I have heard Jim Holland state and now i've heard someone else say that if the plan's 2008 FTAP is at least 92% quarterly contributions are not required for the 2009 plan year. I can not find any cite that applies the transitional funding levels (92%, 94%...) to the definition of funding shortfall for quarterly purposes, only for the exemption of shortfall amortization charge (and also in 436). Does anyone have a cite that says the transitional levels can be applied to the FTAP for quarterly requirement?? Thanks.

Is there a problem with using forfeitures to make a corrective contribution (assume the plan specifically allows for it)?

Client has two plans - one Union and one nonunion.

1. Can the two plans be covered under one bond?

2. If the one plan needs $500,000, and the other 70,000 do we add the two together or is their one limit per employer?

I think they have to have the two added together, but I cannot find something to "prove" it to the client.

Thanks - any comments or help appreicated.

Pat

Is it possible for union employees to bargain for some of their retirement benefits, but not all?

An employer is telling me that they have union employees and they bargain for a DB plan. This plan is only for the union employees.

But the employer also sponsors a 401(k) plan. Everyone is eligible for this plan (both union and non-union). But the employer is indicating that the union employees do NOT bargain for the 401(k) - but they can participate in it if they want to.

So if that's the case, then there would be no union employees when it comes to nondiscrimination and coverage testing on the 401(k)? That means no bargaining exclusions for coverage and everyone is included in ADP/ACP?

Does that seem legitimate?

Stupid question, but when you are putting the 5500 packages together, are you putting the "SB" after the the "R" and before the "SSA" or are you still putting it in the old "B" slot?

From my accounting 101 class I was always told to organize schedules in alpha order, but the schedule checklist section of the 5500 still lists just "Schedule B" and doesn't say "SB" or "MB". However, the directions list the schedules in alpha order with the "SB" after the "R".

I know, stupid question, but is everyone else putting the "SB" after the "R"?

I would appreciate advice on the following situation:

I was employed by a company that offered a HDHP and HSA from 9/08 thru 5/09. I made excess pre-tax contributions to the HSA in both 2008 and 2009 and have a balance of approximately $5,000. I contributed ~ $3000 pre-tax in 2008 and another $1650 pre-tax in 2009. My company contributed approximately $2000 over the same period. I used some of the funds to cover health care costs, resulting in the roughly $5000 HSA balance.

I left the company at the end of May, 2009 and received a severance. Part of my severance was an agreement by the company to fund my health care through the end of 2009 (under COBRA), or until I started at a new job that provided health care.

I started at a new company on 8/3/09 that does not offer a HDHP -- only a PPO with the option of a Flexible Spending Account to contribute pre-tax dollars. My previous company ended my coverage when I advised them I had started work at a new employer.

My questions:

-- Can I leave the $5,000 balance in my exisiting HSA where it is (credit union account) and use this to cover health care costs later on in retirement? If not, what happens to the money? Must it be refunded to me and if so, is there a 10% tax, plus the refund appears as ordinary taxable income at year-end?

-- Can I enroll in the FSA offered by my new company and contribute pre-tax $'s from 8/09 thru year end while still leaving money in the HSA? Can the FSA funds only be used to pay for unreimbursed health care costs incurred from the date of my employment (8/3/09) thru year end -- or can they be used for any 2009 unreimbursed expense, including the deductible from the previous HDHP?

-- Can I use the HSA funds already contributed and in my accout to pay for unreibursed health care costs from the PPO plan?

Thanks in advance for your help....

(I am not a benefits person -- hopefully I explained this well enough to elicit a few replies...

I'm having a brain cramp. I remember that for small plans, there was an alternative to the long form SAR language in 2520.104b-10.

In lieu of preparing a full SAR, a Plan Administrator could distribute a notice that said a copy of the entire 5500 would be supplied on request. Another alternative was that a copy of the 5500 could be provided in full in lieu of preparing an SAR with the long form language.

I see that as late as 2007 TIAA-CREF was advising that these alternate approaches are still permissible. I just can't find the language in 2520.104b-10 anymore. Are my regs out of date, or is this small plan alternate rule to the full SAR in another location? Or, are these alternatives no longer available for small plans?

Thanks.

I'd be very interested to hear others thoughts on this one....

