Hi,

Could someone please help me with this. Our office uses Datair's Volume Submitter Documents. Through an oversight, we have not had our clients adopt the 2007 required amendments. Am I right in saying that for calendar year clients, we have until the due date of the employer's 2008 corporate return to adopt this 2007 amendment?

Any help would be greatly appreciated.

Thank you!

A client of ours was a participating employer on the parent comapny's 401(k) plan in 2008. I don't know the exact date they ceased deferring under the parent comapny's plan, maybe around August 2008.

They started their own plan effective 10/1/2008.

Because the participants had a prior plan to contribute to, this new plan is like a spin-off or continuation of the plan they were a part of prior to 10/1/2008. Is their 2008 415 limit prorated or will each participant still be tested on their full 2008 contributions - to the old plan and their new one?

I know that if a plan was a true start-up, and had a short plan year, that the limits would be prorated, but I thought it might be different under a spin-off plan.

Thanks in advance.

My company has a self funded health plan. There is no trust. Claims are paid out of general disbursements account of the company. There are more than 100 participants. Is an audit required? Even if so, does anyone really do this? Thanks.

I am not sure if Form 5500 is required for a HSA plan. If an employer wants to offer a HSA plan to their employees, they must have HDHP. If a HDHP is required, then the employer will need to file Form 5500, correct? However, if the HSA is subject to ERISA, then Form 5500 is not required? Most HSA plans have the Employer contributing to the HSA account, so would that indicate that the Employer is sponsoring the plan as well? So combine the aspect of sponsorship and contributions, I am under the impression that the HSA is subject to ERISA. Im confused

If Company A is merging with Company B and Company A has excess plan assets in a funded welfare plan, can those plan assets be used for the benefit of all new employees (those of both Company A and Company B). Unable to find guidance on point...any ideas?

I think I read somewhere that for plan years 2008 and later, both the refund and gains are taxed in the year distributed, even if distributed by 3/15.

Is this correct? I searched, but can't find where I read this (if indeed, I did read it).

Thanks.

Do you need to run the General Test under 401(a)(4) for an Age Weighted profit sharing plan?

Hello,

I have a discussion with a consultant who thinks that segment rates to use for funding are the ones at the beginning of the plan year, wheras, I think that they are the ones as of the valuation date. Hence, for an EOY valuation, it would be that month end/next month segment rates (e.g. for 12/31/2008 Val, it could be 01/01/2009).

What are you using for the segment rates for EOY valuations?

Thanks.

Under Rev Proc 2008-50, a plan that erroneously allowed an otherwise ineligible participant to enter may adopt a retroactive plan amendment. This amendment can alter the eligibility or entry date terms so the employee(s) who entered is made retroactively eligible.

This is an approved correction method in Appendix B, Section 2.07 for plans that already have favorable determination letters. However it is less than clear whether such amendment would need to then be submitted to IRS for a determination letter. Section 6.05(2)(b) seems to indicate that a submission is needed by the end of the next "on-cycle" year (whatever than means). The particular plan that I am working on is a Volume Submitter with a FDL.

Does anyone know for sure whether an IRS submission is required for such an amendment and, if so, what is the deadline? Thanks.

I know I should be better at searching, but I never seem to have much luck with the search engine.

After a hardship withdrawal, pre-tax contributions are suspended for 6 months. Do Roth contributions also need to be stopped? Can someone please direct me to some documentation on this issue? Thank you so much for your help.

2007 plan year, plan had 107 eligible participants. Used the transition rule for 2007. This year plan has 109 eligible participants. Can we use the 80-120 transition rule again or is the audit required? Im thinking the latter rather than the former.

The plan sponsor currently provides an enhanced Safe Harbor Match formula of 100% of the first 6% of compensation. They want to cut back to match only 5% instead of 6%. If I follow my guidelines set forth in Treas Reg § 1.401(k)-3(g) and change the match prospectively, do I have to do ADP/ACP testing? My new formula still satisfies the safe harbor rules. But the regs seem to suggest that any reduction would invoke ADP/ACP testing for the year.

Thanks!

Is anyone familiar with (or is there even anything currently available) a good resource that gives a detailed or step by step analysis of PPA actuarial valuations and the transition from prior methodology?

Hello,

I have a situation where a key employee (who is past NRA) did not work for the year, but also did not retire either. That employee is getting an actuarial increase to her DB benefit, but because of no compensation earned during the year, her HCE rate for the minimum gateway is being computed at 1,000,000% by our system. That is obviously wrong!! But, how should I treat her for the test with a comp of 0, considering she owns the company and is essentially getting a benefit accrual? Some NCEs are getting benefits in both plans.

