I found that a prior tpa were filing the Form 5500 under Plan No 001 when in actuality it should have been 002. The Employer sponsors a Plan 001 and later sponsored another Plan but the Document and Form 5500 were marked as 001 instead of 002. Can I just fix this on Form 5500 where it asks if has a new adopting employer? I am restating the Document with 002.

Background:

An Israeli citizen worked in the U.S. for a few years and contributed to his U.S. employers 401K plan. He left and has been back in Israel for 4 years. He now wants to roll it over to an IRA.

Question:

Can he move it to an IRA if he is no longer in the US?

Thanks

Company A acquires a division of Company B on June 1, 2009 through a stock deal. Both companies sponsor 401(k) plans. The division of Company B is immediately allowed to participate in Company A's plan. Company B participants can opt to rollover the assets to Company A's plan.

For 2009 HCE determination, do I need to consider prior year compensation of all of the employees of the acquired division? If top 20%, would I consider all employees of the division in 2008 or just the ones active at time of acqusition?

What if Company B did not have a retirement plan, would I need to consider prior compensation?

What if the division of Company B assets were transferred/merged into the plan-For top paid calculation, would I consider all employees of the divison sold in 2008 or only those active at time of acqusition?

A terminated (2004) participant, who had not yet been paid his plan (profit sharing) benefit, died in November of 2008. When he died, he was remarried. I believe his current wife is the beneficiary. In addition, his beneficiary designation form (signed in 2000) names his first wife as the beneficiary but the form says that “if I re-marry the beneficiary designation below will no longer be valid”and provides that his spouse at the time of death will receive the death benefit (unless waived). What steps should be taken to make sure his current wife is the beneficiary and how can litigation be avoided from the first wife who thinks she is the beneficiary? I am aware that there are several approaches that can be taken (e.g., having the first wife complete a claim of benefits form and then show her why she is not the beneficiary, hiring an attorney to handle the situation, getting the estate lawyer involved, etc.). What would be the best way to handle a situation that ensures payment is made to the correct beneficiary and helps protect the TPA and the employer from possible litigation?

Draft: 8/26/2009

Section by Section Summary

Pomeroy Discussion Draft for Pension Funding Relief

TITLE I—SINGLE EMPLOYER PLANS

SECTION 101. Extended period for single-employer defined benefit plans to amortize certain shortfall amortization bases.

Allows a sponsor of a defined benefit plan to elect one of two alternative amortization schedules for the investment losses that occurred at the end of 2008. One alternative would extend the period for nine years delaying the seven amortization payments for two years with employers making interest payments in the first two years. The second alternative would fund the "2008 losses" over a 15 year amortization period; this would give employers a predictable and practical required funding stream that would not divert funding from other key business needs. To assure that the above funding relief is not undermined by other actions that would reduce the retirement security of employees, employers electing the funding relief would have to meet one of three maintenance of effort options. These include: continuing to provide benefit accruals under the plan; making a 3 percent nonelective contribution to a defined contribution plan for employees frozen out of the defined benefit plan; or, freezing all nonqualified deferred compensation plans and subjecting them to the restrictions that apply to the defined benefit plans that cover rank and file employees. These requirements would apply for different periods depending on the extended amortization schedule chosen by the employer.

SECTION 102. Expansion of corridor within which single-employer defined benefit plans are allowed to average asset values.

Generally, expands the asset smoothing corridor from the current 10 percent corridor by increasing the corridor to 20 percent of fair market value for 2009 and 2010.

SECTION 103. Election to use yield curve.

Allows employers that use the spot yield curve for 2009 to use the segment rates for 2010.

SECTION 104. Lookback for benefit accrual restriction.

Uses the plan's 2008 funded status to determine if the benefit restriction that freezes benefit accruals for plans that are less than 60% funded will apply in 2009 and 2010.

SECTION 105. Lookback for credit balance rule

Uses the plan's 2008 funded status for the purpose of the rule prohibiting the use of credit balances with respect to a plan that was under 80% funded in the prior year. This will apply for both 2009 and 2010.

