Do you know of any way to obtain an IRS Affilliated Service Group determination with respect to a 403(b) plan?

Let's say that a DC plan, in which the only form of payment is a lump sum, states that vested account balances of $1,000 or less will be cashed out as soon

as administratively practicable following termination. There are participants in the plan whose vested account balances exceeded $1,000 when they terminated

employment but, thanks to investment losses, now have vested account balances that are $1,000 or less. Can the employer now amend the plan to state that

vested account balances of $1,000 or less at the annuity starting date (the date of distribution because only form of payment is lump sum) will be automatically

cashed out as soon as administratively practicable following the annuity starting date and apply that rule to pay out these participants whose vested account

balances exceeded the cash out threshold when they terminated, but whose vested account balances do not exceed the cash out threshold now, without this violating

the anti-cutback rules?

Here is why I THINK this is permissible:

1.411(d)(4), Q&A 2(b)(2)(v) states that a plan amendment that provides for involuntary distributions that are permitted under 411(a)(11) and 417(e) do not

violate 411(d)(6)

417(e) states that a plan can provide for cash out of amounts not in excess of cash out threshold prior to annuity starting date

So if the annuity starting date is the date that distribution is made for a lump sum only plan, then it presumably would not be a 411(d)(6) violation to amend the

plan to provide for cash out distributions as soon as administratively practicable following the annuity starting date. Do you agree or disagree? (Note that

participants are 100% vested so no forfeitures occur when participants are cashed out.)

Thanks!

A client with a safe harbor 401(k) (3% employer nonelective contribution) wants to terminate the plan. I have several questions related to this termination:

1. Can the plan be terminated mid year?

2. If so, is the nonelective contribution made through the termination date? That would seem to violate the 12 month safe harbor rule. Or is the nonelective contribution based on full year compensation? If the nonelective contribution is made through the end of the year, how do you do the termination mid year? Would it be easier to wait until year end?

3. If the termination is done during 2009, does the Plan still have to be restated for EGTRRA? Or can we escape the EGTRRA restatement if we terminate prior to April 30, 2010?

Thanks.

Have an employee that has regular wages, ST disability wages, and LT disability wages all in the same calendar year.

Plan states that comp is W-2 wages and that employer contribution will be made for the year, if the only reason that you were not employed at end of year is due to disability.

My question, is how much of the disability payments do I actually count as compensation?

I have no problem with including ST disability in income b/c it covers "temporary" absences. However, LT disability seems like it would be compensation earned after a termination of employment.

FYI. Company pays all disability premiums to insurance company so benefits are taxable. The agreement with the insurance company requires the employer to pick up the disability payments on the W-2s and pay FICA matching.

Any thoughts would be greatly appreciated! I'm talking myself into circles now.

A 401(k) plan has an auto enrollment feature starting with a 1% deferral rate for new participants, plus annual increases of 1% up to a maximum of 5% of pay.

A newly eligible participant is auto enrolled at 1% during 2007 and terminates employment later in the year. The individual is gone for all of 2008 and is returning to employment in 2009.

The document is silent and I haven’t found any guidance in the regs as far as at what deferral rate he should be set-up with upon rehire: 1% as a first year participant, 2% as a second year participant, or at 3% as if he never left?

Is it a requirement to restate a plan that terminated and paid out all participants prior to 2009? If the plan received all the amendments from the document sponsor and is in compliant, it would seem that plan restatement would not be necessary and that the sponsor would not want the added cost of restating the plan.

Thoughts?

We are changing health ins. carriers on 2/1/09. In looking at the In-Network level of benefits, under our current and proposed new plan there is an unlimited lifetime maximum. I would like to now limit that to either the same as the out of network benefit OR make both the in and out of network lifetime max something like $2m or $5m. We are a medium size company of 115 employees and we will get hammered with a single high claim. What amounts are some of you using as lifetime max?

I've been talking to a prospective client and apparently he has a profit sharing plan where no Form 5500 has ever been filed. The plan document that was forwarded to me was executed in 1996 (and has never been updated). Is there a statute of limitations for non-filing or will the TPA need to file 5500's going back to the time the plan started? Thank you.

WCJ

I have a plan where it was discovered that an employee made an election of 20%, but the company's payroll system did not deduct for all of 2008. Employee never noticed that the money was not coming out.

Does the employee have any ability to make up those contributions? Or is the only fix through the company making a QNEC equal to 50% of the missed opportunity plus match?