Your help would be most appreciated!!

Thanks.

Company adopted amendment terminating DB plan effective 1/1/09 (a standard termination). Company will not request a favorable determination letter on the plan termination.

Company would like to prolong making distribution as long as possible - preferably until the 1st quarter of 2010.

My understanding is that the Plan administrator must file Form 500 with PBGC no later than 180 days after the proposed termination date and must provide a notice of plan benefits to the participants no later than the day its files the Form 500 with PBGC. The notice of plan benefits may include estimates of the plan benefits so long as it is explained that the amount is an estimate and the actual amount may be higher or lower.

The PBGC has a 60 day review period beginning on the date it receives the Form 500.

After this review period expires, Company has 180 days to complete the final distribution of plan assets.

Company would like to distribute plan assets on 2/15/2010 which fits withing the timeline outlined above.

The Plan's actuary has told us he must wait for interest rates to be published in January 2010 before he can compute the benefit amounts for participants.

This throws a monkeywrench into how to handle the elections forms for participants.

My questions:

1. In general, is it feasible to wait until 2/15/2010 to make a distribution under these circumstances (or is it overly ambitious)?

2. Mustn't election forms be sent to participants at least 30 days before the distribution commences?

3. May the election forms contain an estimate of plan benefits (assuming the actual amounts are not capable of being computed by the 30 day deadline)?

Which code section states that a non-qualified plan must file according to the regular calendar year (i.e. January 1 to December 31)?

A topic has caused some discussion in our TPA office and I would like any opinions or ideas.

We are a small regional independent TPA. We run daily plans on relius.

A book of our plans have default funds. If a payroll comes in and the participant is not enrolled, we routinely used the default funds.

Everything was fine until the day 1 participant came back to us and said that he had been invested in the default fund for a year, and it was not what he filled out on his enrollment form. We said we never received an enrollment form, he went to his HR Department and they faxed us a copy of it, saying it was mailed to us the prior year.

Weeks of discussion ensued...who did or didnt get or send it. What really happened? I have no idea. Maybe they did mail it. Maybe not. Maybe someone at our office lost it. Maybe it got lost in the mail. Who knows.

Point is, we wound up paying out a big chunk of money over it.

We instituted a new policy: any plan could have any default fund they wanted, the plan could have a default, no problem...but the use of that default required the instruction by the advisor or the plan sponsor.

It worked to cover us in case a default was not really a default but a lost enrollment form. But now we are growing and the number of plans we are processing is increasing. We are wondering how to manage it.

We have thought about it for days. Maybe send a monthly report to plan sponsors that says who we defaulted? But then we thought, that will require time to run, time to post to the web...about the same 5 minutes we spend contacting the plan sponsor to have them email us that it is ok to default the participant.

Anyone have thoughts on this? We know it seems a bit overkill in the CYA category. But we really dont want to write a check again. And if we cant get plans to enroll online, we are stuck with paper for a certain set of plans and there's nothing we can do about it.

Appreciate anyone else's thoughts or suggestions!

A parent company would like to become the new plan sponsor for a subsidiary. The subsidiary has a health care plan and is going out of business.

Can the parent become the new plan sponsor and avoid any legal issues related to the subsidiary's going out of business, basically continue things as they have been? (Other than collectively bargained issues--this plan is set up with a union as part of a CBA.)

But, solely from an ERISA perspective, since health care isn't a vested benefit, I suppose the subsidiary could just cancel or continue the plan altogether without any liability?

Thanks in advance!

A parent company would like to become the new plan sponsor for a subsidiary. The subsidiary has a frozen pension plan and is going out of business.

Can the parent become the new plan sponsor and avoid any 'termination' or other immediate funding issues related to the subsidiary's going out of business, basically continue things as they have been?

I think it's possible considering 'controlled group' liability. What's the authority for that?

Thanks in advance!

re: 401k loan for self-employed person.

Client is self-employed (he uses an S corp. where he is sole employee and 100% share holder). He wants to start a 401k plan and fund it by rolling over his IRA into the 401k plan. Will he be allowed to borrow up to $50,000 from the plan at 50% of his vested balance? Years ago I read that this is not allowed for self-employed people and I'm unable to find what the current rule is. Do the no cost boilerplate template plans provided by retail Broker-Dealer Custodians allow this or will client need to use a custom built plan?