I'm trying to sort out the implications of including clergy's housing allowance in plan compensation per Rev Rul 73-258 in a safe harbor 410k non-electing church plan. This rev rul says you can treat it as plan comp; however, the IRS does not consider it part of 415 comp according to PLR 200135045. Since the plan is a safe harbor 401k, our definition of plan compensation must satisfy the requirements of 414(s). It appears we would not include housing allowance in 414(s) comp given the use of 415 comp as the starting definition for 414(s). Regardless, it seems it should always be ok to include housing allowance in plan comp if the participant is an NHCE. Further, the determination of HCE status is based on 415 comp, thus housing allowance must be excluded for the HCE determination. I appreciate any guidance on the 414(s) analysis in particular. Thanks!

I need some assistance in determining a grandfathered amount in a non AB plan. Plan provides that participants receive a pro-rata share of an aggregate amount (determined pursaunt to a very complex and non-discretionary formula that is set forth in the plan). The formula is based largely in part on the compensation paid to all participants in the year prior to the year in which installment payments from the plan begin (which is on termination of employment). (I'm paraphrasing, of course) Plan was in existence during 2004 and all participants were fully vested at all times. Regs say that it is determined as if the participant voluntarily terminated w/o cause on 12/31/2004.

Thanks.

This is an easy one, but I just want a comfort level. Suppose an employee has elected to make the maximum deferral necessary to fund their dependent care assistance plan. Ideally, they will make regular payments throughout the 12-month period. However, is there a problem with funding the entire amount early in the year? There is always the possibility that the employee will not be able to use the entire amount and will have to forfeit the unspent portion. However, in my situation, that is extremely unlikely. The employee wants to pre-fund because she is going on medical leave soon. Thanks!

So, the title may say it all...I think I'm overthinking this, but if there's a controlled group with a Cash Balance Pension Plan (calendar Plan Year), and one of the subsidiaries is on a fiscal taxable year (ending 3/31), when would that company need to make its portion of the contribution? I'm going around and around in my head about whether the Plan Year controls or whether each participating employer's individual taxable year controls. Any quick suggestions on where to focus my thoughts?

We discovered a plan that filed their 2007 and 2008 return under the incorrect EIN. There were 2 numbers transposed in the EIN. Do you have any suggestions on the best way to correct the filings? I searched the board, but did not find anything that really addressed this issue. Thanks!

Can an ERISA 403(b) plan avoid the qualified joint and suvivor annuity requirements by offering a lump sum and requiring spouseal consent on any change of beneficiary just like a 401(k) plan?

We have an employee who was incorrectly marked as terminated in August 2006 in a feed that went to the TPA. For whatever reason, the correction did not make it to the TPA. TPA sent distribution packet to employee, who requested an immediate distribution of her account balance. EE also had 3 outstanding loans at the time that were deemed distributed. TPA issued applicable 1099's for 2006. EE resumed deferrals in January 2008; however, because TPA showed EE as terminated, they kept sending her checks every pay period for her deferral and match, minus withholding and early withdrawal penalty. TPA issued 1099 for 2008 distributions. EE did not contact ER or TPA to question the 2006 distribution or any of the 2008/early 2009 distributions. EE called TPA in June 2009 to request her account balance so she could take out a loan, which is when the problem came to light. Apparently TPA provides a web-based report for ER which shows action items, but no one in the HR department was aware of this report until now. It seems that we have multiple operational failures, beginning with the improper distribution in 2006 and then again beginning in 2008. I think we start by asking the employee to repay the distributed amounts, but expect we will be wholly unsuccessful. Do you think this needs to go through VCP? If not, any other SCP suggestions? Thanks!

In 2008 a participant in a 401(k) plan made salary deferrals of $24,000 instead of $20,500. We informed the plan sponsor / trustee to remove the excess in early March 2009 but they failed to do so.

I believe VCP/SCP is the only way to correct this now.

If they distribute the excess plus earnings now, the amount is double taxed. How is this done? Does the participant receive two 1099's in January 2010 (one showing $3,500 taxable for 2008 and one showing the excess + earnings taxable for 2009)? If this is the case and the participant has still not filed his 2008 tax return, could the additional $3,500 be reported now on the tax return even though he will not have a 2008 1099 reporting this yet?

Thanks a million.

A 401(k) plan covers an owner and his spouse. The owner also owns a second company with zero employees. The 5500-EZ instructions state that an EZ can be filed if the plan does not cover a business that is a member of a controlled group. However, it does not make sense to me that the plan would have to file a regular 5500 just because the owner happens to own another company (since the company doesn't have any employees). Is there any official IRS guidance or clarification on this issue?

I have a plan with an owner and a child, who would both be eligible. The owner only wants the plan for themselves, but I am concerned about meeting 401a26, mainly the "at least 2" part of it. Is there an exception since it is only owners/family or do I need to include both the owner and child.

I need some direction...

Here is the situation: Plan A and B are part of a Controlled Group. Each plan on passes Coverage.

