Has anyone ever dealt with a situation like this: We are a service provider & record-keeper for a 401(k) plan. We bill the plan sponsor record-keeping fees quarterly pursuant to a service agreement with the plan sponsor; this service agreement also states that if payment is not made within a specified time period we can deduct the record-keeping fees directly from plan assets. We also collect contract asset charges monthly and directly from the plan assets (i.e., the various separate accounts where the plan invests its assets). The latter charges are specified in a group annuity contract which is issued to the plan itself.

The plan sponsor filed for Chapter 11 bankruptcy several months ago. Since then, we have continued to charge and get paid by the sponsor our quartlery record-keeping fees, and we have continued to deduct the contract asset charges each month. We recently received a letter from a law firm that represents the plan sponsor in its bankruptcy proceeding. They are demanding that we return the record-keeping fees and contract asset charges we've collected from the plan sponsor since the bankruptcy filing.

As I see it, because it is clear that retirement plan assets are not part of the bankruptcy estate, we have a very strong argument that we are entitled to keep these fees and charges. All of the fees and charges would have either been paid directly from plan assets, or if paid from the plan sponsor, for the benefit of the plan. Has anyone ever dealt with a situation similar to this? Particularly from a service provider/record-keeper perspective?

Thanks in advance.

I recall sometime ago that IRS changed opinion and we no longer need to file Form 5330 for late deposits of 401k.

I also thought we no longer needed to check a prohibited transaction occured on Form 5500 Schedule H/I.

Does anyone recall.

Thanks

I have a plan with a 6/30/2009 plan year end... they are currently applying for a distressed termination. They refuse to contribute any more money to the plan (well, they say they don't have any money). Would they still be required to pay an excess tax on the rmc for the 2008 plan year if the distressed goes through?

I am a lot confused. Here are the facts:

Traditional DB plan with BOY Valuation (Calendar Plan Year)

Minimum required contribution for 2008 plan year - 0

Contribution made on 6/15/2009 - 30,000

2008 Effective Rate - 5.70%

Line 19© of 2008 Schedule SB "Contributions allocated towards MRC to current year, adjusted to Val date" - 27,676

First question: What is the number that can be used to increase the prefunding balance? 27,676 OR 30,000 OR something else?

Second Question: When you must reduce the assets by the prefunding balance in order to calculate the AFTAP, do you adjust the pre-funding balance to 01/01/2009 using the 2008 effective rate? Or do you simply subtract out 27,676 because this is the number that can increase the prefunding balance as of 12/31/2008? Is that even true?

Final question: I was under the impression that the FTAP and AFTAP should only differ if there are annuity purchases. Why am I seeing otherwise?

Any help would be appreciated.

I am trying to restate an old MPP Plan that was converted to a PS Plan. The employer had a PW Plan in 1996 under company A. Company B adopted a 401k Plan in 1998 (001). In 2002 Company A changed their Entity/Plan Sponsor to Company B. One, I cannot find an amendment stating this change. But as I look at 5500's Company A and B both have 001 as the Plan number. Shouldn't Plan A be 002 since the Adopting Employer already had a Plan? The 2002 Form 5500 for Company A shows a change in the Plan Sponsor, Plan Name and EIN but the Plan No is still 001.

Are general post-separation expense reimbursement amounts that are structured to be compliant with 409A but not necessarily exempt from 409A included in items that cannot be paid to specified employees within the first 6 months of separation?

For additional information, we have a specified employee who, in addition to severance or separation pay, is receiving reimbursement for certain moving expenses and continued health benefits, is there a prohibition on paying those reimbursements during the first 6 months? I know the regulations provide for some exemptions when reimbursements are made as part of a separation pay plan (including apparently voluntary separation plans) provided certain rules are followed (see 1.409A-1(b)(9)(v)). In particular, those rules require that the reimbursements be provided within a limited period of time--e.g., reimbursement for moving expenses incurred within 2 years following the year of separation.

In our situation, the moving reimbursement provisions are not expressly limited to expenses incurred within 2 years following year of separation. Instead, they generally envision a one-time moving expense reimbursement being provided for any move at any time following termination for the life of the former employee. As such, I do not think they are exempted under the separation pay plan exemption discussed above. I do believe they comply with the general reimbursement rules / provisions under 409A so I think they are generally compliant if not exempt with the exception concerning application of the 6-month delay requirement.

IRC 401(k)(2)(B) was amended to add (v) qualified reservist as a distributable event for elective deferrals.

Sections of the Code dealing with QNECs, QMACs and Safe Harbor Contributions require that these contributions meet the requirements (distribution restrictions) of Paragraph (2)(B), with no exception listed.

Portions of the HEART Act seem to specify that only elective deferrals may be distributed as a Qualified Reservist Distribution.

Does anyone know if QNECs, QMACs and Safe Harbor Contributions may also be distributed as part of a Qualified Reservist Distribution?

Thanks.

An employer has a fully insured medical plan issued in New York which covers employees in all 50 states and US territories. MA has a mandate providing continuation coverage for a former spouse. The statute, found at Chapter 175, Section 110I (a) specifically provides, "The provisions of this section shall apply to any policy issued or renewed within or without the commonwealth and which covers residents of the commonwealth." Does the mandate apply to a contract issued in NYS which covers MA residents?

I have 2 questions:

I have a 1 person plan with an AFTAP of 65% as of January 1, 2009. Is a Notice of Benefit Restriction required since only 1 person? I couldn't find anything that excluded the 1 person plan from providing a notice.

Also, what about a plan (also with an APTAP of 65%) that is non-PBGC. Is a notice required? Since the restricted amount has to do with the limits of the PBGC would this plan have to do a notice? I would think it would since I couldn't find anything that excluded non-PBGC plans.

