FINALLY a definition of "involuntary termination"!!!

"Involuntary termination is a termination that is at the direction of the employer."

"while death of an employee can be a qualifying event for that person's beneficiaries to be eligible for COBRA coverage, death is not an involuntary termination of employment."

House Ways & Means Committee

On their website the PBGC shows the maximum guarantee benefit at age 55 as $24,300. The PBGC shows the PV of guaranteed maximum in 2009 at age 55 as $349,238. This determination ostensibly uses the 2009 applicable mortality table and segment rates of 4.78%, 5.45%, and 5.46% I agree within reasonable tolerance for ages 65 and 62 but not at age 55, where the PBGC is about $5,000 higher.

Would someone mind checking as it appears one of the PBGC published guarantee or pv is off. Or alternatively, I am off, which is my self-accepted norm these days.!

Has anyone seen anything addressed regarding the new Annual Funding Notice (aka M.F.P.) that (a) reported assets will not necessarily allign with IRS Form 5500 Schedule H or the PBGC premium filing and (b) it in many instances must be submitted before the auditor has completed its review of the related plan year?

The response to Q-4 of "good faith compliance" Field Assistance Bulletin No. 2009-01 indicates that most covered plans are not required to file this notice with the PBGC (unless the PBGC requests). Are anyone's clients planning to file anyway? If so, does anyone know the address to mail this?

I have several Plans where the match is paid monthly but the doc is annual. And of course all of my 3% SHNEC plans that pay monthly also need a true up. I had an idea that would make this easy and I wonder if anyone sees a problem.

If you have imported contribution amounts into census that overrides anything Relius would calculate. And Relius calculates nothing unless you delete the import.

I am thinking about setting up weekly payrolls and importing into the second to the last payday that month or year. Than we can do a " last pay day" contribution transaction using "year to date minus prior" to get the true up amounts.

Now my question: Does anyone see a problem with always importing into the second to the last pay day on all plans as a standard operating procedure?

If an "eligible plan" was effective January 1, 2001, submitted for GUST and received a waiver of the User Fee, is that plan eligible for another waiver if submitting again for the EGTRRA restatement. Plan is on a prototype document.

I thought the waiver was a one time waiver for the first letter submitted for. But now we are getting responses back from reviewing agents suggesting that the plan might be eligible for the waiver and do we want the $300 back.

Thanks!

I have what might be an embarrassingly simple question, but that's why I like the (relative) anonymity of these message boards.

Some welfare benefit brokers we've encountered offer things like FSA Discrimination Testing, Health Fairs, Flu Shots, FSA and COBRA administration and so on to clients. Absent some kind of billing/commission sleight of hand, is that rebating?

I'm also curious whether people run into this a lot. We see a lot of it in the LA area.

Thanks!

Are there any differences in the RMD rules (required beginning date) for persons who may have a voluntary 403(b) plan (Non-ERISA plan) with an employer vs. an ERISA plan with the same employer? An individual who is over age 70.5, is still working with a tax exempt organization but he has been informed by a consultant that he must begin taking RMDs at 70.5 regardless of still being employed. I am wondering if there could be any different treatment, say, if the individual had a portable 403(b) where the employer simply made contributions but had no further involvement with the plan. I have asked for details on the plan type but just thought I would check the forum to see if there are any references or aids someone could point me to for further understanding.

It was my understanding that box 14, "Self-Employment Earnings (loss)" was used to determine plan benefits for the partners of an LLC as earned income. I have been questioned by the CFO of a client who is questioning why "distributions" in box 19 arent also included. All of the literature that I have seen (so far) refers to box 14. However, upon looking at the instructions for box 19 I can see why this MAY be included as earned income. Does anybody have any insight on this?

Is a governmental 403(b) plan with a service based employer allocation schedule subject to non-discrimination testing? I believe governmental plans are subject to testing, but not sure about governmental 403(b). Thanks.

If a new calendar year cash balance plan is established with a 1-1-2009 effective date, can the crediting rate for the cash balance accounts (not the funding rate), use a rate in effect at the beginning of the plan year (such as a rate for the month of January), or must the plan have a 1 month (or more) lookback to get the crediting rate (such as December's rate, or August's rate)?

The plan document does not technically state this is a reason for a hardship, but.....Here's the sob story: Participant has two mortgages, they(husband and wife) were on short term disability last year, they are trying to sell their house in alabama, but it has not sold. They do not have other assets to sell and they do not want to take out a loan and get further in debt. They owe $9000 in fed taxes.

The SPD does say that the amount of your need may include any amounts necessary to pay any federal, state or local income taxes or penalties REASONABLY ANTICIPATED TO RESULT FROM THE DISTRIBUTION, being the operative words.

It would seem like if the government is due money, they could get it from a retirement plan.

Once again this year, an employer sent $15,500 to the investment company 11-2-08 and told his CPA. The CPA who doesn't do the payroll personally, never thought to tell his staff to run this through payroll. W-2 is wrong and so are medicare taxes.

This is a 5 year old plan. The employer blames me, because his wife told me about it and asked if there was anything else for her to do. I never thought of payroll and said no.

