I know that salary deferrals are generally not subject to a substantial risk of forfeiture such that a 457(f) plan cannot provide for salary deferrals. However, what if the plan provides that the employer will make matching contributions on the salary deferrals? Does this sound like it will work?

From Defined Benefit Answer Book Q19:104

Example:

The funding target of $1,452,362, in Q 19:102, is used in this example. The value of assets in the plan as of December 31, 2007 is $1,000,000. The plan had a funding standard carryover balance of $100,000. Therefore, the value of assets to use is $900,000. The transition rule from Q 19:105 is used, so the funding target is multiplied by 92 percent, or $1,336,173. The shortfall amortization base is equal to $1,336,173 less $900,000, or $436,173. This base is amortized over seven years using the segment rates in effect. Since there are two segment rates in effect over a seven-year period (the first segment rate is effective for the first five years, and the second is effective for the last two years), the calculation of the amortization is a little more complicated. The present value at each year must be calculated using the particular rate, and then added together...

I thought the transition rule (i.e 92% of target liability) is used for the exemption from the shortfall amortization calculation. But if not exempt, full target liability is used to calculate the shortfall and the shortfall amortization base.

Did I miss some corrections, explanations, etc. that stated that 92% of the funding target could be used to calculate a shortfall amortization base?

DC newbie question.....

In a profit sharing plan permits in-service distributions provided that the "Plan Administrator has allocated the contributinos to be distributed, for a period of not less than 2 Plan Years before the distribution date."

How is the amount eligible to be distributed calculated? Is it accumulated contributions only? Is it accumulated contributions +/- earnings? Is it the account balance 2 years prior to the date of distribution?

Thanks!

Has the DOL actually opined to say its appropriate to use the DOL Calculator to calculate lost earnings on a late contribution for purposes of the VFCP? There doesn't seem to be a consensus on this issue. The IRS clearly states that the underpayment rate is the appropriate rate to use to calculate the excise tax; the DOL provides a calculator for a stated purpose of calculating lost earnings on late contributions based on the underpayment rate (Example 1 in the instructions to the calculator); but as far as I can tell, the DOL's formal guidance (i.e., the VFCP) says you need to use the "higher of" best invsetment earnings in plan and underpayment rate.

We've generally used the calculator, but I'm now questioning the appropriateness of this technique. Please, any thoughts?

Thanks

Employer sponsors DB plan and 401(k) Plan. Employer terminates DB plan and wants to amend 401(k) plan to provide that 401(k) participants who were former DB participants are entitled to an extra contribution. Is this OK as long as the plan passes 410(b)?

432(b)(1) ENDANGERED STATUS. --A multiemployer plan is in endangered status for a plan year if, as determined by the plan actuary under paragraph (3), the plan is not in critical status for the plan year and, as of the beginning of the plan year, either --

432(b)(1)(A) the plan's funded percentage for such plan year is less than 80 percent, or

432(b)(1)(B) the plan has an accumulated funding deficiency for such plan year, or is projected to have such an accumulated funding deficiency for any of the 6 succeeding plan years, taking into account any extension of amortization periods under section 431(d).

If my valuation date is 8/1/2008. The Plan has a credit balance as of 7/30/08.

What is considered "such plan year"? 8/1/2008-7/30/09 so that the succeeding 6 would be through 7/30/2015 or do they mean as of 7/30/08 so the succeeding 6 would be through 7/30/2014?

If my plan is projected to have a credit balance on 8/1/2014, but will have a deficiency by 7/30/2015, am I endangered?

Hello,

I am a student, doing a paper on benefits. I am trying to find out what percentage of extended benefits are really used by employees who have such plans.

Also, what is the chance for non-regulated alternative therapies to be included in extended benefit plans in the future?

Can anyone send me some links to such information?

Thanks,

Rodica

A company wants to terminate their 401(k) safe harbor match plan during the SECOND YEAR (first plan year was 2007), because the sole owner (well under age 55) wants to take his money out (we informed them that the owner cannot just willy nilly take his $$, and he didn't want a loan, and is not eiligible under the hardship rules).

There is no legitimate reason to terminate, i.e. no company financial hardship, not going out of business, etc.

They want to get a DL from the IRS on this termination, but I'm sure the IRS will ask what the reason for the termination is, not to mention I think after only 2 years in existence, it's a red flag for an audit.

Any advice?

I am a participant in my employer’s Section 125 Plan and have been deferring the premiums for my family health insurance coverage through the plan. Our open enrollment period for health insurance and the 125 Plan is the month of July.

My daughter married recently and moved to her husband’s health insurance coverage effective September 1st. My spouse and I planned to change to single coverage through our employers since they both pay the single premium. (Both of our employers only offer a single or family plan.) His open enrollment period for health insurance coverage was the month of September with coverage taking effect October 1st. I have requested a change to single health insurance coverage through my employer. The Insurance provider has no problem making the change outside the open enrollment period since I am reducing rather than adding a covered individual.

