive payments after the principal dies. One of them clearly applies after divorce. But the other is called "surviving spouse", and it apparently does not apply to a divorced spouse (the plan says that the benefit can be paid instead to a dependent child or parent). My question is if a QDRO can be used to force the university to treat a divorced spouse as a surviving spouse. My husband has no objection to having me receive both forms of payment after he dies.

4/1/2009 Plan sponser elects to use non-tranistional segment rates for 1/1/2009 val. I see AFTAP will be 55%, but wait until 9/30 to certify since prior year was 82%. Benefit restrictions came in 4/1/2009, participants notified of 50% LS restriction.

9/14/09 IRS says you can use yield curve for 2009 and switch back to segment rates for 2010

9/30/09 I cert AFTAP at 55% based on non-transitional segment rates.

10/2/09 PS elects yield curve for 2009 valuation. AFTAP based on yield curve is 75%.

10/2/09 I re-certify AFTAP at 75%.

Since no notices were ever sent notifing participants of complete restriction, is this a material change?

I'm thinking my 10/2 cert is the AFTAP and it's not material. I think if it would have happened after the 100% lump sum restriction notice was sent, then I might have a material change and I would have been stuck with the 55%, although the proposed regs seem a little contradictory.

What if the PS made this election on 9/14/2010? I think How do you handle changes in the funding target after 10/1 of the current year?

Hi,

I have a plan that wants to elect non-elective safe harbor that is 7%, is this permissible? Is there a percentage limit that they can elect?

Thanks!

Jason

I am preparing for my term mailing. I have captured my terms for 2008.

My question is do I need to send out to terminated employees in 2009

who were in the plan 2008. Any help would be appreciated.

thank you

I'm trying to understand the distinction between the 409(h)(4) put option period of at least 60 days in 2 succeeding years and the -7(b)(11) requirement of at least a 15 month put option. They both start the day the stock is distributed in year 1. The 60 day one then springs to life again for another 60 days after the valuation is complete in year 2 (we says statements are distributed to participants). Assume all that happens on the same day every year, June 1. So you have a put option that runs through the end of July in year 1 and then may go dormant until June 1 of year 2 and then runs again through the end of July. Under this scenario, a total of 14 months. This option periods could run longer but only have to be at least 60 days.

The -7(b)(11) option is exercisable at least during a 15 month period. How do they work together, or do they? Seems like the 15 month period wouldn't really work for the period of time after a year end valuation date unless everything gets done very quickly. Not my normal experience. You couldn't exercise the option at the previous year's price in the new year. So just use whatever is longer? I don't recall ever seeing a document using the -7(b)(11) language. They all (including ours) seem to use 409(h)(4). As always, thoughts are appreciated.

A cash balance plan credits interest on 12-31 of each calendar year.

The credit is equal to a safe-harbor (for age discrimination rules) rate x the hypothetical account balance on 12-31 of the prior year.

The interest crediting rules say that interest must be credited at least annually. However, under the above noted approach, new participants won't get an interest credit on their first 12-31 because they don't have an account balance that existed on the piror 12-31. This means that a participant who joins on a given January 1, won't get an interest credit until nearly two years later.

I can't find any guidance (other than what's in the proposed regs) on this, but it seems that we have to credit interest at some point during the participant's first 12 months of service.

Any thoughts?

Small ESOP Plan (<20) has rollover accounts which have insurance policies as an investment.

Is there any reason why this plan would not file a Schedule A?

Regarding plan amendments to small closely held companies sponsoring a defined benefit pension plan.

Say a company has an owner who is also the President and Trustee and maybe another owner who is also a director and then maybe a few employees in the company (or not).

When adopting the plan or a plan amendment is it necessary to have a resolution or consent of the Board even if the Board memebers are going to sign the plan amendment, or is the amendment alone sufficient?

Thanks.

Resolution to terminate 401(k) plan well over 1 year ago. Most of participants have filled out distribution paperwork, but there are 5 that have not responded. We have sent out the paperwork several times. They are not technically missing...more like unresponsive because we believe that we have the correct addresses. The balances are all well above $5,000. One is close to $300,000 and we do not want to roll this over without good authority that we can do so. What can I do to get these participants out of the plan? Can I roll them over to an IRA without authorization when above 5K? As the TPA we are incurring expenses for filing 5500's, etc. and the plan sponsor is out of business and will not pay us so we are not receiving fees for this. Custodian will not take fees out of remaining participants accounts even with Trustee authorization. Any help would be greatly appreciated. Thanks.

Do you know anyone who prepares IDP 401(k) documents or other DC documents for each cycle? For example, someone who currently has or is working on an IDP 401(k) document with updated language for all of the cycle D LRMs within the document (not as add-on amendments)? We've tried a few firms so far with no luck.

If a participant elects to defer 5% as Roth 401k, is the 5% calculated on the gross wages or the wages after all tax withholdings have been done? I have a payroll company that is applying the percentage after the withholding and I am not sure if that is correct. I need to have some backup for this and have yet to find anything.

Thanks for your help!!

What is the process for termination? Is there a formal process for paying excess assets (i.e. a certain method for paying such excess assets)? I gather that one would have to pay in accordance with Trust and Treas. Reg. 1.501©(9)-4; have sponsor adopt termination (is that termination of plan or VEBA); and file final Form 990 and 5500.

Any thoughts on this process? Thanks.