Plan A: Match formula is 100% up to 3%

Plan B: Match formula is 100% up to 4% for Location X and 50% up to 10% for location Y

Since there are differenct formulas within Plan B a BRF test is needed. When running the BRF test, do I only consider the employees of Plan B? Or do I have to considered all employees in the controlled group.

I have always been under the impression that once a plan passes coverage ALL discrimination testing is done on the plan basis not the controlled group basis.

Any thoughts would be greatly appreciated as well as regulations for reference!

Does anyone know when the new, promised PPA regs (300+ pages?) will be released?

Company A's stock was held mostly by another public company. On June 26, 2009, the assets of Company A are acquired by a group of investors that are unrelated to the previous stockholders and a new company is formed to continue Company A's operations. The employees transfer to the new company and it's business as usual.

Company A sponsors a Safe Harbor Nonelective plan. 401 (k) contributions to the plan ceased on June 26th and no SH nonelective contributions have been made to the plan for 2009. The plan has not yet been terminated and the new company does not want to sponsor the plan. The new company however would like to create a Safe Harbor Match plan.

Since this is an asset acquisition, it appears Company A could terminate its plan (assuming all required contributions have been made) and distribute assets to participants, even though the same participants are now covered under the new company's (k) plan. I just want to make sure I'm understanding the successor plan rules correctly.

Does anyone know what the earliest retirement dates are that a participant in CalPERS or STRS can receive "unreduced" benefits, for purposes of electing the 457(b) catch-up?

In some of our U.S. qualified defined benefit plans, we have forfeiture provisions along the lines of:

In the event that all or any portion of the distribution payable upon a Participant's Mandatory Commencement Date or upon the date that payments must commence under the Plan to a beneficiary cannot be paid because of the Plan Benefits Administrator's inability to locate such person, after diligent efforts to determine such person's location, such person's benefit shall be forfeited and shall be used to reduce the cost of the Plan. In the event that such Participant or beneficiary is subsequently located, such benefit shall be restored, and payment retroactive to the applicable date shall be made.

The above seems to be consistent with Treasury Regulation 1.411(a)-4(a)(6) which I've cut and pasted below:

6) Lost beneficiary; escheat. In the case of a benefit which is

payable, merely because the benefit is forfeitable on account of the

inability to find the participant or beneficiary to whom payment is due,

provided that the plan provides for reinstatement of the benefit if a

claim is made by the participant or beneficiary for the forfeited

benefit. In addition, a benefit which is lost by reason of escheat under

applicable state law is not treated as a forfeiture.

We've never forfeited a benefit but for some participants we've exhausted our internal efforts at finding them (including locator services) and are preparing to use either the IRS or SSA letter forwarding service as our final effort...before declaring such participants as lost. We would not escheat the benefit.

Questions...

If a benefit is declared forfeited, may we 1) remove the participant from PBGC participant rolls, 2) remove the participant's liability from the Plan (and remove the participant from 5500 counts), etc.

Our plans are large and the number and average benefit size of the group that would be forfeited would be relatively immaterial from the perspective of the plan's liability.

I know the DOL doesn't necessarily agree with the IRS/Treasury on forfeiture...but most commentary I've read indicates that since the participant or beneficiary will be paid the benefit if they "pop up later", then...."what's the problem"...

I am just looking for any formal/informal guidance from any regulatory bodies on this topic (other than the Treasury regulation itself) that someone may know of and seek the experience of others who may have forfeiture provisions and actually have forfeited benefits under such provisions.

Thanks for any help.

Does the Federal Mental Health Parity Law apply to outpatient behavioral health services if a plan has outpatient limits on Chiropractor and short-term Therapy services like OT, PT?

Facts (simplified):

Calendar Year Plan terminates 8/31/08

All assets distributed by 10/31/08

Valuation Date: 12/31/08

I don't believe I am required to change to a BOY-Val. If I don't, is there any reason I can't just show zeroes (0's) on the Schedule B since my Fair Market Value of assets is $0 and my benefit liabilities as of 12/31/08 is $0 too ? The only reason I question it is that I had an accrual for 2008 which would produce a normal cost but on 12/31/08 all benefits and liabilities are $0. I don't think it would make sense to show a normal cost on the Schedule SB if all assets & liabilities are paid out before 12/31/08. Any thoughts ?

Is this another "no current guidance" question ? If so, opinions are still appreciated.

Plan allows employees to pay their portion of health premiums pre-tax. The company pays 100% of health premiums for 65 out of 115 employees. The remaining 50 ees utilize the POP and pay their portion pre-tax. I have read that the participant count should be 50, and that makes sense, but I cannot find anything definitive.

Also, I assume the 100/120 large plan rule would apply if the 115 count was used?

Any insights would be appreciated, I am from the Pension side and the Welfare rules do not seem as straight forward.

Thanks.

A participant received a hardship distribution which he used for a non hardship purpose.

The distribution will be repaid to the plan.

Are the repaid funds considered "after-tax" contributions in the participants account?

Under 404© what requirements, if any, are there when a plan sponsor changes the investment options available to participants based on the advice of an Investment Consultant?