Are there any circumstances where a negative target normal cost is possible?? Should a participant be floored at zero or should the floor be at the plan level?

This goes back to the IRS position where they do not particularly care for negative costs.

One of our recession-hit plan was unable to put in the last $10,000 of the 2008 MRC, after electing to waive off the entire COB.

Can I recertify the 2008 valuation using WRERA provisions like asset smoothing ( hadn't done that earlier ) so that the funding deficiency disappears?

Has anyone done the same or faced a similar situation? Is there a deadline for this, I thought it was sometime in October.

Looking for all possible help! Thanks.

A plan Sponsor inadvertently deposited their DB contribution into their 401(k) plan (plans are with the same vendor). When we noticed we had them transfer the assets from the 401(k) Plan into the DB plan. Later on I was told that this in fact can disqualify the Plan. The money should have been pulled out of the 401(k) plan as a mistake of fact, and then redeposited into the DB plan. Is this true? And what's the difference? I could argue if we had them pull out the money from the 401(k) it looks like the assets reverted back to the employer, which is a no-no also. What would be the correct way to handle this, by law?

A company will add an HSA option mid year. I don't know yet if this will be inside or outside their 125 plan.

The main question being asked is can this trigger a change of election wherein and employee drops their FSA in favor of the HSA. I say it does not.

My own question is can (or what's the use of) an employee have both an HSA election and an FSA. election?

Hello:

We have an ESOP that is being reviewed under Cycle B and the IRS is asking for our amendment to the ESOP for the final regulations to 409(p). The IRS indicated that the final regs 409(p) amendment must have been adopted by the plan sponsor on or before December 31, 2006, because the final regulations were effective January 1, 2006.

I recognize that on the 2006 cumulative list (which covers Cycle B submissions) that the final regs to 409(p) are listed on there; however, I disagree that a final regs 409(p) amendment was required to be adopted by the ESOP on or before December 31, 2006.

I have three questions:

1. Is the IRS correct that an amendment required to the ESOP for final regulations 409(p) on or before December 31, 2006 (the ESOP is a calendar year)? (Please note that if the answer is yes, I find this hard to believe since the final regulations were only issued on December 19, 2006).

2. If the amendment was required, is it the same language as is in the model amendment issued by the IRS in 2008?

http://www.irs.gov/retirement/article/0,,id=184380,00.html

3. Does anyone think that the IRS is just mistaken and is confusing the triennial methodology discretionary amendment (which is only required if the plan decides to use the triennial method). http://www.irs.gov/retirement/article/0,,id=173372,00.html

I sincerely appreciate any input.

Elizabeth

We merged several plans, and unfortunately the largest was not the survivor. So we want to file SSA's that show about 15,000 participants who had been reported as A's in the old plan over history as D's for the old plan and C's to the successor plan. Our auditor (who's also doing the 5500) is saying that they can't get the EFast to load more than 9,999 records for the SSA.

Anyone out there who has been successful doing that?

To make it more interesting, we'd like to do a cleanup sweep of all the terms who have ben paid out, to make sure that they are deleted. But that would give us in excess of a quarter million records. I'm not optimistic about that one.

A physician client wishes to make use of the self-directed brokerage account feature, which provides that the participant must use a broker dealer and invest in publicly-traded securities only. He has specifcally asked for the removal of such restrictions. However, we are concerned that the risk he is taking on is enormous. My questions are:

1. What exactly is a prudent investment under ERISA?

2. How could an individual invest in securities or even commodities without using a broker dealer?

3. What other risks does this request entail?

PPA 508 Amended ERISA 105 to require a DB Plan to provide a pension benefit statement at least once every three years (due for the 2009 plan year).

Originally for DC plans, FAB 2006-3 gave 45 days after the plan year to provide the notice, and FAB 2007-3 extended this deadline to the date Form 5500 is filed by the plan.

However, no guidance is given as to how long after the close of the plan year a DB plan has to provide the statement. Are practitioners relying on the 45 day DC plan deadline as good faith? The 120 day deadline to furnish the annual funding notice? Or another deadline?

Thanks.

I have a 401(k) plan that has as a distribution option installment payments figured over the life expectancy of the participant.

Say a person selects this method. But three years later, she wants/needs the money. Can she cease those payments and take a lump-sum distribution for the remaining amount?

A plan has NEVER filed as a large plan filer. This year the BOY participant count is 111, and 139 at EOY, including terminated participants. In reading Sal's book, I am under the impression that I can continue to file as a small plan filer because my participant count went above 99, but stayed below 120 (at the beginning of the year). The question is, because of the 139 participants at the END OF THE YEAR, if I were to get them paid out (the 29 termed) by the end of 2009, could I again avoid being a large plan filer if my participant count at the beginning of 2010 is still below 120?

Hi! I'm hoping to get some input on this subject.

1) Can 2 spouses working at different employers each participate in MFS?

2) Is there a plan year maximum for both participating in MFS as in dependent care flex spending?

Thank you in advance!

This year the IRS accelerated the deadline for filing partnership tax returns from 10/15 to 9/15. As such, we’ve been telling our clients that they need to fund their discretionary profit sharing contributions for their 2008 calendar year plans by 9/15/09 (opposed to 10/15 in the past).

Assuming a partner has the proper deferral election form in place by the end of the plan year (12/31/08 in this case), is it allowable that a partner can still make their 401(k) deposit by 10/15/09 or should they be made by 9/15/09 too?

