2 Companies in a Controlled Group - each have their own Plan - administered by different TPA's. For the Plan the I administer, I cannot pass coverage on my own, so I must ADP/ACP Test the combined group. My ADP Test fails and corrective distributions are required to some participants of the other Plan. However, they pass coverage and they ADP/ACP Test on their own (only their group) they pass ADP and ACP. Do I still correctively distribute, to their participants, based upon my test?

Assume a Participant does not have a designated beneficiary. If he dies prior to his required beginning date his entire interest must be distributed under the 5-year rule. What if he dies after his required beginning date? Does the 5 year rule apply there as well?

I have a client that gave me the following information. John Doe is a vendor w-2 paid gross wages. The w-2 for him only had box 16 (State wages, tips, etc.) completed. No other box for wages or taxes withheld was completed. He has a US address on the w-2.

Is he considered an employee of the company or is he a vendor that is paid by a w-2?? Can a vendor be paid by w-2?

In negotiating terms of an agreement allocating responsibility for performing administrative chores (Treas Reg § 1.403(b)-3(b)(3)(ii)) between an employer that sponsors a 403b plan funded with individual contracts and one of the 403b contract vendors, an issue has arisen over the administration of RMDs (required minimum distributions). The vendor does not want to agree that it will make the RMDs, but simply that it will notify the contract holder of the RMD requirement and amount for the year (as computed by the vendor).

IRC § 403(b)(10), IRC § 401(a)(9) and Treas Reg § 1.403(b)-3(a)(6) requires each employee’s 403b contract to satisfy requirement minimum distribution requirements found in Internal Revenue Code § 401(a)(9) per rules otherwise applicable to IRAs set forth in Treas Reg § 1.408-8.

If one 403b contract that is part of the funding for the employer's 403b plan does not provide by its terms that RMDs will be made, does that poison the whole 403b plan or just the 403b contract in question?

Similarly, if in the 403b contract's language that RMD's will be made but a vendor does not, does that operational failure taint the entire 403b plan or just the 403b contract in question?

I have a one person plan with an AFTAP of less than 60%. Can the participant take a loan from the plan, or is a participant loan considered a prohibited payment under Section 436?

Although a loan is not necessarily a distribution, it could become a "deemed" distribution if in default, so it would make sense to me that it should be prohibited. However, regs and code not specific on this matter, and I thought I heard at some prior webcast that loans should be prohibited.

Any input would be appreciated.

Thanks.

We have a client with DB and PS plans. His father (already at RMD age) has accumulated a lot of money in the plan over the years, and we only yesterday found out that in 2007 and 2008 he took out a total of over $530,000 dollars and rolled it over to an IRA.

Since we were never told of the distributions, there were, of course, no 1099-Rs preparerd. At this point, both 2007 and 2008 are late. But since all three distributions were rollovers and therefore not taxable events, we felt the best course of action might be no course of action.

What are people's thoughts on not preparing 1099-Rs for IRA rollovers???

Have a new plan in 2008 which utilizes Top Paid Group. None of the employees are owners. Only one employee made over 100k while working for the Company last year. One person times 20% equals point 2 - can I round my top paid group down to zero?

OK, so the SH Match discontinuance notice is sent out 3/18/09, and there are weekly payrolls. 30 days later is 4/17/09. There is a pay-date on 4/15/09 and 4/22/09. Which pay-date is the final pay-date for the SH Match?

I vote for 4/15/09, because the 30 day period expires on 4/17/09, so it's OK to discontinue the match after tha date (i.e., to have no match on 4/22/09). So to confirm, any pay-dates after the 30 day period need not have any SH Match.

Don't mean to be disrespectful, just trying to help us smile thru the pain:

1. "Don't worry your job is secure!" or "Your job is safe."

2. "By the way, is your laptop in your office?"

3. "We're giving you a one-time opportunity to expand your resume."

4. "Wouldn't it be great to spend more time with your family?"

5. "Where do you see your career going with us in the next year?"

6. "We're not laying you off; we're just not rehiring you."

7. "Are you going to be here this Friday? Say...around 3 p.m.?"

8. "So how's your wife's job going?"

9. "We are re-sizing our global footprint."

10. "Could you close the door, please?"

What do you do when an small employer does not pay premiums and the group health plan terminates due to non-payment? Hipaa protection is removed IF the policy termed due to non-payment of premiums. There is an individual going through some major medical procedures when the policy terminates.

On what basis can an employer mandate that full-time employees must be covered under a health-care plan of some sort (e.g., provided by the employer, or on a spouse's plan, or on an individual plan)? Does the fact that the employee must pay for employer-provided coverage change the answer?

