An employer has a 401(k) plan and a discretionary match on the elective deferrals. If not already stated as an eligibility requirement for receiving the match, can the employer, after the end of the plan year, decide that only those employees who were employed on the last day of the plan year may receive a match? Thanks for any help.

Non-standardized PPD Document. I'm trying to track down the base document, familar with Corbel. Deferral, fixed match, and discretionary profit sharing. A participant has three types of contributions. The employer always gives a 10% pro-rata profit sharing allocation, but what happens if this would cause a 415 excess. Does the plan document prevent me from allocating above a participant's 415 Limit? I seem to recall that I would allocate this excess to others. I guess I could reduce my profit sharing contribution so that in the end no one receives an allocation of more than 10%. Does this sound right to anyone?

Article from Workforce Magazine on restricted benefits. It contains some comments.

Perhaps we should have the fourth estate writing our pension laws?SPECIAL_REPORT__Downturn_May_Limit_Lump_Sum_Pension_Payments___workforce.com.pdf

I have a situation where an employer has a Target Benefit Plan with a class exclusion but where a separate 401K plan covers everyone (no class exclusions). Since the plans together are TH, they must contribute 3% to all non keys in the K who do not get their TH min in the Target (all of the class exclusion people who are not in the Target but ARE in the K). There are no other employer contributions in the K plan.

The K also failed the ADP Test. So, I intend to use the 3% TH also as a fully vested QNEC which is permitted. This helps me pass the ADP test. Problem is that 1 of the 5 people getting the TH minimum is an HCE non–key. I really don’t want his TH minimum treated as a QNEC in the ADP Test for obvious reasons .

But if I don't treat the HCE's TH minimum as a QNEC would I have a discriminatory situation since the only PS contribution which is NOT a QNEC is for the HCE? Or, is it OK since that PS contribution is a mandatory TH minimum and that would not cause a 401a4 failure?

Can anyone put an extra eyeball on this one.

My understanding is:

Do ADP test - fail

Adjust deferral % for HCEs.

Tally a dollar amount based on adjustment

Spread the dollar amount to reduce deferral dollars

Then, consider what is a catch-up

I haven't put a pen to it, but I'd love to say

ADP fails

Hack out $5,000 catch-ups

Test again

It may actually come out worse that way.

adp_test.pdf

A Money Purchase plan has been terminated with one participant remaining in the plan. The spouse will not consent to a distribution. We wish to pay out the participant with the purchase of an annuity. Does anyone know of a company that will accept this type of annuity in the State of New York?

For 2008, I've been saying that a change of funding method has occurred, on line 25 of the Schedule SB, and on line 7 of the Schedule R. I'm assuming that the switch to the PPA-mandated procedures is a change of funding method. Anyone think otherwise?

TIA.

in connection with a change of payroll companies the sponsor sent out a notice 3 days advance telling participants deferrals would not be taken. is that permissible? i am concerned it might be a failure to follow deferral instructions and the employer is now liable to make up the contribution. the plan is also automatic enrollment. but on the other hand this is not a blackout as defined by the regs and therefore i am unaware of any 30 day notice requirement.

How are wellness programs taxed? Generally, do they qualify as a de minimis fringe benefit?

Hi,

I'm relatively new to church plans and am looking for some good reference materials. If you know of any, please let em know what they are.

Thanks.

I have a plan doc saying that the AE factors are the same as 417(e).

For calculating a termination benefit for a participant, I would use the First Segment Rate to get the Joint & Survivor Annuity Factors.

Am I correct or missing out on something??

Thanks in advance.

Owner took a distribution last year of over $100,000 then found out she couldn't do that and deposited all of it with Lost Earnings into the plan. It was reported as a prohibited transaction on form 5330, I believe in the form of a loan. Owner would now like to take out a loan of the maximum $50,000 with the understanding that she must treat it as a loan. Since the prohibited transaction was within a year, would there be any affect on the maximum loan she can take? In this case, it would be zero since it exceeded $50,000.

I pay my son in law for managing my IRA's and other investment portfolios. I simply write a monthly check to him. He is retired and has experience with investments. How should I handle the payment on my tax return? Can I deduct it as an expense? Is my check sufficient proof?

I have one employer who does not want to start the match on someone until they make at least a 4% deferral. Where is the site that says they can't do that? Basically, it would be a zero percent match on the first 3.99%, then they start matching. I know you can't increase the match as deferrals increase, but I'm not sure of where to find that in the regs.

thanks

I have a quick question - I am hoping someone has come across this already.

