I have a restaurant client and need to clarify the 100 employee rule.

From the publications and FAQs I have read on the IRS website, it was my understanding that the 100 employee count was determined by looking at any employee that had $5,000 the preceding plan year. From posts I am reading, however, I have seen some that have implied the $5,000 does not affect the 100 employee detemination. Can anyone confirm which way it is?

Also, on the exclusive plan rule. The client was part of a multiple employer plan 401(k) but will be sold effective 2/1/09. With the sale, they will set up a new entity and new EIN. Can they then set up a SIMPLE IRA under this new entity even though they had deferrals and match under the prior plan and entity?

Thanks for any clarification.

Private company ESOP was funded with a section 133 loan. Section 133 required pass thru voting on all matters. Loan has been repaid in full (i.e., no 133 exclusion is now being claimed). Can plan now eliminate pass thru voting on all matters and limit it to only those matters described in 409(e)(3) (merger, etc.)?

hi everyone -

a client with fairly shoddy record-keeping provided us with documents to file a determination letter request on their behalf. While they have had 5 amendments since their last letter, no signed copies of these documents exist. What is the best way to submit these documents? Suggestions on explaining to the IRS what happened or giving them some proof that the amendments were actually adopted many years ago?

Thanks for your help! Any ideas would be greatly appreciated!

On December 23, 2008, President Bush signed into law the "Workers, Retiree, and Employer Recovery Act of 2008." One major provision of the law allows for the suspension of required minimum distributions (RMDs) from tax-deferred retirement accounts for 2009. Plan participants who are financially able to forgo their distributions may chose to suspend the 2009 RMDs so that they don't have to sell investments that may have fallen substantially in value.

Does the Workers, Retiree, and Employer Recovery Act of 2008 apply to non governmental 457 (b) Plans? Meaning that plan participants' can suspend their required minimum distributions (RMDs) for 2009?

I have a question regarding the discrimination testing, High Comp Employees and a flex plan. We have a company that all the employees would quailify as highly comp. Can you still have a flex plan if all the employees are HCE's? I would think so since it is not discriminating against any one since they are all HCE but I could not find anything on it.

Thanks

When performing an ADP test for a plan with 9.30.08 year end, can participants exceed $15,500 in deferrals? Ex. a participant who is not over 50 made deferrals of $16,000 for the plan year but does not exceed the 402(g) limit for the 2007 or 2008 calendar years.

Is there gasb 45 software out there for groups who don't qualify for the alternative method?

I see the 2008 Form 5500 instructions include something called Voluntary Alternative Reporting Option for Certain Plans with Fewer Than 25 Participants.

Am I missing something, or is this much ado about nothing? I haven't analyzed the differences in detail, but it sure looks like it doesn't reduce the reporting by much.

May QNEC's be included in determining if 60% of account balances are for the benefit of key employees?

Facts: Determination Date is 12/31 (last day of plan year). As of the 12/31/07 determination date, the plan is determined to be top heavy. However, on 6/15/08, QNEC's are made to correct ADP failure for 2007. The addition of the QNEC's results in 57% of account balances for the benefit of key employees.

Question-1: Is the Plan top heavy for 2008 (based on the determination date of 12/31/07)?

Question-2: If the answer to Q-1 is no, does it make a difference if the QNEC's were made within 2-1/2 months of the 2007 year end?

Thanks for any thoughts on this.

I have a client who's certain he heard that the 2008 3% safe harbor non elective contribution does not need to be made in an effort to provide relief to employers. All my research indicates that it must be made and there's no relief available. He's wants me to prove my position. Any help would be appreciated. Thanx.

As briefly as I can, I have left a large bank that had HDHP and a HSA. The new company has terrible family coverage, but excellent individual coverage. Therefore, I am covered by the company insurance (Blue Cross Blue Shield) and have money take out of my check and put into a company sponsored FSA.

My wife and kids are under a privately purchased HDHP plan. My question is this. The HSA is still open, but has a zero balance, but is in my name.

Can I open an HSA in her name (since she has the HDHP) and contribute to it (she doesn't work) and keep my FSA open and use it?

Even more important, can I transfer any remaining balance in the FSA at year end to the HSA and simply not do the FSA next year.

My issue is that I think I will have a balance in the FSA and like the employer deducted contribution route better than contributing with after tax dollars.

Any help would be greatly appreciated

I have an employer with a MPP with a 1 year eligibility and a 401(k) with a 6 month eligibility. What is the easiest way to get all of the employees and all of their census and payroll data into both plans every year.

In the past, I have imported the payroll and census info into the 401(k) and then used a DER to export from one Plan and import it into another. Is there an easier way yet?

Can anyone provide a link to IRS, DOL, PBGC email addresses? I'm attempting to find the email address of Nancy Martin at the PBGC.

Thank you,

andy t. a.

We currently use the Relius VRU for our DV platform. Relius won't sell you a VRU box. They direct you to a vendor that sells the sound card that is compatible with their system. There's only ONE vendor and they no longer sell the card.

