If a participants gap period is a loss do you include the loss in the refund calculation?

We failed to make the employer contribution of $29k for our 2006 failing top heavy test by the deadline of 12/31/07. What are our options at this point? Any information would be greatly appreciated. Thank you.

It appears that there are 4 possible methods for avoiding the (b), ©, and (e) restrictions, but only one (reduction of the COB/PFB) for avoiding the (d), and that has its own limits. Am I right on this?

Despite prodding as well as disclosure of what has to happen, there are just going to be some (calendar plan year) clients who just are unable to get census in time to certify the AFTAP by April 1. Surprise!

So, supposed the 2007 AFTAP is certified as 85%. Then, the presumtive 2008 AFTAP effective April 1 is 75% and restrictions apply. The Plan must provide notice of the restrictions to some persons (see my most recent post) by the end of April. Suppose the client gets information in time to certify the 2008 AFTAP by April 20. Must Participant still be give notice?

In short, is the effective deadline for certifying the AFTAP April 30?

To whom must notices be provided when benefits are restricted?

It appears a fundamentalist reading of the proposed regulations would suggest everyone. And while this may be the correct answer, it can produce a totally ludicrous and unncessary result.

Certainly, why would you notify participants whose benefits are in pay status, or for that matter active or terminated vested deferred participants who are not eligible for payments during the period to who the restrictions would apply?

Is there guidance of which this actuary is unaware?

After spending a considerable amount of time searching for an answer to my most pressing question, it occurred to me that most posts are for people beyond where I'm at.

I'm filing the 5500-EZ for the first time, along with a 1099-R. I'm new to both forms, and the instructions are really vague regarding a rather important detail - Employer Identification Number (EIN). Which EIN am I supposed to use?

Here's the situation...

I had a one-participant 401(k) plan from 2004-2007. On Dec 31, 2007, I terminated the plan and did a direct roll-over to an IRA, so I now need to file the 5500-EZ (first and final). The company I went through in setting it up had me obtain an EIN for the retirement trust. I also have an EIN as a sole proprietor.

It seemed logical to use the retirement plan's EIN on the 1099-R, since the payment went from the plan to the new IRA. That what I did (please tell me if that was wrong). The 5500-EZ, however, asks for the name of the plan and plan number (001, in my case)... but it asks for the employer's EIN in box 2b. That's my sole proprietor EIN, correct?

Also, in box 3b, the form asks for the plan administrator's EIN. When I obtained the EIN for the retirement trust, it asked me whether or not I am the administrator/trustee, which I am -- so I answered yes. Does this mean the EIN in box 3b is supposed to be the EIN of the retirement trust?

Sadly, the instructions just blow right by it without going into any detail.

Can someone shed some light?

So what do the custodians of these 1 person/no employee plans do since they cannot avail themselves of the DOL regulations on abandoned plans, since that's within the purview of Title I. Is there recourse to distribute the assets to an IRA and to terminate this plan -- by the custodian or TPA? Any input would be very helpful. Thank you.

I have a client that currently has two plans, a defined beneft (PBGC Covered) and a 401(k) Plan.

The defined benefit plan is currently an end of year valuation.

The two plans are permissively aggregated for 401(a)(4) testing purposes.

The client also likes to fund their DB plan on a weekly basis and would like to know their current year contribution by December 1 of the current year, so I am thinking of switching to a beginning of year valuation date to accomdate them, and possibly make AFTAP Compliance less of a mess.

Are there any issues with permissively aggregating a BOY val DB plan with a 401(k) Plan?

Joseph Carolan

When amending NQDC arrangements for 409A, does the effective date of the amendment have to be (A) the later of 01/01/05 or the date of the NQDC arrangement, or can it just be (B) the actual date of the amendment?

The ESOP's assets are mainly in employer stock, plus a little cash. All assets are allocated to participants' accounts.

The ESOP makes a distribution (paid to participant, not a rollover) in stock and cash, where the cash, for example, is for partial shares ($7) plus the cash account balance ($11). The stock basis is, say, $20,000, so mandatory withholding is $4,004, but withholding cannot exceed the cash portion.

The total cash portion ($18) is less than $200, but it is not ALL in lieu of partial shares.

All the references I've found, including IRC 3405(e)(8), say that no withholding is required for a distribution which consists only of employer securities and "cash (not in excess of $200) in lieu of fractional shares."