Conservatively, I’ve been telling clients 9/15, but I was wondering if anyone has an opinion?

Thanks for any input.

I have a client that would like to merge their existing Keogh (HR10) assets into our MEP. Their Keogh is set up as a QRP and is a DC Plan. I've consulted with my counterparts and they indicated a merger of this type is not allowed in our plan but cannot provide proof within the code as to why. I reviewed Rev. Rul. 2004-12 but it specifically addresses Rollovers and not mergers. I've also reviewed Treasury Regulations, Subchapter A, Sec. 1.414(l)-1 but can't locate anything concrete to prove to the client why we cannot allow this type of merger.

The only piece of information I may be able to rely on is Rev. Rul. 94-76 and Rev. Rul. 2002-42, 2002-2 C.B. 76. "§ 414(l) transfer between dissimilar § 401(a) plans (or a plan amendment treated as such a transfer), the characteristics of the transferor plan continue to apply to the transferred assets held in the transferee plan"... although it doesn't specifically addresses merging a Keogh to a MEP we may be able to rely on this argument because we cannot guarantee the characteristics of the transferror plan will continue due to the fact that we are limited to the plan design of the MEP and cannot make amendments for individual Adopting Employers.

Any thoughts or suggestions are appreciated.

what do you do if the problem goes back more than 6 years or for years that the sponsor does not have records. for example, lets say you only have records for the last 6 years but you know the plan was administered the same way the entire life of the plan and you don't have records for any years beyond 6. how can you determine the contributions? should you even include those years in your submission?

I've got a 401(k) plan that uses the "deemed" (safe harbor) definition of hardship. The regs seem fairly clear in saying the Plan Administrator can rely on the participant's representation that no other resources are available. (There is the matter of participant loan availability - but that's not my question.) My question is this:

Can the Plan Administrator rely on the participant's representation that the hardship exists? Or, must the participant present an eviction notice; medical quote; proof of secondary school enrollment; etc.?

As I read the Regs, there is no rule allowing Plan Administrators to rely on participant representation that the hardship itself exists.

thx

A plan sponsor implemented a 412i insurance funded plan, thought the fact that it is intended to be a 412i plan should not be relevant as the matter pertains to death benefit limits.

The plan includes the husband and wife as the only employees/participants.

For each participant a total contribution of $200k was made, where $100k was for the life insurance premium and the additional $100k was to an annuity poicy. If the participant lives until NRA then the amounts in the two policies is to fund the retirement benefit. And if the employee dies prior to NRA then the life insurance and value in the annuity policy is the death benefit.

This seems to comply with the incidental death benefit limits of rev rul 74-307.

My understanding of 74-307 is that less than 50% must be applied to life insurance. So that would mean if the annuity policy contribution was instead $100,001 it would technically mean that the life insurance premium is less than 50% of total contribution. Not sure if such a technicality is truly meaningful or relevant, but just an observation.

I've even seen where a DB plan could have as much as 66% of contribution be applied to the life insurance policy.

Any views on the compliance of such a death benefit provision?

Thanks.

As you know, due to attribution (for example, between husband and spouse, or between child and parent), two companies can form a controlled group. My questions include

1. Can the plans meet 410(B) coverage requirements separately? For example, if, without aggregating the plans, one plan achives a 80% 401(B) ration, while the other plan achieves a 100% coverage ration, will that cover the controlled group as a whole for 410(B) coverage requirements?

2. What if the two plans have different plan years? Say one plan has a fiscal year that ends in September (so, for example, the plan year would end on 9/30/09), while the other plan runs on a calendar year and thus has a plan year that ends in December (for example, 12/31/09)? How does one figure out the 410(B) required coverage then? Would one compare the plan year that ends within the calendar year of the latter plan?

I have a client that would like to merge their existing Keogh (HR10) assets into our MEP. Their Keogh is set up as a QRP and is a DC Plan. I've consulted with my counterparts and they indicated a merger of this type is not allowed in our plan but cannot provide proof within the code as to why. I reviewed Rev. Rul. 2004-12 but it specifically addresses Rollovers and not mergers. I've also reviewed Treasury Regulations, Subchapter A, Sec. 1.414(l)-1 but can't locate anything concrete to prove to the client why we cannot allow this type of merger.

The only piece of information I may be able to rely on is Rev. Rul. 94-76 and Rev. Rul. 2002-42, 2002-2 C.B. 76. "§ 414(l) transfer between dissimilar § 401(a) plans (or a plan amendment treated as such a transfer), the characteristics of the transferor plan continue to apply to the transferred assets held in the transferee plan"... although it specifically addresses merging profit sharing and money purchase pension plans the argument we may be able to rely on is that we cannot guarantee the characteristics of the transferror plan will continue due to the fact that we are limited to the plan design of the MEP and cannot make amendments for individual Adopting Employers.

Any thoughts or suggestions are appreciated.

We are using high 3 average compensation to test in a cross tested plan.

Plan Specs: YOS for eligibility, dual entry, 1/1 and 7/1. Comp from entry for contribution calculation.

A participant hired on 5/1/07 had the following data:

2007 total annual compensation = $20,000.

2008 total annual compensation = $30,000.

2008 compensation from 7/1/08 entry date = $15,000.

What compensation is used for testing? In other words, what is the "high 3 average" for this participant?

In this situation, is the plan paying the distribution responsible for coding the distribution as taxable? How in the world would the sponsor know whether or not the rollover account relates to a Roth IRA?