If I have determined that a distribution needs to be done under an RMD- how to do determine what the taxable amount is? For instance if someone has an account balance of $100,000 and 15,000 was post-tax contributions and 85,000 was pre-tax contributions and considering the factor tables and if the RMD ends up being let's say $17,000 for the current. How do you determine the taxable amount on the $17,000? Do you have to allocate the taxable amount for instance- would 15% of the $17,000 be non-taxable and 85% of the $17,000 be taxable? or Can I use the $15,000 and its nontaxable and $2,000 would be taxable.

Hello 401k experts,

I have a question regarding past 401k amendments. I was looking through some old files and found 2 401k amendments which had not been signed or adopted into our plan. One is the Amendment effecting the in voluntary distributions and the other is the 415 amendment. Both amendments should have been signed back in 2005 and 2006.

Does anyone know if we can ask the board to approve them now even though its been over 3 years? I have no intention of back dating them but want to make sure that if we can, we get in compliance quickly. In addition for the 415 I believe we needed to do something with our tax returns is that correct?

Thank you!

If a married couple's employers both offer an FSA, may each of them make a $5,000 max contribution to their own respective FSA's for dependent care = $10,000 annual total, assuming their qualifying childcare costs for the year are at least $10,000?

Thanks

BruceM

What are the consquences of an employer who fails to pay their portion of matching contributions of 3% against employee earnings? Payment was submitted for 2006, but not for 2004, 2005, 2007 or 2008. The employer never changed their election to anything other then the 3% match. They were provided the payment schedules for these missing years by the 401K sponsor after computing against the salary census. However, due to money constraints, the company never made the payments. Are they liable for this and if so, are they liable for potential earnings against these monies owed?

In a health care reimbursement FSA plan, can an employer limit a terminated participant's reimbursements to the amount the participant contributed to the plan? For example, Jane pledges $1000 to her FSA and terminates employment mid-year after contributing $400. Jane incurred $1000 in medical expenses prior to her termination of employment. Can Jane now seek reimbursement for the full $1000 or can the employer limit her reimbursement to $400?

I can't remember when the Volume Submitter DB restatement cycle begins though I think it is in 2010. Anyone know ?

Have a client who wants to designate his spouse as the primary beneficiary of his 401(k) account. No problem.

Next, he wants to name his daughter as contingent beneficiary if she is age 18 or over at the time of his death. Otherwise, benefit would go to a trust established for the daughter's benefit.

Anyone have issues with this?

Has anyone seen or willing to admit understanding how to value 415 lump sums when segmented interest rates are involved?

For example, assume the interest segments are 4.5%, 5% and 5.5% (funding). Now, a 62 year old retiring at 65 has a maximum benefit and the stream of payments begins discounting using the 4.5% for 2 years commencing at 65, 5% for 15 years and then the 5.5% for the remainder. The 415 lump sum limit is computed using 5.5% for all years. Which present value stream is adjusted OR am I missing something??

Is this requirement satisfied if the participant receives an annual or quarterly benefit statement or do they still need to receive a separate "Notice of Deferred Retirement Benefit"?

Thanks!

Does the Creditable Coverage determination have to be made by an Actuary?

For a non-calendar year PS plan with annual valuations on say 7/31, if the RMD is paid after 7/31, we generally subtract it from the 7/31 balance before calculating the next year's RMD amount.

Consider a regular calendar year plan and a participant reaches age 70 1/2. Say participant is paid next yr prior to 4/1. For RMD calculation in next yr, do you subtract that first RMD paid after valuation date, similar to example above?

Example:

Balance 12/31/08 = $100,000

2008 RMD paid 2/1/09 (based on 12/31/07 balance) = $3,000

2009 RMD calculated as:

Option A: $100,000 - 3,000 = $97,000 / 26.5 = $3,660

Option B: $100,000 / 26.5 = 3,774

Under ERISA Sec. 101(l)(1)(B), which I believe was added by PPA, the plan must disclose to a participating employer an explanation of how estimated WDL was determined, including "the actuarial assumptions and methods..., the data regarding employer contributions, unfunded vested benefits, annual changes in the plan's UVB..." Two questions: how much detail do plans generally provide for the "explanation"? and does the reference to "the data regarding" refer to employer contributions only, or to UVB and other items mentioned? In particular, does an employer have a right to all participant data to attempt to reproduce the plan's calculation of UVB?

I"m having a hard time understanding what a DC plan is allowed to do for a terminated participant who has left their account balance which has been greater than $5000 since terminating in the plan and the participant reaches the later of age 62 or normal retirement age. Can a plan distribute a balance at that time that exceeds $5,000 involuntarily at that age?

If a Profit Sharing plan (with no other contribution types) has not made any contribution whatsoever for at least 3 years, is it considered frozen and all participants would become fully vested? What if Forfeitures only have been allocated in that period?

What must laws must one amend a retirement plan after 12/31/06?

Actually, of course, the Pension Protection Act comes to mind.

http://www.irs.gov/retirement/article/0,,id=165131,00.html

http://www.irs.gov/pub/irs-tege/ppa_chart.pdf

If anyone recalls matters regarding the finer points of these amendments, feel free to reply.

Takeover 401(k) has a doc they say is Datair. It was signed in early 2007. The copy write date is "2002-2007". And the adoption agreement mentions EGTRRA vesting schedule.

I would appreciate anyone's opinion or direction on this question? Could this document be good for all of EGTRRA or do I need to restate it this year?

It is common for defined benefit plans to require participants pay $350 to obtain an updated statement of accrued benefits, once one has been provided for free in a given year? Would this constitute good faith compliance with FAB 2006-03?

Do we have guidance on how a rollover account in a DB plan is treated for 401(a)(9) calculation purposes. The calculation for the DB accruals is different now than for a DC account balance (years ago there was some support for calculating them on the "account balance" method).

So does a rollover from an outside plan within a DB plan get treated like a DC account balance for the calculation rules ?

We administer a 401(k) Profit Sharing Plan that allows for participant-directed accounts. A participant has attained NRA and will begin taking in-service distributions (S)he has a piece of property in the earmarked accont that was just appraised at $400,000. The participant also has a substantial amount of cash and mutual funds in their earmarked account.

The participant has elected to withdraw the property. In this case would the gross distribution be $500,000 (20% federal taxes = $100,000 plus the property worth $400,000) -- and is it required that the $100,000 in federal taxes be paid from the earmarked account since the funds are available in the account and since this is an eligible rollover distribution; or does the participant have the option to pay the taxes from his or her personal account (thus making the gross distribution $400,000 with zero federal taxes withheld)? Citations or any input on this would be very helpful.

Thanks!

Lots of problems here. Any comments are appreciated:

There is a 401(k) plan with a 6/30/09 plan year end. Safe harbor match contribution. In April, 2009, the employer decides he wants to stop the match. He never tells us (TPA). He claims he provided a 30 day notice stopping the match, but so far, he has not been able to give us a copy. I'm not sure where he would have gotten one from since we did not do one. Maybe the payroll company did one.

(1) If he did provide proper notice, can he stop like that mid-May? Does the documetn need to be amended as well? If he did a notice but not an amendment (and one was needed) is the cessation valid or is the employer on the hook for the rest of the plan year?

(2) Can he stop a safe harbor match in mid-year?

Thanks