a safe harbor 401k currently has the following employer funding: 3% safe harbor qnec, 3% employer p.s. and an employer match of 100% up to the first 3% of deferrals. I understand a Safe Harbor utilizing the basic safe harbor match formula could be enhanced, yet could not incorporate a regular match as well, but could they fund lets say a 5% qnec? This is a unique plan with unique features(i.e. employer funding, monthly entry, etc). We have tried to simplify matters, but this is a group of architects and simplification is not in their vocabulary.

Interesting. the new Corbel document, for Normal Retirement Age includes the following "However, solely for purposes of nondiscrimination testing... the employer may deem the social security retirement age as the Normal Retirement Age"

so, that implies (at least with those documents) you can now use SSRA as testing age. It is my understanding that you would still have to do a BRF on the different SSRA ages.

Accountant wants to dissolve a p.c. but the pension plan is still in existence. There are some issues preventing it from being terminated.

Is there a recent change that allows such pension trusts without sponsors?

An employer's fiscal years end 3/31. The employer has a cafeteria plan with medical FSAs, and the plan years end 3/31.

A local "co-op" of optometrists are offering a 'vision card' to employers that amounts to a flex account, but may only be used at one of the co-op optometrists. The co-op has an IT system that will track usage of the vision card, keep the supporting documentation, produce statements for the employee and employer, and invoice the employer periodically. All the employer needs to do is pass out SPDs and sign up sheets.

This employer wants to add these vision card FSAs in addition to the general use medical FSAs in its cafeteria plan, as vision insurance is being dropped. The challenge is that the co-op only offers these vision card FSAs on a calendar year basis. Each March employees would elect their new medical FSAs for the upcoming plan year to begin April 1, but then they'd also be able to elect each December for the vision card FSA for the upcoming calendar year.

May the employer adopt the vision card FSAs as a second cafeteria plan, along side the PYE 3/31 cafeteria plan with a general medical FSA without violating the rules against mid-year election changes? If the two programs would in essence be considered just one, then I think the answer is no. If the two cafeteria plans would be treated distinctly as two, then I suppose that this might work.

A participant in a calendar year plan terminates on 12/31/2007. Their final paycheck is paid on 1/15/2008 and includes only pay for hours worked in final pay period. The compensation will be shown on the participant's 2008 W-2. (The compensation was not used as part of the 2007 plan compensation.)

Should this participant be included in the 2008 ADP test since they had plan compensation paid in 2008? Or are they not included in the 2008 ADP test since they are not actually an employee in 2008?

Thanks.

Employer wants to set up deferred comp agreement where it agrees to pay 10% of company's fair market value to employee on the first of certain specified events in the future.

Fmv is to be determined by company's cpa or appraiser and must be agreed to by the employee or an arbitration process will be initiated.

Would that be a 'determinable amount' under 1.409-3(i)?

So Company A has a Safe Harbor 401k plan, they match 1/2 of the first 8 % of your contributions. The acquiring company, company B has a traditional 401k plan..

1. Can a Safe Harbor plan be converted to a traditional 401k plan?

2. Will company B's employees be grandfathered into their current plan?

3. What else can happen or what would normally happen in this situation??

Client has a safe harbor 401(k) plan. TPA misses that detail, prepares an ADP/ACP and instructs client to take refunds due to a failed test. Client processes the refunds as instructed. TPA later discovers its error and instructs client to deposit the refunds back to the plan. Client has spent the cash and refuses.

How do you fix this mess?

New plan with an initial effective date of 10/1/07. Plan has 3% SHNEC with additional ps. Using accrued balances, plan is top heavy for 12/31/07.

Document says "For a Participant's initial year of participation, Compensation shall be recognized for the full calendar year."

1 - Is the comp limit pro-rated to $56,250 because of the short plan year?

2 - Are the top heavy minimum and safe harbor contributions based on compensation earned between 10/1/07 & 12/31/07, or is it the full 12 month period ending 12/31/07.

My question is does any one have any type of signoff exhibit/language they they send with completed tests that requests that the client review the data and/or the tests and/or the plan specs and sign off and send back for their records?

