We service a small profit sharing plan that has a trustee directed fund, subject to an annual valuation. In otherwords, an old style balance forward profit sharing plan.

Our practice for this type of plan is to have an employer file an SS-4 to obtain a TIN for the trust. Of course, clients sometimes don't file the form (even though provided signature ready), or lose the number (and coupon book if received); resulting in problems processing withholding. In this instance, the number is unknown, there is no coupon book, and we have federal withholding of about $50 to process.

I know that the employer can serve as "agent", but my questions are how is this done? Specifically, what form is sent (945 or 941) to remit the withholding, and what TIN (employer's) is used for that filing and the 1099R? Any details on this processing would be very helpful!

Thanks.

A client wants to put in a new deferred compensation plan effective April 1, 2009. They want to include a performance-based bonus election (2009 bonus payable in 2010).

If a participant makes an election to defer this bonus, will the deferral amount need to be prorated from April 1 - Dec 31? Or can the full 2009 bonus be deferred because the election was made six-month prior to the end of the bonus performance cycle?

My understanding is that there are 4 possible statutory reasons for excluding employees from a QRP:

1. Less than 1 year of employment

2. <21 years old

3. EE covered by another QRP through collective bargaining

4. Foreign nationals working for ER ourside of US

My question has to do with part-time employment.

Lets say an EE is working full time and a participant in the QRP, and then drops to part time (<1,000 hrs/yr). May the plan then exclude the EE, allowing the EE to do a rollover on the vested QRP plan balance? Or, after meeting the 1 yr working requirement, must the now part-time EE continue to be non-excluded and eligible for salary deferral/ER contributions if the EE is otherwise eligible for plan participation?

Thanks

BruceM

Hello. I seem to have found a place where there are some highly educated people regarding issues with self-funded plans(or self-insured or whatever the preferred name is) and I really need to pick your brains.

I'll try to make a long story short. My husband is employed with UPS. We have Cigna PPO and our health benefits are administered through the Health and Welfare Trust or the Fund office as it is often called. The only summary plan description we have is from 2005 and is about our old insurance with Alliance PPO. I asked for a new book and am told there is no updated SPD. I called repeatedly to confirm benefits for gastric bypass surgery. I was told on no less than 5 occasions (kept calling to make sure) that obesity treatment was excluded unless it was medically necessary. I told them all I saw in the old SPD was the obesity treatment exclusion but was again told there is coverage if medically necessary. Forward to now. I followed all of the precertification requirements to get medical necessity determination. I am scheduled for surgery Feb. 3 and have received a precert from Cigna. I called the fund office just to verify some recent changes in deductibles and they tell me that there is a review of how the gastric bypass claims are paid and the previously paid claims may have been paid in error due to an audit finding. They said they may be "retracting" the other payments and denying one that is pending. We are talking 25-40K for this surgery. My question is can they do this? Can they arbitrarily mid contract (meaning union contract) just decide they are going to interpret the exclusion differently now? I'm praying someone has some clarity for me and better yet has something I can throw at them to help them decide to continue paying for the surgery as they have been. Any ERISA stuff or any other legal mumbo jumbo that might pertinent?

Thanks so much for any help you can lend. My surgeon is ready to go ahead, but I'm terrified to proceed with this being so up in the air.

Thanks a lot!!

We discovered a system glitch in which health & dependent care deductions for 2 employees stopped in September.

We discovered this during finalization of 1/1/2009 open enrollment

How do we fix this issue now that we are into another tax year?

Can we double-up their deductions in 2009 to play catch-up for the next 3 months?

Can we ask them to send a check for amount on an after-tax basis?

any other viable options?

Calendar year plan. 2008 AFTAP=91%. 2009 AFTAP= 72%.

Discussion bandied about is whether EA should certify 2009 AFTAP early and thus restrict lump sum payments or wait until say September 30. Further, question that has been posed what does the client want.

Perhaps, our answer lies in the attached?

Pages_from_ea_program_booklet_fall_2008.pdf

Researched and can not find a distinct answer - hoping someone could help.

According to PPA Amendment, excess deferrals are now taxed in the year of distribution. I am assuming that means only one 1099r in 2009, unlike prior years where you did the "P" and "8".

However, what do you do when there is a loss - do you still distribute the full amount and send a letter regarding the loss, or do you send the net amount as the refund with a letter explaining why the amount is less than the full excess deferral.

Thanks for any help.

What is the Effective Rate for a new plan with $0 FT?

I thought I had read a thread regarding this, but it may have been somewhere else.

