A participant enters the dual eligibility for profit sharing mid-year. The participant was eligible for 401(k) and SHNE for the entire plan year. The document is written so that the participant is eligible for a profit sharing contribution based on his compensation from the dual entry date to the end of the plan year. The participants full year comp is $30K and his eligible comp based on the dual entry date is $5k. Which compensation does the gateway min need to be based on?

Thanks!

I have an insurance client who is now self-employed and therefore does not report payroll taxes to the IRS. However, this client has a former employee who are currently covered under Colorada state continuation (employer never met COBRA employee requirements) - the former employee lost coverage 1/1/2009 when involuntarily terminated due to the employer (insurance client) closing their office. The employer/client still functions as a business, so the insurance policy is still in place (thus allowing the former employee to continue coverage).

Since the employer/client does not have payroll taxes, does anyone know how would this employer be reimbursed for their 65% of the premium for the terminated employee? I tried the IRS information line, but this situation is not addressed.

Thanks.

Qualified plan, calendar year profit sharing plan. Intends to contribute their profit sharing for 12/31/2008 (by April 15, 2009). Intends to make no further contributions.

Has not yet signed a resolution to terminate (nor have they adopted all amendments that would be required to update the plan as of a current plan termination date).

Let's assume they adopt a resolution to terminate now (say the plan termination date gets set as April 15, 2009) and they also adopt an amendment to update the plan for all of the recent laws/regulations (HEART, WRERA, etc). Also assume the contribution made on April 15, 2009 is the last contribution, it is allocated in 2008 and no contributions are made or allocated in 2009.

Can they now adopt a SIMPLE for 2009?

When there is an invalid rollover contribution and the amount grew before the refund, the reg is clear that the earnings must be included in the refund. But what if there is a loss?

Say a participant rolled over an mount from a 457 plan to a 401(k) whose plan document prohibited rollovers from 457 plans. The participant rolled over $7,000, and the TPA made a mistake of accepting it. The mistake was discovered a few months later, and now there is only $4,000 of the money left. Should the participant get $7,000 or $4,000?

We have a 401K plan that the employee deferrals have been sent late several times during the year. All the contributions have been sent in, they were just late. I have entered all the information for the late contributions in the VFCP online calculator and found the Total Lost Earnings to be $380.74. From what I understand we need to send the $380.74 to the plan and file a 5330 to pay the 15% excise tax and indicate on the 5500 that late contributions were made.

My first question is on calculating the 15% excise tax do I include the amount of each deferral contribution that was sent late during the year? For example, if there were 3 contributions that were sent late and each was $5000 would the excise tax be (5,000 + 5,000 + 5,000 + 380.74) x 15%?

My last question is what is the cost for applying under the VFCP? The plan has less than 20 participants. Is the cost the same as the VCP chart (20 or fewer = $750)?

Any help will be greatly appreciated!

A client who participates ( a doctor) in a company that payes him W2 wages of about $100,000 and he also has an S corp that had flow thru income of about $100,000. If he had a solo K set up, would we be able to consider both his income and profits for deferral and/or PSP contribution? Thank you.

A client who participates ( a doctor) in a company that payes him W2 wages of about $100,000 and he also owns an S corp that had flow thru income of about $100,000. If he had a solo K set up, would we be able to consider both his income and profits for deferral and/or PSP contribution? Thank you.

I have a 401k plan that is removing a poorly performing fund from their investment line-up. They wish to transfer all existing balances in this fund and move the investment directions to a fund which currently exists in the plan's investment line-up.

1) Other than fiduciary responsibilty, is there a required notification to be made and if so, what is the timing for the notice prior to the fund change?

Thank you!

Multiple ER plan - 1/1 plan year - 2 employers. In 2007, each employer was tested separately. On 4/1/08, Employer A becomes 100% owned by Employer B - and they are no longer unrelated employers.

How should testing be done for the 2008 plan year? I can see 2 options:

1. Test each employer separately from 1/1/08 to 3/31/08. Then test them together from 4/1/08 to 12/31/08.

2. Test them together from 1/1/08 to 12/31/08 - as they were a controlled group as of the last day of the plan year.

Any thoughts?

Can a 3% safe harbor plan have a 1 year wait on allowing employees to enter the plan for purposes of making elective deferrals and a 2 year wait for purposes of receiving employer contributions (profit-sharing and safe harbor)?

Is there any responsibility or obligation for an Administrator or a Plan to report or take action when a participant of an HRA plan is buying what appears to be an excessive amount of over-the-counter medicines under the HRA plan? The retailer uses the Inventory Information Approval Substantiation with the SKUs so the expenses are automatically substantiated. The over-the-counter medications are normal cold medications that are qualifying expenses and permitted under the plan.

Any thoughts?

I have received an email inquiring about a new regulation that Obama has signed into law that allows for distributions from 403(b) plans. I have not heard any information about new 403(b) regs and I cannot find anything on the internet that is recent enough to have been signed by Obama.

We have ERISA 403(b) clients who want to get out of AIG/Valic, with its current downward spiral. What are your clients doing to transfer? Our clients don't want to put new money into AIG or AIG annuity products (both group and individual annuities), and they want to do something QUICKLY.

What are you advising? Terminating the 403(b) and simply starting a 401(k)? Amending plan doc to allow a trust, and client says up new trust to collect new deferral money -- and then transferring to whatever new provider (whether for a new 403(b) provider or newly adopted 401(k) plan/provider).

What can be swiftly done to protect old/new money? Satisfy fiduciary obligations (after all, because these are products, backed by a company that may or may not be around next year), what's an ERISA 403(b) fiduciary to do?

Running an end of year valuation (12/31/2008). AFTAP for 2008 plan year using 2007 RPA current liability (12/31/2007) is about 124%.

There is a Carryover Balance as of 12/31/2007 of about $88,000. The 2008 minimum contribution is too high for the client (big surprise). Can I burn some of the Carryover Balance to offset the minimum contribution? Or, did an election have to be made by the end of 2008?

A pretty big mistake caused a payroll clerk to "withhold" and contribute nearly 4-8 pay periods worth of deferrals for a participant in a single pay period. Deferral agreement indicates somewhere in the area of 25% per pay period. So, this participant didn't even receive a paycheck for that period, and now they are reducing the next few paychecks to make up for the amount they withheld over the period compensation.

Not only that, this withholding took place about 6 weeks (or 20%) ago. The issue was brought to the attention of the payroll administrator promptly, who said there was nothing she could do.

It is my understanding that the company who made the error (sponsor) is liable for the losses of the deferrals made in error; they are saying otherwise. My next step is to get the DOL (as the sponsor is not being very easy to work with) involved but I would like some feedback in case anyone has handled this situation before.

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!