This could apply to any group whose members embrace self rather than group interests.

A. Treasury Regulation 1.401-1(a)(2) A qualified pension, profit-sharing, or stock bonus plan is a definite written program and arrangement which is communicated to the employees and which is established and maintained by an employer...(ii) In the case of a profit-sharing plan, to enable employees or their beneficiaries to participate in the profits of the employer's trade or business, or in the profits of an affiliated employer who is entitled to deduct his contributions to the plan under section 404(a)(3)(B), pursuant to a definite formula for allocating the contributions and for distributing the funds accumulated under the plan (see paragraph (b)(1)(ii) of this section)

#1 Issue with respect to the safe harbor match -

#1.1 Information provided concerning validity of payroll based safe harbor match:

paragraph 3.02 of the Basic Plan Document, “the matching contribution amount may be determined by the employer at any time during the Plan Year so long as the amount of the matching contributions is determined in a uniform and nondiscriminatory manner”. In summary, our 401k plan is fulfilling its safe harbor match obligation (4%) by submitting matching contributions at the same time it submits elective deferrals.

#1.2 Issue:

No participant can calculate his or her match with certainty. They will only know it after it has been it has been determined and deposited. The match provisions of this paragraph also contradict the safe harbor notice which provides for 100% of elective deferrals up to 4% of compensation annually.

#2 Issue with respect to deferral suspension on account of participant loans -

#2.1 Information provided concerning suspension of deferrals on account of participant loans:

No documentation has yet been provided that states the plan has ever restricted elective deferrals on account of a participant loan. A statement was first made that federal regulations prohibit deferrals while making loans payments, which was subsequently reduced to a statement that there were agreements in the prior plans that created this restriction.

#2.2 Issue:

If such a plan provision existed it was not disclosed in the SPD, loan policy, or loan application and it still has not been shown to be a plan provision at any time via a reference to a plan document or an actual copy of the plan document. A participant would have determined their deferrals to continue based on the documentation provided to the participant. I would venture to say most participants would have taken at face value an assertion that there are federal regulations which prohibit concurrent deferrals and loan repayments. I doubt many participants would know they were denied benefits to which they were otherwise entitled if in fact the plan provision to restrict deferrals never existed or were denied benefits if the provision existed while the plan was a safe harbor plan.

B. Treasury Regulation 1.401(k)-3©(5)(ii) Periodic matching contributions. The safe harbor matching contribution requirement of this paragraph © will not fail to be satisfied merely because the plan provides that safe harbor matching contributions will be made separately with respect to each payroll period (or with respect to all payroll periods ending with or within each month or quarter of a plan year) taken into account under the plan for the plan year, provided that safe harbor matching contributions with respect to any elective contributions made during a plan year quarter are contributed to the plan by the last day of the immediately following plan year quarter.

#3 Issue with respect to safe harbor match -

#3.1 Information provided concerning validity of payroll based safe harbor match:

paragraph 3.02 of the Basic Plan Document, “the matching contribution amount may be determined by the employer at any time during the Plan Year so long as the amount of the matching contributions is determined in a uniform and nondiscriminatory manner”. In summary, our 401k plan is fulfilling its safe harbor match obligation (4%) by submitting matching contributions at the same time it submits elective deferrals.

#3.2 Issue:

The paragraph provided states the contribution amount may be determined by the employer at any time. It does not say the contribution amount will be determined on a payroll basis.

C. Treasury Regulation 1.401(k)-3©(6) Permissible restrictions on elective contributions by NHCEs —(i) General rule. The safe harbor matching contribution requirement of this paragraph © is not satisfied if elective contributions by NHCEs are restricted, unless the restrictions are permitted by this paragraph ©(6).

(ii) Restrictions on election periods. A plan may limit the frequency and duration of periods in which eligible employees may make or change cash or deferred elections under a plan. However, an employee must have a reasonable opportunity (including a reasonable period after receipt of the notice described in paragraph (d) of this section) to make or change a cash or deferred election for the plan year. For purposes of this paragraph ©(6)(ii), a 30-day period is deemed to be a reasonable period to make or change a cash or deferred election.

(iii) Restrictions on amount of elective contributions. A plan is permitted to limit the amount of elective contributions that may be made by an eligible employee under a plan, provided that each NHCE who is an eligible employee is permitted (unless the employee is restricted under paragraph ©(6)(v) of this section) to make elective contributions in an amount that is at least sufficient to receive the maximum amount of matching contributions available under the plan for the plan year, and the employee is permitted to elect any lesser amount of elective contributions. However, a plan may require eligible employees to make cash or deferred elections in whole percentages of compensation or whole dollar amounts.

