We put all our plans (almost all) on investment platforms like ING,A Funds etc

for ease of admin for us and what we feel is sponsor protection re investment choices

Q;sponsor wants to leave HIS monies at Schwab.

Is that kosher or what is a solution?

Does anyone know if there is some sample language for amending a Plan in light of the waiver of required minimum distributions under Section 401(a)(9) for calendar year 2009?

I inherited a 401k Profit Sharing plan from a colleague that ran for the hills last summer. This plan maintains insurance policies as part of the trust for some of the older participants as a holdover from a past reincarnation of the Plan. Every year the sponsor pays the insurance premiums out of the assets put aside for a profit sharing allocation. The premium was deducted from the PS allocation payable to the participant. This year however, he has elected not to make a PS allocation to the Plan. He's asking how to go about paying the insurance premiums since they are now due. I want to be careful; this is the first time I'm dealing with insurance as part of the trust. I would think that the premiums should be paid by accessing a fee against the balance of the vested assets in the participant accounts, but I want to be sure this is OK. Anyone have thoughts on the subject?

Mahalo for your insight! Excerpt from Plan doc:

"(d) Payment Of Premiums: If Employer contributions are inadequate to pay all premiums on Policies, the Trustees may, at the direction of the Plan Administrator, utilize other amounts remaining in the Trust Fund to pay the premiums, allow the Policies to lapse, reduce the Policies to a level at which they may be maintained, or borrow against the Policies on a prorated basis if borrowing does not discriminate in favor of Policies issued on the lives of officers, Shareholder-Employees and/or Highly Compensated Employees."

If a series of substantially equal periodic payments are taken, then distributee avoids the 10% early distribution penalty. In researching this (trying to assist a client who may be subject to the 10% penalty that he already took in 2008), I found that there are 3 ways to calculate the distributable amount. My question is whether that amount can be exceeded? For example, if I use the RMD method and that results in a figure of $10,000, can the distributee actually take out $20,000 per year as long as he/she maintains that level for at least 5 years or age 59 1/2?

p.s. Happy April Fool's Day to all my fellow pension fools.

Employer A maintained a 401(k) filed for bankruptcy and terminated the Plan and employees have been given the opportunity to take a distribution or roll over. "A" essentially reemerged as Employer B - different TIN, name, but providing the same product with the same employees and employer B is establishing their own 401(k).

Do you agree that B is a different Employer and no issue with successor plan rules?

And if B is a different Employer than A, any rollovers would be unrelated?

Controlled group has separate 401k plans for the two related entities. One plan has safe harbor match, the other plan has no employer contributions. Because of this I do not have the option of aggregating for coverage.

The non-safe harbor plan has no HCEs, so coverage is automatically passed.

The ratio percentage test for the safe harbor plan is failing, so the average benefit test was completed. The nondiscriminatory classification test passes, however, the average benefit percentage test does not.

The plan document allows for discretionary QNECs to be given to only the NHCEs employed on the last day of the plan year. However, most of the NHCEs terminated in 2008.

Under Treas. Reg. 1.401(a)(4)-11(g) can the plan adopt a retroactive amendment to remove the last day requirement so that more of the NHCEs are eligible for the QNEC? This would reduce the total dollar amount of the QNEC because the youngest NHCEs are the terminated ones and we are using accrual rates for the average benefit percentage test.

I am determing if we should have a 401(k) audit for 2008 and need help. The plan had 65 employees participating in 2008. Of course, some of these employees were terminated before 12-31-2008. The plan has 29 eligible to participate in 2008, but did not. Of course, some of these employee were terminated before 12-31-2008, but all was elgible to particpate before reaching termination date. In addition, we have 16 terminated (terminated prior to 2008) employees with account balances. Are we considered a small or large plan?

I just had a broker call and ask if I would set up a 401(k) plan for a one member LLC that wants to terminate his 412(i) plan and roll the proceeds to the newly established k plan. The assets to be rolled over consist of a paid up whole life policy and an annuity. There are no other employees of the LLC and there will not be any other employees in the future. Also, there will not be any future premiums on the insurance policy.

Does anybody see any problems with this? I have no desire to work with 412(i) plans but am concerned I may end up getting involved with this one in a round about way.

Sources say it appears that Henry Winkler was charged last week with running a giant Fonzi scheme.

Apparently, not all securities were rated Aaaaaaay.

The deferrals are deductible the year paid. I understand that, I think.

The excise tax is not deductible: Correct?

How about if an amount equal to the excise tax is paid into the plan as a gain instead of paying the excise tax: Deductible?

The lost earnings put into the Plan: Deductible?

The fee for my time filing VFCP application: Deductible?

Can anyone think of any other costs?

In today's economic environment, it is apparent that soon, the Treasury Department will run out of TARP funds. As a supplement to TARP, the Committee is introducing HR 4109, the Corporate Recovery of Assets Program, or CRAP. CRAP is not the same old stuff; this is a strong, bi-partisan CRAP. It is intended that CRAP flow from Washington to all tax payers. We think that once this gets started that corporations can't wait to be full of CRAP. Many state governors will be reluctant to take CRAP from Washington. We understand if you do not want to take any CRAP, we will not give you any CRAP. Once the economy is flush again, we will be taking the CRAP back. To our critics, we do not believe for a minute that CRAP stinks. While we aren't sure whether CRAP will unblock the economy or how much it will eventually cost, we are certain we can work it out with a pencil.

