I am relatively inexperienced in the benefits area and I'm hoping someone here can help educate me on this specific scenario.

If Mr. Smith owns 80% of a publicly traded company, owns 100% of a not for profit organization, and owns 100% of a privately held company, does this form a controlled group? The entities are in seperate lines of business and do not transact with one another.

It doesnt seem right that they would be in a controlle group, but I can't find the legal provision that would expempt them from the 80% rule. Then again, I am a newb to this area.

Another scenario....A holding company with 3 subsidiaries. Holding is a US publicly traded company, the 3 subsidiaries are in US, Japan & UK. No one is on the payroll for the holding company, hence no benefit or retirement/pension plan. Is it technically correct to say that there is controlled group here? Also, do the rules for a controlled group go beyond US borders?

Thanks for any help provided.

I have this plan that we took over for another TPA and I only have the VS doc that they adopted late in 2005. The old TPA would have been required to amend for Final regs and for the 2006 cumlative changes, and possibly for a change in the classes, as the 2007 annaul valuation has 7 classes when the doc I have has 4. I have just emailed the old TPA for this info (and clarification on some other things), but I had a thought that I wanted to post here for other options.

The client says they can't find or don't have anything else (not everyone is organized they are just trying to run their business....). Let's say the TPA did amend the plan for the required amendments, but would charge a fee to resend them (we would). If the client doesn't want to pay, where do I go from here? We need to restate their document, and will include the items I mentioned above (classes are a seperate issue), but if they were audited, what would the IRS think? We would run with the asumption that these were done previously, but we couldn't prove it.

The plan sponsor is going to have to get me something on the classes. But again, I don't know where to go from here if they don't.....

It's like pulling teeth to get info from this client...

Thansk for your thoughts...

I plan to amend to eliminate an excluded class which will allow me to pass coverage. It's just deferral and safe harbor match, both coverage tests fail equally. How do I handle the Safe Harbor match? For the 401(k) piece, the client will be making a QNEC equal to the average deferral percentage for the NHCE's to each NHCE that is brought in. Do I apply the same principle to the safe harbor match by taking the average match percentage for the NHCE's? Does this take me out of the free pass on the top heavy status as well as (k) and (m) testing?

These things get complicated!

Where is there mention of the 30-day wait period for distributions, and that people can waive it and get their distributions sooner?

Employee gets divorced while working for a company. At that time an order is entered stating that employee must pay child support and enroll dependent child in employee's health plan, which presumably the employee does at the company.

Employee leaves employment and goes to work for another employer and enrolls (through cafeteria plan) employee's child in plan as a part of initial enrollment.

Sometime later, employee gets revised order stating that dependent original order is vacated (because the child is emancipated), therefore, employee does not have to pay support or carry dependent on health plan. Dependent is has been added to former spouse's plan although the revised order does not require it (it is silent on issue). Not sure how child was added but assume that the child was added in an open enrollment period held in late 2008 for the 2009 plan year.

Can employee change employee's cafeteria plan election to remove dependent's coverage mid-year?

Thanks for any thoughts.

The revised Schedule SB has modified the disclaimer under the EA's signature:

1. [ ] If the actuary has not fully reflected any regulation or ruling promulgated under the statute in completing this schedule, check the box and see instructions.

2. [ ] If the actuary has no idea whether he has failed to fully reflect any regulation or ruling promulgated under the statute in completing this schedule, check the box and join the crowd.

I hate to revisit this topic, but i'm still not sure which way to go with this. It seems the concensus of this board is that if for a 2008 calendar plan year with quarterly conbtribution requirements, a credit balance election is made in April of 2009 to apply the entire 2008 funding requirement and no cash contributions are made, the funding requirement is met and there is no penalty discount for late quarterly contributions since any credit balance in essence applies the credit balance as of 1/1/08.

However, it seems to me that the proposed regs say that the quarterly contribution is deemed satisfied on the date the credit balance election is made, and if late, a penalty discount would apply.

I also realize that final regs may confirm the concensus of the board, but until then is there any cite or publication that is being relied upon to support the concensus?

Thanks.

Suppose you have a small DB and 401(k).