(iv) Restrictions on types of compensation that may be deferred. A plan may limit the types of compensation that may be deferred by an eligible employee under a plan, provided that each eligible NHCE is permitted to make elective contributions under a definition of compensation that would be a reasonable definition of compensation within the meaning of §1.414(s)–1(d)(2). Thus, the definition of compensation from which elective contributions may be made is not required to satisfy the nondiscrimination requirement of §1.414(s)–1(d)(3).

(v) Restrictions due to limitations under the Internal Revenue Code. A plan may limit the amount of elective contributions made by an eligible employee under a plan—

(A) Because of the limitations of section 402(g) or 415; or

(B) Because, on account of a hardship distribution, an employee's ability to make elective contributions has been suspended for 6 months in accordance with §1.401(k)–1(d)(3)(iv)(E).

#4 Issue with respect to deferral suspension on account of participant loans -

#4.1 Information provided concerning suspension of deferrals on account of participant loans:

No documentation has yet been provided that states the plan has ever restricted elective deferrals on account of a participant loan. A statement was first made that federal regulations prohibit deferrals while making loans payments, which was subsequently reduced to a statement that there were agreements in the prior plans that created this restriction.

#4.2 Issue:

If such a restriction existed in the plan at any time it was a safe harbor plan it was not a permissible restriction at least with respect to non-highly compensated employees. I do not know if the existence of a restriction is sufficient error that needs to be corrected or if a correction is only necessary if at least one non-highly compensated employee was affected.

D. EPCRS correction method for the exclusion of eligible employees can be found in Rev. Proc. 2006-27. They provide for a QNEC contribution equal to 50% of the missed deferrals and 100% of the missed match, adjusted for earnings.

#5 Issue with correction method

#5.1 Information provided concerning correction:

It was verbally communicated that a contribution equal to 50% of the missed deferral would be added to the next contribution file as well as a contribution equal to 100% of the missed match. It was communicated that the deferral portion would be added to the deferral made for the next period and the match portion would be added to the match made for the next period.

#5.2 Issue:

The corrective contributions are not being processed as QNECs and no adjustments for earnings are included. This may not be a problem if the other recent participant affected and I are the only participants affected, but the EPCRS correction may need to be used if there are other participants affected as identified in issue #4.

Can a church set up a Simple IRA plan for its lay employees?

I seem to remember that the Simple IRA is not an option for churches, but I can't find that documented any place.

Thanks.

See discussion from 2002 here:

http://benefitslink.com/boards/index.php?showtopic=15210

Does anyone know if anything has changed on this? Is it still disallowed for an employer to subsidize the cost of a Medicare supplement and Part D coverage?

Is there any mechanism by which it would be allowed?

We've had one employee jump ship from our group plan and two more are planning to... it would be win/win if we could subsidize their supplement and Part D cost.

Thanks

I did not think that an employee eligible to participate in an SEP could waive participation (as is permitted in a qualified plan), since there is no comparable test to IRC Section 410(b), but the following appears in the Instructions to IRS Form SEP-5305 (the IRS SEP document):

Our DB Plan provides that the accrued benefit as of the close the plan year is equal to the participant's projected retirement benefit multiplied by a fraction: numerator = years of participation, and denominator = total years of participation at NRA. We are now seeing the accrued benefits of several participants increase substantially from year-to-year. Our actuary advises that the reason for the increase is because under PPA the accrued benefit must now be accrued over no more than 10 years. In other words, the denominator in the accrual fraction cannot exceed 10. Is this correct? I certainly understand that PPA changed the manner in which benefits must be funded. But, did PPA also change the manner in which benefits can be accrued?

This is important now because we are considering terminating our Plan and we need to know how much we owe Plan participants. Thank you.

A small company has an underfunded frozen DB and is thinking of add a 3% non-elective safe harbor 401(k) plan before 10/1.

They are funding the frozen DB until it can be terminated at 100% but no new accruals.

The aggregation group is T-H as is each plan on its own.

The safe harbor 401(k) plan is planning on making only the 3% non-elective employer contribution to NHCEs only. Does this qualify for the top-heavy exemption? The plan has 1 highly compensated non-key employee (the one who wants the 401(k) this year) who would not receive a contribution under the exeption but would get about a $4K T-H min if the exemption does not apply. 401(k) plan will fail testing miserably w/o safe harbor.

Not sure if this is better here or the 401(k) section.

Any help would be much appreciated.

Quick question for someone over their head on Form 5500 questions.

If you have a wrap plan that has several fully insured benefit programs (group health, dental, life, disability, etc.) as well as a self-insured health FSA / medical reimbursement arrangement, do you have to pull in and report data on the various insured programs on Schedule H or can Schedule H simply be limited to information related to the health FSA. (As I understand it, if it were not for the health FSA, the plan would not have to file a Schedule H at all.) Thanks.

I am trying to understand more clearly the risks associated with holding retirement assets in a one person Keogh plan vs. moving those assets to a SEP IRA, whether it makes sense to segregate assets in IRAs according to their origin (keep qual rollovers separate from future contributions to IRAs, etc).

