Can you give more than than a 3% Safe Harbor Non Elective Contribution and still be considered a Safe Harbor Plan?

What is the Non Elective % Maximum?

Thank you, ALEX

Is there any if the plan was previously frozen (post-9/05) and doesn't pay lump sums? Does the deemed election of 1.436-1(a)(5) still apply?

Conversely, is there any advantage to maintaining the COB/PFB rather than burning to get back up to 60%?

After reading the last posts [Link], I have convinced everyone that the Simple invalidation is not worth the trouble. Instead, we are looking at terminating the Simple and starting the 401(k) at the beginning of next year. However, this seems to bring up a whole new can of worms regarding the notification to employees that the plan was being terminated. It seems that notice was supposed to be given at the beginning of November; is this an unavoidable date or are there ways to cure this problem since we are creating the new 401k?

Thanks for the help, I am new in the area of emplyee benefits and am just starting to wrap my brain around everything.

Under the new PPA provision for allowing participant's to take hardships for primary beneficiary expenses, can a mother be the primary beneficiary and the participant take a hardship for a parent's medical expenses? If so, can this only be the case if there are no spouse or children that could first make claim on the plan account upon the participant's death?

Typically the deadline to make a deductible employer discretionary contribution is the due date, plus extensions, of the employer's tax return. If the employer is a nonprofit that does not file a tax return, and has no corresponding deduction, what is the deadline?

Has anyone heard if we still need to do a Notice of Benefit Restrictions if no benefit restrictions apply?

I have a 10/1 case. 2007 AFTAP proxy was 85%, 10/1/08 AFTAP 75%.

The new bill states I can use my 2007 AFTAP to determine if benefit restrictions apply for 2008, therefore I assume benefit restrictions don't apply, but I didn't see anything relieving me of the notification requirements.

Also, since my plan only pays lump sums of less than $5,000 (which have been exempted from the restrictions), even if restrictions applied, they wouldn't really apply since my plan doesn't pay lump sums > $5,000. (I heard someone say that it isn't really $5,000, but it is the mandatory distribution amount. Therefore, if your plan states that only lump sums < $1,000 can be forced - due to those wonderful IRA rollover rules- than only lump sums less than $1,000 would be exempt and lump sums between $1,000 and $5,000 would still be restricted.) :angry:

So, do you think I still need to give a notice prior to 1/31/09 (assuming I certified AFTAP on 12/31/08)? If so, would it simply state the AFTAP? Which AFTAP? Would I need to mention the restrictions that don't apply?

Client's FSA administrator offers a system where participants can elect to have payments made directly to healthcare/daycare provider. Participant enters info (service, date, amount, provider) on adminstrator's web-based system. Administrator then sends check to provider. Check stub indicates participant's name, type of service (medical, dental, etc.), date of service, and amount. Face of check indicates that endorsement certifies payment is for qualified healthcare or daycare expenses. I'm concerned about this process under current cafeteria plan proposed rules re: expense substantiation. Administrator indicates check constitutes third party verification of expenses due to endorsement statement and that because check has to be endorsed prior to payment, it meets the requirement for substantiation prior to payment. Thoughts?

Client wants recordkeeper to make a deposit directly into the plan for an error that was made. My understanding is that the recodkeeper cannot make a deposit directly into the plan account. The client is disagreeing.

1) Please confirm that I am correct.

2) Either way, please provide a cite for me to present to the client.

Thank you in advance.

The ERA of ought eight now allows the infusion of an assumed interest rate [3rd segment rate] into the determination of average value but it does not appear the corridor has been expanded. Thus, if assets lost 30% from A_t-1 to A_t, the maximum average value would be 70% x A_t-1 x 110%. or 77% of A_t-1. In short, you're still in the toilet, because you're down nearly 30% (the loss plus what you were expected to earn). Conclusion: Rah!

Any disagreement?

Here is a tidbit you may have not realized, but the possibility does exist that the plan limits could actually drop next year. (I know, that quite a ways off, but it is food for thought)

The CPI factors have dropped so much the last few months it is a real possibility.