SECTION 106. Clarification of the treatment of expenses.

Clarifies that plan investment expenses are not included in the plan's target normal cost.

SECTION 107. Information reporting.

Modifies the section 4010 reporting rules by repealing the PPA rule requiring reporting with respect to plans that are less than 80% funded and replacing the trigger for reporting. The new trigger would be when a plan had aggregate unfunded vested benefits of more than $100 million and would disregard plans that are at least 90% funded. Additionally, rules regarding the confidentiality of the reported information would be tightened.

SECTION 108. Benefit restriction effective date for collectively bargained plans.

Generally, with respect to collectively bargained plans, the draft delays the application of the benefit restrictions until plan years beginning after December 31, 2011.

SECTION 109. Social Security level-income options.

Social Security level-income options are excluded from the benefit restriction limiting lump sums and other prohibited payments.

SECTION 110. PBGC guarantee.

Changes the determination of the amount of the PBGC guarantee by using the date of plan termination, rather than the date that a contributing sponsor enters bankruptcy.

SECTION 111. Application of extended amortization period to plans subject to prior law funding rules.

Provides comparable funding relief and maintenance of effort rules to plans not yet subject to the PPA rules. This relief is limited to the deficit reduction contribution ("DRC") rules under the pre-PPA funding regime.

SECTION 112. Additions to funding-based limits on benefits and benefits accruals under single-employer plans.

Prohibits the adoption of early retirement window arrangements under which benefits are payable in a lump sum unless the plan after taking into account the additional benefits is at least 120% funded. Alternatively, the company could fund the full cost of the additional benefits.

If such an amendment does take effect, all benefits under the plan would be required to be 100% vested.

SECTION 113. Reportable events.

Revises the treatment of PBGC reportable events based on a specified reduction in the number of active participants in a plan so that such an event is treated as not occurring if: (1) there has not been the statutorily specified reduction in the number of active employees of the employer, (2) the plan was at least 80% funded for the 2008 plan year, and (3) the plan sponsor notifies the PBGC that it is using this special rule

TITLE II— MULTIEMPLOYER PLANS

SECTION 201. Adjustments to funding standard account rules

Allows multiemployer plans that meet solvency tests to elect one of two approaches, available for 2009 and 2010, to fund recent losses over a 30-year period; strengthens and streamlines existing amortization extension provisions.

SECTION 202. Multiemployer plans in endangered or critical status.

Extends the Rehabilitation Period and the Funding Improvement Period by 5 years, net of any extension in that period elected by the plan under section 205 of WRERA; authorizes trustees of a multiemployer plan in endangered or critical status to elect to treat any schedule of benefits and contributions adopted under their Rehabilitation or Funding Improvement Plan as the Default Schedule, once it has been approved in collective bargaining agreements covering at least 75% of the plan's active participants as of the start of the plan year in which the schedule is so designated; streamlines and clarifies certain technical rules for plans in endangered status.

SECTION 203. Multiemployer plan mergers and alliances.

Facilitates the merger of multiemployer pension funds though the creation of multiemployer pension "alliances." Authorizes the PBGC to facilitate alliances by providing direct or indirect financial assistance, when the PBGC determines such assistance is reasonably expected to reduce the PBGC's likely long-term loss. Provides fiduciary clarification to allow trustees to be deemed to meet exclusive benefit standard of ERISA.

SECTION 204. Strengthening participants' benefit protections.

Updates the level of PBGC guarantees for multiemployer plans that become insolvent, so that someone who had 30 years of service could be assured of receiving a maximum of roughly $20,000/year, up from roughly $13,000/year. Modifies existing provisions for multiemployer plan partitions so that eligible plans that have suffered substantial reductions in contributions due to employer bankruptcies and terminations to transfer liabilities attributable to those employers to the PBGC, if that would significantly reduce the likelihood that the eligible plan would become insolvent.