I am new and am unclear on where to post a question like this.

I am an employee of a very small company. There are 2 people in the company and I am the employee. I get a W-2. We are a web services company. The company has been around for 12 years or so and I have been a part-time and then full-time employee for about 9 years. I have been full-time for 7 years.

During this time I have never received a salary increase, except for when I went full-time. There are no benefits whatsoever. The good thing about working for said company is the very flexible schedule provided. In the past few years, while I keep track of vacation and sick time myself, there seems to be no set limits. I take very little time off so I suppose it's not an issue. But the flexibility is good. I do work evenings and weekends sometimes to keep up with work and I consider myself more than an employee. My boss and I have become friends over the years, albeit not "best" friends. She does work for other clients on her own, too.

I would like more compensation. I responded to a posting looking for programming expertise. I landed the contract worth several thousand dollars. I could have taken on this client on a 1099 basis but chose not to do that and shared the opportunity with my boss with the stipulation that I would have 50% of the profit realized from this client. My boss agreed. However, now my boss seems to be backpedaling on this and has stated that would rather give me a bonus of some sort. I am told the problem is a book-keeping one and since the hours worked on this contract per month are variable, it's difficult for boss to figure out. Boss has payroll company and bookkeeper. Other business my come from this new client and I would like a piece of the action for that, too.

Incidentally, we have only one other major client. I do the lion's share of work for that client and all the work for new client, plus anything else asked of me. I usually work out of my home office but are now going to the city for major client 3 days a week. I am receiving no extra compensation for that except parking allotment.

My question was going to be this: Can I receive a W-2 AND 1099 from my boss, segregating the 1099 work for this new client. But now I think the answer to this is 'no'. I could have received a 1099 from the new client only.

Any comments would be welcome on how to handle this.

THANKS!

I just found out my ex-husband (divroced in 1998) did not file a QDRO with his employment. I have moved since then and live in another state. Do I have to get a QDRO signed in state and county of divorce or can I get one where I currently live. Need help desperately with this situation.

I am trying to derive rough estimates of the value of lump-sum payouts for workers separating from a job with a DB plan before retirement (using national survey data) for a thesis paper. My understanding (I am not a practitioner in this field) is that the lump sum payout for DB plans is the present value of the annuity payments a worker would have received in retirement (adjusted for mortality risk). My question concerns valuing the lump sum payment option (assuming the plan allows one) for workers who leave their job long before retirement age (say, age 40). In that case, does the present value of the annuity paid in retirement need to discounted back to the worker's age at separation? In other words, the procedure I had in mind first involves taking the PV of the annuity payments in retirement, starting at, say, age 65 and based on male/female life expectancies at that age; then, as a second step, discounting that amount back to the date of separation. Is this (very roughly) how the actual calculation works and, in particular, is the second step necessary?

Thanks for any help (and I apologize if this is too elementary a question for this forum)!

I am working on restating 2 Documents for a client. One Plan is a 401k Plan that excludes all employees performing work covered by Davis Bacon Contracts. The other Document is a Prevailing Wage Plan that excludes all classification of employees other than those covered byt the attached Davis Bacon Contract.

Question

1. It sounds to me that the 401k Plan is excluding all employees from the Davis Bacon Plan? The former TPA states no that they are excluding compensation made with the Davis Bacon Plan.

2. Doesn't 410b need to be done? If so for each Plan excludinig each classification? If compensation was excluded shouldn't 414s test be performed?

Any other thoughts?

The trust holder for the company's defined benefit plan issued duplicate checks for the plan's consultant services. The consultant cashed both checks. The consultant is now issuing a check to the trust holder in the amount of the duplicate payment. Does this scenario constitute a prohibited transaction? Are there any reporting obligations required on the part of the plan? Thanks.

Have you heard any rumors that Accudraft has been sold?

Let's say an employer maintains a 401(k) plan for its employees. A participant retires and then starts receiving minmum distribution payments in connection with his/her attainment of age 70 1/2. The checks are payable to the individual who is the participant and bear the correct social security number. Unfortunately, the participant moved without informing his//her employer of the change of address. Therefore, the checks are still delivered to the same home address in the name of the participant at the same social security number. However, in the meantime, an individual with the same first and last name as the participant has begun cashing the checks although s/he has also been reporting the distributions on his/her tax return. The error has since been discovered and the individual who had cashed the checks is now willing to pay the amount back to the plan.

My question would be what should be done by the plan other than through the SCP program of simplying issuing the checks to the intended participant? I see no qualification issue on the part of the plan since it paid the checks to the correct SSN and to what it thought was the correct address. Similarly the participant should not be subject to the excise tax because the circumstances should make him/her eligible to satisfy the reasonable error test resulting in waiver of the tax. Does anyone see anytihing else here that I have not specifically mentioned?

A client of mine is interested in updating its Plan's definition of Actuarial Equivalence to a more recent table. Are there any issues in doing that? I believe we need to preserve the old basis (as a minimum) during the year of the switch?

I know that some people talk about prices in terms of a percentage of annual revenue. What ranges are you seeing for non-producing TPA firms?

Would a TPA (fiduciary or not) be liable if an employer stops funding the plan so the TPA cannot pay participant claims?

I am trying to track down a copy of the Retirement Equity Act of 1984 (Public Law 98-397). Does anyone have any suggestions as to how I can obtain a copy online. I can't seem to find anything online using google. I need a copy b/c I am trying to determine the genesis for Q&As 4 & 5 of Treas. Reg. 1.411(d)-4. Any suggestions as to how I can retrieve a copy of the REA or the proposed regulation for 1.411(d)-4 would be helpful.