The 2009 limits were based on the following factors:

July 219.964

Aug 219.086

Sept 218.783

The most recent limits are well below those:

Oct 216.573

Nov 212.425

A participant in a 401(k) plan terminated employment and filled out distribution forms. The employer accidentally paid the terminated participant from the corporate checking account rather than the trust. The former participant still has an account balance at the investment company, and has also been paid the equivalent of her account balance from the checking account.

No 1099-R or 945 was filed because as far as the investment company was concerned, no money left the plan in that year (2007).

What is the proper way to proceed to correct this error?

Thanks!

Help! Client wishes to freeze future contributions to an account balance NQDC Plan. To avoid future administration costs, client wants to "terminate" the plan. Client maintains other NQ Plans so would not meet the requirements to distribute accounts upon "discretionary" termination (as opposed to termination by operation of law). Under the 2007-86 transition rules, can the client amend the plan to freeze future contributions and also provide that all accounts will be paid in lump sums by say, 3/15/09 regardless of any prior employee elections?

Alternatively, in lieu of a unilateral ER mandated time and form of payment, can the client allow participants to make elections to receive distribution of their accounts as early as 1/2/09, as long as the elections are made by 12/31/08?

Thoughts and comments are most appreciated.

We have been laid off at a five mins notice. we are told we have to return to work to work for our severance pay. is this legal? which means we are on unemployment insurance for three weeks but have to return to work just to earn our severance pay?

Ronnie

If the plan doc provides that forfeitures will be used to reduce employer contributions and pay administrative expenses, is there any reason why a plan sponsor couldn't pay for them out of pocket up front and then get reimbursed from the forfeitures account at the end of the plan year? Any thoughts are appreciated. Thanks.

Just found out a participant in a plan for the last 5 years is illegal. She has taken a loan out. The plan does not allow for illiegal aliens.

What do you do with the deferrals and match that has been deposited for her? Do they have to make her whole outside of the plan and forfeit the money? Do you treat it like an ineligible participant?

What if her social security number is fake? If you give her money outside fo the plan - how does it get reported to the IRS - with her fake SS #? She will probably be fired - and I dont think they will want to give her more money outside of the plan.

Thanks

Private corporation provides medical insurance coverage to all employees. It has contractually agreed to continue to provide the same medical insurance coverage received by other executives to its current CEO executive and his family after his retirement and until his death. Only the CEO has this retiree medical benefit and none of the other executives will receive it upon retirement.

Is there any reason why the payment of insurance premiums by the Company to provide this medical coverage to the CEO and his family upon retirement would not be excludible from income under Section 106 of the Internal Revenue Code?

Beginning 1/1/09, can an individual self-certiy that he/she has a disability?

The situation is this: Plan of a small sole proprietor is being wound down as the sole proprietor has retired. One of the assets it holds is life insurance on the sole proprietor, a plan participant. Normally, the sole proprietor's spouse ignores the premiums on the life insurance when they come due, simply allowing the premium to be assessed by the insurance company against the investment portion of the policy.

Spouse is out of town when a quarterly premium statement comes to their home in 2007. The sole proprietor simply writes out a personal check for the quarterly premium to the insurance company. There are no earnings for 2007, so there can be no 'contribution'. And it was not claimed in any way as a contribution.

Looks like a prohibited transaction, personal assets of a disqualified person being used to benefit the plan being an "extension of credit", and anticipating (a) repayment (with interest) and (b) filing a Form 5330. Section 6.09 of Rev Proc 2008-50 provides that PT's cannot be corrected using EPCRS.

Anyone else dealt with a similar situation?

Comments and suggestions regarding this situation will be appreciated.

Folks:

We were discussing recently whether an excecutive who was 85 years old could voluntarily waive his retirement benefits.

Can someone direct me to that discussion?

The reason I have an interest is a paper I am reading on whether employees who have been misclassified as independent contractors can sue for lost benefits, even though they signed up as (misclassified) independent contractors who voluntarily waived the benefits?

In one of the IRS or DOL rulings, as I remember, it stated something to the effect that voluntarily waiving a contracted for retirement benefit was not an option for the employee.

Don Levit

Can you retroactively change the Plan's definition of compensation to the beginning of the plan year for a plan using safe harbor match? Doesn't seem right since participants should know by January 1 what compensation will be used for purposes of the cap on the match.