Children of HCEs are also considered HCEs, right? I'll assume so.

Is there a coverage test-type requirement with a tuition reimb. plan?

This wording in pub 970 makes me wonder:

This program only qualifies if..... The program benefits employees who qualify under rules set up by you that do not favor highly compensated employees.

I'd like to interpret this to mean the benefit offered to eligable HCE's is not greater than the benefit offered to eligable non-HCEs. And also; The eligibility requirements weren't set up to favor HCEs.

Am I on the right track?

Thanks in advance for your input.

A plan has a normal retirement age of 55 (yes, I know that is unrealistic BUT I have statistics to prove it is valid for red-headed actuaries working on PPA <GG>!!)

The plan document has the following definition of actuarial equivalence:

Pre-retirement

Interest

What is the 2008 415 dollar limit at 55??

I have a client who has two plans - a DB Plan and a 401(k) Profit Sharing Plan. Two owners and about 5 or 6 employees. The owners participate in both Plans.

How do the permissive aggregation rules work? Do the two Plans need to be tested together for 401(a)(4)?

What about top heavy? The Plans are top heavy (tested together or separate), no matter which way you slice it. I always thought if the keys participate in both they need to be tested for top heavy together. If this is the case, is the top heavy minimum then 5% of annual compensation in the DC Plan?

The amount of salary deferrals available for a hardship is supposed to be the cumulative salary deferrals without adjustment for gains or losses. But when there is a loss it seems like it must be adjusted because you can't distribute more than is in the account. If the only money in the account is deferral source, it's easy, but what if there is other money available? Example: cumulative deferrals $20,000, current deferral balance $13,782. The available hardship is supposed to be $20,000, but to distribute that amount would require taking $6,218 from profit sharing or match that do not allow hardship distributions.

Related quandary, what about mutual fund loads? The money is not in the account, but theorietically it seems like not including the full amount withheld from pay violates the rule about not adjusting for gains or losses.

Does anyone have a crystal report that would show participants name, address, social, loan id, loan amount, frequency, # of payments and payment amount? We are looking to supply this kind of report to each of our plan sponsors after a loan has been processed.

It looks as if WRERA invoked the law of unintended consequences again:

Is any one doing anything more elaborate than assuming that current year's estimated expense is the same as prior year's actual expense? If so, how would you ever modify the assumption in the future without obtaining IRS approval?

This is an interesting subject. Assume frozen plan, no shortfall amortization charges apply, and suppose the expense assumption is CYE=PYA as described. Suppose 2008 expense -- all actuarial fees -- was 100,000 [i reduced my fees!] but client announces for 2009 and thereafter he will pay all expenses directly rather than out of Trust. So, TNC for 2009 is 100,000. Now, client must contribute 100,000 as minimum and must also pay 100,000 directly. To make matters worse, the 100,000 client contributes for 2009 is not an excess contribution so client does not enjoy PFB buildup.

Does this just fall into the category, "Ah, that's too bad" or am I missing something?

If I'm not missing something, then this particular client would be wise to always pay expenses from trust which is clearly not the IRS's intention.

The other side of this coin is suppose client has historically paid expenses (including investment management) directly. So, 0% expense assumption is appropriate. Client rolls around for a few years and continues to pay expenses directly. Now, client's business is in the potty so client decides to pay expenses from trust and the prospects are he will continue to do so. However, expense assumption is "0%." You can't change it without IRS approval. Are you required to request IRS approval or do you qualify your SB certification? Suppose client is unwilling to pay cost of obtaining IRS approval. Then what?

Who is the best health club marketing company to use for my gym to increase memberships?

A client has adopted an amendment to their plan in 2008 changing the contribution for 2007. The contribution is deductible in 2008. In the aggregate for all participants, contributions are less than 25% of compensation. However, when preparing a partner's 1040, the contribution on the 2008 return will exceed the 25% limit (adjusted for self-employment). Can the 2008 individual partner return include contributions for the 2007 & 2008 plan years, even if it exceeds that limit, or does it need to be carried forward to future years?

Thanks

We have a 401(k) plan with common law employees and a couple of union employees. (Union employees are permitted to participate.) My understanding of the ADP test is that these 2 groups are tested separately. If that is accurate, the dilemma is that the 2 union employees are both HCEs. There are no union NHCEs. How does that affect the ADP test for union employees when there are no union NHCE ADPs to compare the HCE ADPs?

Treasury, IRS Issue 2010 Indexed Amounts for Health Savings Accounts

These amounts have been indexed for cost-of-living adjustments for 2010 and are included in Revenue Procedure 2009-29, which announces changes in several indexed amounts for purposes of the federal income tax.

