Client called wanting to know if the former company owner who has sold the business and been hired by the new owners must meet eligibility now that he receives W-2 income. Apparently they were under the mistaken belief that because the business is a partnership, and the partners receive only K-1 income, they were not eligible for the plan.

The plan has other HCEs and has failed ADP testing for several years, requiring them to take refunds. If we add the partners to the test with zero deferrals it will likely pass. The company anticipates that the folks who got those refunds won't want to repay them to the plan and they've asked what happens in that case.

But then there is the issue of QNECs for missed deferral opportunities. Are they included in the test? Are they based on the other HCEs' deferral rates before or after the testing correction?

We anticipate that the new owners will not be happy about the company paying money to the old owner because of the old owner's error. The more I think about this, the worse it gets! Any suggestions?

A client has a distribution coming from a qualified plan which includes some after-tax contributions. I'm thinking they could roll the after-tax account directly into a Roth IRA and the earnings could be rolled directly as well but would be treated as a conversion and taxable. Or they could just roll the tax-free amount to the Roth IRA and the taxable portion to a traditional IRA along with the other taxable portion of the distribution. Any thoughts on this process?

Company currently has a 401k safe harbor with a 4% non-elective. Immediate eligibility. Questions have been asked regarding whether they can amend to make deferrals immediate, but Safe Harbor non elective only to those who have 1 year of service. Can this be done? and if so would it need to be done at the time of the Safe harbor notice ?

The DOL released model funding notices for single and multiemployer plans

DOL site - model funding notices

You may have already seen this...but just in case ...http://www.americanbenefitscouncil.org/documents/mrd_requestforguidance_council020609.pdf ://http://www.americanbenefitscouncil....ncil020609.pdf ://http://www.americanbenefitscouncil....ncil020609.pdf ...

After a frustrating few hours trying to figure out why my Print Screen prt sc button on my Vista laptop keyboard would not work, I figure it may help to post what I found here:

In order for the print screen button to work, the FN button and the print screen button must be depressed at the same time. The Fn button is located beside the Windows logo ( bottom right hand corner).

You can also use the Print screen function by doing the following: Click on Start , then All Programs , Accessories, Ease of Access , On Screen keyboard , then Prt Screen.

The best- IMO- is the Snipping Tool. To find this, type Snipping Tool in the search bar. It walks you through the process.

I want to amend a plan now to change from dual entry to quarterly entry effective 10-1-08. We talked about doing this last summer so a partner could come in to the Plan when he bought into the law practice. Over the summer we talked about many things including letting in his wife who was just starting as office manager.

In August, when I heard never mind, just leave it the way it is. I left the whole Plan the way it is. He meant leave eligibility at 1 year. But go ahead and do what we discussed before and change entry dates to quarterly. This way the new partner will be in the Plan 10-1-08 instead of 1-1-09. By the way the new partner did defer $15,500 from his December bonus and made a enough money 4th quarter to want to put in a sizable discretionary non-elective.

Is there anyway I can amend now to add 10-1-08 as a plan entry date? We will be bringing in 1 HCE and 1 NHCE.

BTW the doc is VS with an adoption agreement.

I know there is a Relius specific board but not much activity there. We are a small TPA shop and thinking about changing our current Relius installed setup to Relius ASP. One thing we are contemplating to keep costs down is keeping our balance forward (bundled) plans on our current server, and pushing our daily plans to ASP.

In looking at whether to move all plans to ASP or just our daily plans, we would be interested to know from other Relius users who moved to ASP if you think moving bundled plans to the ASP model is worth doing. How much increased efficiency is there with bundled plans? What specifically would be faster? Do you think its a good idea to keep them seperate or is ASP so great that you would recommend moving all plans there?

We are discussing with Relius as well, but of course they are a little biased...

Thank you!

A client tells me they had to issue two (2) W-2s to one of their employes this year. The first W-2 reported wages. The second one reported proceeds from an AFLAC policy. I had no idea that AFLAC proceeds must be reported by an Employer. In any event, the employer wants to know whether AFLAC proceeds must be included in allocation compensation.

I've had a super-hard time researching this question on CCH. Does anyone have any insights of this?

Thanks.

A 401(k) plan contains a transfer of money purchase accounts that came over through a plan merger a few years back. The money purchase dollars are tagged with a required QJSA distribution form. Is there anyway to "terminate" the money purchase accounts so that there is no longer a QJSA requirement? We'd like to treat those accounts as true rollover accounts. Any ideas other than transfering them to a new MPP and then terminating that plan?

Does a small calendar year DB plan need to adopt a WRERA amendment if it terminated 12/31/2008?

I think WRERA only provided relief.

A calendar year company wants to adopt a new Safe Harbor 401(k) plan for the 2009 year. The notice will be considered timely if provided when participants become eligible. The plan document will be signed shortly, Safe Harbor Notices will be given and salary deferral elections will be made all effective March 1, 2009.

Does this preclude the plan from being effective 1/1/2009? In other words does a retroactive effective date automatically mean that the safe harbor notice was not timely?

If we do need to make salary deferrals effective 3/1/2009, are we required to pro-rate the 402(g) limit?

