we are having an office dilemma.

For restatements distributions to terminated participants have several options, one being the distro can occur as soon as administratively feasible after the participant terminates. Another option is the distro may occur as soon as administratively feasible after the close of the plan year in which the participant terminates. The latter option allows for possible miscalculated matching funds to be deposited into the terminated part account and results in only one distro to the part rather than multiple under the former option. However, some of the plan administrators are going ahead and paying them out prior to the close of the plan year and not in accordance with the terms of the plan, which says "as soon as administratively feasible after the close of the plan year in which they terminate". For EGTRRA we are thinking of switching to as soon as administratively feasible after the participant terminates. That may allow the sponsor more flexibility. THOUGHTS?

A Plan Used $60,000 in forfeitures to Fund part of the Employer Contribution in 2008.

Where do I account for this on the 5500?

I have an employer that did not make their safe harbor match for 2008 regularly. They are just now funding most of it. Since it is due, latest, by the end of the quarter following payroll, it is a late deposit. What is the correction method for this?

thanks!

Two previously unrelated employers maintained 401k plans which are merged 6/1.

Plan X was merged into Plan Y effective 6/1.

If I plan on testing Plan X separately from 1/1 - 5/31, do I need to prorate my 415 compensation limit?

Additionally Plan X is audited, but there appears to be an exception to the audit requirement when a short plan year is created due to a merger which is less than 7 months. Is this true? I understand Plan Y will be audited for the full year.

Thanks

Our insurance carrier has just sent out student verification letters. The letter states that if the dependent is no longer a full-time student (fall quarter), that they will be retroactively terminated from coverage back to July 1st and any claims that were processed after July 1st will be backed out and the dependent responsible for payment. Under this scenario, the student has to be given the right to elect COBRA. So the termination date is July 1st, but the notification date is October 1st (date required the student notifiy the carrier whether or not they are a full-time student). I am telling the insurance carrier that they have to keep the dependent covered until they are notified of the COBRA election. They are telliing me since it's the participant's responsibility to notify someone that their child will no longer be a full-time student, they are allowed to do this. My contention is that the term date would be Sept. 1, not July 1, the date school would have started. Any comments?

The judge signed a QDRO directed to my ex's deferred compensation plan. The judge stated that the alternate payee's share is:

"fifty percent (50%) of the Participant's account value that accumulated between February 21, 1991 and September 30, 2005, together with earnings or losses, as determined by the Plan, until such time as the account is established for the alternate payee."

Since the judge used the word "accumulated", I took that to mean that he was including all interest earned between those 2 dates and that this also included the interest on my ex's pre-marital portion.

The fund disagreed and interepreted it to mean that my ex is entitled to have the interest/earnings/losses portion on his pre-marital share that was earned during the marriage. They also stated that they couldn't do calculations of interest from years 1991-1994.

The Fund had no statements for m ex's pre-marital amount so they said without that they couldn't implement the QDRO. I had a statement for the quarter ending 12/31/90 and asked them if it would help with calculations if I sent it. My ex did not have this statement. The only record the fund had of my ex's contributions was the actual amount he contributed for years 1989 through 1991, which was less than the amount on the statement I had.

I sent them the statement and the Fund said it would try to do calculations.

What should I do if I do not agree with their calculations?

Should I have just let the fund reject it and submit a new QDRO to the judge with similar language:

"fifty percent (50%) of the Participant's account value that accumulated between February 21, 1991 and September 30, 2005, minus the amount of the Particiant's actual contributions before Feb 21, 1991, together with earnings or losses, as determined by the Plan, until such time as the account is established for the alternate payee."

Does anyone have an opinion on this?

With the new PPA funding method, when a plan has been "around a while" you sometimes get a huge disparity between the minimum required and maximum permissible contribution. We have been running our valuations under say the "old school" individual aggregate just to get what we like to call a "suggested contribution" amount. It gets a bit tricky with sole props of course..lol

Just curious as to what others are doing on their vals?

Was there any input from the IRS at the ACOPA meeting regarding these questions? Should the carryover balance be subtracted in order to determine the FTAP and AFTAP?

A client had a payroll on 12/31/2008, but the check was paid on 1/2/09.

Does the employee deferrals counts towards the 2008 or 2009 402(g) limits and will they show up on the 2008 or 2009 W-2 for the Employee?

This question seems to come up everywhere I have worked. We are a non-producing TPA firm. Not CPA's. We do have an actuary on staff.

When a client terminates our services and moves their plan to another TPA, what is our obligation to provide copies of documents if the client has left owing us money, or if the client refuses to pay for copying costs? By documents, I mean plan documents, prior 5500's and admin reports, etc.

Our administrative service agreement has its own issues and really needs to be revised, but I'm wondering what our constraints are outside of the service agreement.

