Is it permissible for a loan policy to limit plan loans to only fully vested participants?

Does having two matching formulas, one with allocation conditions, cause BRF testing due to different rates created by the allocation conditions?

For example, plan has payroll by payroll match of lets say 50% up to 5% of pay, no allocation conditions. Then plan has a discretionary match for anyone employed on the last day. Lets say the formula is 50% of pay up to 6% contributed. Under the first formula, coverage will be passed, but not the second formula. Do you apply one ACP test to both matches, and then BRF test the rates, or just do a coverage test on the second match?

Any help would be appreciated!

I was wondering whether anyone knows of a good resource that discusses the security law issues of nonqualified deferred compensation plans? I have the Corporate BNA entitled "Securities Law Aspects of Employee Benefit Plans" authored by Mr. Maldonado right in front of me but it seems to focus more on qualified plans.

The issue is whether a salary deferral plan for executives which allows the participants to elect to forego a portion of their annual salaries, have such amounts placed in a rabbi trust or some other vehicle, and then have such amounts paid to them at some specified time in the future (death, disability, separation from service) will be deemed an offering of securities such that an exemption is required.

No employer securities would be involved in the arrangement. The cash placed in the rabbi trust would probably be invested in mutual funds.

Any thoughts?

Can I simply convert an IRA distribution to my Roth? I retired this year at age 75. Also may want to convert part of the distribution next year.

A DB call center operations function will move from location A to location B. There will be 100% turnover in assigned staff because of the location change (driven by consolidation on the part of the service provider). Would it considered prudent to visit the new call center on site? Would that protect the fiduciaries in any way or demonstrate fiduciary prudence?

Conversely, do you think not visiting the new call center operation on-site would be imprudent or expose the fiduciaries to any risk?

The fact that location B is in a very attractive location, especially in January when it would be very nice there and could snowing where I live, is irrelevant.

I have a situation where the participant is the child's grandmother. The child is the grandmother's tax dependent and the child's parents are not in the picture.

The grandmother is employed full time.

The grandfather, however, is retired, but older. He is not able to take care of a 4 year old at all.

Can she participate in the dependent daycare account, or is she prohibited because she is married and her husband is not gainfully employed?

(I personally would never leave a 4 year old with a 70 year old).

Thank you.

Can someone explain to me the difference between a 401(a) and a FICA / Social Security Alternative Plan? Doing various searches on the web I cannot find a clear distinction between these. In some cases I'm thinking that a FICA / Social Security Alt Plan is also a 401(a).

I've noticed that TIAA Cref, Fidelity and other large carriers provide these plans typically to universities, some non-profits. Some plan descriptions explain that their plan mandates participation and the previous employee FICA payment of 6.2% will now become a 7.5% contribution into the new plan thus eliminating Social Security. Other 401a plan descriptions never mention this.

So, is a FICA / Social Security Alternative Plan an option within a 401(a)? Can this also be an option within a 403(b)?

Thanks in advance for your time.

DOL audited employee deferral contribution for 2006 - 2008 and came up with a penalty for late transmittal of $12. Now they have sent a letter recommending filing 5330 so when they send their findings to IRS in Ogden, we will already have filed. For 15% of that $12.

Anybody have experience with 5330's for these miniscule amounts? Does IRS really look for small amounts like this?

Could we donate to our favorite charity instead?

A client has a DB plan that he wants to terminate.

The plan was effective around 2002 or so.

Over the years the attorney may or may not have kept up with all required amendments, such as GUST, EGTRRA, PFEA, PPA, HEART, WRERA and so forth.

My thought is to restate and terminate the plan using the approved Sungard Relius document with all pertinent amendments in the plan and of course the salient plan provisions re: plan formul included, instead of trying to patch the old plan with various amendments.

The approach of using a Sungard document with their approved and/or current amendments seems like a clean and efficient technique without trying to sort through the old document and its amendments or lack thereof.

Does this seem like an acceptable approach?

Thanks.

Is there any commentary or authority on the treatment of an annulment as a COBRA qualifying event (i.e. the same as a divorce)?

We wanted to talk to someone about it, as we are considering doing this in-house to cut-out the expensive middleman (i.e., recordkeeper), particularly on small plans.

We use relius for admin work right now....

