Can a 401(k) plan keep its safe harbor status if it is amended mid-year to eliminate the safe harbor match for the HCEs only?

Thanks.

The sponsor is a construction firm who keeps many employees "on call" , sometimes for over a year, until their services are needed. They are reported as employees with zero compensation and no hours worked during these periods, but not terminated. Many of these employees became participants in the PS plan during the previous year, but will not be receiving an allocation for this year due to their lack of compensation. If they had a compensation, they would get an allocation since the plan uses new comparability and they would be eligible for a gateway allocation (plan is top heavy). If they are considered not benefitting, 410(b) fails. I suppose one way to avoid this is to have the employer consider them terminated during the year so they wouldn't be entitled to the gateway amount, but if the only reason they're not getting an allocation is a lack of compensation, can one say they are "benefitting" in a twisted, yet legal, way? Has anyone seen this type of situation before?

403(b) plan currently does not have provision for employer discretionary contribution. Employer would like to add provision for 2008. Can the 403b plan be amended by March 15, 2009 to allow for 2008 plan year employer contribution??

EE and spouse divorce. QDRO was signed by divorce judge and presented to PA. PA is processing the determination re the order for its status as a QDRO, when the ex-spouse informs the PA that she and the EE are going to get back together in a couple of months. I vaguely recall something several years ago about some airline pilots having gone through phony divorces to get QDRO payouts of benefits. Is there a case citation or DoL ruling/announcement anyone is aware of about that situation?

An employer was late sending in the deferrals, so we are calculating the interest due to each participant from the DOL site. The match is made each payroll period. Since they legally have until the time of the employer's tax return to make the employer contribution, do they get a pass on paying interest on the match?

Greetings,

Are there any states that do not allow deductions for employee 401(k) contributions? If so, is there a list out there somewhere? I have searched and searched but cannot find anything.

Thank you.

Plan Sponsor is based in UK. Plan covers US employees. Current trustee is US citizen, but is resigning. Can the sponsor appoint a non-US citizen to be trustee?

NQDC plan was established in late 2006. A Participant who is also a "specified employee" deferred amounts in 2006 and 2007 totaling approximately $27,000. Employee terminated in August of 2007 and received the first of 3 (unequal) installment distributions in September of 2007. The unintentional failure to delay the distribution for 6 months was discovered in late 2008. The Employer is going to distribute all remaining accounts under the Plan in Q1 2009 and once all distributions are made, the Plan will terminate. The first two installments were in excess of the 402(g) limit (by about $2,500 each) and the remaining balance is around $2,500. Previuosly distributed installments were included in W-2 income for the applicable years. Deferrals were subject to FICA when withheld from pay.

These circumstances don't seem to fit any of the correction options. I am considering proposing that the 20% tax be paid in 2009 with an explanation of the circumstances. I am unsure how the premium interest tax would apply. Any input is appreciated.

My computer seems much slower since around the time I loaded 14.0.

It takes 6 or seven seconds to open Plan Specs. and 3 or 4 seconds to print plan specs notes. These used to be instant.

Even Excel is slow. It takes 18 seconds to open on a blank spreadsheet.

I have a 3.4 chip and 2 gigs of ram and technology support says that I have plenty of resources.

Anyone else running into this?

A 2008 Calendar year plan:

On the participant count date (01/01/2008), only the 100% owner is covered. On some date during the year (7/1), two other participants enter the plan. Is it a PBGC plan on 7/1/2008 or at 01/01/2009 when the determination date has more than the owner as a participant?

edited to remove incorrect terminology and date.

I'm wrestling with the provisions of a plan, and trying to reconcile it with the actual administration...

Plan Terms

The Plan is a Cash Balance that suspends benefits paid to retired participants upon re-hire as follows:

• Any benefit being paid ceases
  
• On subsequent termination, benefit is re-calculated using all service/comp
  
• The re-calculated benefit is offset by any prior benefits paid.
  

On its face, it seems fairly straightforward. However, I'm unsure how the case of a purchased annuity would be treated under this provision.

Question

How would a purchased annuity be treated under this plan?

On purchase, would it be treated as a full distribution of the benefit from the plan's perspective, such A) there is no ongoing plan benefit to cease and B) the offset performed on re-employment would mean a reduction for the full accrued benefit as of the original termination?

Authority

The closest thing I could find ot authority on the subject were the DOL regs at 2530.203-3(d) which limits the "suspendable amount" to "the portion of a monthly benefit payment derived from employer contributions." Does this mean we're only suspending benefits paid directly from the trust, and not from purchased annuities? Or does it simply mean that we're not allowed to suspend payments form employee contributions under a defined benefit plan?

Thanks in advance for any help/background you can provide on the subject.

I have been talking with clients regarding the new notice which is due the end of April. The new funding notice asks for carryover balance / prefunding balance. These numbers depend on the whether the plan is a BOY or EOY valuation in my opinion.

Is the following interpretation correct:

An EOY valuation has to take the beginning of the year balance and increase by the effective rate to get the EOY balance used to offset the assets. Similarly, the credit balance is adjusted to valuation date for the current liability percentage.