Client referred from their new accountant due to potential problems with retirement plans. After speaking with client and their new accountant, discovered that client was part of controlled group. Previous accounant only had them doing contributions on the company that had the owner as the only employee. This has been going on for almost 8 years!

Need to to a VFCP submission to get plan correction done to correct for failed coverage tests and get plan in compliance. My big question here is How can we fix this? What we want to do is return the contributions (plus earnings) to client and make them pick up as taxable. Going back and giving 25% contributions to the employees is NOT an option. It would bankrupt the company. Owner only put in at most $12k a year.

Anybody come across this before?

Someone mentioned that Technical Corrections now uses the new 417 mortality tables for 415 lump sums beginning in 2009.

I read where small employers may provide a fixed 5.5% interest rate (ignoring the 105% rule??) for maximum lump sums but did not see the above. Did I misread or overlook something?

Hello Everyone,

I started a Roth with Vanguard in 2007 with $4,000. I invested in a Target Retirement Fund, and plan to retire somewhere around 2035. I contributed another $5,000. in 2008 and was planning to do the same this month with another $5,000. for 2009. I'm not sure if I should do so now, considering I've already lost approximately $3,000. with this fund. I know there are many people in my position with the way the economy is right now. I want to make a wise choice here. Should I continue with my plan of contributing $5,000. since I am in this for the long haul, or keep my money safe until the economy gets better? What do I need to consider here? Any thoughts either way? Any advice would be greatly appreciated. Thank-you, Gracey

We are preparing a Form 5500 for a plan that is a members of the controlled group. In this particular 401(k) plan there are two employees who have separated from service from this employer; however, the two employees are still actively employed by members of another related employer in the controlled group. On the 5500, do we report these two employees as "active" or "terminated"? I can see either way making sense (and I've seen it reported both ways) but I don't know which one is correct.

Any input would be greatly appreciated.

Thanks!

Does anyone know of a "list" of amendments by date required to use as a reference when determining if a terminated plan needs to be restated or to ensure the plan has all "required" amendments prior to the plan termination date?

Thank you,

Profit Sharing Plan participant is deceased. His wife was his beneficiary, and she received MRDs from the plan in 2005, 2006 and 2007. Wife died in 2008. The TPA discovered that it miscalculated MRDs in previous 3 years, and wife should have received more. The EPCRS-approved correction method is to pay out the amount of MRDs that should have been paid, plus earnings.

Question: to whom should the corrective distribution be made? To the wife's estate? To the beneficiaries of the wife's account in the plan?

Any insight into this scenario that you can share is much appreciated.

All I have are links to the code sections, but I never see the preables anywhere.

Does someone have a link that would point me to them (the preabmles)?

Many thanks in advacne.

This advisory opinion appeared on today's Benefits in the News. Which do you think would have cost more: the legal fees paid to secure this opinion or the extra 42-cent stamps to make the redundant filings on behalf of each member of the controlled group?http://www.dol.gov/ebsa/regs/aos/ao2008-08a.html

In Section 15.05 of Revenue Procedure 2005-16, the IRS permits VS practitioners, in certain circumstances, to amend a client's document on the client's behalf. In Announcement 2005-37, the IRS laid out a pretty clear procedure that VS practitioners must follow in order to do so.

Does anyone know whether the IRS has updated or changed the procedure it laid out in Announcement 2005-37?

I've heard of a number of VS practitioners who have amended their client's documents on their client's behalf in ways which ignore or only partially satisfy the procedure described in Announcement 2005-37 based, apparently, on "informal" guidance from the IRS that they (the IRS) wouldn't enforce the procedures in Announcement 2005-37 for certain amendments, e.g., 415 final regs and definition of NRA. Has anyone else heard that? If so, where and from who?

As trust and confidence breaking as 2008 has been, there are far worse years to forget. In fact, as I accentuate the positive and eliminate the negative, relatively speaking 2008 was a pretty darn good year -- both worldwide and personally.

My wishes that your 2009 be at least as good as 2008 and no worse. If these wishes are fulfilled, you will have a great year.

Happy New Year,

andy t. a.

My understanding is that when a health plan is amended to exclude a class of employees that was not previously excluded, a resulting loss of coverage is not a qualifying event. Can anyone confirm that? I guess my follow up question woiuld be is there any notice requirements for this type of amendment?

Thanks for any assistance.

Here we are 12/30/2008. In mid-November 2008 our 401(k) client distributed a notice indicating that the plan would be a safe harbor plan (with a 3% nonelective contribution) for 2009. It was not a "wait and see" notice. Now they have changed their mind and don't want the plan to be safe harbor for 2009.

What are our options? Can the plan still be amended once a non-"maybe" notice has been given out?

Some quick thoughts would be appreciated!!