Does this mean ONLY in lieu of fractional shares, or can other small cash amounts be included in the $200?

In other words, does the ESOP need to withhold the $18 cash portion?

Thanks in advance for any advise, references, and experience. If you need more information, let me know.

(For reference, the ESOP used to keep larger cash reserves to pay all benefits in cash. This year it will make distributions in stock and cash, and situations like the example are likely.)

Thanks, again.

Is there a formal definition for the term "Hybrid Plan"? Is a Floor-Offset arrangement a "Hybrid Plan"? Ever? Always? Never? Any opinions regarding the application of vesting requirements under PPA2006 to a Floor-Offset arrangement?

Thanks for your input.

a plan's initial computation period for eligibility purposes starts w/ EE's first hour of service. EE are immediately eligible if they are credited w/ 1,000 hours of service in a 12-month period.

EE starts on jan 1, 2006 and terminates on june 1, 2006 w/ 500 hours of service. EE is re-employed on feb 1, 2009.

upon rehire, does eligibility computation period remain the same (jan1-dec31) or does it become feb1-jan31?

BTW: plan does not go to elapsed time method and there are no retroactive entry upon completing a year of service after rehire. plan does have 5 1-yr break in service rule, which obviously doesn't apply because this EE was never a participant.

any thoughts?

Part 1

If I have a 403b plan that has to adhere to Title 1 ERISA, I understand that a 5500 has to be filed. I also understand that up to 1/1/08(?) the filing requirements were very limited.

I think I am understanding that as of 1/1/08, IRS filing requirements for this type of plan will become much more like that of anyother pension plan, including participant counts, Sch. I, etc.

Am I correct or will the filing requirements remain limited?

Part 2

I know certain 403bs that offer matching contributions can still be exempt from Title 1. What kind of entities are they required to be in order to remain exempt.

thanks

COMPANY HAS CHANGED SERVICE PROVIDERS FOR THE 401K PLAN. THE NEW PROVIDER IS ADMORTIZING THE LOANS DIFFERENTLY THAN THE OLD PROVIDER RESULTING IN MORE PAYMENTS/INTEREST ON THE EXISTING LOANS EVEN THOUGH THE ADOPTION AGREEMENT STATES THAT THEY WILL "PRESERVE PROVISIONS OF LOANS OUTSTANDING PRIOR TO RESTATEMENT" CAN THE NEW PROVIDER LEGALLY DO THIS?

This is a takeover situation where the old custodian has charged the plan fees (for previously unpaid set up costs and recordkeeping fees) prior to transferring the assets to the new custodian. Empoyer is wanting to reimburse the plan for these fees. Can this be done?

My view is that a one person (owner of company) plan is not subject to Title I and therefore would not have to purchase a bond in order to avoid a CPA audit if it has non qualifying plan assets in excess of the limit. can anyone confirm this is correct?

I have something I cannot believe has never come up before:

Deceased participant (2006) still has a balance in the Plan. Is this reportable on the Schedule SSA?

I was always under the assumption that the SSA was used by the Administration to inform participants of a possible benefit in a retirement plan when the participant applied for Social Security Benefits. This participant will obviously not reach that point. Would the Administration notify whoever applies for any Social Security benefits on behalf of the participant?

added twist...original beneficiary was spouse, spouse was convicted of participant's murder. Participant has minor children and client believes court will award the minor children/their guardian to receive benefit.

I have seen this question posed in prior posts without any responses.

A 401(k) plan uses prior year testing. They have never made matching contributions but their document allows for matching contributions. They decided to start matching in 2007. Obviously, they will fail testing.

Can we use shifting to go back to 2006 and shift some of the NHCs deferrals to match and use that ACP in this year's test?

What happens to a health fsa when there is a purchase transaction involved?

Buyer and seller both maintain a health flexible spending account. Upon the closing of the sale, do the elections under the sellers plan terminate and underspent accounts offered COBRA or can the underspent amounts transfer to the buyers plan and election for the coverage period continue under the buyers plan?

Any guidance/experience in this issue is appreciated - thanks.

I know that we've gone over this before, but I need a little refresher... do I have to use AE as my assumptions in the testing of a cross tested cb plan or can I use reasonable assumptions?