A newly hired employee would like to opt out of the ER's 403(b) plan. Not only does he choose not to defer, but he'd rather receive more compensation than an ER contribution to the plan. I know that under a regular DC plan, the ER would have to adopt a volume submitter or individually designed plan to allow this, but 403(b)s aren't available as prototypes and don't have the same submission process -- at least not yet. I tried the 403(b) Answer Book, but couldn't find anything.

Can a self-insured health care plan reduce the hours for elibility from 30 -24 to ensure that a reduction in work across the board for a manufactuing plant does not change the health care for the employees? I would think that as long as the underwriter is ok with it - that there would be no problems.

Also - do we have to amend the plan? If the reduction in work to 24 hours a week is only temporary (2 months) - can the 30 hour requirement still be met since it is supposed to be "normally" work 30 hours? Can this be calcuated over a year or over the quarter to see if more often than not they work 30 hours a week? And since the Plan administrator is the company - can they chose to interpret the 30 hours normally worked to be calcualted over the year?

Any help would be appreciated.

thanks

I am going to prepare a new DB plan document for a client.

My understanding is that NRA must be set at at least age 62 unless the typical retirement age in the particulat industry is justifiably less than 62.

My simple solution to use age 62 is as follows:

Set NRA to age 62 and have early retirement begin at age 55 with fully subsidized benefit. That is, accrued benefit with no reduction for early retirement.

This way the plan can use an assumed age 55 retirement while meeting the age 62 requirement for in-service distributions.

Any thoughts with this approach?

Thanks

I have a cash balance plan with 4 HCEs and 10 NHCEs.

2 HCEs want to leave the company and start their own company.

The plan has a shortfall.

Can the 2 hces that are leaving waive part of their benefits so that the other 2 hces aren't on the hook for it?

Client deferred more money than employee requested. When returning excess money should earnings be given?

Doesn't seem to be addressed in Rev. Proc. 2008-50.

My thoughts:

EPCRS attempts to make employee whole, as if error had never occurred. If earnings loss then return principal amount. If earnings gain, then include earnings.

Please provide citations.

Note: this is not a 402(g) or 415 issue. Company just didn't follow admin procedures.

Worker dies in late February. His name beneficiary, who is also his sole living relative, is a daughter. She then dies in early March. Her remaining relatives are two minor children (grandchildren of worker), who she defined as her beneficiaries in a will (not related to Plan). A court order has been issued that says pay to either (???) the estate or the minor children. If the latter, monies are to be sent to a "trust account" for the 2 children.

My thoughts are that the payment should be to the estate as the grandchildren were never named as beneficiary of the worker. Comments?

It seems as though companies not required to capitalize costs under IRC Section 263A can deduct IBNR as long as they accrue it without having to fund same. Service companies such as accounting and consulting firms come to mind.

What other firms can take advantage of this departure from the 1972 U.S. Supreme Court decision involving General Dynamics?

Jack, a 5% owner, was born 2/15/1939 so Jack turns 70 1/2 on 8/15/2009. His RBD is 4/1/2010. The defined benefit Plan covering Jack allows for inservice distribution after age 70. Jack elects to take a lump sum distribution in July 2009.

Q1: Is part of the lump sum considered to be a minimum required distribution and therefore not eligible for IRA rollover? In short, does taking a lump sum distribution nullify the ability to defer the minimum until the next April 1?

Q2: If the answer to Q1 is "yes," is it valid to determine the minimum distribution as his lump sum divided by the joint life multiple for Jack and his wife (Jill)?

If we elect to use the yield curve for a November 1, 2008 valuation (using the valuation month), are the rates 7.11%, 8.23% and 7.42%? These rates would definitely lower the Funding Target.

Are these rates used for all purposes of the valuation calculations (i.e. AFTAP, benefit restrictions under Section 436, PBGC). How long are we stuck with using the yield curve (versus the segment rates)?

When does the plan sponsor have to make this election to use the yield curve.

Any other comments?

I need some clarification regarding conversion of my traditional/ roll over IRA to Roth IRA and Required Minimum Distribution(RMD) from IRA and annuity with the following facts.

My date of birth is July 16th. 1939.

I file Income tax as married file jointly and my AGI is less than $100,000.

I will be 70-1/2 on January 16th. 2010.

What will be my required beginning date to receive distributions from my IRA. April, 1st. 2010 or 2011?

What is the maximum amount I can convert traditional Ira to Roth IRA?