Our DB plan has recently (in the last couple of years) had a dramatic increase in the number of child support QDROs issued with respect to the plan. Most of these QDROs are not handled by attorneys but rather handled by child support enforcement officers and signed by the AG's office of the particular state. Certain of these QDROs call for back child support in a lump sum amount. (We require them to clarify that they actually want a portion of the PPT's accrued benefit which, if converted to a lump sum, would = [blank]). Some of these also call for a future monthly payment that represents what the court deems to be reasonable future support.

The plan has very detailed QDRO procedures that are given to APs (or their reps) upon notice of a proposed QDRO and freezes the PPT's benefit upon any type of notice that we are expecting a proposed QDRO, and we do not release the freeze unless it is 100% clear that no QDRO will be issued, the parties sign a notarized consent to that effect, or of course until the QDRO is qualified and processed. These procedures also clearly state that no payments under any QDRO will begin until (1) the plan issues a letter qualifying the order; (2) sixty days passes, during which time the parties can review the plan's interpretation of the order and object if necessary; and (3) the AP requests and completes election forms from the Plan administrator.

When we are in the stage of reviewing the proposed DRO and giving comments to ensure that it qualifies under the terms of our plan, we always make sure to remind APs of the fact that payments won't be made until the plan's process is complete, so that they can take that into consideration in determining the appropriate amount to be assigned. When an order calls for an "immediate payment", we ask that they change that to "payment as soon as administratively possible after the Plan qualifies the Order as a QDRO". Accordingly, if the June 1, 2009 order calls for a $5,000 lump sum (representing back support), and $500 monthly payments (representing future support), and that language is in the order, the plan will begin to make those payments as soon as possible following the administrative process discussed above (approximately September 1, 2009). Accordingly, on 9/1, AP will get a check for $5,000 and a check representing September's $500 payment.

This recent influx of these types of payments (in most other cases the AP only wants a lump sum) has us wondering whether the plan should be segregating the "future" monthly payments as of the date of the initial DRO under the 18 month rule. This is due to the language in IRC Section 414(p)(7)(A) (paraphrasing) "During any period in which the issue of whether a domestic relations order is a QDRO is being determined by a plan administrator, by a court or otherwise, the plan adminsitrator shall separatelyu account for the amounts which would have been payable if the order had been determined to be a QDRO " In that case, the $500 monthly payments should have been segregated as of June 1, 2009, and as of September 1, 2009, the AP would get the $5,000 lump sum, a payment of $1500 representing the three months of monthly payments, and a check for $500 for September. However, this seems inconsistent with my understanding of the 18 month rule, and perhaps more importantly (given the ambiguity regarding the interpertation of QDROs) contrary to the precise language of the order. If the language of the order contemplates the plan's review process and therefore payments are not "required to be made under the order" until that review process is complete, does the plan still have a responsibility to segregate those three months and pay it out, notwithstanding the terms of the order?

Sorry for the long post, and thank you for any thoughts.

501©(3) employer (that is not otherwise excepted from ERISA coverage) provides for a 403(b) deferral-only plan and is "hands-off" in such a way that it should be eligible for the ERISA exception under DOL reg 2510.3-2(f). (I recognize there are many pitfalls with this, but assume the exception would apply here.)

In preparing its plan document, the employer wants to provide that loans and hardships are not allowed under the plan. The only motivation for this is to avoid having to take discretionary action that would trigger ERISA, as the vendor will not agree to administer hardships and do everything required to administer loans.

Does the employer's decision not to allow hardships/loans violate the ERISA exception, by virtue of the employer exercising some discretion in "plan design"? This would seem to be a bad result, as the employer is trying to avoid ERISA application, but I welcome any thoughts.

A self-funded health plan has received uncashed claim reimbursement checks from the Claims Administrator. The cover letter from the TPA advised Plan Sponsor (Employer) that this unclaimed property may be subject to state escheat laws. The information I've been able to obtain regarding this issue is conflicting.

I have found documentation of 2 old lawsuits involving Aetna and BCBS in which it appears that the escheat laws are NOT preempted by ERISA. However, other commentary seems to indicate the generally accepted practice is to consider the funds forfeited and returned to the plan to apply against future plan costs (claims).

