Husband and wife owners of S-Corp failed to deposit their own deferrals from their final paycheck in 2007. The funds were withheld from their paychecks and reported on their W-2s, they simply neglected to send them to the investment. Since it is obviously well past the deposit deadline, what is the correction for this?

Thank you.

Kate Smith

Do you see any problem in writing an eligibility rule as follows?

"Non-Shareholder Physicians are eligible immediately; all others must complete one Year of Service."?

The physicians will likely be HCEs within a year or two; but since they can't be HCEs in year one, it seems to be a viable approach. Any disagreements??

Hey Reader(s),

I am fairly new in the benefits world but I have come into my career knowing a little bit more about 401k plans vs. 403b plans. I have now run into this situation: 403b plan that we "had", was "frozen" and the assets were rolled into a 401K plan. We have been filing a 5500 for the 401k but not the 403b.

Now we have "people" telling us that we need/needed to file a 5500 for the 403B. Does that make sense?

Thanks

A plan's determination period begins July 1st. The COBRA premiums increased as of that date. However, due to a billing error, the July COBRA premium billing that was sent out included the lesser premium rates from the previous determination period. The error was fixed with the August billing. However, the employer would like to collect the July underpayment amount from the qualified beneficiaries, and terminate coverage (after satisfying all requirements for doing so) if a qualified beneficiary refuses to pay the difference between the lesser amount billed in July and the actual COBRA premium amount that should have been billed.

Is this permissible?

Say a one person/owner has a company. Actually it is a one member LLC.

He wants to contribute qualfied direct costs and annual additions to the plan.

The post retirement medical benefit is an account value of 100k at retirement to be used for medical expenses.

My thought is that as long as the contributions are within the 419 limits they are deductible.

And any investment income in the fund is taxable.

Are my above comments correect?

Thanks.

A client expressed an interest in establishing a VEBA to fund certain post-retirement medical expenses. The client maintains an LLC. Husband and wife are the only individuals who provide services to the LLC. There are no common law employees. Is this sufficient to satisfy the requirement that the VEBA's membership consists of individuals having an employment-related common bond?

Any advice you can provide would be greatly appreciated.

Ed

We are sitting on a failing preliminary test according to our vendor. When I read the regs., it cross references 410(b) under 129(d)(9)(A) for rules on excludable employees. Our plan allows everybody in immediately and our vendor insists that as such, all must be included in the test. However, for 410(b) testing in qualified plans, I would be allowed to apply statutory exclusions (age 21/12 months of service), create two testing groups and test the groups separately. Our vendor is not offering this solution which would result in a much better result.

Does anyone have anything definitive which would prevent the application of "otherwise excludable" testing in a cafeteria plan? It seems reasonable to me that since they cross reference the reg. we should be able to apply guidance from the reg. for establishing our testing groups.

A 401(k) Plan was amended and restated on 1/1/2007. The previous vesting schedule was 5 year graded, and the new vesting scheule is a 6 year graded.

Am I correct to say that any employee hired before 1/1/07 must use the 5 year graded vesting schedule and any employee hired after 1/1/07 must use the 6 year graded vesting schedule?

Does this have something to do with the anti cutback rules?

Any thought would be greatly appreciated.

ALEX

A small DC plan is terminating. A participant is deceased, his wife is deceased and there are only children and step children available. The plan is wanting to close out his account. Can they pay the balance(appx $5300) to the children and be done with it? There was no estate trust set up.

Doc says distributions are as soon as administratively feasible after the next valuation date. It was set this way when there were quarterly valuations. Then they went to a daily platform for a few years.

They decided they did not like the higher costs, so they switched to one big trustee directed account.

Valuations will be done annually. I sure would like to hear opinions. Is this a cut back on distribution options if the document is left the same?

I am trying to find out the difference between the methods used in determing the valuation of pensions. I do not have an attorney anymore. We have been going through this for 5 yrs. Since then, he has become disabled since 2006. His attorney is suggesting to use the "Coverture" method for our pension division. We both work for Ford Motor Company and have pensions. However, he has contributory retirement as well. He was salaried and I am hourly. We have been married for 27 years. We have one adult child and one minor child from this union. He does not want to give me any portion of his pension benefits and wants to assign beneficiary to his children outside of our marriage. I thought it was the law just to divide everything equally. He is now disabled as of 2006 but has not retired. He has 30 yrs and I have 15. He was in the 3 yrs before our marriage although we were cohabitating 4 yrs prior to marriage. So...I am trying to find out what is the best method to use in effort to protect my interest, but primarily my two children to assure they can receive any benefits that I may be entitled in the event something happens to me. Please help!

