Hello - here's the situation: The TPA where I work erroneously did not process a distribution rollover from a 403(b) to an IRA in mid-August. The participant's financial rep called in a couple of weeks ago to report this and requested that we fund the difference in losses that resulted between mid August and late October. This difference amounted to $40,000 because of the downturn in the market.

My question is this: Do we have a right to request investment elections from the rollover institution to determine what would have happened if the participant was invested in with his/her IRA? If they were invested similarly in the IRA as they were in the 403(b), the value of their account would have gone down there as well.

I'm having a hard time finding out what our liability is in cases such as this (we've had a few others that resulted in large dollar amounts as well). Does anyone have any information on this type of correction?

Thanks in advance.

A lady has an LLC, and contracts her services to a state, and is paid by the state on a 1099. Ok so far.

This same lady finds more contractors for the state for other projects, and is paid more by the state. This lady pays the contractors that she finds, on a 1099. Income is generated to her based on the difference between what the state pays her and then what she pays the consultants.

Can this lady have a plan, and if so, what do I do with/for the contracted employees(?)? BTW, each of these contracted employees(?) are opening their own plans for themselves.

I have searched on this message board, but really am finding nothing.

Thanks, again, for your guidance.

So, how do you guys pronounce QDRO?

I've heard kew-drow. And qua-drow. Even sounded all the way out: kew-dee-arh-oh

How do you say it?

Q & A 12 of IRS Notice 2004-50 defines the Topic Title thusly:

"Family HDHP coverage is a health plan covering one eligible individfual and at least one other individual (whether or not the other individual is an eligible individual)."

Some (including Aloca Aluminum per its website) group health plan sponsors interpret this definition to mean that an eligible individual covering a non DOMA domestic partner may contribute up to $5,900 in 2009 less employer seeding plus catch-up contributions up to $1,000.

Question 1: Is this a correct interpretation of the Code and related IRS pronouncements?

Question 2: May the portion of the employer seeding earmarked for the non DOMA domestic partner be deposited into the HSA tax-free of all federal taxes?

Citations are encouraged and happy holidays.

In my past experience with leveraged ESOPs, the company will pass their loan payment through the trust and based on the plan document, at the end of the plan year, you calculate how many shares should be released based on a formula and allocate those shares.

I've got a new leveraged ESOP client and he is making the annual ESOP contribution today and then in January wants me to use some of that money to make his loan payment.

I've never allocated contributions in cash to eligibles and then subsequently used some of that money to make a loan payment and then, at the next year-end (8/31), released shares based on that payment.

Does that work or make sense? I'm more inclined to not allocate the amount of the contribution that equals the loan payment and hold it in suspense until January.

Any guidance?

Depending upon 2008 year-end mutual fund distributions, my wife and I may be under the $100K threshold which currently prohibits conversion of Traditional IRA assets to a Roth IRA.

Can I wait until 2009 (after I have the eligibility-determining information I need) to make the conversion - before filing my 2008 tax return - or must I make the conversion in 2008, possibly resulting in the need to recharacterize if our AGI exceeds $100K?

If I must convert in CY 2008, can I convert more than one Traditional IRA to different Roth IRAs and recharacterize selected conversions, to control our 2008 taxable income?

Thanks,

Michael

a company maintains two plans a db plan for the union and a dc plan for non union.

are either true?

1) the funding as % of compensation are independent of each other because one plan is collectively bargained.

or

2) the ps can still fund up to 25% of comp because the union plan is covered under pbgc.

Am I way off?

This is regarding a premium reimbursement election.

One of our clients has an employee who's insurance went way down. Unfortunately, it was not reported for a month and now more money has been sheltered from the employee's pay check than would be sheltered by the end of the year if the change had been reported on time.

So, if we change the election to a compromise amount, we still cannot account for all the extra funds paid out by the end of the year.

I know how to correct for this in our software but what should our client do? Are they within their rights to demand the extra money paid out to come back?

