A child has been making the required withdrawals from the deceased parents' IRA accounts (inherited accounts). Based on the rules for 2009 that minimum required distributions are not required - would this fall into that category? The deceased parents never had attained the age of 70.5. Any guidance is greatly appreciated.

I have a Not for profit that would like to set up a nonqualified plan for an executive who has recently terminated employment with the organization. They would like to provide him with a $3,000/month joint and 100% survivor annuity. Can this be done in the 401(9)(A) or 457(f) arena?

I have a NFP that would like to provide retirement benefits for an executive who has recently terminated (a J and 100% survivor annuity of approximately $3,000) Is this possible in a 457(f) arrangement?

A TPA is trying to use a document's 4 step excess integrated allocation formula, but is confused about why a 3% contribution is allocated twice (steps 1 and 2) instead of just once before getting to the integrated part of the formula. If the 3% non-elective safe harbor contribution satisfies top heavy, why are these participants getting 6%? I've looked at Notice 98-52. Section VIII,B says that "safe harbor non-elective contributions may not be taken into account under any plan for purposes of section 401(l) (including the umputation of permitted disparity under section 1.401(a)(4)-7)."

I think that's saying that the 3% non-elective contribution must be allocated without being integrated, which is fine. But that doesn't mean that it can't be used to satisfy the top heavy contribution requirement.

Am I interpreting that section incorrectly, or is there another section in 98-52 that I'm missing? Section VIII,C specifically says that "if a plan allocates to all eligible employees a 3-percent safe harbor nonelective contribution, the plan generally would also satisfy the top-heavy minimum contribution requirement." There's no exception mentioned for integrated plans.

To determine if a PBGC plan can use the Variable Rate Premium Cap, the PBGC says it is "the aggregate number of employees ... as under section 410(b)(1) ..., without regard to section 410(b)(3),(4), and (5)..."

If I have a plan that has 10 non union employees and 30 union (with a collective bargain agreement), I would take that to mean that I have to ignore 410(b)(3), which lets me exclude union CBA, and the double negative would mean that I have to count the CBA and will have 40 ees and I am not eligible for the Cap.

Is this correct? Has anyone heard that you can exclude Union CBA to count whether you are eligible for the cap?

I am having a problem with figuring out how to correct the following: An employer has a 403(b) Plan which has a matching benefit accrual requirement of 1000 hours of service per year. Thus in order to accrue a matching benefit for the year, the employee must have worked 1000 hours or more. The plan has basicially ignored this requirement in practice and has given all employees a match, whether or not they have worked 1000 hours in the year.

The employer needs to correct this problem under EPCRS. The plan does have a written document already.

How would this be corrected?

Thanks!

Good morning. Hope everyone had a wonderful Easter weekend.

If an employee requests a hardship because of expenses for a dependent, do you require the employee to prove that the named individual is their dependent?

If so, what documentation would you request?

Thanks,

Laura

Plan's eligibility includes part time employees. Owner's young children (ages 13 & 16) are in the plan, however hurt testing because of their young ages. All employees are in their own allocation group. Is there a problem giving the children a 0% contribution, which will then enable testing to pass? Has there been any word from the IRS on this design?

To either meet minimum funding or make FAS look better;can a substantial owner sign something reducing his accrued benefit

A Plan was frozen in 2006. The 2008 AFTAP was 80%. The EA has taken the position that he will issue no AFTAP certification until the employer requests. The employer makes no such request (ever!). As of 4/1/2009, the plan is presumed to be 70% funded and the AFTAP is deemed to be 70%. Employees are notified by 4/30/2009 that lump sums are restricted to 50% as of 4/1/2009. As of 10/1/2009, the plan is deemed to be less than 60% funded since no AFTAP certification has been issued. Employees are notified by 10/31/20090 that lump sums are not available. Thereafter, employees are notified by April 30 that the lump sum option is not available.

The employer has effectively eliminated lump sums without violating 411(d)(6) even when the plan's actual AFTAP may be greater than 80%.

Apart from employee relations problems, does anyone see any legal problems in this process?

For ERISA-governed plans, DoL FAB 2003-3 (May 19, 2003) allows plans to charge an individual plan account in a DC plan for administrative expenses pertaining solely to that account. That includes charging either the EE's or the ex-spouse's account for the costs of reviewing and processing a QDRO.