I have a plan that had $63 in redemption fees in 2007. The Schedule A report from the custodian lists them as a total and then has an appendix listing out the four fund companies the $63 is attributed to. Are these reported in total or individually? (The amounts are $37, $3, $4, and $18). Thanks!

For all the Relius - Crystal reports experts out there (!) ...

I recently upgraded; on Crystal 10 I find that an old status report I have (that sorts HC employees first) is not working properly. The report data is correct, however it now lists each participant multiple times. As an example, the first HC employee is listed on the first 40 pages! I'm sure it must be something simple to change in the CR template; I'd like to narrow down where to look...any ideas?

thanks in advance!!!

A small company has shut down and has distributed benefits to the terminated employees prior to amending the Plan to terminate. All benefits have been distributed in a lump sum (surprise!). However, one participant is estranged from his wife and the wife refuses to sign the J&S waiver no matter how much talking. The participant is under NRA.

The lump sum is about $35K. The broker (and this is someone who understands DB plans) is having difficulty getting a highly- rated insurer to write a contract on this small case, in particular because the contract would have to offer the anytime lump sum option. Since neither the participant nor spouse are missing, the PBGC won't assume the liability.

My solution is simply to purchase an immediate J&S annuity assuming the participant will so elect.

Any alternatives?

Okay - so bd voted to terminate plan effective 2/07 (all contrib ceased, service accrual ceased, accts fully vested, take all actions to effectuate). Began process of terminating.

Lots of missing participants (high turnover of NHCEs, plan had auto enrollment feature) and plan's still going through steps required to try to locate.

Here's where I was brought on board.

So, as I see it, here's where we are:

1) gotta continue to take req'd steps to locate missing participants (and, yes, I've read past posts on that topic!)

2) under Rev Rul 89-87, plan may not be "term'd" since distrib of assets took longer than 12 months after term date. I'm investigating to see exactly why taken so long, to see if we have any argu re the process was still "as soon as admin feasible."

3) plan needs to be brought into compliance with req'd amendments to date. Prob untimely amender; need to consider EPCRS (file VCP submission and 5310 at same time).

which brings me to 4) this plan, I believe, is a standardized prototype. I don't believe they filed for a D letter before. Any reason they should file for a termination letter? (except, perhaps, to address the issue of whether the distrib of assets was timely.)

5) what about the plan needing to be amended when Bd action has occurred to terminate? Should Bd take action to rescind the termination vote, recharacterize as cessation of contrib - which would be at least a partial term - but from analytical perspective, does that clean up its amending the plan now?

CLient has an existing DC plan and wants to add a DB plan offset by the DC plan. So far so good.

When I load it up - disaster!!! DUH - PPA is a unit credit funding method, and the current balances in the DC plan are greater than the current accrued benefits in the DB plan (even granting the permissible 5 years past for accrual).

So I took a plan which would generate wonderful contributions (in excess of $1,000,000) and instantly get a plan with a maximum contribution of $190,000, and NOTHING for the biggies. Remember they can only accrue 1/10th the max benefit in any year.

Is this correct or is my software suspect?

Well it's late and it seems so easy but why am I having trouble with correct deductible deposit deadlines for contributions? Consider calendar year plans. Am I correct that for required funding (defined benefit and money purchase pension plans) the extended deadline for deposit of the 2007 contribution would be 9/15. For profit sharing plans however, do they have until 10/15 to be deducted in the prior calendar year?

A prior recordkeeper of a profit sharing plan recorded on Schedule I the eoy balance of participant loans incorrectly under 'Loans (other than to participants)' instead of under 'Participant loans' for up to 8 years going back (1999-2006). Because the plan is terminating and they are filing a form 5310, the administrator would like to correct all plan years for this item. Is there a fee for each plan year that is amended? I'm not sure how to approach this. Thanks.

I am running an average benefit test for a plan that is narrowly failing the 70% rate group coverage test. Although the plan is a DB, the same question would pertain to a DC plan. I am using the "accrued to date" measurement period for the average benefit accrual rates. I have a participant who terminated in the plan year with more than 500 hours but less than 1,000 hours and who had no benefit accrual for the year but did accrue benefits in the prior 3 plan years. Does he still have a normal benefit accrual rate using the "accrued to date" measurement period?

I would think that he would because he does have an accrued benefit and he is not an excludable employee for the year being tested.

Any thoughts pro or con?

Is there some relief/technical correction in the pipeline so that PBGC filing can be completed based on prior year valuation as was the case before 2008?

If not, what are people doing?