If a Gov't employer realizes they have made contributions in excess of $49,000 this year to a 401(a) plan, can a 415(m) plan be set up by the end of this year to receive the excess contribution, or is it too late and the excess needs to go into a suspense account to be used as a credit next year? I have been told that once the money actually "touches" the plan, any determined excess can not go into the 415(m) plan. They would actually need to have stops in place so that no more than the dollar limit will ever go into the 401(a) and the calculated "excess" goes into the 415(m) directly.

I have a plan that has a 2008 AFTAP of 70%, 2007 Funded Ratio of 74%. The 2008 minimum required contribution was $300,000. The plan was subject to quarterlies in 2008.

There was a carryover balance as of 1/1/2008 of $5000. The plan will not be putting in any contribution for 2008. Which would be the correct way to look at this:

(a) Since, the plan’s 2007 Funded Ratio is less than 80%, we cannot use any balances to offset part of the 2008 min reqd contribution.

(b) Since the plan’s first quarterly was due on 4/15/2008 (and was not made), the entire credit balance gets automatically adjusted against part of the required quarterly.

Based on one of the choices above, funding deficiency is calculated accordingly.

I think (a) is the correct way to look at it. Any help appreciated.

Can the sponsor of a multiple employer plan terminate the participation of an adopting employer who the sponsor feels is jeopardizing the tax qualifed status? I assume so since the sponsor's consent is needed to allow an employer to adopt in the first place.

I am preparing a 1/1/2009 valuation and calculate an FTAP/AFTAP of about 53.0% A deemed election will not bring it up to 60% so I'm stuck at 53.0%.

Since < 60%, benefits are frozen and no lump sums are allowed. How is this reflected in the valuation? Do I just do the valuation as in the past. It doesn't make sense that there would be no accrual (no TNC) for the 2009 year. How about showing benefits to participant?

We are a small company with 7 total people. The partners have not historically drawn a salary and would like to participate in our safe harbor 401k plan. Can they do this without drawing a salary and getting a W-2?

Any comments would be appreciated as to whether this makes sense

Facts:

NRA=62

AA=50

Accrued Benefit $195,000 (10+ years of participation)

Lump sum available as deferred annuity at NRA

Suppose terminating employment.

Then, contend lump sum is computed as $195,000 x (f)

(a) N62/D50 using plan rates

(b) N62/D50 using 417(e) rates

© Greater of (a) and (b)

(d) 105% x (b)

(e) N62/D50 computed using applicable mortality table and 5.50%

(f) Least of ©, (d), and (e)

Suppose funding (assume no pre-retirement mortality). Then, FT computed as $195,000 x (f) / (1+second segment rate)^12

(a) N62/D62 using plan rates

(b) N62/D62 using funding segment rate 2 for the first 8 payments and funding segment rate 3 therafter

© Greater of (a) and (b)

(d) 105% x (b)

(e) N62/D62 computed using applicable mortality table and 5.50%

(f) Least of ©, (d), and (e)

It is my understanding that RMDs are waived for individuals turning age 70-1/2 during 2009. The waiver applies to the payment due by April 1, 2010, but NOT to the payment due by December 31, 2010, which is considered a 2010 RMD.

Is anybody aware of an extension of this waiver to 2010 or beyond? I believe this waiver is limited to 2009 only.

Thank you.

Company A (previously a subsidiary) was a participating employer in a 401k plan (Plan X), was later sold and set up its own Plan (Plan Y) and is now to be merged into its Parent Co.'s plan (Plan Z). It has been discovered plan X has qualification issues (non-amenders, etc.)....Is it possible (i.e., does Company A have the legal authority) to submit an EPCRS submission for itself regarding Plan X qualification failures? If not, how does Company A get rid of the nonqualification "taint" of Plan X?

In January we received most of the funds for a conversion plan, along with an explanation from the prior investment company that there was not sufficient cash in their real estate fund to honor any redemption requests at that time. This is an individually directed plan where the affected participants had chosen to invest some or all of their balances in this fund. Nine months later they are still unable (unwilling?) to transfer the remaining funds and have no estimate of when they might be able to do so.

Clearly the blackout period has long since expired. And it is only a matter of time until the plan needs to make a distribution to a terminated participant who has chosen that fund.

Is there any sort of enforcement mechanism that the plan fiduciaries could use against this investment provider in this type of situation?

Hi,

My wife is a S-corp and our Financial advisors setup a Solo 401K and deposited $15500 in the account in Dec 08 and I am in the process of adding $6k to max it out. They offered to setup a TPA but asked them whether it was necessary as I did not think having a yearly $400 charge was a good idea and said I could fill up the info myself. I have a couple of questions.

1) Do I need to file a 5500EZ? I looked at the instructions for filing it and the section on "who might not have to file" it is not needed if total assets (I am assuming this is the value of the 401K) is less than $250K.