I have two different situations I am currently working with.

1) Our client is a Temp Agency. They have about 30 "staff" employees that are allowed to participate in the plan. (of the 30 staff employees 5 are HCEs-2 of which are owners that are excluded by plan design) They have 1300 "non staff" employees (they are the folks that go temp at other employers). They exclude these people from the plan. We were able to work down the number to 42 people who would have otherwise been eligible had they not been in an excluded category. My coverage ratio is 65% but unfortunately they do not pass average benefits. I am stuck on how to advise how to fix. Can they make the 3 participating HCEs distribute their money due to the coverage failure? I know they can make a qnec or allow these non staff into the plan to fix it, but that would be very costly. Any other ways to correct?

2) Different employer: The plan has multiple divisions. 2 of the groups do not provided for a match. Of course these 2 groups have most of the NHCEs. On top of the coverage issues, the groups that have a match, they have multiple matching formulas. The most generous formula is the one most of the HCEs receive. They client wants to retroactively amend their plan so that the HCEs do not receive a match for 2008. Is this possible?

Any help or guidance would be greatly appreciated!

Thoughts greatly appreciated on the following scenario: Single employer plan files funding waiver application for the 2007 plan year. The 8 1/2 month deadline for making contributions to avoid a funding deficiency for that year has expired, but the application is still pending. Absent a favorable outcome on the waiver application, a funding deficiency exists. Is a Form 5330 with 10% excise tax now due, or only if/when the waiver application is denied. Same question with respect to PBGC notice under Section 4043©(5). ERISA Section 101(d)(2) provides an exception to the participant notice requirement while a funding waiver is pending, but cannot find a similar exception for the excise tax or reportable event notice.

One local colleague indicates that the IRS requires reimbursements to be honored for any plan participants up to the total of the committed annual contribution. Another says the company is not required to pay out reimbursements in excess of the amounts withheld year to date from the participant's pay checks - it's purely at the company's option.

For example, a participant has had $400 withheld from their pay through March. They submit expenses of $650. Colleague one says it must be paid. Colleague two says it's the company's option - not required by the IRS.

IRS Pub 969 sees to match the advice of colleague one, but that might mean tapping assets outside the plan. I'd like to do it the right way. Can anyone point to the definitive answer on this one?

Sorry - it appeared board didn't post this message

Sorry - it appeared the board hadn't finished posting this.

A sole proprietor (SP) operates two (2) separate and distinct businesses. No employees in either enterprise (never has been - never will be).

For 2008, SP has a separate Schedule C for each "business" - one with a "Net Profit" the other with a "Net Loss".

SP has an SEP. Must the 2008 "Net Profit" and "Net Loss" be further "netted" for SEP contribution purposes, or can a contribution be made only by the business that had a "Net Profit"?

Thanks!

I have been reviewing a sale of assets transaction, and I noted that the 4204 Sale of Assets language specifically limits the purchaser's withdrawal liability for the purchased operations to the liability calculated using only the last 5 years of contribution history for the operations. For most plans that use the presumptive method, adding up an employer's propotional share of UVB pools for each year in the last 20 based on the employer's proportional share for that year, this would wipe out up to 15 years of UVB pools that the seller would have had included in its withdrawal liability for a purchaser of the seller's business.

It doesn't seem like the result the statute is going for, if the goal is to ensure the stability of the plan, why exclude up to 75% of the UVB pools used in calculating the seller's WL when assessing the purchaser of those operations?

Is my reading correct? Is there any guidance confirming this reading? Thanks.

Notice 2009-27 IRS Guidance on COBRA Subsidy in Q&A format including information on "involuntary termination" for purposes of qualifying for same.

n_09_27.pdf

Here's the situation. QDRO says that awarded to ex-spouse is $xx,xxx as of "date of segregation". Does that meet the "clear award" standard of IRC § 414(p)(2)(B)?

My concern stems from shifts in the value of the employee's DC plan account one day to the next. The current market volatility makes this concern more vivid. It takes a plan administrator time to review and determine that a received order is a QDRO. Then there is a time lag for the implementation--the segregation--from the time the plan administrator sends its instruction to the recordkeeper/custodian. The speed in turning this around is relatively quite quick (a matter of 2 to 3 weeks). Given that the regulations specify a reasonable amount of time, no more than 18 months, a 2 to 3 week turnaround time seems reasonable. After all, the outside parameter mentioned by those regulations is 18 months. However, there’s a big difference in the proportion of the employee’s account that gets carved out if that was effected by recordkeeper/custodian on March 9 when the Dow Jones was around 6,400 as opposed to last Friday when it was around 7,700 hundred. That’s just a couple of weeks. My concern is the possibility of an employee pointing a finger at the plan administrator if the 'segregation' took place on March 9 when it would also have been within the reasonable turnaround time to have done effected the 'segregation' on March 27. What I do not like is the perception that could spawn out of the potential for market timing manipulation by the plan administrator, at least it might look that way from the employee’s perspective.

Any thoughts on whether the Plan Administrator could insist on an exact date (e.g., April 5, 2009) rather than "date of segregation" in the name of needing that clarity per IRC § 414(p)(2)(B)?