Here's one I haven't seen before.

Client installed a new 401(k)/PS plan for 2008. clearly indicated on plan "set-up" papers that they wanted to allow up to 100% deferrals, catch-up, and Roth.

However, document was completed by TPA, and signed by client, not allowing deferrals.

Client deferred anyway.

Can this be fixed by retroactive amendment under VCP? There's no specific fixmin Appendix B. However, plan loans or hardship withdrawals that were allowed where document does not allow them are eligible for correction, so it seems reasonable to attempt this. Anyone ever run into this? Success or failure with a fix? Other fixes? Perhaps consider an excess deferral?

Are annual royalties from a previously published book automatically excluded as earned income for SEP contribution purposes? Does it matter whether the person is currently an author by profession? Where would I find the references?

Thanks!!

What limited due diligence do you TPAs out there accept as sufficient to cause you to believe that the rollover $$ are coming from a qualified plan? A recent statement showing sufficient assets in the partcipant's account? A statement actually showing the distribution which is resulting in the rollover? A check which mentions the name of the plan? A signed statement by the Trustee of the plan from which the assets are coming?

Once the DOL has granted an exemption from the prohibited transaction provisions, how long after does the applicant have to complete the transaction? For example, let's say the DOL approves the proposed sale of property from the Plan to a participant for all cash. As a condition of the exemption, the applicant agrees that the purchase price will be updated to fair market value as of the date of the sale. Once the exemption has been granted, can the applicant in a sense sit on the exemption for some period of time (say, 2 years) before consumating the transaction -- provided of course that none of the facts described in the application have changed?

We have company that is reducing everyone's hours 20%. My understanding is that a reduction in pay such as this is not in and of itself a qualifying event for a (status) change of election. Rather, the change must be based on a change in eligibility for benefits (such as full time to part time) or a change in cost of benefits. It is unlikely that a company has written into their plan document that a pay cut constitutes a change in eligibility.

If true, then is this written in the tax code somewhere (the client wants to know) or is it by implication; the fact that a change must be based on eligibility or cost and nothing else is mentioned?

Perhaps is there something I'm missing and these employees can change their elections under circumstances I'm not aware of?

Thanks

Edit: I forgot to ask: What about contributions the company is making to these elections? Are there any circumstances such as this one under which the company can change these amounts?

2 separate plans of a Controlled Group - Plan A (I am TPA): Only union employees excluded and the 401(k) portion has immediate eligibility. Plan B (another TPA): Excludes Japanese employees on temporary assignment at Plan B's Company, and has a 3 month wait for 401(k) eligibility.

For the coverage and ADP/ACP testing, I have used the lowest service requirement. However, can I include the Japanese employees that have met eligibility (immediate) in my ADP/ACP tests? Plan A does not exclude Japanese employees from Plan A.

Are there any cites to either a yes or no answer?

If a plan was subject to Title IV will it always be subject to Title IV even if it happens to meet one of the exceptions in Section 4021 in later years? For example, what if the number of active participants in a plan maintained by a professional service employer falls below 25?

A plan that excludes employees who customarily work less than 20 hours per week but contains language which states if hours exceed 1000 in any computation period the employee is eligible follows the participation rules under 410(a).

However, what happens if the plan has dual eligibility (immediate for deferrals and 1000 hours for employer contributions). When an employee is hired it is estimated (based on the job title) that they would work greater than 20 hours per week and are allowed to start deferrals. In the first employment computation period they actually work less than 1000 hours and continue to work less than 1000 hours in each subsequent plan year.

After the first 12 month employment computation period, when it was discovered they never worked 1000 hours, were you suppose to stop the deferrals and consider them excludable or since they were allowed into the plan do you continue to allow deferrals.

Any thoughts would be appreciated.

Employer wants to enhance benefits to long-service participants.

They provide (a) 3% safe harbor contribution.

(b) 4% discretionary contribution and

© wants to provide an additional 1% of comp each year once the employee has reached 20 years of service.

Testing part © is the issue. Should (b) and © be tested together or is disaggregation permitted here? Does it matter?

Does this reporting only apply to large plans? That is, a certain size or asset value or amount of underfunding?

I know it references AFTAP under 80%.

Thanks.

The Form 990 includes a section where Officers, Directors, Trustees, Key EEs and HCEs need to be listed disclosing compensation amounts. One of the items includes "The annual increase in actuarial value of a qualified defined benefit plan, whether or not funded or vested". Has anyone seen this and does anyone know what actually needs to be reported?? Thanks.

An owner of a company has two common law employees. Neither employee met the 21 & 1 requirement to enter the plan on 1/1/08.

The wife was hired 1/1/08.

Can the DB plan include the wife for 2008 and exclude the employees? That is, liberal entry for wife, but still exclude employees due to the statutory requirement.