2) For sole proprietors the deadline for funding the 401k is up until the April 15 deadline or Oct 15 if an extension was filed, but the instructions said it is just at a later date for S-corps. What is the deadline for funding it?

3) Do I need a TPA?

Thanks

Large company (20+ ees) is buying 100% ownership of two smaller companies. Each of the smaller companies will continue their in-force health insurance plans, their own 401k, their own employees, etc. The only thing changing is the actual ownership of the companies. It is a controlled group I believe.

Do the smaller companies now need to offer COBRA under their small group plans because the owner of the companies is subject to COBRA?

There is no outstanding COBRA liabilities, no employee is being termed. Just wondering going forward how 20+ employees are counted in this situation and can't find it exactly.

I have several clients using a Default investment for participants who are not enrolled in the Plan yet but were due a Profit Sharing contribution. However, the default investment is not Qualified. What are the consequences, do they meet 404c?

I also have a client that has a ACA and has a default investment that is also not a Qualified Default Investment, therefore they don't give QDIA notices. What could be the consequences on this?

I am preparing a 1/1/2009 valuation. I first calculate an FTAP (after subtraction of the COB/PBF) balances of 65%. I can get an AFTAP of 100% if I there is a deemed election of all the COB and part of the PFB. Must the deemed election go only to 80% or all the way to 100%?

Or if I am at 93.5% must a deemed election be done to get to 100%?

Rev Ruling 2009-30 adds the following to our jumbled knowledge of Automatic Enrollments.

There are 2 'situations' provided

Situation 2

The annual increase does not have to be the first day of the plan year. This example uses April 1 rather than the plan year begin date of January 1, because salary increases are enacted on April 1.

Situation 1

I am not sure who dreamed this one up. the increase is the greater of 1% or a number of percentage points calculated as 30% of the percentage increase in the base pay. (rounded to the nearest whole percentage)

In this example the plan is not intended to be a QACA or an EACA, so the increase does not have to meet the uniformity requirement (e.g. some people will increase 1% each year, but someone with a big salary increase would increase 2 or more- definitely non-uniform for 2 people who otherwise have the same number of year, etc )- so the odd annual increase is ok.

C'mon - which one of you characters out there are setting up plans like this?

"Never argue with a fool, onlookers may not be able to tell the difference." - Attributed to Mark Twain

First off, this is generally a polite and courteous forum. Even "heated" debates manage to stay w/in the bounds of general decorum.

However, all forums are subject to the occassional person who posts for the simple sake of argument or, worse, for the simple sake of getting a rise out of another poster. A person making posts like that is sometimes referred to as a "troll".

The best way to respond to a troll is to not reply at all. Rather, if a post is sufficiently inappropriate, then use the "Report" button on the lower left side of the post.

I understand that Key/HCEs can be discriminated against, and don't have to receive any Safe Harbor match if the document so states. Based on the formula, one of the partners should receive approximately $8k in safe harbor match, but only wants to put in $5k for himself. Can he do this?

Last year we bought two small TPAs, under $250,000, that had old software and limited to no website service. Upgrading them to our software and the expanded services we offered worked out great. Both were close to us and we sorta stumbled into them. We would like to find more but haven't been able to find any merger firms that do deals that small. The firms we have come across have fees that start at $80,000K plus. Anyone know of any firms that facilitate small deals in the under $250,000 range?

Have an existing calendar year profit sharing plan where a 401(k) provision was added effective 9/1/08.

I am pretty clear that for ADP testing purposes, I have the option of using either full year comp, or comp after 9/1, for purposes of the ADP calculation.

My question is really a 410(b) one. If I have individuals who terminated before 9/1, can I still count them as benefiting under the 401(k) provision? I would think not. Even though the 401(k) is open to all nonexcludable employees, I would think I may still have a coverage issue here.

Any thoughts? I have to think this has been asked before, but as usual, my search comes up dry. I am hoping there are others out there with no life who are working this weekend.

Dog

A large fully insured group health plan providing mental health and addiction benefits renews its contract on October 1st each year. Its benefit year which tracks deductions and out of pocket maxima and the calendar plan year coincide.

Is the compliance date January 1, 2010 or October 1, 2010 or ????????????????????

P.S. Most employee benefits attorneys and consultants as well as EBSA associates have no clue that this issue even exists!!!!!!!!!!!!!!!!!

P.P.S. Please provide citations acknowledging the regulations due out by October 3, 2009 don't exist even in proposed form

I work on the 5500 for an ESOP that hasn't made a contribution in years. Every one is 100% vested. There are around 50 participants with balances but that number would be over 100 eligibles which would share in a contribution if one were made. So we've filed a Schedule H with an audit.

Now they have decided to freeze the plan. Since the extra eligibles will never receive a contribution or have a balance in the plan can we go to a small plan 5500? Technically are those who were once eligible but will now never receive a contribution still counted as "participants" for 5500 count purposes?

Thanks