I have a client that is on COBRA. They will be eligible for the subsidy, but the $2200 a month price tag still leaves them $770 a month for their portion, which is a lot when you have lost your job.

So here is where my questions start:

1. Can someone on COBRA qualify for CHIP, or do they have to be on active coverage?

2. If they do qualify and CHIP will pay for the children, can the adults still qualify for the subsidy of 65% for their portion of the premium?

I know this is double dipping, but this family is going to have to decide between their house or their insurance.

I know this question is going to come up again - was just wondering if someone else had figured out the answer already!

Thanks!

Shannon

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

A multiemployer money purchase DC plan (no individual accounts, investments by plan trustees) values participant account balances quarterly, but distributes benefits upon receipt of an application, at any time (not just on valuation dates, even though there is no ability to value account balances between valuation dates), and distributes the account balance based on its value on the valuation date following the retirement of the participant.

Practically, what this has meant is that the participant gets his account balance as soon as practicable after a complete application is submitted, and a proportional share of investment gains occurring between the valuation date preceding the distribution until the date of distribution and less the proportional admin fee.

Of course, in a down market, this means that participants get a full distribution of the account that may have dropped in value between the preceding valuation date and the date of distribution, and the plan is out the difference. To remedy the problem, we would like to either (1) restrict distribution dates to valuation dates and require that the application be submitted no later than 15 days before the valuation date upon which it is to be distributed or (2) stagger the payout on distribution to 75% as soon as practicable after application and 25% as soon as practicable after the next valuation date.

I tend to believe that the plan may restrict times for distribution (while retaining all required benefit forms) without violating 204(g) and the 411(d)(6) restrictions on eliminating benefit options, but am unsure if the staggered distribution option also meets the requirements. Any opinions?

A small plan has no active participants. Two of the participants terminated many years ago and have not been paid out. The third participant, the owner, died about a year and a half ago. The estate of the owner would like to terminate the plan and pay everyone. Plan assets exceed the PVAB. We would like to revert excess assets to participants pro-rata based on PVAB. The deceased owner will be limited by the 415 Max Lump Sum.

Do I calculate the 415 Max LS as if distribution would have occurred on the date of death one and a half years ago? If so, can I add interest (and at what rate) to the actual date of distribution? Or, do I base the calculation on what his age would have been at the time of actual distribution if he had been alive? Does the beneficiary's age come into play at all?

Assuming I figure out how to caluclate the 415 max properly, what if there are left over assets after the owner's beneficiary is paid the max lump sum? Do we need to make an additional allocation to the other two participants? Or, does the rest of the excess revert to the employer?

I have a separation pay plan that currently meets the requirements for exclusion under 409A -- upon involuntary termination, the employee will continue to receive base salary for 2 years. Currently one employee's salary is lower than the 401(a)(17) limitation (but is rising), and another employee's income is above the 401(a)(17) amount. The separation pay plan does not specify that the installments will be treated as a series of separate payments.

Is it too late to amend the plan to cap the payment at twice the applicable 401(a)(17) amount (assuming the employees are agreeable)? Or would it be okay for the first employee, but not for the second (and may be capped at his current salary)?

I believe it would be okay to implement the 401(a)(17) cap because, until involuntary separation occurs, the right to the payment continues to be subject to a substantial risk of forfeiture.

Second question -- if the cap is not imposed, and a terminating employee has a base salary greater than the 401(a)(17) amount (and thus the benefits will be partially be "deferred compensation"), will the payments not be treated as "deferred comp" until such time as the payments reach the limit, or will each installment be allocated between deferred comp and excluded separation pay? I believe the first alternative is correct.

Thanks for looking!

Controlled Groups (CG) and especially Affiliated Service Groups (ASG), are not my forte. Any help with the following determination would be greatly appreciated.

Mother and Adult Son are in real estate together. Their firms are (1) each has an individual propreitorship, under which they are respectively paid. They also own an agency that is an S-Corp which they have both have a 50% ownership. This agency is where they do selling, and it employs real estate brokers that work for Mom/Son.

My first conclusion is that there is NO a CG. This is because neither Son or Mom have more than 50% ownership in the Agency, meaning no attribution of ownership. Without attribution, you don't have 80% common ownership, so no CG.

My question is primarily directed toward the ASG. I think that the Agency could qualify as a First Service Organization (FSO) as it does appear to satisfy the definition of service organization. I also think that the proprietorships could each be deemed to be A-Organizations, especially since commisions earned under the Agency are paid through the proprietorships.

Any help would be appreciated. Thanks!