Can anyone please offer guidance or resources regarding this issue?

Thanks in advance,

Benny

I have tried so many ways to all his bosses and retirement places w/no help how to get what is do me. I am exhausted and having such difficulty. I need help w/different avenues before he wipes it all out! :angry:

I have a plan that the TPA thinks has always been a prototype (since 1976). Effective March 1, 2008 (fiscal year plan), I restated the plan as a volume submitter with one modification since the TPA only does prototypes. I have restated it effective March 1, 2009 on the same volume submitter with the one modification for EGTRRA. Does anyone know if I am going to have to produce the complete trail of plan documents to get a determination letter. The plan has never had a determination letter.

I have a plan that had several ACP excesses for 2007 that were forfeited instead of paid out. The people were not 0% vested (some were not 100%, but all were partially vested, at least).

What is the remedy? Are they paid out of the forfeiture account, plus earnings from the date the distribution was done? And is the ER on the hook for the 10% excise tax? The money was taken out of the HCE accounts, just not out of the plan.

Your thoughts are appreciated.

(The forfeitures were done before 3/15/08)

I have a safe harbor plan with a SHNEC for a clinic that excludes the employees of the hospital, which is a related employer ie they are a controlled group. The hospital has a profit sharing plan, which is not safe harbor. The clinic plan is failing coverage due to all the NHCE's in the hospital. RPT is like 50%. What happens in this scenario when one plan is a safe harbor and the other is not? Can you aggregate them for coverage, or does the safe harbor plan always have to pass on its own? Forget coverage testing for deferrals because the hospital has a 403b plan and so the clinic 401k plan can exclude the 403b plan from coverage for purposes of the 401k feature (1.410-b)6)(g))

Can the safe harbor plan be amended to include additional NHCE's from the hospital plan so that it passes RPT? I think it would need to be amended this year, or the entire safe harbor is blown and you would have to do a VCP filing?

Does anyone have experience with this?

IRC 4980(d)(2)(A) defines a qualified replacement plan as one in which at least 95% of the active participants in the terminated plan who remain as employees of the employer after the plan termination are active participants in the replacement plan.

I have a client whose terminating defined benefit plan only covers employees in a division that was shut down over 10 years ago. There are no active participants in the terminating plan. However, the employer does sponsor a 401(k) plan that covers current employees. Can they transfer the surplus assets in the terminating plan to the 401(k) plan and avoid the 50% excise tax?

We want to find out if other employers with Davis-Bacon contributions to their retirement plans have the same plan design as we do. Our plan is designed so a participant's wages are split into Davis-Bacon and non-Davis-Bacon wages. A regular profit sharing contribution is made that is a flat percentage of non-Davis-Bacon wages. The contribution on the Davis-Bacon wages varies according to the required fringe for each Davis-Bacon job. Do other plans just include the non-Davis-Bacon wages when calculating the profit sharing contribution like we do? Or do you include all wages in that calculation?

We have never signed the Form 5330 as paid preparers. Do other TPAs sign this form as paid preparer? If so, what liability does this open you up for?

We have a client who intended to have a non-Erisa 403(b) Plan. The plan operates as a non-ERisa plan and meets all of the non-ERISA 403(b) requirements.

Upon review of the plan document, the plan document states that the Plan is covered by ERISA.

The client wishes to avoid filing 5500s (and having an audit). My question is, can I restate the Plan as a non-ERISA plan now?

Thank you!

This Q&A was just published in the benfits link newsletter. If a plan uses the safe harbor standards for the hardships, this letter suggests that a participant would be required to take a loan before a hardship even if it would increase the hardship (i.e., disqualify the participant from obtaining a mortgage to buy a home). But they also said this at the very end:

On the other hand, there is commentary that suggests the regulations do not require a participant to take counterproductive actions under either a safe harbor or a non-safe harbor hardship standards.

Does anyone know what commentary they are referring to?

http://benefitslink.com/modperl/qa.cgi?db=qa_401k&id=93

Can a a participant roll over his after-tax account (cost basis only) to a Roth IRA this year regardless of income or would he have to wait until 2010 when the compensation limit goes away? The idea is to roll the cost basis over now to the Roth IRA and the earnings from the account to a Traditional IRA wiht his other taxable accounts