Does anyone have a free resource or other current information that they can share about current average employer matching contribution levels in 401(k) plans?

Question: Is it possible to be exempt from establishing a new shortfall amortization base while not being eligible to wipe out prior bases?

IRC Section 430©(4) defines the term Funding Shortfall as the excess (if any) of the funding target over the value of the plans assets reduced by the carryover balance and prefunding balance.

IRC Section 430©(5) gives an exemption from establishing a new base if your assets reduced by pre-funding balance (if applying the PFB to the Minimum Required Contribution) is greater than the funding target multiplied by the applicable percentage (i.e. 94% for 2009)

IRC Section 430©(6) says that if the funding shortfall is zero than all shortfall bases and charges (and waiver bases and charges) shall be reduced to zero.

If you are exempt from establishing a new 2009 base because your AVA minus PFB is greater than 94% but less than 100%, do you have to carry forward the 2008 shortfall base and charge since 430©(6) does not include any applicable percentage?

Numerical example

01/01/2009 Funding Target: 100,000

01/01/2009 AVA: 95,000

01/01/2009 FSCOB: $2,500

01/01/2009 PFB: $750

2008 Shortfall Amortization Charge: 10,000

Sponsor elects to apply the PFB toward the 2009 MRC.

430©(4) 01/01/2009 Funding Shortfall = Funding Target - (AVA-FSCOB-PFB) = 100,000 - (95,000 - 2,500 - 750) = 8,250

430©(5) 01/01/2009 Shortfall Base Exemption: 0.94*FT - (AVA - PFB) = 0.94*100,000 - (95,000 - 750) = -250 therefore the plan is exempt from establishing a 2009 shortfall amortization base.

430©(6) 01/01/2009 Early Deemed Amortization Upon Attainment of Funding Target: Even though the plan is exempt from establishing a new 2009 base, there is a funding shortfall as defined in 430©(4), so it appears that the $10,000 amortization charge is maintained for the 01/01/2009 valuation.

Sincerely,

Joseph Carolan

430_c__4__430_c__6_.pdf

Hello,

I have a question regarding FSA nondiscrimination testing. We are in the middle of trying to complete our FSA renewal and need some help on the IRS' definition of "group health insurance". Is medical, dental, vision, life, LTD and STD apart of their definition? Or just medical, dental and vision?

Our FSA administrator was not all that convincing when she said all of them so I thought I could get some help through here.

Thanks!

Has anyone heard anything further about the likelihood of the IRS issuing a document failure correction program by the end of this year?

I wasn't expecting an automatic change in valuation date to be allowed for 2009 but if I'm reading the final regs correctly it appears to offer such for 2008, 2009, and 2010. I'd appreciate any confirmation and other interpretations to the following questions:

1. So a plan using an End-of-Yr valuation date through 12/31/08 has automatic approval to change to a Beg-of-Yr val date as of 1/1/09 ?

2. Do you interpret this as being a multi-year option for years from 2008-2010 so in theory could you do a EOY-Val for 12/31/08, BOY-val for 1/1/09, then back to a EOY val for 12/31/09 ? Kind of an extreme example but just trying to flush out the full scope of options available.

See attached for the section I'm talking about (red-boxed section).

Valuation_Date_Change_Final_Regs.pdf

Can a 401(k) plan with Safe Harbor NECs plus matching contributions of 50% of elective deferrals up to 6% of comp. eliminate the matching contribution feature mid-year and remain a safe harbor plan? Will the plan be required to conduct ACP testing for the year?

ARRA states assistance-eligible individual has to have involuntary termination "through" 12/31/2009.

If someone is involuntarily termed on 12/31/09, COBRA would start 1/1/2010.

Also, if an employee is termed anytime in Dec. and coverage runs through the end of the month, COBRA would start 1/1/2010.

COBRA admins and others saying that in the above 2 scenarios, no subsidy because coverage was not lost by 12/31/09. I don't think that was the intention of the law.

Any opinions?

An employer has an older 403(b) plan for its veteran employees (and retirees), and a newer 401(k) plan for those hired in recent years. It wants to move all the veteran employees' and retirees' money from the 403(b) plan to the 401(k) plan. The insurer holding the 403(b) assets says the employer can do that—IF the state insurance department approves its application for a new policy form or something like that (presumably to change the policy to allow such asset movements—whether as rollovers, trustee-to-trustee transfers, or whatever).

A 2007 Treasury regulation change (72 Federal Register p. 41128 et seq., especially 41140 et seq., amending Treasury Regulations section 1.403(b)) did expand the ability of employers to terminate 403(b) plans and transfer their assets to some other kinds of plans (see particularly subsec. 1.403(b)-10). But those regulations do not appear to allow a 403(b) plan when terminated to have its assets transferred to a 401(k) plan specifically.

Does anyone know of a way to make such a movement of all of an employer's 403(b) plan assets to its existing 401(k) plan?

EditInIllinois

Doctor Group, Cash Balance plan plus a 'Maybe' Safe Harbor 401(k) Profit SHaring plan, all on Corbel documents. Obviously Top Heavy.

The DC doc says it makes the TH contribution unless it is a Safe Harbor year, and the DB document does not make reference to the DC plan - all the usual language.

Now let us pretend that the DC plan elects safe harbor for years 1,2,3,4 but not 5, and elects again in year 6. THe DB plan provides TH in years 1,2,3,4, does not in 5, does in year 6. THe question is what is the DB TH formula in year 6?

