The testing in a new comparability plan works out to where the 5% gateway for all NHCEs would be OK. There are only 2 allocation groups - the HCEs and the NHCEs. Although the document defines compensation as the amount paid while an employee is a participant, it's my understanding that for top heavy purposes you must allocate 3% of the participant's compensation for the entire year. There are a couple of NHCEs who enter the plan mid-year whose TH min would exceed 5% of comp for 6 months. I'm wondering if I'm looking at this the right way - for testing purposes, their TH min allocation would be about 6% of their 6 month comp. Is this acceptable when all other NHCEs are getting 5%, or would you have to bump them all up to 6%? All help is greatly appreciated.

mpp is on calandar year. want to freeze it for next year (so we make contribution for 2009 but not 2010). should plan be frozen effective 12/31/2009 or 1/1/2010? thanks

IRS determined that there was a failed Roth conversion. The IRA provider is seeking guidance from the retiree on how to proceed. Shouldn't they know how to proceed in this case?

It seems like the IRA provider would simply recharacterize (retroactively) the Roth as a personal brokerage account with no favorable tax status. What else do they have to do?

I have a plan that has an 11/1 --> 10/31 plan year. For whatever reason, they set it up that way long ago. It's a pain for them (and us) to administer it that way, given their fiscal year is also the calendar year.

Is it too late to do a short plan year for 11/1 --> 12/31 and to switch to calendar starting 1/1/10?

An active participant in a 403b is wanting to take out the full value of his account. He is not terminated or 59.5. The current plan document became effective 1.1.09. The plans SPD states that distributions of elective deferrals can occur at age 59.5, hardship or disability and that employer contribution accounts invested in annuity contracts can occur at any stated age, hardship or disability or other stated event, however it has the wording "you should consult with the Administrator to see if the plan actually permits all of these distributions and what conditions may apply to the distributions". The participant was told that in service distributions can not occur. The participant then provided a provision from the original annuity mass mutual annuity contract that stated the "contract owner may, upon written request, make a total or partial withdrawal of the contract value".

Question is, would the plan doc now prevail over the provisions of the old annuity contract? Would they have to amend the plan to allow for inservice dist at any time to mirror the original contract?

If a cash balance plan has an AE of

Preretirement mortality: none

preretirement interest: 5%

Postretirement mortality: 94 GAR

postretirement interest: 5%

Hypothetical interest 5%

Does the plan have to amend both the AE and hypothetical interest or just the hypothetical interest?

Is there some type of correction for this? During the year the employer deposited all of the PS contribution for the owners but none for the NHCEs under the theory that because the plan has a last day rule the owners will definitely be there on the last day but the other employees might not. We have explained to them that they cannot do this, but it is obviously too late to stop what they did during the year. My question is related to correction. Is this a violation that can be corrected? Is it some kind of BRF perhaps that obviously fails coverage? Fortunately with the market conditions in 2008, earnings were not an issue and we are looking at it for 2009.

Hello. I am new to a small group plan, working in the HR Department. Today I had an employee come to me who technically was eligible for our 401k plan back on October 1. He did not enroll at that time, but now with only 1 month left in the year, decided for tax purposes that he wants to enroll and make a lump sum deduction from his pay for his missed deductions from this quarter. I didn't think that this was possible and that he was just SOL until 1/1/2010. Has anyone ever experienced this before? Any chance anyone can point me to IRS documents to support my ability to tell him one way or another?

Thanks in advance

Eric

Company EFG leases its employees from another company, I guess because they think it is easier to process payroll, non-retirement benefits, etc. (To clarify, EFG had its own employees and then one day turned them over to the leasing company. They are clearly under the control of EFG.) I understand that these people are "leased employees" after a year, and if we want to include them in EFG's plan, we simply include "leased employees" and are done.

But they want to include these employees after 2 months, and we think that we need the leasing company to sign on as an adopting employer in a joinder agreement, specifically referencing employees of EFG so as not to include all of the leasing company's employees.

What do you think, are we headed in the right general direction or is there some other way to do this?

Question is this...

Val date 1-1-09

Funding Target = $ 500,000

Assets = $ 475,000

Phase in percentage 94%

Target Normal Cost =$50,000

What's my minimum contribution?

Has anyone hearch about a possible PPA extension? I understand informally it has been discussed at the IRS. Thanks!

Hi, is anyone concerned about the proposed legislation in H.R. 4126 or is the general consensus that it could never pass?

I hate partnerships. Just needed to say that to start. I've done some seaching but can find anything exactly on point so if this has been covered I'm sorry.

