Hi all,

We have an overfunded, terminated DB plan with surplus assets, and we're looking for creative ways to avoid a reversion to the employer. A qualified replacement plan isn't viable, because the employer is now dormant and doesn't expect to have any payroll in the future. Allocating some of the surplus among the participants also won't work, because both participants (H/W) are already at 415 limits. Both are at the 100% of pay limits, and the plan's normal annuity form is J&S. The effective date of plan termination was 12/6/05, believe it or not.

I think we're going to buy a J&S annuity for the husband, because the premium will be much higher than his max permissible lump sum under IRC415. That works well because his wife is much younger than he is. But even after the purchase, there will be about $75k of surplus left. The wife doesn't want to annuitize any of her own benefit.

Here are a few random thoughts and questions. Any ideas that you might have would be most welcome.

- Am I correct that the 50% tax (vs. 20%) would apply to any reversion, since we're not able to allocate any of the surplus among the participants (already at 415 limits) and there can be no qualified replacement plan? These seems like a harsh result, but I don't see any relief provisions in the Code.

- Is it possible to use up more surplus by including a COLA in the annuity purchased for the husband? If so, are insurance companies issuing such animals? And how does the COLA typically work? A flat % per year? Must it be limited forever to increases in the 415 dollar limit?

- If we can demonstrate that husband and/or wife terminated employment with the Employer (a corp) prior to 2009, may we increase their percentage-of-pay limits for the period between year of termination and 2009? For example, if they terminated employment in 2006, may we increase their 415 limits to 100% x 195/175 of high 3 average comp? (they both had 10+ YOS)

TIA for your help and ideas.

Best!

Scott

I recently received a letter regarding the forfeitures of contributions to my 401k due to failing the annual contribution percentage (ACP) test for 2008. This is my first time experiencing this situation and I have the following questions:

1)Does the ACP test that is performed take into account any contributions that I make (i.e. pre-tax & 401k roth post-tax)?

2)Regarding #1, according to what I found on the internet, it includes employer matching and employee after-tax contributions. Does the 401k Roth option fall into the employee after-tax category and is therefore included in the ACP test?

3)If the 401k Roth option that is offered by my company is included in the ACP test, would changing my contribution percentage to pre-tax deductions possibly eliminate this problem in 2009 and beyond?

4)Is my company required to pay out the forfeited money back to me?

A)Is this tax free money or pre tax money?

Thanks in advance!!

Fidelity Bond Question for retirement plans; any special exceptions for plans with separate accounts as opposed to a pooled account?

Does any special exemption for having a fidelity bond pertain to a retirement plan where the amounts reside in separate accounts instead of a pooled account? Does such an exemption exist if the business owner sets it up so that he cannot access the accounts? Each employee has a separate account, receiving his or her own asset statements monthly? Any special fidelity bond exemptions for money purchase plans?

This time, I hope to figure out retroactive entry. The idea entails this situation; if someone works 1,000 hours during the first six months of the plan year, they retroactively enter the plan as of the first day of the plan year. However, if they do not complete the 1,000 hours till after the first six months of the plan year, they do not enter until the first day of the next plan year.

I already have a file set up for entry, but I have not figured out retroactive entry yet.

John_Eastland_revised_1.xls

We are the TPA for an employer who sponsors a money purchase plan. The only contributions made to the money purchase plan are prevailing wage fringe contributions.

The employer would like to give the employees the option of receiving their prevailing wage fringe benefit in cash or have it contributed to the plan (or a combination thereof).

I know that the employer can satisfy the prevailing wage fringe by making an additional cash payment to the employee or by making a contribution to a plan, but they can allow the employee to choose between the two?

To me this screams CODA as I do not know of any exception to the CODA rules for Davis-Bacon plans.

I just received the BenefitsLink Retirement Plans Newsletter. One of the articles ("Retirement Plans Work Differently for Highly Compensated Employees ") states that 'The regulations define an HCE by compensation. The limit is adjusted for inflation each year. If you earned $105,000 or more in 2007, you would be an HCE for 2008, and if you earned $110,000 or more in 2008, you will be an HCE for 2009.'

I think that the above is incorrect. I believe that if you earned $100,000 or more in 2007, you would be an HCE for 2008, and if you earned $105,000 or more in 2008, you will be an HCE for 2009.

Does anyone disagree?

(I have always found this issue to be troublesome as the way the figures are displayed on any chart are misleading.)

Does anyone know the answer to this question from one of our employee's?

I currently have money coming out of my check for my dependent mother's day care. I just found out that she is going to need surgery and then rehab so she will not be able to attend day care for a few months. Is there any way that we can stop withholding for dependent care from my check?

Thanks.

Does anyone know the answer to this question from one of our employee's?

I currently have money coming out of my check for my dependent mother's day care. I just found out that she is going to need surgery and then rehab so she will not be able to attend day care for a few months. Is there any way that we can stop withholding for dependent care from my check?

Thanks.

I have clients who have two or more Traditional IRAs set up with different investment companies. They are, for estate planning purposes, considering converting one or part of one Traditional IRA to a Roth IRA after 1/1/2010, which marks the elimination of AGI limits on IRA conversions. I did not think this would be a problem until I stumbled across professional commentary regarding the inability to make partial conversions after 1/1/2010.

Some advisors are under the impression that all IRAs maintained by a taxpayer will be treated as one IRA by the IRS for purposes of a 2010 conversion. The problem they're warning against is that, upon conversion, the IRS will tax amounts held by all of the taxpayer's Traditional IRAs rather than just those amounts which are converted, essentially eliminating the taxpayer's ability to convert only part of his Traditional IRA or convert only one of two or more Traditional IRAs.