Thanks.

Effective May 1 of this year, a "creditor" must "develop and implement a written Identity Theft Prevention Program . . . designed to detect, prevent, and mitigate identity theft . . ." (16 CFR Section 681.2(d)(1).) "Creditor" is defined to include "any person who regularly extends, renews, or continues credit . . ." with respect to a "covered account", i.e. "[a]n account that a . . . creditor . . . maintains . . . that involves or is designed to permit multiple payments . . ." (15 USC Section 1691(a)(e) and 16 CFR Section 681.2(b)(3)(i)). The rules are enforceable by the FTC. So far, a qualified plan which provides loans to plan participants would seem to be covered, so I'm starting to worry about this new Identity Theft Prevention Program obligation (although the program only has to be "be appropriate to the size and complexity of the . . . creditor and the nature and scope of its activities"). (16 CFR 681.2(d)(1)).

But, a "covered account" must be an "account", which is defined as "a continuing relationship established . . . with a . . . creditor to obtain a product or service . . ." (16 CFR Section 681.2(b)(1).) So, my simple brain tells me that qualified plans are not covered because they do not extend credit "to obtain a product or service"--i.e., this rule appears to apply to retail or wholesale establishments which allow payment at a later time for providing a service or selling a product now (like a law firm, or a TPA, or an actuary, or a recordkeeper, or an accountant). (By the way, this requirement apparently does not generate any civil liability to an individual for failure to comply, just liability to the FTC.)

Has anyone addressed the applicability of this new obligation on qualified plans which provide participant loans? If so, what have you determined?

I would appreciate your help in checking my calculation of Maximum Target Normal Cost for 2008 at various ages.

Assumptions:

Valuation - segment rates: 5.31 / 5.92 / 6.43%. Pre/Post retirement mortality: None / 2008 combined static mortality table (which is irrelevant if probability of lump sum payment at NRA is 100%).

S417 - applicable rates: 4.85 / 5.02 / 5.09%. Pre/Post retirement mortality: None / 2008 applicable mortality table.

Plan’s A/E: 5%/5%. Pre/Post retirement mortality: None / GAR 94.

S415 maximum lump sum based on: 5.5% & GAR 94 mortality

NRA: 62 / 2008 Max monthly accrual: 1,541.67

Probability of lump sum payment at NRA: 100%.

Lump sum at NRA not to exceed S415 max lump sum.

Age TNC

35 41,700

40 56,900

45 84,400

50 112,500

55 149,900

TNC is rounded to nearest $100.

As the result of an administrative error, elective deferrals were taken and matching contributions made for an employee who had opted out of the plan. I assume this is not a mistake of fact and that the error must be corrected under EPCRS. The plan will refund the elective deferral amount. May the plan refund the employer matching contribution? Any help would be appreciated!

We have a client who is switching from GAAP accounting to IAS accounting. I've downloaded and read everything I can find on IAS 19 and I think I'm fairly clear on the differences between FAS 158 and IAS 19. What I'm not clear on is what to show the client. Would anyone have a sample report they would be willing to share?

I think the answer to my question is no - you can't do what I want but I thought I'd ask anyway.

Plan fails the ADP and ACP test.

The only participant due a refund is catch-up eligible and has not used any catch-up amounts prior to the ADP test for calendar year 2008.

After running the ADP test the HCE needs an excess contribution refund of $3,000, but 100% of the refund is recharacterized as catch-up and no refund is made due or made by the plan.

The plan also fails the ACP test and the HCE needs an excess aggregate contribution refund of $1,000 to correct the ACP testing failure.

However, if 1% of the NHCE, ADP is shifted from the ADP test to the ACP test, the ACP test will pass but the ADP test will now have a larger refund due. Under these facts the HCE would now need refund of exactly $5,000 due to failed ADP after shift. Because the HCE had used no catch-up prior to the test 100% can be recharaterized as catchup.

The Plan document allows for shifting, can this be done?

It seems like gaming the system to me if it can be done but there are what I consider more abusive games (see cross testing and DB/DC combos) that can be played that are perfectly allowable under the code and regs.

Getting conflicting information from sources on these topics...are these statements true?

1. An "unfunded plan", as it relates to required reporting, referes to a fully insured plan. As such, three is no requirement to distribute the full Summary Annual Report.

2. However, the Summary Plan Description is still required for compnaies with 100 or more employees. Most often, this can be found in the Certificate of Coverage, which is produced by the fully insured carrier.

Thanks for any thoughts on this...

I have an annual profit sharing plan. The termiated participant was paid 20% of his 12/31/2006 balance during 2008. 2007 there was a gain, 2008, loss. If the participant was due 2,200 as of 12/31/2007, but the participant was mistakenly paid 20% of the 12/31/2006 balance, which as an example was 2,100. How would his vested balance be calculated at 12/31/2008. I have always used ending balance plus distribution paid during year times vested percent, less amount paid. This way it shows he was overpaid, but is this particpant due the difference between the vested balances at 12/31/2006 and 12/31/2007, which would be $100 less the loss for 2008?

I hope this isn't too confusing. Has anyone ever had this happen?

read the name then the number