NQDC plan says that executive receives an amount in his "account". Each year, account is "credited" with an amount determined pursuant to a formula. Service provider is fully vested -no SRF. Parties want to "amend" the formula? Is that a permissible change? If so, what is the authority? Thanks.

I have a plan that requires that participants work a minimum of 1,000 hours to receive a profit sharing contribuiton. There is one participant who did not work 1,000 hours and the trustee has indicated that she shouldn't receive a contribution. The plan is top heavy. Doesn't she have to receive a top heavy minimum contribution?

Plan is a small profit sharing plan. It is expected that termination and trust liquidation will be completed any day now. Can we use 2008 paper forms (marked as for 2009) for last 5500, or must we wait until the electronic version for 2009 is available?

Under EPCRS, there's a reduced fee if the only operational issues being corrected are failures to timely adopt interim amendments. Good-faith EGTRRA is certainly an interim amendment. What about the amendments for final 401(k)/(m) regs and 415 regs? Are all amendments, even if IRS required, considered interim if they occur between restatements on the 5- or 6-year cycles?

My mother-in-law has a Veba with a large school system in the midwest that is Ran by Met. I am a financial advisor after looking over the funds they are full of unneccesary expenses and we both share the belief that money for healthcare should not be gambled (ie in the stock market, which by the way should be criminal). We just want something that earns a little interest like a savings account would (steady as she goes). There is only one fixed option that probably hasn't paid 3% since the early 1980's when intrest rates were in the high teens. Is it possible to move these funds outside the control of Met? Or is the money locked in like 401k plan or worse?

Thanks in advance

The participant count for a calendar-year plan as of 12/31/06 was 86. On 1/1/07 and 12/31/07 the counts jumped to 105 and 121, respectively, the first time the plan ever had a count of over 100. The plan was considered a small plan due to the BOY nature of the 80-120 rule for 2007.

The participant count as of 1/1/08 remained slightly over 120 but dropped to 71 by 12/31/08 and probably will never go over 100 again.

The sudden and significant increase and decrease in the participant count was due to the fact that the employer has high turnover and it seems the TPA failed to process distributions for about a year or so, and then the new TPA cleaned everything up in 2008.

I could not find anything that would justify allowing the plan to file as a small plan for 2008 and I would like to be sure before I tell the client they have to get an audit for the plan just because the payables piled up due to the TPA's neglect - I'm sure many of you know that the audits are not cheap. Is the employer forced to file as a large plan and get an audit just for this one year? All help is greatly appreciated.

Here's the Story (of a man named Brady ....):

I'm looking for observations on a practical level, not extremely technical.

A client has a 401(k) plan with match that is administered by another firm. Presumably they have certified that the plan meets the ADP and ACP tests.

My firm then implemented a cross tested plan that includes a profit sharing plan component and a defined benefit plan component.

We are to now value the plan for its second plan year.

The client provides data that he thinks is sufficient, but really isn't ideal, unless they just can't get complete data.

For example regarding the 401(k) plan we have account balances as of end of last year but not this year and we have the amount of deferrals and matches for the current year. So in order to compute the average benefit percentage, I don't have year end account balances but can impute some estimate.

For the profit sharing plan (which our firm handles) the client did not provide year end balances, but of course we know the allocations for the first year of the plan. So again we can simply estimate year end balances for non discrimination and average benefit testing. The testing is done on an accrued to date basis.

I don't know for sure but I beleive they do not have sub accounts for the PS plan and just one account with a total value.

As practioners, I am looking for a consensus. Are most of you getting year end account balance data or imputing year end data?

While year-end balances are not imperative yet, after a couple more years the estimates will be all but worthless.

Regarding plan distributions. 2 employees terminated and are due benefits from the profit sharing plan. Let's assume all assets are combined in one account. The plan provides that the valuation date be the last day of plan year or any other date the administrator deems appropriate. These are to be the first plan distributions from the plan. The plan year end is 3/31/09. Logistically any suggestions?

That is, would you just recommend to take the value as of 3/31/09? And if not what day might you use (recommend to client), as the values change daily?

Thanks.

Can the sponsor of a VEBA pledge the assets as collateral?

We have two trusts for which this question has arisen.

One trust has language in the VEBA indicating that the assets can be pledged, but it is not a well-crafted document and does not indicate the circumstances under which the assets can be pledged.

The second trust is silent on the issue.

Does anyone have an authority to cite? That would be very helpful.

Thank you!

OK, plan failed ADP test and made refunds from all roth-K source on 3/14/2009 for calander year 2008 test failure.

Roth - Deferral to correct, $1,000

Loss on Roth Deferral, $200

Check to Participant $800

I get the 1099-R ($800 box 1, $0 box 2a, $1,000 box 5) reporting and that the participant has no taxable income on this distribution because it is 100% Roth-k with no gain. The question is can the participant claim the $200 loss on his/her 2009 tax return?

I'm pretty sure the answer is yes they can but if anyone can point me to any specific IRS guidence confirming this I'd be very appreciative.

