Currently, this 403(b) only has Employee Deferrals. However, in the past, it did have an Employer Nonelective. Assuming that in all other respects this plan would qualify as exempt (no control by employer, etc...), does this plan need a full 5500 in 2009 given one deposit of Employer Nonelective several years ago.

My initial response is yes, it must file a full 5500. In fact, I believe that ever year including and after that year of deposit of the employer contribution needed a 5500 (limited). Does this sound right?

how does plan sponsor show they have made effort to find person;and what do they do with monies?

man dies;he had named his children as beneficiaries;but he was married(legally separated and living apart for 4 years)

who gets monies?

Owner has a pooled profit sharing plan. In mid-2008, she transfers all the money from the plan account into her personal IRA (which already had $300K in it) under the mistaken belief that she is the only participant remaining in the plan (why she believed this, I don't know). She presumably completed forms from the brokerage house, but nothing plan-specific. She moved ~$250K out which is now worth ~$200K.

Clearly, this is all wrong and needs to be fixed. But why and how?

I think the best-case scenario is to treat this as a loan that juuuuust slightly violates 72(p). So I'd have her return the amount taken to the plan (which means the company would have to find $50K) and also some reasonable rate of interest for the six months it was out of the plan. But this is a client who will need things airtight and in writing (and in excruciating detail), so I want to make sure I'm using the right methods to correct this. Are there any other alternatives? Thanks.

A new hire has COBRA coverage through his old employer, which he is maintaining until he is eligible to enroll in his new employer's health & benefits plan. The new employer has agreed to pay his COBRA premiums pending his eligibility to participate in the current employer's plans. Must the new employer treat the COBRA payments as taxable wages? Is there any authority to exclude the COBRA payments from the employee's compensation under the established exclusion rubric for employee benefits coverage?

I have a 4-tier integration for contribution, in addition to a 3% 401(k) safe harbor. I understand that the 3% safe harbor cannot be part of the 1st tier 3% for integration. The 1st, 2nd, and 3rd tiers are the standard integration.

The standard 4th tier is usually pro-rata to compensation (that is, uniform percentage). Then the entire contribution passes 401(a)(4).

But, we have a provision that the 4th tier is cross-tested (Groups A, B, etc). If we do the 4th tier with different percentages to different groups, do we do the 401(a)(4) test on the 4th tier allocation only, or the entire contribution.

We're looking at this since the demographics in some years may not allow a standard cross-test to pass 401(a)(4) at all, and the 4-tier integration will at least give some separation between the principals and the staff (given their respective compensation), even if the 4th tier is limited to a straight pro-rata (same percentage to all groups).

A plan we work with will be in critical status effective 1/1/09. One issue we have been struggling with is reductions to adjustable benefits. It seems the trustees can reduce adjustable benefits for vested terminated participants without the agreement of the bargaining parties and the reductions can apply to all vested terminated participants whose benefit commencement dates were after the date the actuary certifies that the plan is in critical status. What about active participants? It seems for participants who are active on the date the actuary certifies critical status the plan has to wait until their employers adopt a schedule or the deafault schedule is imposed before adjustable benefits can be reduced. Is this correct? What does the plan do with active participants who retire after the actuary certifies critical status but before the plan adopts a rehabilitation plan? Are these participants treated as active participants or as vested terms?

One attorney broke off and started his own firm with 2 other employees. He wants for himself and these two employees to receive credit for years at old firm. In Corbel volume submitter that is easy.

The old firm changed name but kept EIN. When I put in doc to give credit for years with old firm name, if he later hires another employee from the old/new firm, will my client have to give credit for years with the other attorney's new firm name?

Is there a way to set which forums will show up for me when I ask to see new posts in the last 24 hours?

Not sure this question belongs in this topic, but I don't know where else it might go.

Company offers voluntary buy-out to a number of employees, & gives each a choice of 2 benefit options: (i) lump sum, or (ii) smaller lump sum plus a set number of health care continuation payments. If the buy-out offer is turned down, the employee gets nothing, and then prays that he/she still has a job when the dust setttles and involuntary terminations are announced following an evaluation of the success of the buy-out program.