Thanks

It seems under PPA there are many more required computations and present value calculations.

Below I present a scenario and then give my interpretation of the methodology of the applicable present value calculations.

I am curious to determine if I am on solid footing.

Say we have a new DB plan implemented 1/1/08 for one participant.

We will assume he is to receive a lump sum at retirement age of 55 and the participant is currently 45.

For minimum funding it appears that the following PVs must be determined.

1. PVAB applying 417e would be based on 430 funding segment rates and applicable mortality

2. Plan has lump sum act equiv of 5.5% and GAR94, thus PVAB using plan rates is based on funding segment rates for deferral period and 5.5% and GAR94 at time of distribution.

3. The 415 lump sum limit would be based on (lowest annuity purchase rate below):

a) plan rates of 5.5% GAR94 stated above and same methodology stated above.

b) 415 basis of 5.5% and GAR94 (same as determined above)

c) 105% 417e basis - which would be funding segment rates for deferral period and 417e minimum present value segment rates and applicable mortality for period beginning at time of distribution

For maximum deduction purposes the following PVs are to be determined:

The plan allows for lump sum of PVAB at termination. We will assume the participant could receive his AB as a lump sum if he were to leave at end of plan year. So we have the following PVs:

1) Plan lump sum basis is a one year deferral using 1st funding segment rate and then a lump sum beginning in 1 year using 5.5% and GAR94 at time of assumed termination.

2) using 417e - it would be the same as done for minimum funding since the funding segment rates are used for entire period

3. 415 purposes.

a) plan basis and 415 basis (GAR94, 5.5%) are the same as plan lump sum basis above.

b) 105% 417e basis is based on 1 year deferral using 1st funding segment rate and then use 417e min present value segment rates beginning in one year at assumed termination.

For purposes of the above example, the lump sum is the present value of normal retirement benefit (i.e. no early retirement subsidy).

So, what do you all think?

Thanks.

5% Owner turned 70 by June2008, retired in July 2008. Wants to rollover all assets before the end of this plan year. The Prototype Document only states RMD must be done by RBD which is April 1 2009. Plan is a calendar year plan. Can owner roll 100% of his money out of the plan before he actually turns age 70 1/2 in December of this plan year without the plan doing his RMD? Annuity company that holds his plan assets says that he does not have to take RMD since he is removing his assets prior to age 70 1/2. As the TPA, I don't want to be on the hook for possible plan disqualification in not forcing the RMD.

First, the two companies are not related in one bit.

Second, Owner A is 50% partner in Company Y and Sole Owner in Company Z.

Company Y has a db plan where Owner A is at the 415 limit.

My question is, can he start a plan in Company Z where he gets up to the 415 limit in that plan too?

Participant made a 401k election for 2007, however the Employer did not withhold any 401k money for the participant, in error. The employer found the error and made the participant whole for 2007, by depositing the corrected amounts in 2008 to make the participant "whole" for 2007.

1. Does the 2007 ADP/ACP test need to be rerun for 2007 with the correct information?

2. Or is the 2007 corrected deposits applied to 2008, since the deposit was made in 2008?

3. What about the taxes? Does the employer get a tax deduction for these corrected contributions, and if so, is it for 2007

or 2008? Does the participants payroll get affected?

Anything else you think I might be missing. I know this is common, but this is the first time I've had it cross my desk.

Thanks for the help!

I'm willing to give HSA a try but have hard time getting answers from the HR Dept.

So if you're picking up your prescription medication at the pharmacy - and your deductible (if any) hasn't been satisfied:

- do I pay full price at the register

- or Pharmacy might submit claim and/or wait for EOB and apply discounts (again if any) later?

We have a calendar year (2008) non safe harbor DB plan that excludes non-key HCE's from participation. Plan document calls for compensation method to determine HCE's. Due to change in demographics, the 2008 401(a)(4) test will produce non favorable results--compared to prior years. Amending the plan in determination year, from compensation method to Top-Paid Group will shift a few HCE's to a non-HCE status benefiting our test results.

