Unfortunately I did not notice it right away and I have missed out on three or four contributions. I received a loan on 7/31 and am now being told my deferrals stopped automatically because it forbidden under federal regulations to continue deferrals while I have a loan.

I am not aware of any such regulations and have asked the plan administrator to provide them.

In the event no such regulations exist, can anything be done to make my account whole?

A plan sponsor failed to make their $97k minimum required contribution for the 2007 Plan Year. Up until 2007 we had been doing end of year valuations. We switched to a 1/1/2008 valuation date for 2008 and the plan was frozen effective 1/1/2008. We filed a Form 5330 for 2007. However, my question is do they need to file another Form 5330 for 2008 if he makes no contribution for 2008 either? Does he need to keep filing Form 5330's until the 2007 MRS is contributed in full?

Mostly because this snuck up on me... remember the election to add to the prefunding balance must be made by the due date of the previous year's 5500.

In other words, if you are using a prefunding balance in your 2009 valuation, the sponsor must elect to create it (from excess 2008 contributions) before the due date of the 2008 5500, even though it doesn't show up on 2008 SB.

Just one more thing to do, along with 5500s, AFTAPs, Elections, participant notices, all at various dates before 10/31.

We're seeing more DC/401(k) plans offer these types of annuities as an investment option so that a minimum account balance can be locked in. Is it possible to use these in a DB plan that has more than one participant? If so, how would it work?

If an ER establishes a profit sharing plan without 401k and 401m features, has no vesting requirement, and allows in-service withdrawals of amounts that have 'seasoned' in the plan for just two years, is the plan subject to ERISA Title I?

After all, ERISA § 3(2)(A) defines

the terms "employee pension benefit plan" and "pension plan" mean any plan, fund, or program ..., to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program—

(i) provides retirement income to employees, or

(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,

regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan. A distribution from a plan, fund, or program shall not be treated as made in a form other than retirement income or as a distribution prior to termination of covered employment solely because such distribution is made to an employee who has attained age 62 and who is not separated from employment at the time of such distribution.

Since withdrawals may be made under a plan as I described before retirement or termination of employment, is the plan subject to ERISA Title I?

As I understand it, the law does not allow someone to maintain both a model SEP and another retirement plan. Does anyone know of any official documentation forbidding this?

True scenario: Mr. X has a 401k loan from his employer's plan, which being a tiny company does not do payroll deductions. So Mr. X has to make payments himself. Loan is for 5 years, with monthly payments.

Early June 2009 - 401k loans are reviewed by recordkeeper/trustee for any beyond 90 days delinquent. Find the last monhly payment from Mr X was December 2008. A letter is sent, telling X he has to make 3 months payments by June 30th, or it's taxable distribution time. He makes the 3 payments in time.

Early September 2009 - No other payments have been made by X. So now April. May, and June (not to mention July and August) are due. He will get another letter telling him to pay for 3 months by September 30th. He will make it once more, just in time.

This routine has been repeated every quarter since the loan was issued, and it's pretty likely to keep replaying over and over. My questions is : Even if technically Mr X is avoiding a deemed distribution, isn't the envelope getting pushed a little too far? Since his payments are being made quarterly rather than monthly, as specified in the note, could it be deemed due to violation of the terms? Is our shop too soft of heart?

Calendar Year Plan. 2007 ADP test failed and correction method chosen was refunds. Testing was done disaggregated between Stat EEs and OEEs. All refunds were initiated and all were processed in 5/2008 except for one participant who had a self directed brokerage account. His refund was never processed. In 8/2009, the oversight was discovered. What is the correction? It would appear to be a self correction under EPCRS, but it is not specifically addressed. Here are the options that I have come up with. I think #3 would be my chosen conservative correction, but I would consider #2. I think #1 is a bit aggressive and #4 a bit conservative.

1) Refund the calculated amount with gap earnings and stop there.

2) Refund the calculated amount with gap earnings and process a 1-to-1 qnec based on the calculated refund amount.

3) Recalculate the refund amount for the one participant under an aggregated test run, include gap earnings, and process a 1-to-1 qnec based on the revised calculated refund amount.

4) Recalculate the refund amount for all of the participants under an aggregated test run, include gap earnings, and process a 1-to-1 qnec based on the revised calculated refund amount less any amounts previously refunded. (Refund the ommitted participant as in #3.)

Please provide opinion or please feel free to suggest another option. If possible, please provide any back-up to justify the response.

Thank you in advance.

Can they participate in a Cafeteria Plan? Subject to discrimination?

I have a plan that currently has compensation defined as W-2 Compensation. They wanted to make the change to Section 415 "safe harbor" compensation, but when can I make the amendment for?

If I did it today, could it be done for the 2008 Plan Year or does it have to be for 2009?

Thanks for your help!

A participant is still working with the company and has not met the age requirmenmt for an in service distribution.

They want to Rollover their account from the 401k into a Roth IRA , becauase they think Roth IRA offers better investment selections.

