How do you calculate interest for a 5330? Say it was due about a year ago?

If a plan performed it's 2006 NDT testing and failed the ADP test but due to a variety of reasons during 2007 it did not refund the excess contributions to HCEs, can they do it in 2008? Is there a way to correct this and make it right?

Can a new plan use the 5-year phase in for the 417(e) interest rates? Participants will be 100% vested immediately in the new plan, so there will be lump sums paid during the first five years.

Pre PPA many small DB plans used the Individual Aggregate funding method - this worked well for the employer who also wanted to see what each participant's share in the cost would be - some doctor groups especially like to be able to see the split since year-end bonus allotments are dependent on the individual's other expenses to the corporation.

Now enter PPA - the target normal cost is automatically earmarked by participant - but what about the Shortfall Amortization Base - that's an (A-B)/(annuity factor) - how would you split that by participant and still be consistent with the year before's IA allocation ?

It is not in the 5500-EZ instructions but there was an understanding in the pension community that EZ filers were not required to file Sch B for 2005.

Was this a formal guidance (Announcement, Notice) or just a statement at a conference etc?

The broker for a plan we administer called today and asked me to amend the plan to permit in-service distributions at any time, any age, including 401(k) deferrals. I explained the 5 year/2 years allocated rule for profit sharing contributions, and advised him that deferrals cannot be distributed until age 59 1/2 (except for hardship, etc.). He said he has another client with a plan that permits immediate in-service at any age for any money type if the money is rolled to an IRA.

Am I missing a new trend or something? I'm not aware af any law change permitting in-service of deferrals prior to age 59 1/2, at least not in a prototype or volume submitter. Also, would the distribution be eligible for rollover to an IRA?

Controlled group of corporations exist - Co. A B & C in a safe harbor 401(k) plan - using 3% safe harbor non-elective.

If the employer does not want company C participating in the plan - is that okay assuming they pass coverage counting C's otherwise eligible employees? Does it matter that they utilize the 3% safe harbor non-elective?

We started using the accrued-to-date method for testing under 401(a)(4) for a takeover DC plan that is about 10 years old - it's working great so far (a couple younger owners can now also max out). The client is about to add a DB plan.

A couple of questions:

1. Can the entire combined benefits be divided by the largest number of years in either plan (aggressive I think), or should each plans' EBARs be determined separately and then added together (my preferred suggestion), where the total DB plan benefits accrued are divided by the number of years in the DB (ignoring any prior years before the DB was added as a plan).

2. If any rollover balances exist in the DC plan for some NHCEs, should they be ignored?

I am not at my office and do not have my resources with me.

With that said, I was posed with the question: Is a one participant plan considered an ERISA plan?

This question may have been asked in connection with a divorce situation, but nonetheless the question is specific.

My off the cuff response is that it is not an ERISA plan since it is not covered by the Title that covers employee benefits protection. I am not just referring to PBGC.

Are there any other responses out there to that question? Presumably a little more technical than what I said.

Thanks.

We went to a 26 week payroll this year, so this is the first time we had a pay period that carried over from December to January. We made January contributions, both employee and matching, from the entire paycheck and allocated them all to 2008 (ie reported as y-t-d for 2008, not on 2007 W2), regardless of the year in which the services were attributable. Now wondering if this was right. Some employees had not reached 2007 limit yet, but highly compensated had, of course. Also had three employees terminate on the December side of the period, that we deferred income for from the January paycheck based on standard "last paycheck" practices, but now wondering if that shouldn't have been allocated to 2007 on that basis (in that case, one would have exceeded 2007 limits). We've looked at Notice 87-16 and are still not sure what it says to do here. Any advice?

Notice 2008-30 provides for permissive withholding on eligible IRA distributions that are converted to a Roth IRA.

Is anyone aware of whether the default is no withholding or a specified withholding? If a specified withholding, then what is the percentage?

In short, does the election form state that (a) no fit will be withheld unless you specify otherwise, or (b) fit of x% will be withheld unless you specifiy otherwise?

Say we have a partnership that includes 3 partners and 10 employees.

