A DB plan provides a fully-subsidized QPSA benefit and also provides an alternate death benefit to non-spouse beneficiaries if the QPSA is waived by the participant with spousal consent.

The DB plan document says that the QPSA explanation will be provided automatically by the plan sometime during the three year window which opens on the first day of the plan year the participant turns 32 and closes on the last day of the plan year the participant turns 34.

The DB plan sponsor is not providing the QPSA explanation at any time during this three year notification window.

Not providing a notice required by (1) applicable law and (2) the plan document is potentially, with respect to (1), a disqualifying defect and, with respect to (2), an operational defect.

Is this a problem to be concerned about?

Does the IRS offer any correction to this problem?

Thanks in advance for any suggestions.

I have checked everywhere I can think of, and cannot find a definitive answer.

Entry requirements are age 18 and 1 year of service. Year of service is the 12 month computation period from hire date to anniversary (switching to plan year afterward) in which and employee has 1,000 hours of service. Entry dates are monthly.

Date of birth = 5/7/86

Date of hire = 6/13/05

Date of term = 12/10/07 (actual last pay was 4/15/07)

Date of rehire = 7/16/08

2005 hours = 466

2006 hours = 675

2007 hours = 207

2008 hours = 960

2009 hours = 1,032

EE did not have 1,000 hours between 6/13/05 and 6/12/06.

When does this person become eligible for the plan?

a) software says 7/1/09 (1,000 between 1/1/09 & 6/30/09),

b) client says 8/1/09 (based on 7/16/08 rehire date)

c) gut says 1/1/10 (ee never had a year of service in a prior computation period)

I have an issue and could use some advice, I am new to this board. I have a small business client who cut all salaries for all employees by 20% on May 31. He stopped paying commissions, and cut auto allowances by 20%. On June 30 he laid off an EE, gave her a severance package that paid her the commissions from the end of May, made up the missing salary, paid her regular salary for July, made up the missing auto allowance and paid her COBRA costs for 6 months. There was no signed release or agreement. Company rehired EE in July and wants the money back. EE only wants to pay back the COBRA money and is saying that she was owed all the monies that she received. Does the ER have any rights to get the money back since there was no release and no rehire agreement? Thank you for any help that any of you can provide.

Situation:

An employer establishes a new 401(k) plan and signs an adoption agreement with an effective plan date of 01/01/2008. The plan is never communicated to the employees, no enrollment forms are ever completed and no contributions are ever deposited to the plan.

Questions:

1. Does an employee obtain a "right to defer" simply by the signing of an adoption agreement? If so, is the employer now liable for "missed deferrals"?

2. Or, can the employer simply move the effective date of the plan forward, since no communications were made to the employees and no contributions made?

We have a DB plan benefiting only an owner-employee. This person died with a large contribution obligation. Must an executor make the contribution or would they have some alternatives after the death?

My company is looking at an acqustion of a company with an ESOP plan. Can anyone tell me the key ESOP issues to look at during the due diligence process? It will be a stock purchase, not an asset deal. I don't know yet if the stock is publicly traded. Thx.

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