The answer seems very obvious to me, to the point that this seems like a stupid question, but sometimes I question my sanity so here goes.

Corporation A and Corporaion B form a controlled group. Corporation A sponsors a 401(k) plan, and Corporation B signs on as a participating employer. Plan # is 001.

Now Corporation B wants to set up a new plan, for reasons which have not been presented to me. So say they set up a PS plan - to which Corporation A will sign on as a participating employer. Should the plan # be 001, or 002?

I'd say 001, because this is the first plan that B will formally "sponsor" under their own id#.

Any votes for 002?

Has anyone heard of the DOL auditing a TPA firm???

We are terminating our 403(b) Plan. We have a balance in the plan's forfeiture account. We want to distribute this to the current plan participants. The plan document is silent as to how to allocate these amounts. How is this done?

Thanks.

Partnership grants option to buy partnership units to employee x. Employee X later becomes partner. Employee X later exercises options that were granted prior to being a partner. Are these options taxed as W-2 or distribution?

Ok, let's put aside the fact that why would anyone WANT both a SEP and 401k Plan for a moment...

I have a potential client who currently has a SEP plan. He is a sole proprietor. During 2009, he also became an S-Corp (so he will have both SE income and W-2 income) and now has one employee and wants to start a 401k Plan also (before the end of the year). (FYI - His SEP is a 5305 Model SEP.) I assume he can maintain both, but the million dollar question is, can he contribute to both the SEP and the 401k for 2009? I realize he will have a combined limit, but can it be done?

Thanks so much for all of your help in advance.

A plan is terminating and I am to preare the plan amendment to terminate the plan.

The termination amendment contains the plan termination date and includes recent legislation such as PPA, and WRERA.

In reviewing the plan sponsor's document I determined that the following amendments were not included with the plan:

401a31B automatic rollover

PFEA

415 regulations

I can provide the plan sponsor with those prior amendments along with the plan termination amendment.

Any practical suggestions as to what should be done? It's a one participant plan and the plan has operated in accordance with the law, just didn't have the amendments in place (or have been misplaced).

Thanks.

Has anyone ever dealt with a situation like this: We are a service provider & record-keeper for a 401(k) plan. We bill the plan sponsor record-keeping fees quarterly pursuant to a service agreement with the plan sponsor; this service agreement also states that if payment is not made within a specified time period we can deduct the record-keeping fees directly from plan assets. We also collect contract asset charges monthly and directly from the plan assets (i.e., the various separate accounts where the plan invests its assets). The latter charges are specified in a group annuity contract which is issued to the plan itself.

The plan sponsor filed for Chapter 11 bankruptcy several months ago. Since then, we have continued to charge and get paid by the sponsor our quartlery record-keeping fees, and we have continued to deduct the contract asset charges each month. We recently received a letter from a law firm that represents the plan sponsor in its bankruptcy proceeding. They are demanding that we return the record-keeping fees and contract asset charges we've collected from the plan sponsor since the bankruptcy filing.

As I see it, because it is clear that retirement plan assets are not part of the bankruptcy estate, we have a very strong argument that we are entitled to keep these fees and charges. All of the fees and charges would have either been paid directly from plan assets, or if paid from the plan sponsor, for the benefit of the plan. Has anyone ever dealt with a situation similar to this? Particularly from a service provider/record-keeper perspective?

Thanks in advance.

I recall sometime ago that IRS changed opinion and we no longer need to file Form 5330 for late deposits of 401k.

I also thought we no longer needed to check a prohibited transaction occured on Form 5500 Schedule H/I.

Does anyone recall.

Thanks

I have a plan with a 6/30/2009 plan year end... they are currently applying for a distressed termination. They refuse to contribute any more money to the plan (well, they say they don't have any money). Would they still be required to pay an excess tax on the rmc for the 2008 plan year if the distressed goes through?