This question concerns a plan that is covered under Title I of ERISA but is not qualified under 401(a). Prior to 2008 a funding deficiency existed but funding waivers were never requested since the plan is not subject to the penalties applied to underfunded 401(a) qualified plans. The question is, does the funding deficiency still exist at 1/1/2008, or does it go away along with the FSA? PPA seems to have only contemplated credit balances in this situation, not funding deficiencies. Thanks for any thoughts.

Assume you have a controlled group of corporations with each corporation sponsoring their own 401(k) plan. From what I understand, if each of those 401(k) plans passes 410(b) using the entire controlled group population you can run ADP/ACP tests for each plan separately without taking the other plans into account. Is that exception limited to ADP/ACP? What about 401(a)(4) benefits, rights and features? Do you need to review the benefits, rights and features being offered under the different plans if they each pass 410(b)?

A company has a 401k profit sharing plan for several years.

The company is now considering a DB offset plan.

Can the offset be based on the total value of the account balance (including assets accumulated prior to DB plan implementation) or must it be based on the account balance that accumulates after the inception of DB plan?

Obviously it is not intended to be a safe harbor offset plan.

Thanks

I'm mostly a DB guy, so when it comes to 401k's, I always like to make sure I've got it right....

Background:

The plan has 1 HCE and uses prior year testing. His comp exceeds $230,000. I know that the maximum deferral for 2008 will be 6.56%, or $15,088. He is 64, so he is eligible for a catch up contribution. He should be able to defer another $5,000 which would bring his total to $20,588.

If I understand it correctly, anything over the $15,500 surpasses the 402(g) limit, and is considered a catch-up contribution. Then, I fail my ADP test because he deferred $15,500 instead of $15,088. At that point, I can recharactarize the difference of $412 as a catch-up contribution, and everything is ok.

Since I'm doing prior year testing, do I already know the limit, and therefore don't have to worry about failing and recharactarizing?

I know it works out the same way in the end, I'm just trying to understand the concept.

Thanks for your comments.

Got a participant with a loan who cannot afford the payments anymore (got very sick, but is still working). She has a lot of medical expenses not covered by insurance AND she has a son who needs tuition money for school in the fall, so she really wants to get rid of her loan payments.

Question: Can she request a hardship distribution for the above situations in the form of a loan offset? It seems strange given that the proceeds will be used to repay a loan, and not to fund the intended expenses, but I have always read that hardships can be in the form of loan offsets.

Note that the participant could take a hardship in cash (because she is indeed eligible for the distribution) and then use the proceeds to separately repay the loan. I am aware of no requirement that a hardship distribution actually be used for its intended purpose. Once the hardship exists, the participant is eligible for the distribution. They could blow the money at the casino for all the Plan Sponsor knows.

PS, the plan is in a 90 day black out right now so my idea in the previous paragraph would not work.

Stock appreciation rights plan would like to pay out the SAR's value in fixed installments over five years after the date of exercise. Employer desires installment payments over time for cash flow management purposes. Does this constitute a "feature for deferral of income other than the deferral of recognition of income until the exercise of the stock appreciation right" that blows the SAR's 409A exemption? The plan's structure meets all the other criteria for exclusion from 409A coverage. Are most employers simply paying out the full SAR value in the year of exercise? Thanks.

ABC Company is a non-ERISA Salary Reduction Only plan. The new plan sponsor is considering changing the plan to be an ERISA plan. What steps are necessary to effect this change from the plan sponsor and/or legal counsel.

I'm trying to determine how to send out a QE letter for a divorced couple. The employee has divorced the spouse and there are two children. The spouse and children are losing coverage so I need to send out letters for each. If everyone elects COBRA coverage, are each charged as employee only, or would they be able to be charged at the employee + children rate?

How would the premiums be charged if only one or both children elect?

And finally, is this something that would apply to all carriers or would it be carrier-specific?

Many thanks!

I have a client with a cafeteria plan that offers a premium account, medical reimbursement account, and dependent care reimbursement account. A participant has elected to not participate in the health insurance offered by the employer and to instead be covered by her spouse's employer's health insurance plan. Is it permissable to reimburse the amount paid as a premium for her through the cafeteria plan? Is there anywhere in the code that I can reference to explain this to the client?

is it an option?

I know you can roll a roth 401(k) or 401(k) after paying taxes into a roth ira, but is the reverse true as well?