Please send me an email if you would be willing to talk to us.

Plan's AFTAP was determined without regard to FSCOB on 1/1/2008 and was certified as 147%. This is in accordance with IRC 436(j)(3). Instructions to completing line 15 of Schedule SB, however, indicate that AFTAP should be computed in accordance with IRC 436(j)(2) -- i.e., subtract FSCOB from assets, which in this case would be 57%. My inclination is to show 147% under the assumption that the instruction is inappropriate and than showing 57% suggest all sorts of nasty stuff applies, which don't.

Note that Schedule SB instructions indicate FTAP, line 14, are to subtract credit balances. AFTAP line 15 is not as clear.

Any thoughts?

Calendar Year Plan has 2008 quarterly contribution requirement of $50,000. 2008 contribution requirement is $300,000. Plan also has substantial FSCOB which could be applied to take care of $300,000 minimum.

Plan fails to pay $50,000 on 4/15/2008 and 7/15/2008. On October 1, sponsor contributes $300,000. Plan assets decrease 30% over 2008. ERGO, sponsor elects on 4/1/2009 to apply FSCOB to cover $300,000 minimum in 2008 and add $300,000 to PFB and forego pouring $75,000 of FSCOB down the water closet.

It appears since election to apply FSCOB was made well after quarterly due dates, PBGC should have been notfied of missed quarterlies (at least once).

Question: In determining excess contributions 1/1/2008, what should be the discount rates? I.e., should 5% penalty apply? I argue "no" since funding obligation was honored effective 1/1/2008 when 4/1/2009 election was made to apply FSCOB. So, PBF 1/1/2009 is simply $300,000 x (1+EIR)^(3/12).

Comments?

SEE REVISED POST BELOW

We administer a 401(k) profit sharing plan where the plan sponsor is a real estate agency (corporation). Several of the agents in the office have the opportunity to purchase shares of the corporation. One of the sales agents wants to purchase shares with his account in the 401(k) profit sharing plan (this sales agent is a non-owner and does not have an operational title).

Does this constitute a prohibited transaction?

Any thoughts would be greatly appreciated.

Thanks!

Can hardship distribution be take from Employer 401K safe harbor contributions?

Document says yes but insurance company says IRS says no and will not allow.

Small employer with 4 employees (1 owner and 3 employees) who were all employed on 12/31/2008. It's time to file the 2008 Form 5500 and make the 2008 3% safe harbor contributions, but the company is out of business and there are no corporate assets. The owner has filed personal Chapter 7 bankruptcy. Do the participants become creditors for their 2008 safe harbor contribution? Do they have to file something with the bankruptcy court?

We recently took over a 401(K) plan and the definition of compensation is W-2 Gross (Box 5).

The client also sponsors a Section 125 plan.

The previous TPA was using W-2 box 5.

The plan document states that the ADP/ACP tests shall be based on Gross W-2 w/o reduction for employee deferrals or employee contributions to a 125 plan.

Client wants to reduce W-2 by contribution to the 125 plan.

Would this be OK??

Section 504 of PPA 2006 requires plan sponsors to begin posting their 5500 forms for all plans subject to Title I (retirement and welfare) "on any intranet site maintained by the plan sponsor." If the sponsor is a member of a controlled group of corporations and all members of the controlled group participate in the plan, do the controlled group members need to post the 5500 on their intranet site? They are not the sponsor but their employees participate in that plan. Would anyone like to opine?

2008 calendar year plan. SH match plan to start the year, but SH match was suspended 3/31/08 after proper notice. After the amendment to suspend the SH match, a discretionary match is available for 2008, requiring 1,000 hours and employment on the last day of the year. Two new participants enter the plan 7/1/2008. They complete 1,000 hours in 2008 and are employed on 12/31. No discretionary match is made for 2008 and no forfeitures are allocated. They were not participants while the SH match was in effect, so they get no matching contributions for the year.

Are these two considered as benefiting or not benefiting for the 410(b) test on the 401(m) portion of the plan?

Our valuation software counts them as benefiting, but I'm thinking they should be counted as not benefiting. I don't see them as being directly or indirectly eligible to receive an allocation of matching contributions since there is no match for the portion of the year they were participants.

Anyone else have an opinion?