I'm not sure how to interpret IRS Sec. 318 as it pertains to Sec. 416 regarding the treatment of family members. A plan covers a 10% owner, his wife and her mother. No question the wife is considered having the same ownership as the 10% owner and is, therefore, deemed to be a key employee. Is the mother-in-law also considered to be a key employee? All help is greatly appreciated.

After reviewing COBRA enrollees acquired from merger of two companies, discovered the following issue: employee terminated on 06/01/07 and elected COBRA health and dental for himself and spouse, employee enrolled in Medicare coverage on 10/01/07 and continued family dental coverage, spouse remained on single health coverage. As of today's date, both are still enrolled in their coverage elected at that time, employee on family dental and spouse on single health. I believe that both should have had their elected coverage end on 12/01/08. What is the best route to take in correcting this? Any guidance would be much appreciated.

A participant has a vested balance of 10,000, of which 2000 is his loan balance. He is allowed to take in-service distributions from all accounts in the plan. Can he take 8000 (all of the cash) or does he have to keep 2000 in the plan in order to keep his 2000 loan? I was thinking that the loan requirements were only relevant when the participant takes his loan out and that he can take all of the cash remaining now. He will continue making payments on the loan. Is this correct?

Participants are paid weekly. This week, for some reason, the deferrals were not withheld from the participants' wages. This is a one time error - they have already fixed the problem for next week.

Does the employer have to contribute 50% of the deferrals that should have been withheld, or, can they double up on next week's payroll? If doubling up is okay, do they need to notify the participants? This is a large plan which is why that question comes up.

Are there other options?

Thank you.

Kate Smith

Based on what I have seen in connection with 204h reduction in future accruals notices, theys/b provided to all plan participants and beneficiaries receiving benefits and alternate payess of a QDRO.

As far as I know such notice does not have to b e provided to a trustee, or employer, or plan administrator, etc.

I'm not sure what employee org (i.e. DOL) should get such notice or where it would be delivered, etc.

I am curious for comments on the above.

BTW, the plan subject to this reduction is a 2 participant plan

Thanks.

Employee will receive a lump sum severance after being laid off. His CPA told him that he could write a certified check to the 401k plan for deferrals from the severance pay. My understanding is that deferrals cannot be made from pay which is solely severance (does not include anything for sick, vacation, etc.). I am not even going to go into my opinion on the CPA telling him that he can write a check to the 401k plan. That, I know, is not allowed.

thanks for your input.

What techniques are used by large plans and/or annuity companies to verify that retirees in pay status are still living? i.e. what's to prevent relatives or the estate from continuing to cash retirement checks after the participant dies. Is there anything that can be printed on the check to prevent someone other than the payee from cashing it? Are any investigative services available?

TIA.

... Scott

Hello,

It isn't easy to find guidance on this topic, so I thought I would throw it out there. The client would like to hold universal life policies in a start-up profit sharing plan.

1. What is the percentage limit on contributions to be used to purchase such insurance? I believe it is 25% under the incidental benefit rule. I believe there is a 50% limit on other types of insurance, but I'm not exactly sure.

2. What is the percentage limit on a ROLLOVER from a SEP-IRA? I believe 25% of the rollover amount can be used to purchase such insurance, with the rest being contributed to the new plan in cash.

Any thoughts/references would be most appreciated!

Not being too familiar with Target Benefit Plans, is it common practice on a participant's termination of employment, prior to NRA (participant is age 41) for the Plan to purchase the annuity and distribute the annuity to the participant? Participant has elected to defer payment until NRA, I would think the Plan would wait until his claim for benefits at age 62 before purchasing the annuity in case he is re-employed, gets married, changes his mind on form of benefit, etc. I would appreciate any comments or thoughts.

So I know you file a final Form 5500 once final distribution of all assets has occurrd. My question is what does this mean? Does final distribution occur when the checks are cut or is it when all checks are cashed? I've always thought it was the latter since you have money in the trust's clearing account until checks are cashed. However, I also see quite a few TPAs taking the position that once checks are cut you should file the final Form 5500.

I have a plan that is part of a controlled group of three related plans. The plan passes 410(b) coverage on its own it is tested separately for ADP/ACP.

The plan is changing their match formula for a portion of its population thus creating a BRF issue.

Since the plan passes coverage separately, can we perform the BRF test including only the population of that plan? Or do we need to consider the employees in the other related plans? My understanding is that if a plan passes coverage separately, the BRF would be tested separately as well.

The rules indicate that contributions must be deposited not less frequently than quarterly. Does this mean 3 months from when the contribution was determined (May contribution deposited by August 31) or by the calendar quarter (May contribution deposited by June 30)?