Client filed their tax return on 4/15/09. The accountant forgot about the required contribution to the DB plan and didn't put the return on extension. Therefore, the contribution will not be taken as a deduction in 2008. Client is surprisingly not upset, however the question I have concerns taking the deduction in 2009 (for 2008 and 2009 contributions). How would this get coordinated? Thanks.

The Children's Health Insurance Program Reauthorization Act (CHIPRA) of 2009 took effect on April 1, 2009. The law provides that electing states will provide a premium assistance subsidy to qualifying children. Employers have the ability to opt out of providing this subsidy. If they do so, the subsidy goes directly from the state to the employee, and bypasses the employer.

Does anyone know what the process is for opting out? Also, if we don't opt out, how do we know who qualifies for the subsidy and how much the subsidy is? We are in Virginia. I have read that Virginia is participating in the subsidy piece. However, I have been unable to find Virginia-specific information on the subsidy process (and opt-out process).

Thanks.

Hi all! I have a small Safe Harbor non-elective 401k plan with integrated PS allocation and discretionary match provisions. The plan is top heavy.

I usually max out the owner, which results in a pretty large contribution (dollar wise, anyway) to the other employees, as there are several non-owner HCEs and high paid NHCEs.

The owner would like to exclude all non-owner HCEs and select NHCEs from PS and Match. The “select” NHCEs are not set in stone, but rather will be determined annually based on the highest-paid NHCEs that can be excluded and still pass coverage.

I’m having a hard time figuring out whether the document accommodates what he wants….or if it’s even kosher…

Is it possible to incorporate language such as “PS/Match excludes highest paid NHCEs” without defining them by name or division?

Thanks!

Pretty general question -- Can the value of stock in a phantom stock plan be based on the performance of a brother/sister corporation as well as the corporation the employee works for? Put another way, can a company provide that the benefit under a phantom stock plan be based on shares of a brother/sister corp.?

Do the "service recipeint stock" rules in 409A apply to phantom stock plans?

Thanks!

Are health insurance premiums a safe harbor hardship medical expense? such expenses are deductible under Section 213(d) of tyhe Code.

Now that the pass list is out has anyone had success in using the www.pay.gov site to complete the Form 23-EP? I can't find the form on that site and really dislike the idea of mailng a paper form and check to our friens at the IRS. Thanks.

When doing calculations for allocations for self-employed earned income for a retirement plan, does one just subtract the allocation for the employee(s) or does one also subtract the allocation for the employer?

Here's the Story (of a man named Brady ....):

I'm looking for observations on a practical level, not extremely technical.

A client has a 401(k) plan with match that is administered by another firm. Presumably they have certified that the plan meets the ADP and ACP tests.

My firm then implemented a cross tested plan that includes a profit sharing plan component and a defined benefit plan component.

We are to now value the plan for its second plan year.

The client provides data that he thinks is sufficient, but really isn't ideal, unless they just can't get complete data.

For example regarding the 401(k) plan we have account balances as of end of last year but not this year and we have the amount of deferrals and matches for the current year. So in order to compute the average benefit percentage, I don't have year end account balances but can impute some estimate.

For the profit sharing plan (which our firm handles) the client did not provide year end balances, but of course we know the allocations for the first year of the plan. So again we can simply estimate year end balances for non discrimination and average benefit testing.

I don't know for sure but I beleive they do not have sub accounts for the PS plan and just one account with a total value.

As practioners, I am looking for a consensus. Are most of you getting year end account balance data or imputing year end data?

While year-end balances are not imperative yet, after a couple more years the estimates will be all but worthless.

Regarding plan distributions. 2 employees terminated and are due benefits from the profit sharing plan. Let's assume all assets are combined in one account. The plan provides that the valuation date be the last day of plan year or any other date the administrator deems appropriate. These are to be the first plan distributions from the plan. The plan year end is 3/31/09. Logistically any suggestions?

That is, would you just recommend to take the value as of 3/31/09? And if not what day might you use (recommend to client), as the values change daily?

Thanks.

Hello,

Is there a requirement that a retirement plan SPD must have a separate "claims procedure" for any disability benefits? Isn't it enough to use general language in terms of "benefits" if the same claims procedures apply to all types of benefits? I thought the disability language for claims procedures only applied to H&W SPDs.

Thank you!

My question relates to: a participant in a DB plan who has been in pay status for 5 years and we have not been presented with a QDRO. We have calculated the amount overpaid to him, but am struggling if we recover this amount with interest or no interest.

Thanks for your consideration.

Kind of a different situation....

Client has a 2008 DB funding range with approx. 50k-250k funding range due to past service and 50% cushion on max end.

Client actually funded 150k during 2008 but CPA only wants to deduct about 100k for 2008. Since the extra 50k was entirely contributed within 2008, but 50k is not going to be deducted, is it subject to 10% penalty tax. CPA said they'll pay the 10% penalty tax if it applies.

Seems odd to pay a penalty tax on a contribution within the deduction limits but "optionally" not deducted. Does the 10% penalty apply ? I'm thinking it would apply.