What is the end date after which I can not convert my traditional IRA to Roth IRA?

What is the RMD for my Annuity?

How can I tell if a given EB plan is an H&W plan or fringe benefit plan?

I've been reading a lot of very informative posts about employees "sham" quitting to receive a distribution and then being rehired shortly thereafter, but I haven't seen an answer to the question that has come up for me...I'd love to get your thoughts.

A participant terminates employment from a 401(k) plan and elects to take her distributions in installments. Several months later, shortstaffed, the employer hires her back in a part time position. The TPA is not notified and payments from the account continue to the participant. (You may assume that the termination and rehire are bona fide.)

The Plan has a provision that suspends installment distributions of elective deferrals, QNECs, QMACs and Safe Harbor distributions upon rehire, but is silent on the issue of whether installment distributions of other amounts (such as Employer discretionary distributions) are also suspended. No in-service distributions are permitted under the Plan.

The TPA recently became aware of the situation and now claims that all distribution installments made to her were in violation of the plan terms and must be paid back. The participant is devistated as she's been using the money for her living expenses and can't possibly come up with the repayment.

What should have happened upon this participant's rehire? Are the amounts already provided to her really "overpayments" that must now be recontributed to the plan?

If a 401k plan is amended to add an In-Service distribution provision and the provision is utilized by at least one participant, can the plan later be amended to remove the In-Service distribution provision so that no other participants may receive an in-service distribution?

I'd heard that the 2009 waiver of the RMD from a 401(k) plan by the company's owner does not apply, and thus he MUST take the RMD in 2009???

I can't find a thing on the internet, or the IRS website, for that matter, that shows this as being fact.

Individual is involuntarily terminated in November 2008, begins COBRA for himself and his dependent child as of December 1, 2008.

Coverage for both is in place on February 17, 2009, but due to costs the individual drops his coverage before receiving COBRA subsidy notice. Dependent's coverage remains in place. Does the individual get a second chance election?

Does anyone know the amount of the Central States Pension Fund's UVB's ("unfunded vested benefits") for withdrawal liability purposes as of December 31, 2008? Does anyone have an insight as to how to estimate the withdrawal liability without a formal request to the Fund?

Someone asked a similar quetion a few years ago, and that person actually got an answer! So I'm hoping someone here can help me out!

Calendar year 401(k) profit sharing plan, PYE 12/31/2008. Owner was self-employed through 6/30 and then became an S-Corporation (owner was not paid W-2 wages from the S-Corp in 2008). The CPA just gave me the figures to calculate the employer contributions for the year and said that the client was paid $50,000 in "management fees" from a vineyard that are subject to self-employment tax; however, these management fees are not reported on the Schedule C (owner had Schedule C income of appx. $150,000). Do I include the $50,000 when calculating the owner's net earned income or do I ignore it and just use the Schedule C income?

Any assistance on this would be greatly appreciated.

Thanks!!

Wanted to doublecheck the IRS disclosure office to forward letters for under 50 participants

Went to irs.gov and it appears to now just be one address in Doraville, GA

In the past, I've sent to a local disclosure office

Can anyone confirm that it now the GA address

The 202 # in DC I called today does not answer

thanks

Lexy

Company X sponsors a 401(k) plan for its employees. Currently, the plan provides that participants may obtain an inservice distribution of matching contributions prior to age 59 1/2 if such contributions have been held in the plan at least 24 months or the employee has participated in the plan for at least 60 months. The distribution of the matching contribution results in a 6-month suspension of matching contributions. The same provisions apply to withdrawals of matching contributions after age 59 1/2. Company X would like to amend its 401(k) plan as follows: (1) with respect to pre-age 59 1/2 inservice distributions, by removing matching contributions as an eligible source for distribution; and (2) to remove the suspension period for post 59 1/2 in-service distributions.

With respect to (1), is such an amendment a cutback prohibited by Code Section 411(d)(6)? If so, is a viable alternative to simply amend the plan to state that matching contributions after a certain date will not be available for pre-59 1/2 in-service distributions? I looked at the IRS regs and thought there was more flexibility as applied to in-service distributions than appears to be the case.

Is there a minimum excise tax amount for filing a 5330?

I have a case where the client did not remit data until after the 2 1/2 month deadline. Of course, there turned out to be an ADP failure with a refund due of $62. The 10% excise tax would be $6.

Is this really necessary? I thought I saw a few years ago that anything under $10 need not be filed, but could be getting that mixed up with something entirely different.