Does anyone have the EIN and NAIC codes for a Sch A for Allianz Life Insurance Company of NY? I'm trying to wrap up an '08 plan year and no one seems to have a copy of the Sch A. The vendor keeps telling the broker they will send him another but it never materializes. I'm going to fill out all I can but wondered if anyone had the EIN and NAIC codes. (I did try the Allianz website..no luck).

Thanks in advance.

I just discovered that a 2,151 employer contribution was not included on the 2005 Form 5500 for one of our plans. The deposit was for the account of a deceased participant whose bene had been paid out previously, but the participant was due a contribution which is not usually made until May of the following year. The deposit was not taken into account when the valuation was done so when the 5500 was done (on an accrural basis) the additional deposit was not included. The deposit was made and immediately paid out to the beneficiary. The deposit was made in 2006 and was recorded on the 2006 tax filing for the client rather than the 2005.

Do you think we need to amend the 2005, 06, 07 returns or is there anyway to account for this in the current filing. Would we need to complete all the schedules to do this?

Thanks

Hi,

I have a plan that terminated on 12/31/08, there are a number of participants that terminated in prior years, do they also become 100% vested in all money types? I would think that they would otherwise they would add to the forfeitures and create additional headaches...

Thanks,

Jasofk

Can anyone provide an expression for a J&50% survivor annuity with 10 years certain -- the continued payment for the balance of the 10 years is either 100% or 50% depending upon whether or not the beneficiary predeceases the primary annuitant?

Has anyone seen a good form (or go-by) of a breach notification that would be sent to an individual when a covered entity discovers a breach of unsecured PHI?

The AICPA Audit and Accounting Guide of Employee Benefit Plans states "For initial audits of plans where the plan had assets in the prior year, ERISA requires presenting a comparitive statement of net assets available for benefits." If the plan was effective in 2008 and had no assets in 2007, then do you still need to present a comparitive statement of net assets available for benefits in the financials for the period ending 12/31/08?

I have a DB Plan Freeze Scenario, but can't find guidance which fits the fact pattern. Any references would be appreciated.

- Plan is a Defined Benefit Plan with a 12/31 Year End

- Eligibility is Age 21 and One Year of Service (1,000 Hours in Eligibility Computation Period - Anniversary Basis)

- Entry Dates are 1/1 and 7/1

- Accrual Computation Period is based on Plan Year (1,000 hours for 1 Year Credit)

The Plan implemented a hard freeze effective April 30, 2009. Eligibility and Vesting Service is still credited after the freeze, but no service or compensation after April 30, 2009 is considered.

Employee X is hired February 15, 2008 and works > 1,000 hours from February 15 - December 31, 2008 (Accrual Computation Period). As such, employee would seem to have accrued a year of Accrual Service by 12/31/08 (BEFORE FREEZE DATE).

Eligibility Computation Period ends February 15th, 2009, so Employee X does not enter Plan until July 1, 2009 (AFTER FREEZE DATE).

Plan Actuary advised the Plan Sponsor that these participants would have no Accrued Benefit under the Plan because they did not enter the Plan until AFTER April 30, 2009.

However, it appears to me that the employee satisfied the requirements to be credited with an Accrual Year of Service BEFORE the Freeze Date. As such, these benefits should probably be protected.

In essence, my question is whether the timing of the Entry Date is irrelevant to whether the Accrued Benefit had been earned prior to the Freeze Date.

The anti-cutback regulations in Section 411(d)(6) do not seem to address this specifically. They generally refer to protection of the "accrued benefit of a participant as of the applicable amendment date" - but does not clarify whether the earning of the accrued benefit can precede the Entry Date.

Further, once these employees do become participants in the Plan on July 1, 2009, would they get "retroactiove protection" of the benefit they clearly earned prior to April 30, 2009 (i.e. during the Accrual Computation Period ended December 31, 2008?).

Any thoughts on the issue would be greatly appreciated.

When is back pay taken into account as compensation under a defined benefit plan (specifically a cash balance plan)? The plan defines comp as W-2 comp, which leads me to believe that the back pay would be taken into account in the year received (since it would be taxed in that year). On the other hand, the award of the back pay requires that the employee "be made whole in all respects." This would seem to suggest that the back pay should be taken into account when it would have been paid, but for the unlawful termination.

I know DOL Reg § 2530.200b-2©(3) requires hours of service attributable to back pay to be credited to the computation period(s) to which the back pay relates. However, I have not been able to find any similar guidance with respect to calculating compensation.

On a related note, if the award of back pay contains any offsets (e.g., income from other employment), can the plan take those into account when calculating comp? I would think it could since those offsets would be reflected on the W-2.