Is it 2% times 5 years or 2% times 6 years? THe document reads "2% times Plan Years of Service" and years in which TH is made in DC plan is not referenced.

First, I need to fix the documents for cross TH minimums (ie not TH in DB if made in DC) or just always make TH in the DB plan. OR exclude years of TH made in the DC plan from "Plan years of Service" in the DB plan.

Any other thoughts?

From the Explanation of PPA (page 102):

Under the bill, the PBGC is directed to prescribe rules for terminating multiemployer plans similar to the present-law missing participant rules applicable to terminating single-employer plans that are subject to Title IV of ERISA. In addition, under the bill, plan administrators of certain types of plans not subject to the PBGC termination insurance program under present law are permitted, but not required, to elect to transfer missing participants’ benefits to the PBGC upon plan termination. Specifically, the provision extends the missing participants program (in accordance with regulations) to defined contribution plans, defined benefit pension plans that have no more than 25 active participants and are maintained by professional service employers, and the portion of defined benefit pension plans that provide benefits based upon the separate accounts of participants and therefore are treated as defined contribution plans under ERISA.

Effective Date

The provision is effective for distributions made after final regulations implementing the provision are prescribed.

Has anything moved forward on this from the PBGC's end?

1.Employer establishes a SEP on form 5305-SEP but cannot find the form. Is this correctable in VCP?

2. Same employer maintains a qualified plan at the same time as the employer maintains the IRS form 5305-SEP, in violation of the terms of the SEP document which states that no plan can be maintained. Is this correctable in VCP and how would you propose correcting it?

A qualified retirement plan is sponsored by a sole proprietor. The plan solely covers the owner-employee and is therefore not subject to Title I of ERISA. Was the plan required to adopt an amendment for compliance with the automatic rollover provisions under IRC 401(a)(31)(B)?

Does a cafeteria plan that offers a health FSA need to comply with Michelle's Law (amend the plan, provide the notice)? The plan does not define dependent child, it defines dependent as Section 105(b) dependent. Shoud we define dependent child for purposes of Michelle's Law?

Participant turned 70.5 in 1997, the same year 401(a)(9) was changed so that deferred retirees got actuarial increases and continued accruals. The plan was amended accordingly in 2003, retroactive to 1997, within the remedial amendment period.

The plan was terminated by the PBGC in 2004. The PBGC determined that this was a benefit increase and that it was 0% phased in because it was adopted less than a year before the termination.

Anybody run into this situation or have any thoughts?

Thanks.

This is becoming a comedy of errors.

We have been contacted by several plan participants who say that the company has been out of business for 2 years and no one can find the sole trustee. However, we have recently received and processed distributions for other participants. Wondering whether someone had actually found the trustee, or someone had forged the trustee's signature, we pulled the plan document to compare the signatures. What we found is that the trustee never signed the document when the plan was adopted.

Any suggestions how to fix this?

I need some help on a COBRA subsidy scenario. I am working on an employment termination/settlement agreement. As a result of the settlement agreement, we are changing the termination date of an employee so that he is now eligible for the COBRA subsidy as the termination has gone from "for cause" so he didn't get his 90 day notice period, to "without cause" so now he gets the 90 day notice period in his employment contract. Employee has been on COBRA since last November and has been paying 100% of the premium. He asked for the COBRA subsidy and we agreed to pay him for the 65% so long as we are eligible to get the credit. I believe that there is nothing that would limit this guy from being eligible for the subsidy and so we could get the credit retroactive to March 1. However, the COBRA administrator is saying that the guy had to complete his COBRA subsidy application and send it back within 60 days of them mailing it to him, which it did back in April, in order for him to be eligible for the subsidy. He didn't complete the application and send it back to them within 60 days. However, if he had, he wouldn't have been eligible for the subsidy back then because his termination date was prior to Sept 1, 2008, at that point. However, I can't find a 60 day limit to complete the application in any law or guidance from the DOL. The only 60 day limit I can see is for persons electing COBRA. This guy was already on COBRA when he received the subsidy application, he was just paying 100%. So, two questions: (1) Anyone know if it is permissible to get the subsidy retroactive to march 1? (2) Anyone aware of a 60 day limit on completing the subsidy application? We don't want to give him the 65% if we can't get a payroll tax credit for it. The CFO doesn't want to claim the payroll tax credit (for documentation/IRS audit purposes) since the COBRA TPA is saying he's not eligible due to not timely completing the application.

Thanks!

For various reasons the plan sponsor wants to pay the $1500 for missing multiple years of filings by cashiers check and not by company check. Will the DOL accept a Bank cashiers check or does it have to be a plan sponsor / company check?

Can a 401(k) Plan ONLY allow for Roth (not pre-tax) deferrals?

Thanks so much!

Please pardon the brain freeze. w/r/t a PPA amendment, are there "PFEA-related" items that should be included?

thnx.

We use the pre-approved corbel documents, and we are coming close to the end of the year, unfortunetly it’s going to be close to impossible for us to get all of our restatements done and signed by 12/31/2009.

If we start using an effective date of 1/1/2010 we know that we have only until 4/30/2010 to have those documents signed unlike having till the end of the year for our 1/1/2009 documents, but what other disadvantages would there be for not having all our restatements done by the end of this year?

Is it true that we still have to have the PPA amendment signed by 12/31/2009, we are currently sending them out with our restatements?