Similarly, the current liability at the EOY is the old 1(d)(2)(a) + 1(d)(2)(b) (from the old Schedule B) for years prior to 2008. The funding target is used by itself for the 2008 liabilities. This appears to be inconsistent (or maybe just the liability is used from the old Schedule B)??

Thanks for any and all comments.

Client has had a plan for years. For the 2008 plan year, they have informed us that a portion of the population should be treated as a QSLOB and tested separately. The ADP tests utilize the prior year testing method. What prior year percentage should be used for QSLOB? NON QSLOB? I would think of two possible scenarios: The first is to use the prior year ADP as calculated for the combined group. The second would be to use the ADP as calculated for the combined group for the NONQSLOB and 3% for the QSLOB and treat as a new plan. I think the former is the correct way to go.

There was also the idea recalcing the prior year for both groups, but I cannot find justification for that so I chose to exclude that idea.

Any thoughts would be appreciated. Also, any cite or references would be greatly appreciated.

I know employers can decide whether or not to include rollovers when determining whether the distribution is $5000 or less and therefore eligible to be forced out.

However, I was thinking that when looking at whether the distribution is more than $1000 (and therefore has to be rolled rather than paid in cash) you must always include the rollover balance.

But now that I am looking into it, I can't substantiate that.

Does the ability to include/exclude rollovers extend to both the $1000 and $5000 determination?

My wife has a 403b. I have been telling her employer for years that the plan is an ERISA plan, yet they have not filed 5500s. CPAs claim one is not necessary.

Well her employer finally decided to look into the matter and spoke to an attorney who said that they have a 403(p) plan and that they are in compliance.

I have never heard of a 403(p). I looked at the regs and I believe 403 only goes to section (d). I did find one thing on 403(p), which was health benefits for former spouses of CIA employees. I do not believe this to mean the culinary institute.

So either

1. this attorney is making this up

2. 403p is really a plan for non-profits, schools, hospitals etc and I need to brush up on my 403 plans

Please let me know which it is. Thanks in advance

Is it possible to bring in ineligibles to pass 401(a)(4)?

Have a cross-tested 401(k) plan where they have provided nonelective contributions of 10% of salary to employees and whatever it takes to get the owner to the 415 max. They want to do the same this year but fail 401(a)(4).

Would it be possible to bring in ineligibles who worked more than 1,000 hours during the plan year and give them a 10% allocation with an 11g amendment? In this case they would have 5 ineligibles, but 2 of those ineligibles worked more than 1,000 hours in 2008. If it can be done, it is those two who would allow the plan to pass 401(a)(4).

I know a broker who pays for his client's group life insurance premium. As part of his marketing campaign, if you hire him, he'll pay for $10,000 of life insurance for all of your employees. The employees name the beneficiary. Is this legal? Its actually a fairly well know company.

Just got a takeover plan (cash-balance) and the benefit formula only gives a pay credit "if the Participant remained in the Employer's employ through the last day of the Plan Year".

Can a cash-balance plan have a last day requirement ? I didn't think they could but maybe I'm missing something.

Can a custodian designated as a beneficiary pursuant to the Uniform Transfers to Minors Act roll over an eligible distribution to an inherited IRA on the minor's behalf pursuant to IRC 402(2)(11)?

Any nonspouse designated beneficiary, as defined by I.R.C. section 401(a)(9)(E), who receives an eligible distribution from a qualified retirement plan can roll over the distribution to an IRA, which will then be treated as an inherited IRA. 26 U.S.C. 402©(11). Because only “designated beneficiaries” are eligible to roll over eligible distributions, the definition of “designated beneficiary” is the crux of this issue.

Section 401(a)(9)(E) defines “designated beneficiary” as “any individual designated as a beneficiary by the employee.” Treasury Regulation §1.401(a)(9)-4, Q&A-3 elaborates on the definition of “designated beneficiary” contained in section 401(a)(9)(E). It reads:

Q-3. May a person other than an individual be considered to be a designated beneficiary for purposes of section 401(a)(9)?

A-3. No, only individuals may be designated beneficiaries for purposes of section 401(a)(9). A person that is not an individual, such as the employee's estate, may not be a designated beneficiary. If a person other than an individual is designated as a beneficiary of an employee's benefit, the employee will be treated as having no designated beneficiary for purposes of section 401(a)(9), even if there are also individuals designated as beneficiaries. However, see A-5 of this section for special rules that apply to trusts and A-2 and A-3 of Sec. 1.401(a)(9)-8 for rules that apply to separate accounts.

Only individuals and trusts (which satisfy the requirements of Treas. Reg. §1.401(a)(9)-4, Q&A-5) are “designated beneficiaries” for purposes of I.R.C. section 401(a)(9). Therefore, only individuals and trusts may roll over distributions into an inherited IRA.

Any thoughts on whether an UTMA custodianship is an individual or a trust or neither?

We have an HSA design whereby if somene elects family coverage ( we have 2 choices single or family, where employee +1 is a family)

Even if only 1 individual incurs medical expenses for the year the deductible that applies is the family deductible 2500 sungle 5K family

Can we desing our plan where there is a separate deductible to be more like our regular PPO medical plan and allow the single deductibel to be reached rather than the family in this scenario?