Has anyone else heard about this? Can anyone point me to actual IRS guidance regarding this (as the commentary did not cite to any guidance)? I wouldn't be as concerned if I only encountered one or two articles, but there were many of them out there.

Any help would be greatly appreciated.

I have two attorneys giving me different answers to this question:

A group of employees is specifically excluded from receiving a matching contribution. The 410(b) test for the 401(m) group passes easily (90% level) so coverage is ok. When we determine who is to be included in the ACP test, are the excluded employees in the test with -0- match, or are they not in the test at all?

My opinion is that they are not in the test since they are not eligible to receive the match. Which attorney can I give a cite to support my contention?

If a person begins his or her required minimum distributions after age 70.5, then after a few years deceases, what happens with the distributions? May the designated beneficiary roll the whole remaining amount into his or her own IRA? Do the assets have to stay segregated or may he or she (the beneficiary) commingle the assets with their own funds?

I have a plan where an HCE who is terminated has arranged an IRA account that will serve as escrow for the restricted amounts under the plan. If he is below the normal retirement age in the plan is his unrestricted amount the age 65 benefit payable as a straight life annuity (12 payments) or is the age 65 benefit actuarially reduced to his current age?

I am working on my first PPA cash balance plan termination. The plan is only 4 years old but the business closed it's doors. The interest crediting rate and actuarial equivalence has always been the 30 year Treasury Rate.

In order to calculate the annuity options, it looks like I have to use the average of the rates used under the plan for the five year period ending on the termination date, is that correct? If so, even though the plan is only four years old would I use a five year average?

I thought I'd read something that changes the latest employer contribution deposit deadline to 8 1/2 months after the close of the Plan year (impacting sole props, partnerships, etc). I've not been able to find any information to that extent. Has anyone heard of deposit deadline changes for 2008 or 2009?

As everyone knows the economy is hitting the certain construction trades hard on unemployment. Alot of the membes maybe losing their homes, has outstanding medical bills, etc. Our union is in a money purchase pension plan under the Internal Revenue Code. I have be reading that money purchase pension plans may not make hardship distributions. Can the trustee's adopt loan provisions under which participants can take loans against their individual accounts for hardship purposes like how much or how often?

Is there any others multiemployer union plans that you can make hardship distributions other than 401(k) plans?

I have a plan (plan A) that acquired another company (company B) through a stock deal as of 12/31/08. The participants in Plan B's plan were terminated and given the option to rollover their money to Plan A's plan.

I am trying to determine HCEs for the 2009 plan year. Plan A uses the top 20% rule and it does apply. Do I need to include the employees of Company B. Normally for Stock deals, I would say yes, but since Plan A is not a successor plan I am thinking no. Also, Company A did give credit for prior service for eligibilty & vesting.

Any help would be appreciated.

Question - Does anyone know if it is required that all insurance benefits under a wrap plan have the same policy year when you are trying to file only one 5500 for all the welfare benefit plans under a cafeteria plan? I thought I had read or was told that when using a wrap plan for all of an employer's welfare benenfits (Group Health, Dental, Medical FSA, DCAP) that the polices all had to have the same reporting year in order to be able to file only one 5500 form. Anyone have experience with this situation?

On a side note is it proper to file the 5500 for the cafeteria plan year (Aug. 1 to July 31) when the welfare benefit policies run 11/1 to 10/31 of every year? Not sure why the cafeteria plan year was originally set up as Aug. 1 to July 31 as aren't they normally calendar year plans (1/1 to 12/31)? If we want to change the cafeteria plan year to Jan. 1 to Dec. 31 do we just amend the plan document and file a short plan year for the period Aug. 1 to Dec. 31 and not report any activity on the welfare benefit plans, and then report the welfare benefit plan's activity on the new plan year (1/1/ to 12/31)? Any help with this would be great, most of my experience has been with Qualified DC plans in the past.

Nathan

Assuming you read the July 29th letter signed by Aetna, Mercer, Willis and hundreds of large employers and trade associations addressed to Speaker Pelosi and Minority Leader Boehner, where is the citation requiring maintenance of effort with respect to voluntary employer sponsored retiree heath benefits (e.g., not subject to collective bargaining)?

My question is whether a top hat plan has to supply information as required by Title I of ERISA if it receives a QDRO. Although top hat plans are exempt from Parts 2, 3 and 4 of Title I of ERISA, they are subject to Part 1, which includes reporting and disclosure requirements, and Part 5, which includes criminal penalties for willful violation of the reporting and disclosure requirements.

ERISA Sections 104(b)(4) and 105 are included in Part 1 of Title I. A plan administrator will, however, be deemed to satisfy the reporting and disclosure provisions of Part 1 by filing a top hat filing with the Secretary of Labor. Thus, it seems to me that if a top hat filing was timely made, the plan administrator does not have to comply with any reporting or disclosure requirements under Part 1.

My question has two parts: 1) if a PA receives a signed authorization from particpant to release top hat plan info to requesting attorney (atty drafting qdro), does the PA have to distribute such information; and 2) does a top hat plan have to comply with a QDRO?

An ESOP gave a participant the right to put shares of stock distributed to the participant to the company in two 60 days periods in the year of distribution and the year after distribution. The participant did not exercise his or her put rights during such period. Am I correct that the law does not give the former participant any other rights to put the shares? How can the former participant liquidate the closely held stock in this situation?