Does anyone use the VRU and if so, do you have a backup for it? Do you get your sound card from someone other than the only Relius "preferred" vendor?

Relius had the gall to tell us they no longer support it since people are phasing it out and most TPA's don't use it.

It seems that in the 401(k) market, the terms "co-fiduciary" and "fiduciary" are thrown around quite frequently. Whether it is a broker/dealer or another entiity purporting to assume a co-fiduciary or fiduciary role for a plan sponsor, it seems to be a growing trend. The most common co-fiduciary "plan" is the one where an insurance company agrees to indemnify a plan sponsor for damages that occur from a breach of fiduciary duties based on the investment options provided. However, it appears that there are many caveats by which this can blow up in the face of an unsuspecting plan sponsor (e.g. only applies to a select number of proprietary funds as well as other exceptions). Does the term "co-fiduciary" even mean anything in the 401(k) market when an agent or representative uses the term? Does it have to be in writing? Or can ERISA § 3(21)(A)-(B) (29 U.S.C. § 1002(21)(A)-(B)) be interpreted to include a broker/dealer or entity to have assumed a fiduciary or co-fiduciary role by their actions alone as long as the actions fall within the parameters established under subsection (A) and are not precluded by subsection (B)?

As far as I can see, it seems like for an entitity to assume a fiduciary or co-fiduciary role, that it must be in writing per ERISA § 3(38)© (29 U.S.C. § 1002(38)©). Section (38)(B) also lists Registered Investment Advisers, Banks, and Insurance Companies as the entities capable of becoming an "Investment Manager." I would think that plan sponsors should be wary of hearing an agent or representative using either the "fiduciary" or "co-fiduciary" term and promptly ask whether this claim is in writing and what exactly the entity is suggesting it is assuming that responsibility for. Since ERISA 405 (29 U.S.C. § 1105) details the liability for breach of fiduciary duties by a co-fiduciary and that personal liability may ensue via ERISA § 409(a) (29 U.S.C. § 1109(a)), I would think it would be prudent for a plan sponsor to make such inquiries.

So am I on track with my thought process on the concepts outlined above? Does any "co-fiduciary" claim need to be in writing and absent such writing, it would amount to just puffery? Anyhow, these "terms of art" seem to be frequently mentioned, but are not often fulfilled within the 401(k) market and I was hoping to get some feedback on the topic. Thanks!

Plan was amended to be safe harbor effective 1-1-09. Plan had reallocated forfeitures but was changed to reduce when amended for safe harbor. Only employer contributions made are those used to satisfy safe harbor.

The Plan does have some forfeitures (on old non-safe harbor $) that need reallocating for the plan year ending 12-31-08. The plan otherwise would have been top heavy for the 2009 plan year based on the 12-31-08 determination date.

Question - since the plan is safe harbor for 2009 will it be exempt from top heavy for the 2009 plan year if forfeitures are reallocated in 2009 for the 12-31-08 plan year end? It would seem to be the same as if a PS contribution were made early 2009 for the 2008 plan year - the plan would be exempt from t-h in that situation, wouldn't it.

It's the plan year for which they are allocated and not in which they are allocated that would affect top heavy exemption?

Client has a Safe Harbor 3% non-elective (not a "maybe") provision. Due to the economy, they want to cease all Employer contributions. Could they:

1. Terminate the Plan (Plan A) during 2009 and contribute only up to the termination date?

2. Adopt a new 401(k) Plan (Plan B) without Safe Harbor provisions?

3. Instead of distributing from Plan A, there will be a Plan to Plan transfer from Plan A to Plan B. Can this be accomplished?

4. Are they violating any participant rights by not allowing distributions from the terminated plan?

5. Would Plan A be subject to an ADP Test for 2009? If so, would aggregation with Plan B be required?

this is a first year CB Plan... I'm allocating 90k to the hypothetical accounts. Pre-ppa, you could match the 412 contribution with the hypothetical allocation... Now I with ppa, i'm coming up with a contribution of 66k.

Anyone know around this problem? am I doing something wrong?

Has anybody handled as situation like this:

An employee elected to defer $500 from their paycheck. The company deducted $1000 instead and contributed it to the plan. Eventually the mistake was discovered. The excess amount ($500) should be returned to the employee, with earnings. This technically is not an "excess deferral" but is it treated like one? Would the correction method be the excess deferral correction method from EPCRS?

Additionally, what if, instead of earnings on the amount, there were losses. What amount is distributed to the employee, the $500, or the $300 its now worth b/c of the losses the plan took?

Thanks in advance

CL

I have a plan which gave timely notices that they would contribute the 3% NEC for Safe harbor for 2009. The HCEs have decided that they want to be excluded from getting the safe harbor contribution in 2009. The NHCEs will still be getting this. Can I amend the plan and exclude the HCEs for 2009 or do they have to get the contribution this year and wait until next year (2010) to be excluded? I know we cannot stop the safe harbor contributions, but was wondering about this since it does not discriminate against NHCE.