I don't see any cut-back issues if the amendment affects only the 401(a)(4) testing. Are there any underline issues that may be challenged by the IRS (i.e. such change in method needs to be done prior to determination year).

Citations to authority is greatly appreciated.

Ok, I will try to make this question as succinct as possible:

A Multiple Employer plan. One big-daddy holding company, several small employers. One employer "spun out" and opened their own plan. The employees/participants went into the new plan of their employer (ER did not change), and their balances went with them, non-vested and vested. 100% of their balances moved into the new plan. They did not become 100% vested; the part's will continue on their same original vesting schedule.

Here's my question: now another of the employers is pulling away from the big-daddy corp, and does NOT want to open its own plan. But the big-daddy corp wants those 3 participants to be able to take their entire balances, whether vested or not.

There is a great attorney involved in all these corporate splits, but he is very expensive (duh!) and my client(s) don't want me to call him. SOoooo, here I am, asking the experts in my field to HELP. I know this is confusing to me; but maybe you have had experience with this sort of transaction. How can I make these 3 part's be 100% vested? Per the expensive attorney: there is NO partial termination!

Thank you thank you THANK YOU!!!!!!!

Aspen's DB Answer Book 4th Edition Q6:43, part 2a, talks about 80% or more ownership by the same 5 or fewer persons for Brother-Sister controlled group test.

But, IRC section 1563(a)(2) says more than 50% ownership by the same 5 or fewer persons.

Is the 80% number a typo in the DB answer book or has the law changed since the book was published? I looked through the 2008 & 2009 supplement but don't see Q6:43 covered in either of the supplements.

A DB plan participant turned 70 1/2 in 2008. His required beginning date is 4/1/2009 for a RMD. What is the deadline for the required distributions? His first one obviously has to be taken on or before 4/1/2009. However, let's say he gets paid out 3/1/2009. Is his next required minimum distribution not due to be paid out until 3/1/2010, a period of no longer than 1 year later? Or does the deadline move to the end of each calendar year. So if he took a distribution 3/1/2009, another one would be due 12/31/2009? And each successive payment would be due by the end of the calendar year for which the dsitribution applies?

Thanks!!

Can a multiemployer health and welfare fund (a 501©(9) VEBA) provide third party administration services to a different health and welfare fund? It seems to me that providing such services is outside the scope of the "benefits" that can be provided under 501©(9) and possibly even under the Taft-Hartley Act. If they can be provided, I assume the receipt of any fees for such servivces would constitute UBTI. Thanks for any input.

A sole owner of a small business has a Keogh which is managed by financial services company A (plan document maintained, assets held there). She wants to roll all assets from the old Keogh into an IRA and start a new Keogh with financial services company B using their prototype plan document.

Are there any material issues associated with closing down one Keogh as of 12/31/08 and beginning a new keogh in Jan 2009?

I had thought about having the old Keogh amended/restated using the new company's prototype, but wouldn't this prevent her from moving the existing assets from the old Keogh into an IRA?

Thanks for any assistance available!!

Pre-PPA I don't think it was ever a "problem" to assume individuals working beyond NRD retired on the valuation date and therefore had no normal cost. This is fairly common in "real" retirement plans.

If I used this method to do a small plan's BOY valuation where the primary person is beyond NRD I don't think I would have a TNC for that person. Then, if they worked the year and earned the benefit, their accrual would be part of Yr2's Funding Target and therefore amortized (assuming a funding shortfall) and not immediately funded like TNC. This seems to follow the old theory that pushed you to immediate gain methods if you had no active participants accruing benefits.

Typically I would have done these types of plans using EOY valuations, but w/ PPA it seems like shifting to BOY would actually be beneficial. I could use the 150% to fund the accrual if needed, or shift it into future if the client doesn't have the cash.

Does that seem right? Comments? Would anyone argue it is "unreasonable" to use a BOY valuation?