Thanks for any input!

Participant in a 401(k) profit sharing plan (with participant-directed investments) terminates employment and has an outstanding loan. All loan payments are current through termination date. Loan document states that loan repayments are made via payroll deduction.

Of course, when the employee terminates, they no longer have the ability to make loan repayments via payroll deduction.

Is the plan sponsor required to permit continued loan repayments after termination of employment (e.g., via personal check) or is this left to the discretion of the plan sponsor? The plan document does not address this issue.

Any input on this would be greatly appreciated.

Thanks!

I am an attorney in Oregon and I do not know much about retirement accounts, but something here does not seem right and I am hoping to elicit some direction. A small business owner set up a defined benefit plan. The business failed and he rolled over into a "Roll Over IRA" a significant sum he advanced on a home equity line of credit, filed for bankruptcy and is surrendering the home, which no longer has the value necessary to make my client whole. The debtor lists in his bankruptcy schedules he made $80,000 income for 2007 and $0 for 2008. The roll over occurred in early 2009. I am unsure he had the money in the "defined benefit plan" prior to the "roll over." I have requested documentation to prove or deny this fact. To me, advancing on a line of credit significant sums and then filing bankruptcy while attempting to take advantage of the exemptions at the expense of my client does not seem right. Any advice/direction would be helpful.

If the employer is paying the insurance premiums for life insurance policies held in the plan, what are the issues or possible issues involved? I've been trying to figure out if this was permissible and I don't find anything that specifically says it can't be done.

Has the IRS clarified what constitutes "significant benefits in the nature of medical care" beyond the Examples in Q&A 10 of Notice 2008-59?

We're dealing with a free, on-site clinic that offers a level of care somewhere in between the clinic described in Example 1 (physicals, immunizations, allergy injections, minor pain relief, and treatment of on-site accidents), which doesn't render the employees ineligible for HSA/HDHP, and the clinic described in Example 2 (all employee medical needs), which does disqualify them.

All the discussion I've been able to locate merely restates the Examples, and we'd like to know whether the IRS has spoken (even informally) about the shades of gray in between. Thanks.

ok - The 2009 RMDs were waived by Section 201 of the Worker Retiree and Employer Recovery Act of 2008. I know that if your first minimum was due in 2008 but you delayed it until April 1 of 2009, you must still take that RMD.

Any ongoing 2009 RMDs were waived by the Act.

Here is my question...5%+ owner turns 70 1/2 in 2009. First RMD is due no later than 04/01/2010. I believe that RMD is waived (as an '09 RMD), however the next RMD that would be due as of 12/31/2010 is still required as the 2010 RMDs have not been waived.

Agreed?

Just started with my first Aggregate testing.

The client has a DB plan along with a PS, 401(m) & Deferrals. I am aggregating all of them and testing on a benefits basis.

The software we use includes all the 3 DC values for the 410(b) testing but includes only the Profit sharing for the 401(a)(4). I thought the match should also have been included for the test? I know that the deferrals are not to be included for sure but as far as the match goes I am confused.

Also just wanted to confirm if the Deferral has to be capped at $15.5K for 410(B) even if the participant is more than 50 years old and has deferred $20.5K?

Any help will be highly appreciated.

Is it correct that we now send 5500-EZ to EBSA at Lawrenceville?

If a top heavy DC plan (profit sharing and 401(k)) has a dual eligibility provision (i.e. 1 month entry for deferrals, 1 year for profit sharing), a non-Key 401(k) participant must get a 3% PS contribution, right? (Assume a Key Employee gets 10%).

Now assume that the PS plan is permissively aggregated for 401(a)(4) with a DB plan that also has a 1 year service requirement, and the documents say that the DC plan provides the top heavy minimum.

What is the top heavy minimum for a participant who is eligible only for deferrals, 3% or 5%?

Michelle's Law extending coverage for 12 months for students who cannot attend school due to illness or injury will be effective for plan years beginning on and after 10/1/09. Part of the law requires employers to provide in "language that is understandable to the typical plan participant" the provisions of the continuation whenever we request certification of full-time student status. Does anyone know if the federal government plans to issue any model "language that is understandable to the typical plan participant" that can be used for this purpose? or are we on our own for drafting up a notice?

Instructions for Line 4l: check 'yes' if any benefits due under the plan were not timely paid or not paid in full. Include in this amount the total of any outstanding amounts that were not paid when due in previous years that have continued to remain unpaid.

My list of contributions to report here include all nondiscretionary

Top heavy

QNEC

Money purchase from previous years (also reported on Sch R)

Safe Harbor required employer contributions

Employer match

Not salary deferrals because they are reported on 4a (failure to transmit participant contributions within the DOL timeframe)

Comments?