We have a smallish partnership where several of the partners are approaching 70 1/2 for purposes of who is a 5% owner and what comp can be used for benefit pursposes how are "semi-retired" partners treated. That is the partner has no more capital interest and no more profits interest. They are recieving guaranteed payments over a somie time period. The payments are reported as ordinary income on a K-1.

1. Since they have no capital interest and no profit interest are they considered 0% partners for purposes of key, HCE and RMD?

2. They are working though limited hours but receiving large (6 figure) guarnteed payments, can all of that be used for plan purposes since it is considered earned income which looks like it meets the plans definition of includable compensation or is it a violation of the exclusive benfit rule, that is are the partners who are receiving only guarnateed payments considered employees of the partnership? I've read what looks like conflicting guidence in the code and frankly this isn't my area of expertise.

I know what answer the client would like to hear, I'm just not sure it is the correct one.

Any direction would be appreciated.

We have a client with Nationwide, and we are moving their existing loans to the new Nationwide Loan Administration system. Nationwide charges $1 per month per loan (deducted from the participant's account).

Participants with loans have already signed their Loan Agreements, etc. and have paid their set up fees as specified in the paperwork.

Can this new loan fee be tacked on because they are getting these upgrades and functionality (online access/viewing, loan payoff requests, and consolidated quarterly statements)?? Or will this Nationwide fee change the terms of the loan?

Do we have to go through DFVCP and pay the $750?

Can we file with a mea culpa and ask for an abatement of the fee? (The forms were signed on time, but the secretary was out that day and the outgoing mail got all screwed up?

And, if the $750 has to be paid, can they set up a payment plan with the IRS, like, maybe 3 payments of $250 or $100/month?

The answer to this seems obvious to me but a large and prominent COBRA administrator feels differently than I do:

An employee involuntarily terminates employment on December 31, 2009, and loses coverage at the end of that day. If the employee otherwise meets the requirements, can the employee receive the COBRA subsidy?

(This scenario would also apply to employees who involuntarily terminate during December and whose coverage ends until the end of the month.)

A DC plan is a combo plan with a DB plan and has recently been amended to add an optional form of benefit besides lump sum, a QJSA.

If a participant in the plan's spouse will not sign off on the waiver when the participant terminates employment, what options does the participant have if they do not want an annuity option?

Lets assume that the husband and wife are not in any divorce they just disagree????

Is the fact that the benefit is an optional form override any requirement. I understand in the DB plan the QJSA is the normal form of benefit.

Thanks

A surgical practice is an LLC taxed as a partnership. They have a DC plan in which they are maxing out contributions. Each Doctor can decide whether to be on call at the Emergency room of a local hospital and they receive a 1099 personally and report it as Sole Practitioner Earned Income. Can this income be included in the LLC Partnership income? If not, can they make a retirement plan contribution from this income separate from the partnership?

I recently began working for a company that contributes 33% of the premium for employee's health insurance. However, I've learned that in some cases (where the employer felt that the employee couldn't afford insurance and really needed it) they have paid more, sometimes as high as 100% of the premium. This practice is completely discretionary and based on need.

Aside from the obvious morale-crushing impact of others learning of some receiving more of a benefit than others, can anyone tell me if this violates ERISA in any way? While their hearts are in the right place, I feel that an employer can never know everyone's circumstance completely, and should someone's circumstance change (for the better or the worse), how would they know and would adjustments be made? It's just not prudent business practice in my opinion.

I will advise them of my thoughts, however right now I need to know if they are violating any laws or regulations by doing this.

Thanks.

My question is this: No employer contributions have been made during the entire year of 2008 and only $375 of my $1800 for the calender year of 2008 was contributed that had been deducted regularly from each paycheck.

The real problem lies with the fact that my employers are under the impression that the SIMPLE-IRA account set up by them is a 'profit-sharing' program AND since they experienced a 'loss' for 2008, they are under no legal obligation to contribute to my SIMPLE-IRA account. This was not set up as a SIMPLE 401(K) account.

I have contacted representatives of PaxWorld who have told me an 'adoption agreement' was never received from my employer. This form states intent of contributions, salary reduction, and timing of salary reduction election, etc. PaxWorld however set up the account and deposited funds into my account since establishment of Oct. '06 without this form of intent. I feel I don't have any merit to claim this 'missed contribution' because this form was never submitted by my employer.

How do I recover these contributions owed and are there penalities for 'missed deferral oportunity' as written in the IRS Q&A? Is this a Labor Commissions Court case or a Small Claims case?