This week it was discovered that a participant in a profit sharing plan was paid in 2008 a small distribution (approx. $300) from the sponsor's corp. account by mistake. Would filing a 1099R now showing the plan paying the benefit in 2008 be appropriate? Or would showing the corp. on the 1099R as the payer be better? Should the trust reimburse the corp. account now, and if so, how would it affect 1099R reporting?Given the small amount of the distribution, the sponsor is leaning towards the first option without making a reimbursement because he would just explain it was taken out of the corp. account in error should it ever become an issue. There will also be the issue of whether or not to report it as a distribution for 2008 on Schedule I and whether to show the participant as paid out on the 5500. Payment was made as a taxable distribution directly to the participant. What would be the best way to handle this? All help is greatly appreciated.

PPA Section 501 requires most single employer DB plans (covered by PBGC and greater than 100 participants) to distribute an annual funding notice to participants, beneficiaries and the PBGC no later than 120 days following the end of the plan year. For a 2008 calendar year plan, this would be 04/30/09. It is my understanding that this notice has been in place for multiemployer plans, but becomes effective for single employer plans for plan years beginning in 2008.

Can someone confirm that for a large DB plan that this 04/30/09 deadline still applies (i.e. there are no exceptions and no extensions)?

Can someone also confirm that model language has still not been issued by the DOL or IRS and the deadline of 04/30/09 is still in place?

Note: This is the notice that is supposed to replace the SAR for DB plans.

Thanks in advance.

We have an employee who works for two employers. It was recently determined that these employers are part of the same control group. Thus when the employee's income is aggregated, the employee is a HCE in the Plan. Adding this HCE into the Plan makes the plan fail the ADP tests for the last 3 + years (assumingly back to the date the employee started working for both employers). There are no other plan issues other than this. Does this require VCP? How far back do we have to distribute excesses, contribute QNEC etc. (or one-to-one fixes) and do we need to fix the excesses for ALL HCEs? OR can we call this an operational failure - fix the excesses for just the one individual HCE and call it a day? Any thoughts Also Pamela Purdue mentioned in an Benefits CLE that there was a "Woods" case that discussed the requirement that the plan must be "fixed" going back to the beginning of the error not just back to the 3 year statute of limitations- any info on that case?

Thanks

Our TPA uses Relius for the daily recordkeeping of our 401K plan. We would like to add some ETF funds to our plan, which can only be traded in whole shares. Our TPA is telling us that Relius has no capability to track more than one whole share fund per plan. Given that ETFs have become a popular investment option for retirement plans, I am not entirely sure the TPA is correct. Any thoughts or comments on this would be appreciated.

Plan Year is 7/1-6/30. The initial AFTAP for plan would have been 68% which triggered deemed waiver of $660,000 of $680,000 credit balance to reach 80%. Enter Technical Corrections, with the assumed rate of return, assets increased enough to cut deemed credit balance waiver in half. Is it feasible to revise AFTAP or is credit balance considered waived based on original calculation?? Thanks.

True or False:

Any qualified benefit offered through a cafeteria plan is automatically an ERISA plan because in order for contributions to the plan (in which the qualified benefits are offered) to be excluded from income under IRC Section 106, the plan must be "employer-provided." Thus, even if an employer tries to fall within the ERISA safe harbor (e.g., payroll deductions only and no endorsement, etc.), the very fact that the plan is offered through a cafeteria plan means the plan is "employer provided" and thus an ERISA plan.

If true, why? If false, why?

We came a cross a GUST prototype DB plan (small plan, 5 people) where the normal form is a Joint and 100% survivor annuity (life only if not married).

In order to do that, the document provider did not complete the Normal Form section of the adoption agreement, since Joint and Survivor was not an option there, but they wrote an extra appendix and added it to the end of the adoption agreement to define the normal form as Joint and 100%.

I think this puts the plan in the 5-year cycle. Their EIN ends in 2. They are considering plan termination.

Should they restate and submit to VCP since they are a late restater, or are they considered a 'prior adopter' and still eligible for the 6-year restatement cycle?

We thought about amending the normal form to Life only and add a fully subsidized J&100, but the other optional forms are affected too. What do you recommend?

A 412(i) plan filed a Form 8886 with the partnership's information return. Does one have to be filed with the individual's 1040 as well? The instructions say that an 8886 should be attached to "your income tax return or information return", but an IRS agent I spoke with suggested that it should be filed with both in order to avoid that nasty penalty. Doesn't make sense to me at all.

