I'm relatively new to the industry, and I'm hoping to get some help from the members here. I've just joined a company that has created a new death audit solution which is very user friendly and much more reliable than other companies that are currently out there. I'd love to hear any suggestions from the members on how best to get the word out about our product (and I don't want to offend anyone by posting a blatant advertisement). I don't believe it is a process/audit companies look at changing often, which is some of the difficulty I am running into.

Thanks in advance for your replies.

Regarding late deferrals, has anyone put together a flowchart or checklist dealing with both the IRS and DOL requirements and any decisions to be made?

Late deferrals are such a pain!

If a 66 year old, who is not receiving SS retirement, and is enrolled in Medicare Part A, but not Part B, goes to Medicare and dis-enrolls from Part A, can they then make a contribution to an HSA account? Do you know is there is any negative in getting out of Medicare Part A, is there a penalty to get back in if they were employed and covered by group insurance.

If you have a failed conversion (Traditional IRA to Roth IRA), the amount of the failed conversion will be subject to income tax and excise tax. The excise tax is applied each year that the amount of the failed conversion remains in the Roth. If you are beyond the recharacterization deadline, how do you "stop the bleeding" with regard to the excise tax?

Do we have any exact details on how the provision works that states that accruals for HCEs within the past 2 years can't be taken into account for the maximum funding cushion.

For example, Plan is frozen 1/1/08 but is later unfrozen by 12/31/08 as client had better year than expected. This is a 1 person plan that has been in effect since 2006 and these are the first amendments to the plan (freeze and unfreeze)

Since the 12/31/07 AB was not impacted by an amendment within the past 2 years do we still get the (1.5)(Funding Target;past svc) but then DON'T add the 2008 normal cost component (due to recent unfreeze within past 2 years) to arrive at the maximum deductible contribution ?

Need to do a 2009 AFTAP for a calendar year plan by 3/31/2009. The 2008 AFTAP was 80.5%. If we do not prepare a 2009 AFTAP by 3/31, the 2008 AFTAP reduces to 70.5% and the client cannot pay out lump sums starting 4/1 (since under 80%). Assume that the client wants to pay out the lump sum benefits in 2009 for this example.

I believe we have until 12/31/2009 to have the client make an election to reduce some or all of the carryover balance as of 1/1/2009 to get to 80%. However the 2009 AFTAP has to be done by 3/31/09. Here are a few questions/thoughts on this issue:

Does the client have to make the election to reduce some or all of the carryover balance by 3/31/09 so that the 2009 AFTAP can show 80%?

If so, the amount to reduce the balance on the election could be different that what actually happens due to the discounting of the 2008 contributions (affecting the prefunding balance). What if the 2009 AFTAP then goes below 80% using the actual dates on the contributions? Can the election be redone and and effective retroactively?

This client should have his 2008 contributions completed in March. However, if not, I assume you can estimate what the client will put in for 2008. This would also affect the 2009 AFTAP.

The carryover balance has to be adjusted from 1/1/2008 to 1/1/2009 to reflect the actual rate of return in 2008 (obviously the carryover balance will be reduced in most, it not all, cases).

Can the client elect to reduce the carryover/prefunding balance so that it's, say, 83% to allow for some room for the different dates of the 2008 contributions? Or does it have to be at the exact threshold amount?

I appreciate any help on this.

Mr. X owns 100% of two companies. Both companies participate in one 401(k) plan that has equal benefits for employees of both companies. There are a total of 15 employees between the two companies.

Mr. X now is starting a 3rd business, in 2009, again he is the 100% owner. He would like to not have to provide retirement benefits for this group for a few years. There are to be 7 employees in this company, at least 1 will be an HCE.

I know that when a business is acquired, there is a transition rule that allows for the acquired company's employees to be excluded from testing in the controlled group for up to 2 years. Does that same exemption apply to a newly created company? If so, does that mean that these employees of the new company would not count in the 410(b) test until 2011?

Twist: It is expected that the seven employees of the new company will come from the employee pool of the other 2 companies. A tough sell for sure to any employees making that switch. But, does that change the above applicability of the transition rule? Would they still have until 2011 before counting them?

Thanks

1/1/2008 valuation. Minimum required contribution = $0. Maximum deductible contribution = $500,000. Also has a 401(k) Profit Sharing Plan. What can he contribute to the 401(k) Plan in addiiton to deferrals? Is it whatever DB contribution he decides on + deferrals + 6% of comp in profit sharing?

Sorry for the length of this post, but I wanted to try to give you all the info!

Background: A former employee elected COBRA in April 2008. We pay the insurance invoices and then request payment from the COBRA participant. In this case, the new employer is making the payments. Beginning the new year (and after the large insurance cost increases), they've been lax with payments and stopped paying her dental coverage entirely. Since we mail invoices to those employees on COBRA, we let her know on each invoice that payment was still due for Jan09, then Feb09 and Mar09 dental coverage. When we didn't hear anything from her or her current employer, on 2/27/09 I canceled her dental coverage effective 1/1/09 (we only have 60days to make retroactive changes.)