Everything will be fixed through amending. But my question is: how do other people prevent or at least diminish this occurrence?

A plan has a non-uniform retirement age of 62. This means the benefits must be tested at a retirement age of 65.

I understand the normalization calculation involves the following:

1 Take the monthly benefit at 62 and multiply by a normal form APR divided by a QJSA to get an immediate QJSA benefit (all this at AE assumptions)

2 Increase this from 62 to 65 using testing assumptions (either a pure interest if AE has no pre-retirement mortality or Dr/Dx if it does)

3 Take the result and multiply by a QJSA divided by a straight life annuity using testing assumptions

Now, what happens when the test is using different pre and post retirement interest rates for testing purposes. I believe Step 2 should use the post-retirement rate for the increase from 62 to 65.

Is this correct??

A small doctors office has a profit sharing plan. The plan defines comp as W-2 wages. The practice is an S Corporation and in calendar year 2008, the Doctor did not receive W-2 wages but received dividends, which I believe was reported on a 1099. I believe this is something he did under the advice of his book keeper( he does not have a CPA). The adoption agreement only offers the following options for compensation: W-2, Section 3401(a) wages or 415 safe harbor compensation.

I am under the impression that should he choose to make a profit sharing allocation, he gets ZERO since he claimed no W-2 wages. Nor do I think retroactively amending the plan's definition of compensation would accommodate dividend payments. Am I thinking right?

is box 14A the comp for a partner

is 14C relevant?

Our 2008 AFTAP is between 70% and 80% as of 1-1-08 and we are under benefit restrictions now. (Basically we can't pay full lump sums.) If our actuary does not tell us what our 2009 AFTAP is before April 1, I understand that it is DEEMED to be 10% less, or between 60% and 70%, until such time as he calculates it - which must happen prior to October 1. (Please correct me if I got any of this stuff wrong.)

Then what? We expect the real 2009 AFTAP to tank pretty bad. Let's assume it ends up below 60%.

On what date do the under 60% benefit restrictions kick in? On October 1, 2009? On the date the actual calculation of the 2009 AFTAP is determined? In the meantime do we just continue operating under the 2008 restrictions?

I love this stuff. Not.

Here are the facts:

Company A, which sponsors a 401(k) plan, has a wholly-owned subsidiary, Company X. Employees of Company X participate in Company A's plan.

In May 2008, Company B, which has no plan, purchases all of the stock of Company X. Immediately after closing, Company X starts a new 401(k) plan for its employees and shortly thereafter accepts a plan-to-plan transfer of the employees' accounts from Company A's plan. Assuming no employees are 5% owners of Company X, could there be any HCEs for 2008 in Company X's plan?

I understand that this is sometimes a tricky question because there is no IRS guidance on the determination of HCEs in a stock acquisition. However, it seems to me that, even though Company X changed controlled groups and the employees changed plans, because Company X was the employer of the employees both before and after the transaction, you would be required to look at the employees' compensation from Company X in 2007 (when it was in Company A's controlled group) to determine if anyone was an HCE in 2008 (when it was in Company B's controlled group) for purposes of X's plan.

Does anyone disagree?

401(k) plan for Company X - administered by Fidelity. 1/1 plan year. John is a HCE, terminates on 4/18/08, and rolls his money from his 401(k) to an IRA at Washington Mutual. The total amount of the rollover is $122,000.

On 5/1/08, the ADP test is completed for the 2007 plan year - and it fails. John is due a refund of $1500. It will be taxable in the year of distribution. Fidelity adjusts the 2008 tax record of the distribution to show a rollover of $120,500. They create another 2008 1099 for $1500, to reflect the excess contribution refund.

The plan sponsor notifies John that a portion of his distribution was ineligible to be rolled over. John contacts the Washington Mutual and they refund him $1650 (includes earnings). They create a 1099 for the distribution.

January of 2009 - John receives the two 1099's from Fidelity, and the 1099 from Washington Mutual.

Question A: What should John do? Contact Fidelity to delete the 1099 they created? Keep in mind that the 1099 from Fidelity is for $1500, while the 1099 from Washington Mutual is for $1650.

Question B: Who is to blame for the fact that John has two 1099's for the same distribution? Fidelity or Washington Mutual? Who should be creating the 1099 in this situation?

Question C: Instead of rolling the money into an IRA, say that John rolled it into another qualified plan at his new employer. Does that change anything?

Thanks for any thoughts...

So far have two plans impacted. One in particular was valued using an end of year val date and also had plan year that ended 11/30/2008. As of that date, everything was fine in the world (and the statement from the shaky investment manager had it as such). As we all know the curtain was pulled back 10 days later. Working on the PBGC and DOL notifications, but just wondering what the heck to do with the valuation for ye 11/30/2008. Know we're not supposed to reflect anything after the val date, but that seems a little too slick to me (especially since this client had probably 97% invested).

Other plan at least had losses through Lincoln Financial (Rye Investment) with amount under the $500k cap. Other one is trashed. Any advice?

Any suggestions as to what provisions of this document might raise any red flags, either as a matter of compliance with 457b and regulations, or practical aspects of plan operations?