We recently terminated an employee. He, his spouse & dependents participated in the health plan. I am sending out a COBRA notice. Do I just send one to the former employee, or to each of his dependents & spouse?

Thanks.

This abridged disclaimer was at the bottom of an email I recently received. The gist: You paid us to develop this information but it is ours. However, if it is wrong, it is your's.

ELECTRONIC FILE RELEASE

To whom may be concerned: As ABC cannot control the procedures used in retrieving and modifying data stored in this electronic file, you are acknowledging that ABC assumes no liability for the accuracy or completeness of the information recorded herein. The end user of the information being communicated is responsible for verifying the accuracy of the data. The electronic data contained within this electronic file shall at all times remain the sole property of ABC. These electronic files are being supplied to you for informational purposes only. Any use or reuse of the original or altered electronic media file will be at recipient's risk and full legal responsibility.

When an employer makes an elective contribution to an employee's 403(b) or 457 account, it's my understanding the dollars are FICA taxable. If an employer makes a contribution to one of these accounts for a sick or vacation payout at the end of an employee's employment, is it still subject to FICA tax? Thus making it part of their earnings that should be reported on their W2. This is for a public school.

I have a cafeteria plan client that uses a fiscal plan year. As of 1/1/09, several employees were given ownership in the S-corporation so they are no longer eligible to defer. My question is what happens to the pre-tax deferrals that these new owners did not use prior to 1/1/09? Can they continue to submit claims for reimbursement or do they lose their remaining balances? Thanks for any help.

Client pays every Thursday. This year (2009), January 1st is a Thursday. Since Client was closed on the 1st, and payroll clerk was also taking off the 2nd (Friday), clerk processed payroll for the 1st on the 30th. She also processed deferrals from that pay (this is 2009 pay and deferrals -- not on 2008 W-2 Forms) on that day. Member investment accounts show money for these 2009 deferrals being deposited on the 31st. In effect, money was deferred prior to being earned. What should be done?

We have a savings & loan with a 401(k) plan that is set up as a traditional pooled, individually directed plan with quarterly valuations.

One of the fund options is called a CD account but seems to be actually an interesting bearing cash account (as it allows on-going deposits and withdrawals).

The issue is that this account is held by the saving and loan in question. I know that there are some odd rules that pertain to banks but wasn't sure if this wouldn't still be considered a PT as the savings and loan does benefit from the investment.

Any thoughts?

Thanks,

I have a parent-sub controlled group. There are no employees at the parent level. The parent owns four companies (3 of which they own more than 80%); therefore a parent-sub cg exists with the parent and 3 companies. Two of the three subs sponsor their own 401(k) plans, the third does not. Do the employees of all three subsidiaries have to be tested together even though the parent doesn't have a 401(k)?

Hello all-

Does anyone have any recommendations for any online services that my company could sign up for (paid, free or otherwise) to use as a reference tool for researching any kind of retirement plan administration question.

Thanks.

Hello all-

Does anyone have any recommendations for any online services that my company could sign up for (paid, free or otherwise) to use as a reference tool for researching any kind of retirement plan administration question.

Thanks.

ok - here's the situation...one participant was paid out and rolled her distribution; we prepared the 1096/1099-R forms and forwarded to the client for filing. Client filed. In the meantime, I am balancing the 2008 assets and find that the client paid out another participant (also a rollover) but had not sent us the normal notification of distribution for our files.

Can I send the client another 1096/1099-R form for this 2nd payout? That seems to me to be the easiest fix.

Everything on the first 1096/1099-R reporting was accurate for the one payout, so I don't really need to file that as "corrected". I found, in the instructions, the correction for a form that was included that shouldn't have been, but this is the opposite the form was not in the original group but should have been.

Please let me know your thoughts!

1.430(f)-1(b)(3) Adjustments for investment experience. --In determining a plan's prefunding balance under paragraph (b)(1) of this section or a plan's funding standard carryover balance under paragraph (b)(2) of this section as of the first day of a plan year, the balance must be adjusted to reflect the actual rate of return on plan assets for the preceding plan year. ...

1.430(f)-1 Example 1 ... (iii) The excess of employer contributions for 2008 over the minimum required contribution for 2008, as of the valuation date, is $42,198 ($142,198 less $100,000). Accordingly, the increase in Plan P's prefunding balance as of January 1, 2009, cannot exceed $44,730 (which is the excess contribution of $42,198 adjusted for 12 months of interest at an effective interest rate of 6%).

(iv) Furthermore, if Sponsor S does not elect to apply any portion of the funding standard carryover balance toward the minimum contribution in 2008, the funding standard carryover balance as of January 1, 2009, is $25,500 (which is the funding standard carryover balance as of January 1, 2008, adjusted for investment experience at an effective interest rate of 2%).

They seem to be using the actual rated to bring the COB forward (2%), and the effective rate (6%) to bring the PB forward? What am I missing?

