Not being too familiar with Target Benefit Plans, is it common practice on a participant's termination of employment, prior to NRA (participant is age 41) for the Plan to purchase the annuity and distribute the annuity to the participant? Participant has elected to defer payment until NRA, I would think the Plan would wait until his claim for benefits at age 62 before purchasing the annuity in case he is re-employed, gets married, changes his mind on form of benefit, etc. I would appreciate any comments or thoughts.

So I know you file a final Form 5500 once final distribution of all assets has occurrd. My question is what does this mean? Does final distribution occur when the checks are cut or is it when all checks are cashed? I've always thought it was the latter since you have money in the trust's clearing account until checks are cashed. However, I also see quite a few TPAs taking the position that once checks are cut you should file the final Form 5500.

I have a plan that is part of a controlled group of three related plans. The plan passes 410(b) coverage on its own it is tested separately for ADP/ACP.

The plan is changing their match formula for a portion of its population thus creating a BRF issue.

Since the plan passes coverage separately, can we perform the BRF test including only the population of that plan? Or do we need to consider the employees in the other related plans? My understanding is that if a plan passes coverage separately, the BRF would be tested separately as well.

The rules indicate that contributions must be deposited not less frequently than quarterly. Does this mean 3 months from when the contribution was determined (May contribution deposited by August 31) or by the calendar quarter (May contribution deposited by June 30)?

Does anyone have the EIN and NAIC codes for a Sch A for Allianz Life Insurance Company of NY? I'm trying to wrap up an '08 plan year and no one seems to have a copy of the Sch A. The vendor keeps telling the broker they will send him another but it never materializes. I'm going to fill out all I can but wondered if anyone had the EIN and NAIC codes. (I did try the Allianz website..no luck).

Thanks in advance.

I just discovered that a 2,151 employer contribution was not included on the 2005 Form 5500 for one of our plans. The deposit was for the account of a deceased participant whose bene had been paid out previously, but the participant was due a contribution which is not usually made until May of the following year. The deposit was not taken into account when the valuation was done so when the 5500 was done (on an accrural basis) the additional deposit was not included. The deposit was made and immediately paid out to the beneficiary. The deposit was made in 2006 and was recorded on the 2006 tax filing for the client rather than the 2005.

Do you think we need to amend the 2005, 06, 07 returns or is there anyway to account for this in the current filing. Would we need to complete all the schedules to do this?

Thanks

Hi,

I have a plan that terminated on 12/31/08, there are a number of participants that terminated in prior years, do they also become 100% vested in all money types? I would think that they would otherwise they would add to the forfeitures and create additional headaches...

Thanks,

Jasofk

Can anyone provide an expression for a J&50% survivor annuity with 10 years certain -- the continued payment for the balance of the 10 years is either 100% or 50% depending upon whether or not the beneficiary predeceases the primary annuitant?

Has anyone seen a good form (or go-by) of a breach notification that would be sent to an individual when a covered entity discovers a breach of unsecured PHI?

The AICPA Audit and Accounting Guide of Employee Benefit Plans states "For initial audits of plans where the plan had assets in the prior year, ERISA requires presenting a comparitive statement of net assets available for benefits." If the plan was effective in 2008 and had no assets in 2007, then do you still need to present a comparitive statement of net assets available for benefits in the financials for the period ending 12/31/08?

I have a DB Plan Freeze Scenario, but can't find guidance which fits the fact pattern. Any references would be appreciated.

- Plan is a Defined Benefit Plan with a 12/31 Year End

- Eligibility is Age 21 and One Year of Service (1,000 Hours in Eligibility Computation Period - Anniversary Basis)

- Entry Dates are 1/1 and 7/1

- Accrual Computation Period is based on Plan Year (1,000 hours for 1 Year Credit)

The Plan implemented a hard freeze effective April 30, 2009. Eligibility and Vesting Service is still credited after the freeze, but no service or compensation after April 30, 2009 is considered.

Employee X is hired February 15, 2008 and works > 1,000 hours from February 15 - December 31, 2008 (Accrual Computation Period). As such, employee would seem to have accrued a year of Accrual Service by 12/31/08 (BEFORE FREEZE DATE).

Eligibility Computation Period ends February 15th, 2009, so Employee X does not enter Plan until July 1, 2009 (AFTER FREEZE DATE).

Plan Actuary advised the Plan Sponsor that these participants would have no Accrued Benefit under the Plan because they did not enter the Plan until AFTER April 30, 2009.

However, it appears to me that the employee satisfied the requirements to be credited with an Accrual Year of Service BEFORE the Freeze Date. As such, these benefits should probably be protected.

In essence, my question is whether the timing of the Entry Date is irrelevant to whether the Accrued Benefit had been earned prior to the Freeze Date.