The Section 125 Administrator states that I cannot make a change in my health insurance premium deferral until the next open enrollment period (next July and $4000 later). They state that my daughter’s marriage is a valid qualifying event. However, they further state that my husband was also covered on the plan so I would still need family coverage since there has been no change in marital status, etc. to trigger a qualifying event.

Is this correct?

Client has a DB plan under which an ex-employee who last worked for the client in 1981 did not begin receiving benefits at age 65. Now (five years later) he is applying for benefits and the plan did not provide for an increase in the employee's benefit after attaining age 65 (NRA). Is this okay or does the ex-employee's benefit need to be increased to take into account he is beginning to receive benefits at age 70?

What happens when a top hat plan participant is no longer eligible to participate in the top hat plan, ie. he is demoted? If you yank him from the plan and pay his account, wouldnt this run afoul of 409As prohibition on acceleration? But it would seem that based on ERISA/DOL requirements you'd have to pull him from the program.

Thoughts? Citations to authority is greatly appreciated.

What happens when a top hat plan participant is no longer eligible to participate in the top hat plan, ie. he is demoted? If you yank him from the plan and pay his account, wouldnt this run afoul of 409As prohibition on acceleration? But it would seem that based on ERISA/DOL requirements you'd have to pull him from the program.

Thoughts? Citations to authority is greatly appreciated.

When is the due date for the 4979 excise tax submitted on Form 5330? We extended our 401k plan until 10/15

thanks

I have a client who is able to file an EZ. However, he has not prepared any filings since the plan's inception, 2002. He rolled a very large amount into the plan in 2002 so he is not eligible for the waiver of the filing.

Since the IRS deals with the EZ, I am thinking that if I prepare all the delinquent filings and send them in to the IRS then the client is at their mercy and could potentially get hit with a very large penalty.

On the other hand, if I file a 5500 instead I can go in under the DFVCP and pay $1,500 up front and be done.

Does this make sense? Can I file a 5500 even though technically the client meets the criteria for the 5500ez? If I file a 5500, am I then obligated to keep filing 5500s, rather than switching to 5500EZ in later years?

A sole proprietor sponsors a defined benefit plan, and the sole proprietor dies prior to the end of the plan (calendar) year without contribution to the plan. In this situation, can the estate contribute to the plan on behalf of the sole proprietor?

Let’s say I a client with a funding shortfall, and a large credit balance. Their required contribution for 2007 was $0, but they told me (in writing) that they would be depositing $50,000 for 2007. So, I prepared the 2008 valuation and certified the AFTAP based on the client's written direction that they would deposit $50,000 for 2007.

Well surprisingly they did not actually make the deposit. However, because the plan was underfunded, they were forced to burn a large portion of their CB to reach the 60% AFTAP and the fact that they didn't make the $50,000 contribution only increased the amount of the forced burn. From a practical stand point the fact that they didn't deposit the $50K for the prior year had no impact on their required 2008 contribution either since I wasn't able to use the COB to offset the requirement. (Try to explain that one to the client. So the plan is more underfunded that you thought, but that doesn't mean I have to put more in?)

Since only the numbers used to determine the AFTAP changed (and not the actual percentage), do I need to re-certify the 60% or can I just say "I certified the 60%, it is still 60%, and how I got there is not relevant".

I have a client who never did ADP tests for 2005 or 2006. In 2006, they failed ADP Test. Their Plan Document calls for Prior Year Testing.

Since this plan had only a 3 month wait for eligibility, we used to Otherwise Excludable option to run the ADP test and this made the extent of the failure less severe. But, since no refunds were taken by 12/31/2007, we need to self correct. I have 2 questions:

1. Using the "One to One" Correction Method in Appendix B, the Rev Proc. says that "the plan may not be treated as two separate plans with one covering excludables…” . Does that mean that I must re run my test without the otherwise excludable option or may I keep the test the same, but share the resulting "One to One" employer contribution with ALL eligibles and not exclude otherwise excludables from sharing?

2. Can I make a QNEC as allowed in Appendix A, even if I used Prior Year Testing? If so, can I derive my QNEC percentage from my ADP Test that excluded "Otherwise Excludables" as long as I share the resulting QNEC contribution percentage with ALL eligibles?

Our company negotiated a cap on contributions for retiree medical insurance, for accrual liability purposes, what figure is used? the cap figure? (the part the company would pay?) or the cost of the policy itself?

I have a plan that is a Charter School from the New York State Board of Regents. They were told that they could not sponsor 457 plans. I researched and could not find anything prohibiting them from sponsoring a 457 plan. Does anyone know if they are prohibited and/or where I could find some information on this. Thanks.

A Company sponsors a Cafeteria Plan, with only health and dependant care reimbursement. Outside the Cafeteria Plan, the Employer provides Group Health Insurance with a $5.00/per pay co-pay for the employee and the employee can elect to cover spouse and dependants. The employee pays for any spouse or dependant coverage and this is deducted from pay (post tax).

My question is - can the employee be reimbursed, from the Cafeteria Plan, for the co-pay and dependant coverage?