What actually is a 410(d) election? Is it simply an irrevocable written election to be covered by ERISA and to have participation, vesting, funding etc. provisions apply to the specific named plan? Is there any formal requirements as to what all has to be included (a sample)? What does the sponsor do with it once completed?

Plan Year 6/1/2008, plan has less than 15 participants, and one of them carries 80% of the liabilities. This one participant was diagnosed with terminal cancer April of last year, and passed away in August. Are we allowed to recognize events like these in the fas158 amounts as of 5/31/08?

Adopted 401(a) profit sharing plan as sole proprietor. IRS says 1. no deduction if there is a loss 2. should be reported as SEP on 1040 line 28 instead of Sch C and 3. advance contributions are subject to 10% penalty. Help! I see they are wrong on various "summary" overviews but sure could use a code section. Thanks

I'm helping a 401(k) plan that provides for matching contributions. It turns out that in a past year the plan administrator used an incorrect limitation on "compensation" (higher than the applicable 401(a)(17) amount), and therefore some employees had elective deferrals (and matching contributions) in excess of what the plan documents allow.

The plan will be refunding the improper contributions to employees, but the question has come up about what options are available for handling the matching contributions. The guidance I've found points to forfeiture, but this is in the context of elective deferral refunds related to 415 failures or ACP/ADP failures -- which, as far as I know, have not occured with this plan.

I'm assuming that forfeiture is the appropriate correction procedure, and that a refund to the employer would be a PT.

Questions:

Is forfeiture appropriate (and if so, is there a citation)?

Should there be a refund to the participant of the excess match to the extent the participant is vested?

If forfeiture is appropriate, should the forfeiture take into account gains and losses?

Assuming the excess match is properly forfeited or distributed, should the excess match nevertheless be taken into account for testing purposes?

Is there anything else I'm missing here?

We have a Cross-Tested 401(k) Profit Sharing Plan where most NHCE's receive prevailing wage contributions and all NHCE's receive the 3% safe harbor non-elective contribution. HCE's are excluded from receiving the 3% SHNEC. There is no profit sharing contribution for 2008. One of the HCE's (son of the owner) received 9.3% in prevailing wage contributions for the year. When running the a4 test, do the NHCE's have to receive 3.1% of pay (gateway) or just the 3% SHNEC? I think it's the 3.1% but just want to confirm.

Thanks!

This particular Plan was frozen effective 1/1/2008. The amendment to do so was adopted in May 2008 before anyone hit 1,000 hours. They would like to unfreeze the Plan effective 1/1/2008. With 412(d) they can still do this by 3/15/2009, correct? I just wanted to make sure before we went ahead and unforze the PLan for 2008. The effective date of the unfreeze would be 1/1/2008 and adoption date of the amendment would be today. THis is just a 1 person plan so no worries baout notice requirements.

Unfrozen calendar year plan.

2008 AFTAP = 80%

Plan sponsor intends to make 2008 minimum required contribution by 9/15/2008.

If 2009 AFTAP not certified by March 31, 2009, then effective April 1, 2009, 2009 AFTAP deemed to be 70% and lump sum restrictions apply. If contribution, had been accelerated, 2009 AFTAP would have been 82%.

However, 2008 accrued contribution cannot be included because will not be made by time of certification.

So, as of March 31, can you make a range certification "80 percent or higher" that anticipates the 2008 contribution and then issue a final certification after 2008 accrued contribution is made?

The firm that I work for seems to routinely allow retroactive plan termination dates for defined benefit plans (non-Title IV). For example, they are trying to terminate some now, effective 12/31/08, on the basis that there haven't yet been any 2009 benefit accruals. I say no and am becoming very unpopular.

Am I correct that there is simply no basis at all for doing a retroactive plan termination? This is one of those things that I thought everyone knew but now I'm starting to doubt myself.

Following a foreclosure sale of his residence, EE signs a "short-term" note in favor of ER that gives $3,000 to EE to use to pay first and last months rent and security deposit on a rental home. The note provides "The funds may only be used as an initial payment on the rental home. It is expected that EE will withdraw the funds from his 401(k) in order to repay the loan. Requiring payments from EE's future payroll does not appear possible because those funds will be needed to sustain his family with the daily expense."

Now, three months later, the ER has seeked assistance on the processing of the hardship withdrawal request by the EE so that he will have funds with which to repay the loan. The intervening note process is explained as having been need due to the last minute timing, and problems the EE had in trying to assemble the supporting documents to request a 401k hardship withdrawal at the time.

The plan's hardship provisions are safe harbor.

Thoughts on whether the 3 months since the loan was extended blows the possibility of this being a hardship for purposes of acquiring a principal residence?