The employer would like to have a higher benefit for certain HCE's in the DB (say 6% of pay per yr) and provide 2% of pay to all others. In the 401(k) they will provide 7.5% of salary employer contributions every year.

Could the 2% of pay benefit each year be used to meet part of the 7.5% gateway in the 401(k) plan?

Suppose you have outstanding restricted stock that automatically vests upon a change in control. Change in control is currently pending--agreement signed but deal has not closed and will not for another month or two. If the closing occurs as scheduled, it will be during the middle of a blackout period and recipient will not be able to sell shares to cover taxes and so is interested in delying vesting / taxation until after blackout.

If all the parties are in agreement, is it possible to amend the existing restricted stock agreements to change / delay vesting of the awards so that they no longer automatically vest upon closing of the change in control but would now vest upon the earlier of (1) the change in control, or (2) some fixed number of days after the end of the blackout period if change in control occurs during a blackout?

Does that work under Code Section 83? Does it work / continue to avoid 409A? In this situation, the employee would agree to be at risk of forfeiture of the awards through the remaining period so the awards would still be payable immediately upon vesting. Although I know 409A may view some delayed vesting provisions as resulting in an impermissible deferral feature, that would seem only to apply to stock rights subject to 409A out of the gate. Here, there would not be attempt to defer receipt of the stock (compensation) beyond vesting--there just would be a mutual agreement to extend required service period and thus the vesting period.

Does the answer change if the provision in the restricted stock award is amended to provide for vesting to occur upon the earlier of: (1) the fixed date after the blackout ends, or (2) involuntary termination of the executive's employment by the company such that the employee is only at risk of forfeiture if he resigns or is fired for cause?

Thanks in advance for any thoughts or insights.

I recently generated a volume submitter defined benefit plan document and form 5307 using the Sungard Corbel system.

The Form 5307 stated that the date of advisory letter was 3/31/08 but did not provide a serial number; which would appear to be an EGTRRA pre-approval opinion letter. However, the advisory letter we have is dated January 17, 2002. The Form 5307 automatically generates the date of the advisory letter and the serial number.

Has the IRS issued favorable opinion letters for volume submitter plans yet? If not, then I don't know why the form 5307 lists the date of such a letter.

Anyone have an explanation for the above?

I have a call into Sungard but don't when I will be able to talk with them as they are difficult to reach.

Thanks.

We are working on a 2008 calendar year Cross-Tested 401(k) Profit Sharing Plan with a 3% Safe Harbor non-elective contribution (group of physicians with several support people). Two rate groups: physicians and non-physicians. The client didn't realize that an older (non-physician) NHCE paid just under the HCE comp thresshold would meet the plan's eligiblity requirement (1 YOS / age 21) and enter the plan during 2008. So when running the non-discrimination test this person must receive a ridiculous allocation (like 50% of pay) to pass the test to support the contributions already funded and allocated to the physicians.

Is it ok to amend the plan retroactively and bring in the 2 employees that have not met the plan's eligiblity requirements, that were hired, say, prior to 7/2/2007 in order to pass the test? At first glance it appears to be non-discriminatory as we're not picking a specific (otherwise) ineligible employee due to age, vesting, etc. but we are applying the rule across the board for anyone hired on or before the specific date (and there are only 2 of them - everyone else is already in the plan except for those hired after 7/2/2007). If this is ok, what about these 2 employees' eligiblity to make 401(k) deferrals in the past and in the future? Let's say they never will meet the plan's eligiblity requirements? Any other issues I need to be aware of?

Any input would be greatly appreciated!

Thanks!!

A small 401(k) plan failed to submit timely deferral/loan payments in 2007 when they were transitioning to a new manager. The accounts were frozen during the implementation and then they had problems learning how to submit contributions. This, I am thinking, could have easily been avoided by submitting contributions to an interest bearing money market account set up in the plans name at a bank until the kinks got smoothed out at the new provider(Fidelity) or they could have simply opened a holding account at Fidelity. Irregardless they made up the late payments and earnings on the late payments were calculated and ultimately credited to the participants account.

After this they received DOL correspondence requesting them to apply to VFC and provide exhibits that the deposits and additional interest were made.