Is this Allowed?

May I presume that a DB plan that covers only HCEs is not subject to the restrictions on pre-termination distributions to HCEs? I.e., these rules are to prevent discrimination against NHCEs, not against HCEs.

Even though the plan document contains the boiler plate language (the IRS will likely not approve without). may I presume it does not apply? That is if an HCE were to die, we could pay the benefit even though the plan is not funded 110%? Obviously, it's undesirable to have the plan that provides the maximum statutory benefit funded 110% owing to the excise tax implications on plan termination.

Any thoughts about going against my standard bromide of "you must follow the plan document?" Has anyone walked down this road?

Company X provides medical benefits to its active and certain retired employees. Company X is changing its post-retirement medical plan so that if a retired employee who is eligible for such coverage declines to enroll in it, s/he will be forever barred from electing into such coverage. In addition, it is intended that such retired employee cannot get back into the plan through the occurrence of an event that would be a change in status for active employees under its cafeteria plan or that would entitle the retired employee to elect back in through HIPAA special enrollment rights. The only concern is whether HIPAA's special enrollment rights rules apply to retired employees. The Code and ERISA refer simply to "employee" while IRS regs at 54.9801-6 refer to a "current employee." There is nothing in the preamble to the regs which clarifies this.

Any thoughts?

We have a sponsor that wants the option for the participant to be able to drop any or all elections anytime during the cafeteria plan year and cease payroll deductions, but they cannot re-enter until the anniversary date, is this allowed under IRS rules?

We are filing a determination letter request for a terminating DB Plan. The plan sponsor is an LLC taxed as a partnership. The LLC has two equal partners, which are covered by the DB Plan, and no other employees.

Does the plan sponsor have to provide a Notice to Interested Parties concerning the filing?

I met with a prospect the other day. A law firm has a pop plan "administered" by their payroll service. For their health insurance, in the base plan, the firm pays 100% of the employee premium for all, and 100% of the dependent premium for attorneys only. All of the firms HCE are attorneys and none of the non-attorneys are HCE.

I told them that this was discriminatory, because not all of the pretax benefits were equally available to everyone. I know that you can offere benefits to some classes of employees and not others, i.e those in New York but not in California, or mechanics but not shipping clerks. I didn't see this as being the same because in the 2 examples I just gave, there isn't a clear division of HCE and non-HCE.

In this case, if I am a secretary who wants to cover my family, it will cost me $800 per month and if I am an attorney, it will be free. The secretary can pretax her $800. If the attorney buys up, the attorney can pretax the difference between the base plan premium (free) and the richer plan premium.

Any insight would be helpful.

I would like to rollover my 403B by terminating employment with the plan of getting rehired by the same agency soon after this. My retirement plan consultant (not connected with my employer) advises that this a a gray area and there is no law against it and no reason why I can't do it. People terminate all the time and then rehire later and there is no law on intent to rehire. I understand that there is also no law about how long one needs to be terminated before they can be rehired.

However my employer is very conservative and claims that if they did this, they would jepoardize their entire 403B plan. However, they cannot sight any law and seems that this is simply a desire to avoid appearance of any impropriety, with nothing to back it up. My question is, is there any law against termination employment, then rolling over the 403B, and then getting rehired at some later date?

I don't work on DB plans enough to know this question, so here goes: In the past (like in the 80's, you now see how old I am), Key Employees used to waive their benefits on a plan termination so that no future funding had to take place, as long as assets were sufficient to pay any Non-Key's that were in the plan. Today, I have been told by an actuary that these benefit waivers are no longer accepted by the IRS. Is this true? If so, where can I find a cite for my records.

Thanks for bearing with me on this question.

My client is a collectively-bargained mutliemployer plan, one employer withdrew from the plan. The actuary determined the withdrawal liability to be, say, $2 millions and the employer agreed to pay in quarterly installments with interests over 5 years. The question is how should the plan record this? Should the plan record the full $2 millions as receivable and contribution, and record installment payments as reduction to the receivable using an amortization schedule? Or should it record the installment payments as contributions and interests when received? Also, I need to have some backups to any answers provided. Thanks in advance.

I have a situation where a participant has deferred more than the 25% document limit.

If I am reading Revenue Procedure 2008-50 correctly, we would return this to the participant on a 1099R along with the earnings, and notify the participant that the distribution is not eligible for rollover. In addition, this would not be subject to the 10% penalty.

I also see that we would not include this in testing at year end.

I have some questions regarding this process:

1. Do we use this in all cases, or only if it crosses a calendar year? Is it ever appropriate to correct for a current year using a negative payroll adjustment?

2. If this process is used for current year corrections, I would assume that the W2 is not corrected?

3. Is there a good list somewhere that would list the appropriate situations to correct using this method? Perhaps it is contained with the revenue procedure and I just am not catching it.

4. Can we use the DOL calculator to calculate the earnings? What if there is a loss?

I'm sure I am missing something. Any help would be appreciated.

Thank you.