The attached chart shows the limits for 2004 through 2010.

HSA_NewCola_2010_R0509.pdf

HSA_NewCola_2010_R0509_LandscapeView.pdf

If an employer wants to make prevailing wage dollars available for hardship, does that mean those dollars do not go in the ADP test at all? Are they only included in the ADP if they are treated as QNEC? If I don't put them in the ADP, are there really any other testing consequences in a plan where only NHCEs are receiving prevailing wage contributions?

Thanks!

hot off the presses. possible ability to eliminate 3% safe harbor during the year

proposed amendment.

I haven't even looked over it yet it is so hot and out of the oven

On the Schedule of Benefits section of the Datair report there is a Monthly Benefit column and there is an Accrued Benefit column. What is the difference between the two? Is the Monthly Benefit the benefit if the participant works until NRD? And the accrued benefit is the benefit accrued to date?

As I understand it, former employees who receive a taxable cash payment or "bonus" or "subsidy" from their employers as part of a severance package are generally free to take advantage of the full ARRA COBRA subsidy provided the employer payment can be used for anything (including paying the individual's 35% COBRA portion).

Employer who previously paid first few months of COBRA premiums as a severance benefit is considering switching that practice to instead provide a lump sum unrestricted cash payment to severed employees and then let them apply for and take advantage of the COBRA subsidy provisions. The lump sum cash payment could be used to offset the 35% COBRA premiums the severed employees would be responsible for as part of the COBRA subsidy.

Any words of wisdom, pointers, or issues to consider from those that have already made such a switch?

Company A has merged with company B.

Company A has a SIMPLE 401k, company B has a traditional 401k.

There is only one active participant in the SIMPLE 401k sponsored by company A (more than one employee, though).

The administrator of company B's 401k plan is planning on terminating the SIMPLE in July because of the mindset that the company cannot sponsor a 401k and a SIMPLE 401k. The administrator continued to say that the sole participant in the SIMPLE will not be allowed to defer into the traditional 401k plan because "it would then be a continuation of a previously terminated plan." The participant wouldn't enter the Trad. 401k until Jan 2010.

Two of these statements don't make sense to me (and it's likely I'm wrong on both):

1. My understanding is that a company can sponsor a Trad. & a SIMPLE 401k if the circumstances are due to a merger or acquisition.

2. The idea that this participant wouldn't be covered until January 1, 2010 seems to me like they are removing a benefit that was acquired while employed with the company.

Any thoughts on this would be helpful, thanks!

Here is the scenario - Company A has a 401k PS; Company B has a Simple IRA

Company A&B merge 05/01/09

Merged company wants to rename and adopt Company A's plan and credit service etc for participants in company B under company A's plan.

Company B only has one participant who is a non owner currently contributing in the SIMPLE IRA.

Is there any issue with all employees under company B participating immediately, ( credit service there by automatically becoming eligible ) in the renamed plan. I know that the one participant cannot exceed the irs limits on a combined basis.

Thoughts? I have gotten an opinion from an outside person that everyone under company B would be eligible except the one participant who was participating in the Simple because it is a "continuation" of a plan?

I posted this in the ESOP section, but perhaps the question leans more toward cross-testing?

http://benefitslink.com/boards/index.php?s...st&p=181920

An calendar year ESOP plan has 2 valuations per year, June 30 and December 31. The allocation condition is that you must be actively employed on the last day of the valuation period.

An employee who is active on June 30 gets a June 30 allocation, but if they quit December 15, they do not get an additional allocation for the 6-month period ending December 31.

The plan uses a definition of compensation that passes 414(s). The plan uses a pro-rata allocation method for each 6-month allocation period based on compensation paid during that 6-month period.

Assume all 3 are true:

• some employees get no allocations for the June 30 period because they left before June 30, and
  
• some other employees get allocations only for their compensation paid through June 30th because they left before the end of the plan year but after June 30, and
  
• some other employees get allocations based on full year pay because they were active on December 31.
  

Based on the assumptions listed, does this plan design require 401(a)(4) testing?

Can the safe harbor match be used towards satisfying the top heavy requirements? If so, is it then subject to a ACP test? Greatly appreciated, DN

Are participants who are terminated for cause in the year a partial termination occurs entitled to full vesting?

Rev. Rul. 2007-43 provides that "f a partial termination occurs on account of turnover during an applicable period [generally the plan year], all participating employees who had a severance from employment during the period must be fully vested in their accrued benefits, to the extent funded on that date, or in the amounts credited to their accounts."

This makes me think yes. Thoughts?

Is there a certain format that must be used for a plan sponsor to elect use a COB or PFB to reduce the minimum contribution? If so, does anyone know where I can find a sample?