Investment company is issuing 1099R for distribution processed from 401k plan w/ solely pre tax salary deferrals in the 401k account. Account is for terminated participant, who requested rollover to his Roth IRA of the entire amount.

My question is on the 1099 code. Unless I've missed something IRS instructions appear to be somewhat unclear. I found a reference to using code G in box 7 and reporting the taxable amount in box 2a (along of course w/ the distr amount in box 1). This seems to make sense to me however the investment company that is issuing the 1099 states that they will use a code GB.

The B is for distributions out of a Roth source 401k account (isn't it?). In the fact pattern above the money in the 401k plan is all pre tax.

If the B code is used that seems to me would indicate to IRS that there isn't a taxable event (eg the B seems to indicate that the money came out of a Roth, and since it is going into Roth IRA there s/n/b any tax since the original deposited source was post-tax). This would be an incorrect taxation result w/ my fact pattern.

Am I missing something? Anyone have experience w/ this fact pattern and if so what code(s) have you used? Thank you for any help.

I believe Section VI. A. of the preamble to the 409A regulations answers this, but I wanted to see if anyone else had any insight on this. If an employee makes a deferral election for 2009 by 12/31/08, can the company decide to freeze the plan and cancel this deferral election in March 2009 without causing a 409A problem? The preamble section I mentioned seems to suggest that it can not do so. The fact that the regulations specifically mention only disability and hardship as eligible for a change an election also seems to support this answer. Any thoughts?

We have an employee who is covered under his spouse's health plan along with a dependent. Apparently the dependent is no longer eligible under the spouse's plan - we are assuming that it is due to aging out but we don't not yet have all the details. We offer several self insured plans that allow coverage until age 25 without being a student. The employee would like to enroll himself and his dependent in one of these plans now. Is this considered a special enrollment? We think the dependent should just be offered COBRA. Thanks.

How do you de-trust the benefits of a 457b plan incident to its sponsor (a hospital) going from being an agency of a local governmental unit (457b benefits must be trusteed) to being a 501c3 non-profit (457b benefits must not be trusteed)?

What changes to 5500's have people heard of being done by FREEERISA?

Looking at 2005 form the date is handwritten, the signature is deleted (a good thing).

But here is the odd part. The box for amended is unchecked and my copy and the DOL show it checked. Has anyone seen anything like this before?

Any guesses as to why?

Do pick-up contributions have to be 100% vested when made or can they be made subject to a vesting schedule? Any insight would be appreciated. Thanks.

it is a true partnership. Can a partner who chooses not to participate in the firm's plan have his own SEP?

A TPA charges a $150 loan fee to the participants account to process a loan.

Can this $150 loan fee be included in the amortization schedule and paid back into the participants account?

For example:

Loan $10,000

Loan Fee: $150

Amount deducted from Partcipants Account in total : $10,150, but the participant only receives $10,000.

Should the loan amortization schedule be for $10,000 or $10,150?

Any help is greatly appreicated.

ALEX

An employer is giving everyone $600 up front for their medical fsa. How does this look/work on the payroll and should it go into a separate account?

Thanks

This isn't necessarily humorous, but may be interesting to some (I would think) . . .

A building in downtown Detroit (yes . . . there still are some!!), on one of its sides, used to have a painting of Barry Sanders, ex of the Lions (ouch!!), when he was actively running up his record 10-consecutive 1,000+ - yard seasons at the start of a career. In the painting was an arrow, labeled "Canton", pointing away from Canada. Detroit is, and always has been, north of Canton, the home of the Football Hall of Fame. What's wrong with the Barry Sanders painting? (By the way, Virginia, Mr. Sanders was, in fact, elected to the Hall of Fame about 5 years ago.)

I have a friend who has a Self-Directed Roth IRA. He needs a valuation from a CPA or an attorney by the 15th. Lucky me, I'm the attorney. But I have no idea what this valuation is supposed to look like. The IRS is not helpful. Is there some sort of boiler-plate that I can use which will satisfy this valuation requirement? Thanks.

I'm trying to figure out how to categorize the following split dollar agreement. The employee owns the policy and pays the premiums, but assigns a portion of the death benefit to the employer and the rest will belong to the employee's beneficiary. The employee is also an owner of the company. Is this key man insurance? Is this a non-equity collateral assignment? Is it even a split dollar agreement if the employee owns the policy and pays the premiums? Please help!