I am a lot confused. Here are the facts:

Traditional DB plan with BOY Valuation (Calendar Plan Year)

Minimum required contribution for 2008 plan year - 0

Contribution made on 6/15/2009 - 30,000

2008 Effective Rate - 5.70%

Line 19© of 2008 Schedule SB "Contributions allocated towards MRC to current year, adjusted to Val date" - 27,676

First question: What is the number that can be used to increase the prefunding balance? 27,676 OR 30,000 OR something else?

Second Question: When you must reduce the assets by the prefunding balance in order to calculate the AFTAP, do you adjust the pre-funding balance to 01/01/2009 using the 2008 effective rate? Or do you simply subtract out 27,676 because this is the number that can increase the prefunding balance as of 12/31/2008? Is that even true?

Final question: I was under the impression that the FTAP and AFTAP should only differ if there are annuity purchases. Why am I seeing otherwise?

Any help would be appreciated.

I am trying to restate an old MPP Plan that was converted to a PS Plan. The employer had a PW Plan in 1996 under company A. Company B adopted a 401k Plan in 1998 (001). In 2002 Company A changed their Entity/Plan Sponsor to Company B. One, I cannot find an amendment stating this change. But as I look at 5500's Company A and B both have 001 as the Plan number. Shouldn't Plan A be 002 since the Adopting Employer already had a Plan? The 2002 Form 5500 for Company A shows a change in the Plan Sponsor, Plan Name and EIN but the Plan No is still 001.

Are general post-separation expense reimbursement amounts that are structured to be compliant with 409A but not necessarily exempt from 409A included in items that cannot be paid to specified employees within the first 6 months of separation?

For additional information, we have a specified employee who, in addition to severance or separation pay, is receiving reimbursement for certain moving expenses and continued health benefits, is there a prohibition on paying those reimbursements during the first 6 months? I know the regulations provide for some exemptions when reimbursements are made as part of a separation pay plan (including apparently voluntary separation plans) provided certain rules are followed (see 1.409A-1(b)(9)(v)). In particular, those rules require that the reimbursements be provided within a limited period of time--e.g., reimbursement for moving expenses incurred within 2 years following the year of separation.

In our situation, the moving reimbursement provisions are not expressly limited to expenses incurred within 2 years following year of separation. Instead, they generally envision a one-time moving expense reimbursement being provided for any move at any time following termination for the life of the former employee. As such, I do not think they are exempted under the separation pay plan exemption discussed above. I do believe they comply with the general reimbursement rules / provisions under 409A so I think they are generally compliant if not exempt with the exception concerning application of the 6-month delay requirement.

IRC 401(k)(2)(B) was amended to add (v) qualified reservist as a distributable event for elective deferrals.

Sections of the Code dealing with QNECs, QMACs and Safe Harbor Contributions require that these contributions meet the requirements (distribution restrictions) of Paragraph (2)(B), with no exception listed.

Portions of the HEART Act seem to specify that only elective deferrals may be distributed as a Qualified Reservist Distribution.

Does anyone know if QNECs, QMACs and Safe Harbor Contributions may also be distributed as part of a Qualified Reservist Distribution?

Thanks.

An employer has a fully insured medical plan issued in New York which covers employees in all 50 states and US territories. MA has a mandate providing continuation coverage for a former spouse. The statute, found at Chapter 175, Section 110I (a) specifically provides, "The provisions of this section shall apply to any policy issued or renewed within or without the commonwealth and which covers residents of the commonwealth." Does the mandate apply to a contract issued in NYS which covers MA residents?

I have 2 questions:

I have a 1 person plan with an AFTAP of 65% as of January 1, 2009. Is a Notice of Benefit Restriction required since only 1 person? I couldn't find anything that excluded the 1 person plan from providing a notice.

Also, what about a plan (also with an APTAP of 65%) that is non-PBGC. Is a notice required? Since the restricted amount has to do with the limits of the PBGC would this plan have to do a notice? I would think it would since I couldn't find anything that excluded non-PBGC plans.