The employee called me once she received a letter from the insurance company saying that her coverage was canceled 1/1/09. She stated that she repeatedly talked to her employer when she received the COBRA invoices and they assured her that it had been taken care. We've allowed COBRA participants in the past to be late for months at a time because we knew they needed monthly meds, were having money problems, etc. So, going by what we've allowed in the past, I checked with our dental carrier and they stated that we could allow her coverage to be reinstated back to 1/1/09 as a special case. I let the former employee know that we could do this and she brought in payment and said that she would take care of paying from now on, just so she wouldn't run into this problem again.

Here's my issue: I told the former employee that the dental company would allow us to reinstate her effective 1/1/09 and accepted her payment. The head of the office found out and he doesn't want to allow her coverage to be reinstated, but we're unsure what we have to do legally. Can we cancel her even though I told her we could reinstate her and she gave us a check (though it remains uncashed)?

I got a client who made a SEP contribution to her account for $900.00 during calandar year 2008. She can not take the SEP deduction for 2008. She has no employees, it's just her, the owner.

Can she get the custodian to transfer the amount to a non-deductible IRA as an option? Or can she just put the whole amount out, principal

and earnings, then go back and amend the 2008 return, just for the earnings, if any.

So I guess I like to know my options. Thanks for your help

David Banford, CPA

Question - I have to give a synopsis on this topic to a small group of people this week.

Can you someone explain to me what the difference is between doing an ADP/ACP test by Testing Seperately or doing it via Carve Out? This is one of those topics that I inherently KNOW, I just can't seem to explain in laymans terms.

For example, I recently had a plan fail the ADP/ACP. I tried to Test Seperately and the failure was just as bad. So I tried the test by Carve Out and while it still failed, it only failed "less" miserably. Instead of giving 3 refunds, I only had to give one.

Can someone explain to me what Relius is doing when you test via the Carve Out method?

Thanks.

I have a question concerning a 401(k) plan which has a discretionary contribution option. The plan has a one-year eligibility period before an employee is entitled to a discretionary contributin BUT once the employee is eligible, the company makes a discretionary contribution based on the employee's first year and second year compensation, all in one.

Ex. An employee is hired in October of 2008. The employee becomes eligible to participate in the plan on Nov. 1, 2009. In February 2010 the employer makes a discretionary contribution for the 2009 plan year. For the new employee, the employer makes a contribution based on the employee's 3 months worked in 2008 in addition to the employee's compensation earned for the plan year 2009. Thus the discretionary contribution is based on 15 months of salary (3 from 2008 and 12 from 2009).

Is the employer allowed to do this?

Thanks!

Hello-

In late July I received a QDRO as part of my divorce settlement. My ex had no cash to pay his settlement, so I agreed to accept a lump sum of $108,000 from his pension. I received a letter from the administrator in late July 2008 that they had received the order and were verifying it, and that they would be in touch as soon as a decision had been reached, typically within 60 days. It said if there was a delay, I would be notified and told why. It stated that once an affirmative decision was made, the funds would be segregated and arrangements could be made for transferring them (basically). I heard nothing and heard nothing, and finally contacted in mid-January 2009 to request the distribution. I sent another copy of the QDRO. Still heard nothing. Inquired this week, and received a letter saying they could not execute because the value of the account that this money was coming from had fallen to $91,000. They want me to submit an amended QDRO saying that this amount will be acceptable, or that this amount and some other arrangement is acceptable. What went wrong here, and am I going to need a lawyer to figure this out? I need this money to pay my lawyer from my divorce action, and this lawyer likely will not be interested in performing more work as I owe them $4500. I live in Pennsylvania. Please give me some direction!! Thanks so much.

If you pass 401(a)(4) on an allocation basis (with non uniform rates) are you subject to the Gateway for those benefitting?

Can an employer continue to sponsor a health plan after all employees are terminated for the purpose of offering COBRA coverage?

As if you forgot.

As A. Einstein's relatives (may have) said on 3/14, 'Does anyone care for birthday pi?'

Not that I plan on filing any of these any time soon (at least until after the EA Meeting to make sure that all issues are addressed), but has anyone noticed on Relius Government Forms that the Schedule SB prints with no bar codes at the bottom?

Can a currrent Profit Sharing only plan for a non-profit be converted to a 403(b) plan?

Can a 401(a) qualified plan be amended to a 403(b) plan with Employer non-elective contributions?

Any thoughts on how to terminate an ERISA 403(b) plan for an employer that is no longer in business? We have contact with the employer so it is not an orphan plan situation. The plan would still need to go through the process of adopting a plan document, terminating the plan, distribution instructions, etc., correct?

Anything else?

Thanks

401(k) Plan with SH and PS

Adoption Agreement says that forfeitures get allocated once a participant has been distributed his "entire vested benefit".

Participant gets paid out mid year, before the SH match is allocated. He won't get a PS allocation because the plan has a last day, 1000 hour rule.

The investment company automatically transfers the unvested money into a forfeiture account that does not accrue any interest, on 12/31/08 his statement shows -0-, but his Participant Certificate will show that he still has the safe harbor match as of 12/31/08.

Technically the participant is not paid out all the way because he still will be receiving a SH match contribuiton...right? Or is this not a correct statement.

Does his forfeiture get reallocated using 12/31/08 census data?...or must we wait until 12/31/09, after his SH match gets allocated to his account, and then he gets all the way paid out?

Any guidance would be appreciated.

Thank you.