How long must a plan be a safe harbor plan to avoid testing?

We have a client who gives their employees a phenomenal match, but are still failing their testing. When during a plan year can it be switched to a Safe Harbor Plan, if at all?

In December 2008 Employer adopts resolution to terminate DB Plan effective 1/1/09.

Employer wants to prolong the date it distributes benefits pursuant to plan termination as long as legally permitted - say to beginning of 2010.

If a participant terminates employment during 2009 (after the effective date of the plan termination), is the participant entitled to a distribution earlier than he otherwise been entitled to one due to the plan termination?

Does the cost of a bus pass to get to work qualify under the qualified transportation expense program? I would think so, but want a second opinion.

Has the IRS issued any guidance on this?

What if, as is the case for 2008, the return on assets is negative? Is the credit balances reduced!? I hope not!

I know that credit balances are to be adjusted using the actual rate of return on the plan investments, but there are a couple different ways to come up with a rate of return. Does anyone have any thoughts on a reasonable way to calculate this?

I've heard that some think some sort of weighted average rate of return would be appropriate. Has there been any sort of guidance I've missed?

2 Companies in a Controlled Group - each have their own Plan - administered by different TPA's. For the Plan the I administer, I cannot pass coverage on my own, so I must ADP/ACP Test the combined group. My ADP Test fails and corrective distributions are required to some participants of the other Plan. However, they pass coverage and they ADP/ACP Test on their own (only their group) they pass ADP and ACP. Do I still correctively distribute, to their participants, based upon my test?

Assume a Participant does not have a designated beneficiary. If he dies prior to his required beginning date his entire interest must be distributed under the 5-year rule. What if he dies after his required beginning date? Does the 5 year rule apply there as well?

I have a client that gave me the following information. John Doe is a vendor w-2 paid gross wages. The w-2 for him only had box 16 (State wages, tips, etc.) completed. No other box for wages or taxes withheld was completed. He has a US address on the w-2.

Is he considered an employee of the company or is he a vendor that is paid by a w-2?? Can a vendor be paid by w-2?

In negotiating terms of an agreement allocating responsibility for performing administrative chores (Treas Reg § 1.403(b)-3(b)(3)(ii)) between an employer that sponsors a 403b plan funded with individual contracts and one of the 403b contract vendors, an issue has arisen over the administration of RMDs (required minimum distributions). The vendor does not want to agree that it will make the RMDs, but simply that it will notify the contract holder of the RMD requirement and amount for the year (as computed by the vendor).

IRC § 403(b)(10), IRC § 401(a)(9) and Treas Reg § 1.403(b)-3(a)(6) requires each employee’s 403b contract to satisfy requirement minimum distribution requirements found in Internal Revenue Code § 401(a)(9) per rules otherwise applicable to IRAs set forth in Treas Reg § 1.408-8.

If one 403b contract that is part of the funding for the employer's 403b plan does not provide by its terms that RMDs will be made, does that poison the whole 403b plan or just the 403b contract in question?

Similarly, if in the 403b contract's language that RMD's will be made but a vendor does not, does that operational failure taint the entire 403b plan or just the 403b contract in question?

I have a one person plan with an AFTAP of less than 60%. Can the participant take a loan from the plan, or is a participant loan considered a prohibited payment under Section 436?

Although a loan is not necessarily a distribution, it could become a "deemed" distribution if in default, so it would make sense to me that it should be prohibited. However, regs and code not specific on this matter, and I thought I heard at some prior webcast that loans should be prohibited.

Any input would be appreciated.

Thanks.

We have a client with DB and PS plans. His father (already at RMD age) has accumulated a lot of money in the plan over the years, and we only yesterday found out that in 2007 and 2008 he took out a total of over $530,000 dollars and rolled it over to an IRA.

Since we were never told of the distributions, there were, of course, no 1099-Rs preparerd. At this point, both 2007 and 2008 are late. But since all three distributions were rollovers and therefore not taxable events, we felt the best course of action might be no course of action.

What are people's thoughts on not preparing 1099-Rs for IRA rollovers???

Have a new plan in 2008 which utilizes Top Paid Group. None of the employees are owners. Only one employee made over 100k while working for the Company last year. One person times 20% equals point 2 - can I round my top paid group down to zero?

OK, so the SH Match discontinuance notice is sent out 3/18/09, and there are weekly payrolls. 30 days later is 4/17/09. There is a pay-date on 4/15/09 and 4/22/09. Which pay-date is the final pay-date for the SH Match?

I vote for 4/15/09, because the 30 day period expires on 4/17/09, so it's OK to discontinue the match after tha date (i.e., to have no match on 4/22/09). So to confirm, any pay-dates after the 30 day period need not have any SH Match.

Don't mean to be disrespectful, just trying to help us smile thru the pain:

1. "Don't worry your job is secure!" or "Your job is safe."

2. "By the way, is your laptop in your office?"

3. "We're giving you a one-time opportunity to expand your resume."

4. "Wouldn't it be great to spend more time with your family?"

5. "Where do you see your career going with us in the next year?"

6. "We're not laying you off; we're just not rehiring you."

7. "Are you going to be here this Friday? Say...around 3 p.m.?"

8. "So how's your wife's job going?"

9. "We are re-sizing our global footprint."

10. "Could you close the door, please?"

What do you do when an small employer does not pay premiums and the group health plan terminates due to non-payment? Hipaa protection is removed IF the policy termed due to non-payment of premiums. There is an individual going through some major medical procedures when the policy terminates.

On what basis can an employer mandate that full-time employees must be covered under a health-care plan of some sort (e.g., provided by the employer, or on a spouse's plan, or on an individual plan)? Does the fact that the employee must pay for employer-provided coverage change the answer?

What actually is a 410(d) election? Is it simply an irrevocable written election to be covered by ERISA and to have participation, vesting, funding etc. provisions apply to the specific named plan? Is there any formal requirements as to what all has to be included (a sample)? What does the sponsor do with it once completed?

Plan Year 6/1/2008, plan has less than 15 participants, and one of them carries 80% of the liabilities. This one participant was diagnosed with terminal cancer April of last year, and passed away in August. Are we allowed to recognize events like these in the fas158 amounts as of 5/31/08?

Adopted 401(a) profit sharing plan as sole proprietor. IRS says 1. no deduction if there is a loss 2. should be reported as SEP on 1040 line 28 instead of Sch C and 3. advance contributions are subject to 10% penalty. Help! I see they are wrong on various "summary" overviews but sure could use a code section. Thanks

I'm helping a 401(k) plan that provides for matching contributions. It turns out that in a past year the plan administrator used an incorrect limitation on "compensation" (higher than the applicable 401(a)(17) amount), and therefore some employees had elective deferrals (and matching contributions) in excess of what the plan documents allow.

The plan will be refunding the improper contributions to employees, but the question has come up about what options are available for handling the matching contributions. The guidance I've found points to forfeiture, but this is in the context of elective deferral refunds related to 415 failures or ACP/ADP failures -- which, as far as I know, have not occured with this plan.

I'm assuming that forfeiture is the appropriate correction procedure, and that a refund to the employer would be a PT.

Questions:

Is forfeiture appropriate (and if so, is there a citation)?

Should there be a refund to the participant of the excess match to the extent the participant is vested?

If forfeiture is appropriate, should the forfeiture take into account gains and losses?

Assuming the excess match is properly forfeited or distributed, should the excess match nevertheless be taken into account for testing purposes?

Is there anything else I'm missing here?