I would appreciate any leads to articles that discuss how assets gain, lose protection as you move across account types (i.e. 401(k) to IRA, IRA to IRA, Keogh to SEP.

We may see a lot of movement in 2010 simply due to the Roth Conversion activity, and I want to know as much as possible about creditor protection issues that should be considered before people start moving money to and from various plans.

Here are two articles I've reviewed. Please share any you found to be informative.

http://www.journalofaccountancy.com/Issues...ementAssets.htm

http://www.sbca.net/PTXL0802-Altier-Naegele.pdf.

Just in case anybody did not see it, the IRS posted a bulletin that it will allow a new interest rate election for 2010, so if a plan elected the full yield curve in 2009, it can switch back in 2010. It is on their website under Retirement Plan Community. They seem to be silent on an asset election.

Hi, if a 401(k) plan excludes bonuses from the definition of compensation for purposes of elective deferrals and match, do bonuses also need to be excluded from the definition of compensation for purposes of the ADP/ACP Test? For example, if a highly compensated employee made $150,000 in base salary and a $50,000 bonus and deferred $15,000, does the ADP test base compensation on $150,000 or on $200,000 (base plus bonus).

Preparing a 1/1/2009 valuation that results in an AFTAP of 57.1%. A notice of benefit restriction must be provided to participants to notify them that the benefits are frozen under the plan and that they cannot elect a lump sum distribution if they terminate/retire.

On the notice of benefit restriction what date is the effective date that the benefits become frozen ? 1/1/2009? current date?

Has anyone seen any guidance on whether the controlled group rules apply for purposes of USERRA reemployment rights? This seems like an easy issue, but I haven't been able to find any guidance on it. The USERRA definition of employer at 20 CFR 1002.5(d) does not seem particularly instructive.

hi

the irs had given some relief earlier this year for purposes of int rate selection for 2009 funding

can the october 2008 spot rates be used for the 2009 calendar year required contribution calculation even though the december 2008 rates were used for purposes of the aftap/determining whether restrictions were in place for 2009 when issued back in march?

and, if so, does the earlier aftap need to be recalculated/recertified?

and, if such as recalculation / recertification results in the aftap being above 80%, would the remainder of the 50% lump sums that were restricted to terminated participants so far this year need to be offered to them?

thanks for your help

chris

The sample plan amendments in the Notice give participants a choice to receive or postpone what would otherwise be a required minimum distribution for 2009. Is the IRS saying that particiants must be given a choice to waive the required minimum distribution or can a plan choose to not give a participant the choice and force out the 2009 distribution as if it was required?

Our plan has an employer match. To share in the employer match, the employee has to be a participant on the last day of the plan year. We want to get rid of the match this year. Can we retroactively amend the Plan document to remove the match since the employee has technically not accrued the match (i.e. it is not the end of the plan year and we do not know who will be employed at the end of the year).

Also, we switched custodains in the middle of the plan year. So technically, if I am able to process an amendment, is it only retroactive to the middle of the plan year (the date custodians changed). Any help would be appreciated.

The participant is using a loan to purchase a principal residence so the term will be 15 years. What is a reasonable interest rate to use? Help!

Hi All,

Does anybody have a checklist that they've developed of things to consider/processes to follow when sending employees to a war-risk country or another international assignment? If so and you would be willing to share, I would greatly appreciate it! Our international benefits broker came up empty handed (which is a little disappointing!)

Thanks!

Does anyone have any thoughts on the following:

A plan requires documentation verifying the eligibility of a dependent before the dependent may enroll in the plan (eg. marriage license, birth certificate, etc.) Under the special enrollment rules, if a "request for enrollment" is received within 30 days (or longer if the plan allows) of the event (marriage, birth, adoption or placement for adoption), coverage must begin no later than the first day of the first calendar month beginning after the date the plan receives the "request for special enrollment" for marriage and on the date of the event for birth, adoption and placement for adoption.

What is a "request for special enrollment?" Can the plan require that the dependent verification documentation be submitted within the 30 days (i.e. consider that documentation part of the "request")? Or must the plan enroll the dependent based only on a status change form that is received within 30 days even though the verification documentation is not also provided?

Just to be clear, do we all agree that the QDIA rules are impossible to comply with in the real world, particularly the small employer world? (and I know they're just safe harbors).

-For example, 30 days before the contribution is funded, you may very well not even know if there is going to be a contribution.

-OR let's say you play it safe and tell clients to distribute the notice in January, and then they don't fund until September 15th. An 8 month delay seems like a bit of a stretch for a notice.

-And how many people are really sending out additional annual notices to plan participants who never changed the default?

Real world answers only please

As a follow-up, I had heard from someone who had heard that the money market might return as an acceptable default investment. Anyone else hear that?