Treas Reg § 1.457-10© engrafts the QDRO rules of IRC § 414(p) into the 457b plan context.

However, I am unable to find anything that would permit a 457b plan to charge the employee or ex-spouse for reviewing and processing a QDRO. As ERISA is not at play to preempt state trust law, I'm wondering if anyone has run across this issue and concluded anything other than if the charge is reasonable, state trust law permits it to be charged against and paid out of the 457b plan trust.

Why would a church choose the 403b7 over 403b9? I know the "9" plan is for church only, but does it have any other benefits to its plan besides that? I can't seem to find anything?

The plan is new and it is an EOY plan for 12/31/08. The effective date is 1/1/08. For the 2008 premium filing – they would not have accrued a benefit as of 1/1/08 or be vested as of 1/1/08. Would there be a premium due for 1/1/08? Do I still have to pay the participant count as of 1/1/08 even though they don’t accrue a benefit until they worked 1000 hours in 2008 (around June 2008).

What is the definition for a participant in the participant count for PBGC premium?

Is it correct that mandatory e file is for plans beginning 1/1/09 or after. Thus for calendar year plans the first mandatory round of physical e file actually occurs in 2010.

I've been receiving seminar materials from companies offering CPE stating that 2008 filings are the first mandatory E FILE year e.g. for those filings that we are submitting right now in 2009. I understand we need to start gearing up now but I thought the requirement didn't actually come into play until 2010 (for a calendar plan).

Any helpful clarification would be appreciate, thank you!

Does anyone know how options are valued for reporting purposes (1099-R) when distributed from an IRA? For example, if an IRA holding options is converted to a Roth. Any citations or guidance to refer to?

If none of the NHC employees defer does that mean that none of the HC employees can defer? Are they up the creak? 2 x 0% is 0%

Background... Small plan of just HCE participants (no other employees at all). Times are tight.. may only make deferral contribution for 2009. One new employee (bookkeeper) who will be eligible. What is she doesnt defer?

Suggested options? Doing 2009 planning.

Calendar year plan has a funding deficiency in 2007, corrected in December 2008.

How is the funding shortall calculated as of 1/1/2008, by including the amount due for 2007 or not?

Similar questions about how to calculate the quarterly for 2008 and 2009 - based on target nc + amort for 2008 including deficient receivable?

The proposed reg seems to say that the deficiency is not part of the quarterly computation for the next year, but the question remains as to how the unpaid amount is handled for purposes of the determination of shortfall.

Opinions please. Thanks.

A DB plan is not subject to the 436 restrictions but is restricted from distributing lump sums to HCEs. We have the following for a participant who was age 60 in 2006:

Compensation 2006: 200,000

2007: 165,000

2008: 90,000

Employee terminates 1/1/2009. Employee is NHCE in 2009 so may have benefit distributed in a lump sum. However, if employee defers election (to say 2010) and 401(a)(4) HCE restrictions still apply, employee becomes Former HCE in 2010 and therefore cannot have benefit distributed in a lump sum.

Any disagreement?

In March of 2008, I contributed $4000 to a Roth IRA for tax year 2007.

I later realized that about $3000 was an excess contribution due to AGI within the phase out range.

I did not contribute for 2008 as AGI was too high.

Suddenly it is 2009, and I am filing taxes for 2008.

My custodian is often incompetent, so I am asking here.

What is my best course of action to correct the excess contribution?

Can I recharacterize the 2007 contribution made in March 2008 as $1000 eligible 2007 contribution,

plus a $3000 ineligible 2008 contribution, and withdraw the $3000 before filing 2008 taxes on April 15th, 2009?

Do I need to file Form 5329?

FWIW I am not yet 59 1/2, and the value of the IRA has declined steadily since 2007.

Thanks for your kind help!

A secondary qualifying event can result in an extension of the coverage period. Does a secondary event have any effect on coverage itself? For example, a terminated employee elects COBRA coverage for his spouse and dependents. During the COBRA coverage period one of the dependents ceases to be a full time student or becomes ineligible under the plan's provisions due to age. Does that dependent's coverage continue or does that dependent have to elect new COBRA coverage? It seems that once a qualified beneficiary has elected COBRA coverage a secondary event should not negate that election.