The anti-cutback regulations in Section 411(d)(6) do not seem to address this specifically. They generally refer to protection of the "accrued benefit of a participant as of the applicable amendment date" - but does not clarify whether the earning of the accrued benefit can precede the Entry Date.

Further, once these employees do become participants in the Plan on July 1, 2009, would they get "retroactiove protection" of the benefit they clearly earned prior to April 30, 2009 (i.e. during the Accrual Computation Period ended December 31, 2008?).

Any thoughts on the issue would be greatly appreciated.

When is back pay taken into account as compensation under a defined benefit plan (specifically a cash balance plan)? The plan defines comp as W-2 comp, which leads me to believe that the back pay would be taken into account in the year received (since it would be taxed in that year). On the other hand, the award of the back pay requires that the employee "be made whole in all respects." This would seem to suggest that the back pay should be taken into account when it would have been paid, but for the unlawful termination.

I know DOL Reg § 2530.200b-2©(3) requires hours of service attributable to back pay to be credited to the computation period(s) to which the back pay relates. However, I have not been able to find any similar guidance with respect to calculating compensation.

On a related note, if the award of back pay contains any offsets (e.g., income from other employment), can the plan take those into account when calculating comp? I would think it could since those offsets would be reflected on the W-2.

Background: We have a client that has a 401k plan in which the only trustees are the owner of the company and the CFO. It is a discretionary trust that has its investments (mutual funds) with American Funds. American Funds will not ceritfy the investments as being complete and accurate and thus we are not able to do a limited scope audit. American Funds states that they are only the recordkeeper of the plan and not a trustee. They only issue certification letters were they are acting as the plan's directed trustee.

Question: If plan is going to go through a full scope audit and investments are going to be tested what will the trustees of the plan (owner and CFO) have to provide? They have no records of investments besides what american funds provides in their trust report. Whose interal controls would be tested, the trustees or american funds?

I have a plan that changed the vesting schedule from a 3 year cliff to immediate in 2004. There is an employee that was hired in 2004 prior to the vesting amendment. This employee did not meet the eligibility requirements to enter the plan until 2009. Now that she is in the plan, she is 100% vested, correct? I am having one of those Tuesdays that I seem to be questioning everything I think I know.

Suppose you have a DB with a flat excess benefit formula that provides 25% of FAC plus 18.75% in excess of covered comp all multiplied by YOP / 35 years.

The maximum disparity percentage is the lesser of the base % or 35 multiplied by a factor from a table based on the participant's SS retirement age.

This amount is further reduced if the normal form of benefit is anything other than a straight life annuity. For example, life + 20 yr certain has an adjustment factor of 78%. Does anyone know what the adjustment factor is for a 100% J & S normal form? I seem to recall 66%?

I have a client who has a preliminary FTAP as of 1/1/09 of less than 94%. If I recommend that they make an addtional contribution to get the FTAP to 94% how does this contribution get reported on the 2008 Schedule B? Does it make a difference if it goes to the prefunding balance or should it be designated to directly increase the assets and not be counted in the prefunding balance?

What options does an employer have if a participant (i.e. either a current employee or a COBRA person) refuses to complete an application. Say a small employer wants to shop carriers but an individual refuses to complete the carrier's application. The carrier will not provde a quote unless everyone completes an application. So what can the employer do in this case? It does not seem right that one person can hold the employer hostage in this situation but, again, the carrier will not provide a quote unless everyone turns in an applcaiton. Does anyone have a good solution to this situation?

Thanks.

I have a control group situation that causes an employer to fail 410b on their K source. Debating on weather running and passing ABT is acceptable to pass coverage for the K source. Comments on that?

Trying to avoid retro-active amendments and QNECS.

A plan allows for loans to participants and beneficiaries. The sole plan participant has died, it will take some time to settle the estate and other affairs, the spouse beneficiary wants to take a loan for $50K against the death benefit. She expects to be able to make quarterly payments and ultimately repay the entire amount before rolling the death benefit over to an IRA, but there is a possibility that she might end up defaulting on the loan.

If she were to take a distribution directly from the plan, it would be taxable but exempt from the pre-59-1/2 penalty as a death benefit. What happens if she takes the loan now, and then defaults on it later? It would be a deemed distribution for taxation, would it still be exempt from the penalty since it is a deemed distribution of a death benefit? Or might the penalty apply?

Assume a Participant should have entered the Plan on March 1, but was not given the opportunity to defer until much later. If the Participant elected to make no deferrals when they were given the opportunity is there still a need to make a corrective contribution reflecting the "missed opportunity" deferrals? No matching contributions were made under the plan for that plan year.