I assume there is no constructive receipt here, since the employee is not entitled to (i.e., has not earned the right to) any payment whatsoever, so that the higher valued benefit option will not be included in the employee's income if he/she accepts the buy-out but selects the lesser valued benefit option. Thoughts?

WE just took over a db plan and were told prior actuary "erred" by 17 years on a principal(retired) age

(the age was increased incorrectly by 17 years deflating the PVB dramatically.

It probably would have caused deficiencies in some years;and PBGC premiums are off also.

Should we go VCRP or just correct going fwd.

Plan will be terminating either as distress term or by owners waivibg benefits

ty

Plan currrently states 100% match up to 6% of comp; HCE's are limited to 7% deferrals. We have multiple people making over $245K. The max they could defer is $16,500 (assuming no catch-up); payroll is capping their match at $14,700, since the doc states cannot exceed 6% of comp & comp is limited each year. HCE's don't understand why they cannot get the full 100% match of 6% of their salary. Is there an easier way to explain this to them???

5-year Employment agreement, effective on June 30, provides for discretionary annual bonus payable within 2 months following end of an "agreement year" (i.e, after each subsequent June 30), if certain goals are met and if employee is employed on the date of payment. However, another section of the employment agreement provides that if there is a termination of service for any reason (including for cause), the employee will be entitled to a pro-rated bonus amount based on performance as of the termination date, payable within 30 days after the termination date.

This agreement doesn't even involve deferral elections, but it appears to me that it may involve 409A. Even though the first provision indicates that the payment is subject to a substantial risk of forfeiture until payment, and thus would be a short-term deferral, the second provision suggests the right to the bonus vests ratably over the agreement year (even though amount of the payment is not determinable). Assuming both employee and employer have a calendar year, some portion of the bonus will be paid later than the short-term deferral period, and therefore will be subject to 409A

If this payment is subject to 409A, is it noncompliant?

I posted this topic yesterday but for whatever reason it has disappeared.

An employer has a non-ERISA 403(b) plan. All they do is forward deferrals to various providers. We have a plan document ready, but can't get the existing providers to cooperate. They won't even respond to our attempts to contact them. I believe we can (or actually must) tell employees that we will not forward deferrals to any provider that does not agree to comply with the terms of the plan document. Can the employer seek out one provider to that agrees to comply with the plan without creating an ERISA plan? This appears to be permissible under FAB 2007-2 as long as the employees can transfer the existing contracts. Of course, we would permit the employees to locate new providers and would gladly forward deferrals as long as they agree to the terms of the document. Any input or advice would be greatly appreciated.

A new one man plan grants past service. The owner and only participant is in his 80's. He is vested in his benefit. Plan is effective 1/1/2007, so on 1/1/2007 the participant has an accrued benefit.

Since he was already past 70 1/2 on the plan's effective date, is his RBD 12/31/2007? or is it still 4/1/2008?

Thanks!

Hello out there! I'm currently looking for some ideas on software that I can buy to analyze 401K's for integrated testing and cross testing to optimize 401K benefits for owners. We want to act as our own TPA eventually.

The plan has been amended to allow for rollovers to an inherited IRA by a non-spouse per PPA. Do I now have to withhold the 20% federal tax if the beneficiary is not rolling the money over?

Can someone point me to the code section that says you are subject to a 6% excise tax for an ineligible rollover?

(Participant rolled entire 401k account before RMD was taken, and I need to show someone that there is an excise tax if the amount is not removed)

Thanks!

Sorry, I know this was discussed in Aug - Sept (http://benefitslink.com/boards/index.php?showtopic=39608&hl=excess+amounts) but I want to discuss a little further since I've now run into the same thing. Several participants have made deferrals that are under the 402(g) limit but greater then the 15% plan limit. None are eligible for CUC.

The previous discussion talked about retroactively amending the plan for the higher deferral % using VCP. But, if you do that, does it present you with an even greater compliance issue in relationship to those 300 other participants who were not given the opportunity to participate at a higher %? Under 2008-50, section 6.06, can the amount be refunded and treated as taxable in the year of distribution?

Thanks.

PAL

Can anyone name some court cases that have upheld sanctions for nonamenders who attribute the unamended status of their plan to the negligence of third party administrators? Please give tax court or other appropriate citation information.