My question is should the applicant seek relief under PTE 2002-51? Total earnings credited were $1127.93

If not, what would the basis be on the excise tax? The earnings?

E'er and E'ee agree that E'er will pay E'ee $xx if E'ee works two more years. Payment will be made the day after the two-year period has passed and the plan doesn't provide that this timing may be changed by the E'ee. Am I correct that the deferral election requirement under 409A(a)(4) is not applicable?

Thanks,

Ken Davis

Does the E'ee have a legally binding right to deferred comp in the following situation. E'er promises to pay E'ee $xx if E'ee works two more years. The payment is due to be paid the day after the two-year period has passed. If E'ee quits before the two year period has passed, he/she receives nothing. Neither E'er nor E'ee can change the amount of, timing of, or E'ee rights to the payment.

Thanks,

Ken Davis

The plan document allows for in-service distributions on account of disability. Disability is defined as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or which has lasted or can be expected to last for continuous period of not less than twelve months.

The participant has been on social security disability for about 12 years and works part-time (apparently making less than the amount which would affect his social security disability benefits). He has work for the company under this arrangement for about 15 years and is currently requesting an in-service disability withdrawal.

What I am having a problem with is the fact he is and has been employed for the last 15 years with this company. However, am I suppose to be reasoning that he is only able to work part-time and that his position cannot be defined as substantial gainful employment?

Assume he is entitled to an in-service disability distribution. Does the fact he is on social security disability automatically qualify him for the 10% waiver?

I have a small 401k plan that had a couple of late 401k deferral deposits in 2008. The deposit was made within 2 months.

I used the VFCP calculator to determine the amount of "lost earnings", using the 7-day rule. The amount of "lost earnings" is less than $100 in total, but it affects 60 participants who are in various self-directed mutual funds.

Is self correction an option?

I would disclose late deposits on Form 5500 and file Form 5330 paying the small excise tax.

Is it permissable to deposit the lost earnings into the plan's forfeiture account?

Thanks for any and all input.

Here is the situation:

There is a small business owner who would like to adopt a plan where he can maximize his contributions. He doesn't have a problem matching, but would like to limit the matching to only the full-time staff. He has over 150 employees but the majority of those work marginally (PT to less than PT) throughout the year.

I thought a Safe Harbor 401(k) best, but (now here's the simple question) even after reading IRS Notice 2000-3 I don't know whether or not it is even possible to limit those who are able to participate in a Safe Harbor 401(k) by age or hours worked?

Father currently owns two companies. Co. 1 is sponsor of a (k) plan and Co. 2 participates in that plan. Father will soon will sell 99% ownership of Co. 1 to his two sons (> 21). The once controlled group will no longer exist. This will occur 7-1-09. A couple of questions -

1. The intent is to avoid a multiple employer plan so Co. 2 doesn't want to co-sponsor the Plan but if they don't, would the Plan violate the exclusive benefit rule immediatey? Or does the 410(b) transitional rule provide any relief to dispositions such as this and permit participation by Co. 2 in Co. 1's Plan, without either treating it like a multiple employer plan or violating the exclusive benefit rule?

2. Assume Co. 2 is going to start a new plan and spin-off their assets from Co. 1's plan during the plan year. As far as ADP testing - would Co. 1's plan include the Co. 2 employees for the part of the year they participated in Co. 1's plan? Or would it be acceptable to test Co. 2 contributions made while participating in Co. 1 plan under the spin-off Co. 2 plan?

Thanks.

“Bob” worked for ABC Corporation. When “Bob” left ABC, he established a Profit Sharing Plan and rolled his $100,000 401k balance into his new plan. He then withdrew $95,000 in order to purchase and operate his new business. I have read Sec. 4975© and (d), and 406 and 408(e). I’m not clear on how to treat the money “Bob” withdrew. Is this treated as purchase of an investment by the plan? If it’s not a distribution, how do I show this on the 5500?

A fiscal year plan ending in May 2009, reported as 2008 on the tax return.

For the top heavy test, are key employees determined in reference to the 2008 limit which is the tax return year or the 2009 limit which is the end of the plan year?