A calendar year plan had their 2008 AFTAP certified on 10/15/08 and was frozen as a result. In the absence of a very timely 1/1/09 valuation, will the plan's 2009 AFTAP continue to be assumed to be less than 60% until a 2009 AFTAP is certified, or, will it be the AFTAP certified at 10/15/08? Thanks.

My wife and I are both 55 or older and are able to take advantage of the additional contributions to HSAs ($900 in 2008 and $1,000 in 2009). My account was opened in 2008 and funded to the $5,800 limit -- but I still need to make the additional contribution for 2008 and contributions for 2009 (for me). I know I need to have my spouse open a separate account for any additional contributions for her.

My question is, is there any particular reason to fund her account with any funds other than the "additional" amounts or am I just as well off putting the normal contribution for "family" as well as my additional contributions in my account?

Our small company has a SIMPLE IRA plan with Oppenheimer. I would like to transfer the funds out of this high-expense/lousy fund company over to my IRA at Vanguard. I am still employed with the company and have been employed with the company for well over 2 years.

Wikipedia says:

"Unlike a 401(k), a SIMPLE IRA cannot be rolled over to a Traditional IRA without a waiting period (two years from the date the employee first participated in the plan)."

I had thought SIMPLE IRA's were like 401(k)'s in that funds could not be removed until after employment had been terminated with the company.

PPA's benefit restrictions (AFTAP <80% but more than 60%) limit the payment of a lump sum to 50% of the value or the PBGC maximum OR the participant is allowed to defer. Presumably the reason to defer would be to give the plan time to come out of restrictions so that the entire lump sum can be distributed.

In the case where a participant elects to defer all or just the restricted portion, how long can the deferral be? Benefits certainly can't be deferred past 70.5 but what about past NRD? It would seem that post NRD the plan would have to provide actuarial increases so as to avoid forfeiture. However not all plans have a provision for AE post NRA currently and instead provide a Suspension of Benefits Notice. In the case of deferral due to PPA restrictions would a Suspension of Benefits Notice provide similar relief? A SOB Notice would seem to be a catch-22 for the participant at NRD who wants a lump sum. Either they have to take the benefit as an annuity or risk forfeiture. The plan could make things even more complicated by permitting a later lump sum of the annuity in pay when and if the plan comes out of restrictions. But there is more than one way to calculate a such a lump sum equivalent and one that would be complicated, for instance, is a 50%JS where the beneficiary has died - is it the PV of what's left or is it something else?

Another deferral related question is what do you think the death benefit is if the participant dies during the period of deferral? Is it just the Pre-retirement death benefit under the plan? Is the answer different if they took the unrestricted part as a lump sum (split the BCD) - are they pre-ret or post-ret?

Has anyone thought of a way to deal with deferrals and NRD/death that is less administratively challenging while maximizing the participant’s options?

Thanks!

The PBGC issued Technical Update 08-04 that specified what interest/mortality basis to apply when determining a lump sum in a standard termination. Perhaps I'm just getting too old and confused to digest the morass of published words. So, I looked to ASPPA ASAP explanation and find that it distills the PBGC TU with the same legalese.

Is the TU simply saying determine the lump sum as if the Plan were ongoing? I.e., you don't really do anything different.

Let's do what I had hoped ASAP would have done -- use an example. Suppose we have a calendar year plan with a calendar year stability period and a two month look back. The Plan is terminated December 31, 2008 and distribution is made in December 2009.

Consequently, I interpret that we would use the segment rates for November 2008 (distribution in 2009). Thus, we would use 5.24%, 5.69%, and 5.37%. We would use the applicable mortality table for distributions with stability periods in 2009 (not 2008) as published in IRS Notice 2008-85.

Is there more to the PBGC TU than I have understood? If so, then what interest/mortality basis is it saying we should to determine lump sums in the above example?

A spouse is receiving RMDs as the beneficiary. Who gets the 1099 and what would the code be?

Dead guy - Code 4?

Dead guy - Code 7?

Wife - Code 7?

Wife - Code 4?

I've been stuck on these scenarios for years and haven't gotten a solid answer out of anyone :\

Just a lot of shrugs and guesses.

Employer-Cycle C filer executed a Form 8905. The IRS has since issued a favorable opinion letter to the plan sponsor. Must the employer now make sure it adopts the actual newly-approved prototype by February 2, 2009 (the end of the Cycle C EGTRRA RAP), or does its prior exection of Form 8905 act as a placeholder until April 30, 2010? R.P. 2007-44, section 17.04(2) suggests that actual prototype must be adopted by February 2, 2009, not by April 30, 2010.

Thanks very much.

The IRS has only provided guidance re: 5498 reporting requirements. Has anyone heard if they are coming out with any more guidance for other issues (e.g., protected benefits, withholding)?

Thanks!

I am relatively new to church plans. Why would a church 403(b) plan file a Form 5500 if they are not to do so? I did a search on freeerisa for archdiocese and found 32 that have filed form 5500s - many of which are for 403(b) plans.

Thanks.