Thanks.

A plan sponsor is looking for ways to cut costs. they currently maintain a calendar year pension plan. Active participants receive an allocation as long as they are employed on the last day of the plan year regardless of the number of hours of service. Terminated participants get an allocation if they work over 500 hours.

My question is could the pension plan be restated and avoid required funding for the current plan year which started January 1?

I have a QDRO that is almost approved for a 403(b) Plan. The 402(f) rules indicate that the PAYOR has to send a 402(f) notice (rollover notice) of tax consquences of a distribution . Does this notcie have to go to an alternate payee 30 days before distribution?

Any cites would be appreciated.

thanks

Could a plan document require that a claim for benefits (after exhaustion of remedies) be filed in state court rather than federal court?

I've been reading about a letter sent from the DOL's Boston office to a pension plan on July 1, 2008, directing the plan to independently value their alternative investments. Does anyone here know if/where I might be able to get a copy of the letter?

Some argue ethics are ethics; others, that ethics are a function of how much money is involved and what's at stake.

The struggling not-for-profit IHELPU has a frozen DB plan covering 200 participants where the FT=$4 million and assets = $7 million. IHELPU engages you to conduct a plan spinoff/termination study so they can recapture the $3 million and stay afloat. You've been the actuary for the IHELPU pension plan for years and they've always paid you out of the pension trust, except the cost of FASB. You tell them in writing up front that the study will cost 35K and that further this is an expense that should be borne by IHELPU and not the pension trust. You complete the study and send IHELPU an invoice which states on it that this is not an expense that should be borne by the pension trust. You promply receive a check and low and behold it is drawn on the pension trust. You call the executive director and he says if you want to get paid, cash the check. You remind him of the agreement and caveat regarding the legal issues and he cries that IHELPU's cash flow is in the toilet.

You know that it could be two years or so before IHELPU enjoys the asset reversion if their Board even decides to proceed with the spinoff/termination. Just to compound the situation, your office rent is coming due and owing to this lovely economy, your accounts receivable are coming in slow. Times are tough and you've been pushing your credit limit. You also know that if you go above the ED's head to the Board that that will be the end of you (you can't even get to the Board without the ED's involvement).

Any comments other than I need more to do so I don't have time conjure up situations like this?

I have a DB Plan which currently states that Surviving Spouse gets QPSA on the first day of the month following death of Participant. The actuaries hate this and want the payment to begin "upon application" by the Surviving Spouse. Is there anything that would NOT allow me to amend the plan to allow for the payment to begin upon application (date of Surviving Spouse's choice) as long as I limit it as follows:

- must be allowed to commence no later than month in which participant would have attained earliest retirement age (1.401(a)-20 Q&A 22(a).

- must begin no later than the later of 12/31 of the year following P's death or 12/31 of year in which P would have been 70 1/2.

Any insight would be appreciated.

Thanks

Different ARRA question: "qualified beneficiary" is defined pursuant to federal COBRA law. "COBRA continuation coverage", however, includes federal _and_ similar state law.

In NH, civil union partners are eligible for state continuation coverage, but obviously not under federal COBRA (as a "spouse").

It looks, then, like an employer subject to the state-level law has to follow ARRA but a civil union partner (or same-sex spouse in some other states) of an employee of that employer cannot benefit from the subsidy (and that employer needs to be careful about filing for the reimbursement of the subsidy). Is that how others read the law? That is inconsistent to me, but I think that is where the wording leads us.

I'm 62, have been retired since May 2006 retired, am living with wife and two kids on my pension and occasional freelance work, total income was way below the low-side threshold for Roth contributions. In March of 2008, I made a 2007 Regular-IRA contribution and a 2008 Roth contribution. Since I didn't hold a full-time job, though, was I even eligible for the Roth contribution? For Tax Year 2009, if I don't have any income other than my pension or if freelance income is less than the $6000 max Roth contribution, am I eligible for making any Roth contribution?

Two more questions, please:

1) As part of my 2007 tax declaration I forgot to file the Form 8606 for non-deductible IRAs. Am I right to think that since ALL my Regular- and Roth-IRA contributions have ALWAYS been NON-deductible, the oversight doesn't really have tax consequences, so that I can just file an updated Form 8606 with my upcoming 2008 tax declaration to record the 2007 Regular-IRA contribution and, on a separate Form 8606, show my 2008 Roth-IRA contribution??

2) I was SO depressed last year about my stupid investing, I never even THOUGHT about paying to convert my Regular IRA into a Roth. Now, the nearly-all-eggs-in-one stock I have in my Regular IRA seems to be headed out of deep red into green after all, so now I'm kicking myself for failure-to-convert stupidity! My income hasn't changed and won't, so can I convert NOW, even though it'll cost more because the stock has gone up???

Thank you very much in advance for helping me out!