Also, is there any time period in which the employer's liability is capped, meaning that they are responsible for 6 months since the employee did not notice their deferrals were not being taken out?

I could not find anything that states an employee is or isn't allowed to make up contributions for their own purposes to get a deduction.(again, not sure if they even could now that 2008 has passed).

Withdrawn

Does anyone know how to caclulate the Maximum Deductible for two Partners (50/50) with salary below the compensation cap for 2008? Both have DF Max and 4% Safe Harbor. I would greatly appreciate any help you can provide. Thanks.

I want to be sure I understand this correctly. I have a participant who terminated in 2008 at age 74. This was not a 5% owner so the RBD is not until 4/1/2009. Since the RMD due 4/1/2009 was actually for 2008, the amount is still due but the 2009 distribution is not. Is that correct?

New corporation started 1/1/09 and owner is only employee. He wants to start a DB plan 1/1/09. He was previously one of three members of an LLC. He was and always has been an attorney. Can his compensation from the LLC be used for purposes of the new plan (establishing a high three year average compensation)?

A one-person plan has a plan year November 1 through October 31. Assets which weren't so wonderful have eroded more.

With regard to the credit balance, the AF TAP as of 11/1/2007 is 51%. However, I presume we can burn part of the credit balance to get this to 60%. Thus, I can certify the AF TAP at 11/1/2007 as 60% with the condition that the part of the credit balance is burned.

Am I correct that with WRERA, the client has benefited from the WRERA relief date and we can determine its AFTAP as of November 1, 2008 as 60% -- the AFTAP I will certify as of November 1, 2007 -- so all is hunky and dory?

I posted this under the wrong area the first time. For employees who are paid "on call" hours at a different rate (usually lower), how do you calculate these hours of service...or are they hours of service. The employer does not want to count these hours.

I have a Plan with a last day rule for the Employer Match. The match formula is 25% of deferrals up to 6% of compensation. I need to allocate the 2008 match now.

When I allocate the match, the plan fails the ACP test. A lot of NHCE’s were terminated in 2008 and not eligible for the match.

How should I handle the ACP test?

Should I allocate the match for 2008 according to the formula even thought the ACP test fails? And then processes the ACP refunds?

Should I only give the HCE’s the match that would pass the ACP test?

Any other suggestions?

Have a client that adopted an individual plan. He does not want to submit for the cycle as business is down. All of his documents are up to date. Under the 5yr cycle, does he have to submit for a LOD? Is there are penalty if he does not submit for a LOD?

I've reviewed some other posts along these same lines, but not exactly the same, so thought I would give this one a try.

Have a frozen DB plan and a profit sharing plan. Any TH minimum is to be provided in the DC plan.

The profit sharing plan is cross-tested and the sponsor is making contributions, but those contributions wouldn't necessarily satisfy top heavy (for example, participants who are still employed at the end of the year but who have less than 500 hours aren't getting them).

Just based on percentages, this is a top heavy group - and I believe I still have to satisfy the top heavy minimum contribution requirement in the DC plan, even though the DC plan would not be top heavy on its own?

I wasn't sure whether the fact that the DB plan was frozen has any bearing on this situation.

My client has three "cafeteria" plans currently in place: a POP plan, health FSA and dependent care reimb. plan. Each plan says it is intended to be a cafeteria plan under section 125. These plans were already in place when we took on the client. The plans need to be updated and restated. Normally, we would use our cafeteria plan format which includes a cafeteria plan document, adoption agreement and summary plan description which incorporates terms from a separate health FSA and separate dependent care reimb. plan docs. My question is in this case will it be too much trouble to move the client to our platform? I think this would entail "restating" the POP plan to a straight cafeteria plan with an adoption agreement listing the premium reimbursement, FSA and DCAP as benefits under the plan, and then restating the FSA and DCAP to our base plan documents. We also need to change the plan numbers for the FSA and DCAP because they are in a "wrap" document. My boss would prefer them to be on our plan document so I am trying to accomplish this in the easiest and cleanest way possible. Any ideas/pitfalls/things to be careful of?

Participant was automatically enrolled at 3% instead of 6% throughout most of 2008. This occurred during a transitional period. Purely an oversight.

Employer wishes to make a QNEC for 50% of the amount of the missed opportunity (6% - 3% actually deferred) + lost earnings + missed matching.

It looks as though EPCRS does not yet have anything specific to a situation like this and has solicited comments. So employer just wants to do the best thing without specific EPCRS guidance.

Are they, or I, missing anything?

Thank you