I hope this is not too much of a bonehead question..

In a Defined Contribution plan

Is it required to have an early retirement provision in the Plan Document

To have the ability to waive the 10% early withdrawal penalty when a distribution (due to separation from service) occurs at age 55

Thanks

Small plan (25 particippants) failed to make it's $10,000 contribution for the 2007 calendar plan year. Suggested to revise the 5500 and corp tax return showing no contribution. Other options????? make the contribution ($10,000 would have lost money)late or file SCP?

Is there any difference between a "Former HCE" referenced in Reg. 1.401(a)(4)-5(b)(3)(ii) (Restricted Employee Defined) and a "Highly Compensated Former Employee" defined in Reg. 1.414(q)-1T, A-4 and IRS Notice 97-45 (for purposes of IRC 414(q)(6))?

The answer I want is that a "Former HCE" is the same as a "HC Former E!"

Thanks!

Employee sponsors typical medical fsa, which is subject to COBRA, and an excepted benefit under HIPAA. The amount available for reimbursement during a plan year is exactly the same as the amount the participant elects to pay fo the coverage. Participating employees who elect to participate are entitled to receive reimbursements for qualifying expenses incurred for themselves, their spouses and other dependents. However, as is almost always if not always the case with these plans, only the participating employee can claim and receive reimbursements. Neither the spouse nor the dependent can perfect a claim or receive reimbursements.

Assume participating employee and spouse divorce. I believe there are two alternative reasons why the spouse does not have COBRA rights vis a vis the FSA.

1. Spouse was not a qualified beneficiary at the time of divorce, because the spouse had no independent rights under the plan; only the participating employee had rights under the plan. The employee could claim reimbursements for expenses incurred by the spouse, but the spouse could not claim or receive any reimbursements.

2. Even assuming the spouse is a qualified beneficiary, a reasonable interpretation of the regulations (if not an obvious interpretation) is that the spouse's COBRA right, if any, is to establish his or her own FSA account for the balance of the plan year, unrelated to the employee's account (because the employee is entitled to maintain his or her account for the remainder of the plan year and receive reimbursements from that account for expenses incurred by the employee, his or her dependents, and a new spouse if the employee remarries fast enough). Therefore, because in the case of the FSA I have described the spouse's cost of COBRA coverage for the remainder of the plan year is exactly equal to the amount of the reimbursements which would be available to the spouse for the remainder of the plan year (or maybe 102% of the amount available for reimbursements), the spouse does not have COBRA rights.

Any thoughts?

Can a plan be amended to provide that Hardship Withdrawals that are obtained to prevent foreclosure on a principal residence be submitted directly to the Bank or mortgage holder? We've had some employees present the proper evidence of an impending foreclosure and then not forward the distribution to the bank.

It seems like we're trying to help people that won't help themselves. The client was reluctant to have hardhsip withdrawals at all. In fact they are limited to prevention of forfeiture of a principal residence.

Any and all help would be appreciated. Thanks.

A company is insolvent and the assets are being sold out of a receivorship, the PBGC will take over the orphan plan from the insolvent company. When is the plan termination date? Is the plan considered terminated automatically when the PBGC assumes responsibility?

The DOL investigation revealed a prohibited transaction. Client will file 5330 and pay excise tax. Query: do we have to file a corrected 5500 to properly report the non-exempt p-i-i transaction?

Hello there. Would appreciate some input into my topic posted. OK for a 4k safe harbor to allow in-service from basic and/or enhanced match and also in-service from 3% non-elective? Document seems to allow but has some caveat language that makes me think it may not be permitted. Thanks. DN

Before PPA if the employer's taxable year did not coincide with the plan year, the deductible limit would be one of the following:

(1) The deductible limit determined for the plan year commencing within the taxable year, or

(2) The deductible limit determined for the plan year ending within the taxable year, or

(3) A weighted average of alternatives (1) and (2).

Once chosen, the method cannot be changed without the Commissioner’s approval.

1. It appears that PPA changed so that only the 2nd method is allowed. Correct?

2. Does the client need the Commissioner’s approval if he used 1st method in the past and now is forced to use 2nd method?

