Consider the situation where settlement accounting is required when total lump sums for a year exceeds the sum of the service cost and interest cost for that year. When is the settlement recognized?

I believe that in this situation it is quite common to reflect the settlement at the end of the year regardless of when the lump sums were actually paid. In normal years, the settlement gain or loss at year-end would not differ substantially from a more precise method. However, for 2008, an X% recognition of the accumulated loss at any point in the year would probably be better than the same X% recognition at 12/31/2008.

Thoughts?

Are assets in a 401(k) plan protected by the $500,000 of SIPC insurance coverage? I realize that this coverage does not protect against market losses--like today--but what if a firm(s) offering the mutual funds or stocks that are in the 401(k) plan goes bankrupt? Would those be protected?

Beginning of year valuation method. Calendar year plan. New plan 1-1-2009 (small: 60 employees).

Accruals are based on plan years with 1000 hours of service, but excludes any years of service earned before the plan year that includes the participant's date of entry.

As of the 1-1-2009 actuarial valuation date, a half-dozen ineligible employees (all with 1000 hours in 2008) have not yet reached their plan entry dates. Since they were hired early in 2008, the entry dates would be in 2009, such as 2-1-09, 3-1-09, etc.

The enrolled actuary would like to include that half-dozen group of employees in the 1-1-2009 valulation for plan contribution purposes, making this an ongoing actuarial assumption. Another enrolled actuary has stated that this is not allowable.

Comments?

Does anyone have reference or a list of the unallowable (or allowable) investments under 404c regarding self-directed brokerages? It may be a list of prohibited actions (eg shorting) but I am not sure

Also, are there things an adviser should be/could be doing on a routine basis with SDBA in reporting to Plan Sponsors?

thanks

There seems to be a difference of opinion in our office as to how to allocate an integrated profit sharing contribution when the plan has a match and is top heavy. Can someone help to clarify?

Plan has a match, 25% up to 4% of compensation. The profit sharing contribution is integrated with social security. Plan is top heavy.

If the client wants to makes a 3% profit sharing contribution, how would that be allocated? Compensation is from date of entry.

Strange situation..

We have 3 Employers A, B, & C. The ownership structure is such that AB are members of a controlled group and BC are members of a 2nd controlled group within the plan. We looked in the ERSIA outline book and this does seem possible. However, it does not offer much guidance on how to complete the testing.

The attorney is suggesting running a two tests--one for each group. We have done that.

Group AB test fails adp/acp and coverage. Within that group, they have employers that do not make a match and/or profit sharing contibutions. It also fails ABT.

Group BC test fails adp/acp but passes coverage.

How do we go about correccting? For the overlapping employees with Employer B. Do we run the test with original precorrected numbers? ie: a participant needs to have a $1000 ROE due to a failed test for group AB. Do we reduce their contribution in the group BC test prior to running?

Any help/guidance would be greatly appreciated!

Is termination and (rollover) distribution of a SIMPLE 401(k) plan subject to the successor or "alternative" defined contribution plan restriction of 1.401(k)-1(d)(4)(i) same as a regular 401(k) plan?

Client A buys target B. Target B has SIMPLE 401(k). Client A has defined contribution plan. After acquisition, client wants to terminate B's SIMPLE 401(k) and let the 2 participants in the SIMPLE rollover to an IRA. Thereafter those 2 SIMPLE participants will participate in client's DC plan. This seems like a problem to me, but I am not wise in the ways of SIMPLEs.

I appreciate the help.

An employer allowed an ineligible employee to make deferrals in 2008. My research shows that the "preferred" method of correction is to forfeit this and make the employee whole outside the plan. Do they change the W-2 for 2008 on this person to show no deferrals or do they increase the W-2 in 2009 when the refund is made to the employee?

Plan purchases annuities to pay retirement benefits other than small cashouts. No lump sums. AFTAP is 70%. If employer can pay monthly benefits from the pension fund rather than purchase annuities, is plan subject to deemed waiver of credit balance if it gets AFTAP to 80%?? Thanks.

Very basic question.

A terminated EE who was covered by the ER's group health plan is eligible for COBRA continuation coverage except when the EE is terminated for "Gross Misconduct".

What constitutes "Gross Misconduct"?

Example: A truck driver delivering a load of furniture to a large retail store puts his tailgate through the stores large plate glass window, is subsequently fired and from a subsequent blood test is found to have a blood alchohol above the legal intoxication limit of .10. Would this be considered "Gross Misconduct"?

How about termination for such offenses as sexual harrassment? Embezellment? Fighting?

Thanks

BruceM

5"] I have a client who was divorced in 1998. (Married 11 years) Ex-wife was to receive a portion of retirement per divorce decree.

Ex-wife and her attorney sent in a drafted DRO which PA rejected and stated reasons why. Attorney was sent another letter and given X number of days (90) to re-submit DRO.

The ex and her attorney did nothing to proceed with Qualifying the DRO. PA sent another letter letting ex and her attorney know, all holds on PP account had been removed.

My Client has since remarried (10 years now) and new spouse is listed as SS. He has been receiving his benefits for 20 months now and the ex-wife has come back with a new attorney claiming she wants her share.

My Question I guess is this...With PP being remarried for 10 years and her listed as SS, benefits commenced, with no QDRO in place, what, if anything, would be the ex-wife claim with No QDRO in place?

She is claiming she thought her attorney took care of it?