The partnership implements a DB plan where the formula is 2% of avg pay per year for the employees and each partner has their own chosen benefit formula based on the amount each wants to contribute to the plan.

For purposes of this topic, we will assume the plan passes coverage and non discrimination.

The client has no problem combining plan assets in one trust for the employees.

However, the client is concerned and wants assurance that each partner funds his own pension.

Of course the plan can be funded using individual aggregate based on the earned income for each partner.

The challenge comes with regard to asset allocation.

FOr example if after five years the partner terminates and wants to receive a distribution.

Say the partner has a benefit with a lump sum value of 200k, but an asset allocation of 175k.

The client wants the partner to come up with the additional 25k not the partnership.

So the question is: how is this type of situation related to partnerships handled?

DO you just typically have the partner make the 25k contribution? Don't think partner can forfeit the pension.

Thanks.

Is there a reg that states that pre 87 contributions must be taken out first? Participant has a large balance of which a small portion around 10k is pre 87 after tax. Participant wants to distribute only part of his total balance (which is allowed under plan terms) and that the partial distribution be only pre-tax money. Record keeper is stating that they can't process the request because the rules state that pre87 money has to come out first and that since the participant has pre87 that he must distribute that amount even if he wants only pre tax money. What rule is this? The plan document is silent on this issue and this is the first time such a request has ever come through. Other participants with pre87 money elect to just take a total distribution.

Does anyone know if the regs require all nonelective PTO time to be used before all elective PTO even if the plan only allows paid vacation days, for example, to be purchased. In other words, if an employee buys 40 hours of "paid vacation," does he or she have to use all nonelective paid sick time in addition to all nonelective paid vacation time before using the elective paid vacation time. Thanks.

I'm trying to think through a situation of 2 plan sponsors who sponsor the same plan (initially was an Affiliated Service group I believe). One of the employers (small medical P.C.) who co-sponsors the PS plan is now splitting away from the main employer and plan sponsor.

Since his P.C. was a co-sponsor of the plan do we have to apply vesting against his distriution/rollover to a new plan for his P.C. ? Or since he hasn't terminated employment from his practice (same M.D., P.C. is still ongoing) should it be treated as a spin-off/transfer equal to the total contributions allocated to his practice share of total assets ? Maybe like a 5310 transfer though I think DC to DC plan transfers don't require a 5310.

Thoughts anyone ?

I'm not sure what the whole story is, but I got a call from a broker asking if a company can put in a plan to cover its employees if 100% of the employees are leased. If they meet the definition of leased employee under 414(n), then they are basically treated as employees of the recipient for plan purposes, right?

The employer wants to cover the employees under the plan. Are there any issues?

A client just received a Class Action Law suit settlement on an investment they had in there 401(k) Plan back in the year 2000.

My problem is how to allocate the proceeds, if we allocate to all those who had a balance in that particular investment it would be alot of time to research and determine the actual appropriate allocation. Also many of those whom had a balance in the year 2000 have obviously since been paid out.

One option I had thought of is to put it in the plan cash account and reallocate as forfeiture for the PYE 12/31/2008. Would this be an option?

Volume submitter doc has definition of comp limited to comp while a participant. The match is discretionary. They would like to have the match be the lesser of the salary deferral or x% of full year comp. Since the match is discretionary, can that be done?

Hi. I have a client who is closing his PS 401(k) plan. He has bars of gold (!!!!) and I'm wondering how to 1099-R him. Is it considered a "cash" distribution, to be taxed? He can't exactly roll it over to an IRA.

There may be an obvious answer, but this happens so rarely (no pun meant), that I am doing a double take!

Thanks for any help.

I have an employer with 76 W-2 employees in a "C" Corp. 70 are highly compensated employees (HCEs). They have 6 additional W-2 employees are who are not highly compensated. They want to have the 6 do an FSA and the remaining 70 HCEs do a Medical Expense Reimbursement Plan (MERP). Each of the 70 HCEs fund their own MERP as they go ( if they have a reimbursable expense, the employer takes the amount of their paycheck on a pre-tax basis) and then reimburses them.

Is this kosher? If so, how? If not, why?