3. Can client continue to use 1st method?

If I have restricted stock that vests on a Saturday, do I value the stock as of the close of business on Friday? Monday? Do I average the two (like with gift tax)?

Any direction or authority would be much appreciated.

Does anyone have any good sources of info on developing and administering the new bicycle commuting benefits? I would like to discuss implementing this with my employer, but I'm feeling a little lost about how exactly it is supposed to work. A lot of the webpages I can find discuss a $20/month limit, yet it seems as though the code specifies it as an annual limit, which makes more sense since it seems like most people won't have expenses every month.

Taking over a plan with the following fixed contribution formula:

8.75% of pay up to the wage base

+

5.7% of pay above the wage base

My foggy recollection of integration was X% on all + 5.7% on excess and x had to be >,= to 5.7%, which it is here.

So I am thinking that this is not stricly under the permitted disparity method and would require general testing. Does that seem correct?

Thanks

I have a client who has provided me with a document which states that match is made on a payroll-by-payroll basis for all eligible participants. It goes on to say that a matching "true-up" contribution will be made to participants who are actively employed on the last day of the year. The are claiming that they need coverage testing for the true-up match. (This is what was provided by their prior service provicer.) My opinion is that coverage is automatically satisfied as all eligible employees are eligible to participate in the plan and, if they make deferrals, then they will receive a match contribution. Therefore, the coverage ratio is 100% for the 401(m) portion of the plan.

I would take the postion that the issue is a BRF issue, but I am not 100% sure. My problem is that I am unsure how this should be tested. On the surface, I would think that there is a discrepency in the rate of match. However, if the plan sponsor matches accruately throughout the year, then, I would think that no testing is required as everyone was entitled to the same level of match. Do I simply say that there are two groups of people: the first consisting of those who are actively employed on the last day of the year and the second consisting of everyone else? Do I then calculate the nondiscriminatory availability? Or do I review and see of those not active on the last day, who received the correct matching contribution and include them in the first group as they received the "correct" matching contirbution? Or is there something else I should be doing?

As always, comments are greatly appreciated.

I have a client who has received the following link by e-mail.

http://www.pbpexecutivereports.com/er.asp?...mp;id=958799471

I have been asked by my boss to check into the validity of this. I personally think this is just one of those scams that come about in bad economic times. Does anyone know if there are actually new rules or regulations coming out, or is this just a bunch of b.s.?

We have a client with a 401(k) Profit Sharing Plan that would like to exclude an HCE from plan participation by name. The employee in question was hired 10/01/2008 and would be entering the plan on 1/01/2010. When did / does the amendment have to be executed by in order to accomplish this? Should it have been executed by 10/01/2008 or can we do it currently since he hasn't entered the plan yet?

Any input would be greatly appreciated.

Thanks!!

We have solicited a few RFP's for a dependent eligiblity audit and have come down to 2 finalists.

Has anyone had any experience with Chapman Kelly, a firm that provides this service as well as medical claims audits?

Were you satisfied with their service?

Were there any issues?

Would you use them again?

Does anyone use Oracle, and if so , how are you tracking verification of dependent eligibility in Oracle?

Lexy

DB plan is terminating and all benefits are being paid out in June. Elderly owner/participant who has been taking required minimum distributions from the plan has elected to directly roll over her lump sum payout to an IRA. If I remember correctly, the 2009 RMD exemption applies to both DC plans and IRAs; does this mean that she is not required to take an RMD this year even though the benefit was in a DB plan for part of the year? All help is greatly appreciated.

We are a regional TPA who work with numerous financial institutions. Recently, one of the banks we work with interpreted the rule to mean that we must have a policy in place. Also, after reviewing the rule, it looks like the plan sponsors who have loan provisions might also be required to impliment a policy.

Have any of you dealt with this? If so, what is your interpretation?

Thanks

Dune

.

I have an owner that hired employees in October 2008. They are not eligible for the plan until 1/1/2010.

Can I still do a 5500-EZ (owners only) until they become eligible in 2010?

Thanks