Any thoughts on whether a 401(k) plan may have certain groups of participants subject to a QACA and then have other employees fall under another safe harbor? In other words, must 401(k)(13) be applicable to the entire plan for it to apply?

Can a plan exclude part-time employees from participation in an FSA, if so, what kind of limitation can they use. ex. all employees who work under 40 hours, or does it have to be a different hour amount? what would be the maximum?

any help would be greatly appreciated!

A small plan sponsor had employees for the first 10 years of his business. He no longer has employees and will not again. However, he does want to keep the plan another 5 years or so. Must they continue to file the full 5500 or could they switch to a 5500-EZ. Also, the plan has non-publicly traded investments of about $300,000 and they would rather not maintain a fidelity bond since there is now only one participant (the company owner).

Thanks

Two companies are part of a controlled group. They want to maintain separate retirement plans. I think they can, as long as they are willing to go through the hoops of doing annual benefits, rights and features testing. In the end, they might determine that it's not worth it to continue that way, but as long as the plans pass brf testing, they can go on that way indefinitely. Am I right -- or is it just wishful thinking on my part?

Our money purchase pension plan currently provides for the first of each month as the distribution date. I take this to mean that if there are any participants that become entitled to benefits during the month, distribution of those benefits will commence on the first of the following month.

This is very cumbersome to administer. What does the law say as far as commencement of distribution of benefits? Could we limit this to once or twice a year? Can someone point me to the relevant legal guidance on this?

Thanks.

Hello everyone. This is my first post. I hope someone can point me in the right direction

I have a client who is a highly compensated employee and participant in a small (+/- 10 employees) DB plan. Client wants to take a lump sum payout of his benefit. However, a plan actuary told him that he cannot b/c the distribution would bring the plan funding down too low. I guess bellow 80%.

Question 1:

Can the plan take into consideration the affect the client's distribution would have on the funding percentage of the plan, or should it only look at the current funding percentage?

Question 2:

Additionally, client said that a plan rep. told him that he could take a percentage of the lump sum equivalent to the percentage the plan is funded. EX- if the plan is 80% funded, client could take 80% of the lump sum value, and take the other 20% as an annuity. Has anyone heard of this?

Thank you everyone for any help you can provide

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???]