Either way, there was never a QDRO in place and it is over 10 years old....

Any information will be greatly appreciated.[/

A plan provides that if a participant completes 500 hours in a PLan Year (4/1 - 3/31) such participant shall receive one year of credited service for accrual purposes. It is an all or nothing situation.

The plan sponsor merges with another company and the plan year is changed as follows:

4/1/06 - 3/31/07

4/1/07 - 6/30/07

7/1/07 - 6/30/08 and so on

So there is one plan year that is only 3 months during the transition.

An employee completes 500 hours during the period 4/1/07 - 6/30/07. Any reason why such employee cannot receive the one year of credited service for accrual purposes? Or does anyone know of a regulation that addresses this situation directly or by means of an example?

Thank you.

2008 AFTAP=.65 and employer contributed 300,000 in 2008. 2009 FT = 1,000,000 PFB=300,000 Assets=900,000; calendar year plan; benefits still accruing but does not pay lump sums

FTAP=(900,000 - 300,000)/1,000,000 = .6. This is fine since Plan does not pay lump sums.

But, cannot use PBF to offset contributions next year (2010). However, if burn 200,000 in 2009, then

FTAP= (900,000 - 100,000)/1,000,000 = .8 so can use remaining 100,000 PFB to offset minimum in 2010.

Ideally, would like to wait until 2010 to decide whether or not to burn a portion of the 2009 PFB. My, understanding, however is that election to reduce 2009 PBG must be made by 12/31/2009.

So, consulting choices are:

(a) Try to communicate this discombobulation

(b) Burn now -- then you can say for sure how 2010 will work. I.e., what good is having a PFB if you can't use it?

© Decide now not to burn (because of WRERA, 2009 AFTAP will be at least .65). Hey, assets may recover an then you will have burnt credit balance for no purpose. However, you still won't be able to use PFB in 2010.

(d) wait until later in the year. Question: What how do you make certification 4/1 if you don't know how much your're going to burn. My understanding - which may be wrong - is you don't get to use the greater of 2008 and 2009 AFTAP until you certify 2009 AFTAP.

Any other choices? Am I understanding the issues correctly?

What are thoughts on the appropriate consulting and cya practice. In the world in which I reside, (b) is the only rational choice. Trying to caveat this is tantamount to (a).

What section of the code or treasury regulations dictates a definitely determinable allocation, and which section cals for a complete plan document?

What sections of the code or which treasury regulation call for, respectively, a complete plan document and a definitely determinable allocation?

Instrustions for line 10b form 5500EZ is as follows:

Line 10b. Enter the total cash contributions received by the plan during the plan year and the contributions owed to the plan at the end of the plan year including contributions for administrative expenses.

FACTS:

1. Owner & his wife are the only employees of the corporation

2. They both are covered by both the plans (One DB & a 401(k) - PS)sponsored by the employer

Should the amount on line 10b include salary deferrals made by the participants; especially, since deferrals were reported on their W-2?

This confusion has come up because the CPA wants to use amounts from the line 10b to compute the total deductions for contributions that can be taken by the employer. We have been trying to convince him that this will amount to taking a deduction twice on the same amount (Salary deferral portion). BUT........... we are unable to convince him. He insists that the amounts are contributions received by the plan. Therefore our dilemma.

Thank you in advance for any inputs.

Naveen

We have a plan, in which employee and employer both make mandatary contribution (say 12% of compensation) like defined contribution plans,

but employer gives guaranteed return on the contribution, which makes it defined benefit plan.

Thus actuarial valuation is required, am i right?

if yes, what are the possible ways by which we could valuate?

Thanks.

Every day another good question comes up.

I have scanned through everything I can find and nothing talks about voluntary benefits - dental in this particular case. The ARRA specifies that the subsidy is for medical, dental & vision. The only true exclusion I can find is FSA's. I have a client that offers COBRA for their voluntary dental plan. Assuming the employee meets the criteria, are they eligible for the subsidy for this plan? My thought is yes - but that just proves how badly the whole law was thought out!

Anyone?

I can’t tie in the reference in 1.414(w)-1 (e)(1) (iv) & (v) (Final Regs issued 2-24-09) to SARSEPS & SIMPLE IRAS back to a section that establishes the ability of setting up ACAs, or EACAs for those plans. Do the definitions apply to the entire set of regs or just to section 414(w). I thought I was pretty good at interpreting these cross references but it seems something is lacking either in the regs or my understanding.

Does anyone have a specific site or cite I can refer to as a basis to allow ACAs or EACAs in SARSEPs or SIMPLEs.

Thanks

This post has been edited by jevd: Feb 26 2009, 05:02 PM

Moved to correct Forum

Sorry.

Trying to take a pulse. Is anyone self-designing the new/revised COBRA forms required by ARRA or are you all waiting (at least a couple of more weeks) for the DOL to publish its model notices? I realize that there is a certain amount of retroactivity built in to the ARRA rules, but that's not very helfpul when your clients are laying people off and negotiating severance arrangements.

Also, has anybody from DOL said anything in public yet about when we might see those model notices and/or other interpretative guidance?

Here is my question - In 2008 an over 50 year old self employed person has self employed income of $3,000,000 and elects to defer $13,000 ($10,500 plus $2,500 over 50 catch up). Is the match contribution limited to $10,500 or can the "catch up" deferral also be matched therefore $13,000?

Any thoughts would be greatlt appreciated