OK, i am pretty new to FSA's and have a question.

An EE has terminated mid year and has turned in a FSA reimbursment to be paid on their last check.

The EE still owes the ER for a negative PTO balance.

Can the ER withhold the reimbursed FSA amount to repay the negative PTO balance.

(In Maryland we can withhold earnings from an employees final pay to pay back PTO)

Here is the situation - Multiple ER plan with 2 employers (Company A and B). 1/1 plan year.

John works for Company A from 1/1/06 to 8/15/06 and earns $80,000. He works for Company B from 8/15/06 to 12/31/06 and earns $70,000.

He works for Company B from 1/1/07 to 12/31/07.

2 questions:

1. HC determination for the 2007 plan year (must use 2006 compensation for determination). Do you look at the compensation he earned with Company B (which would make him NHC) or do you have to include all the compensation ($150,000 which would make him HC).

2. For the 2006 plan year there is an ADP test for Company A and a sepearte ADP test for Company B. John will be on both tests since he worked for both employers. What compensation will be used on these tests? $80,000 on the Company A test and $70,000 on the Company B test? Or would each test use compensation of $150,000 to determine his deferral percent?

Thanks for any help!

The 401(k) regulations specifically preclude you from permissively aggregating 401(k) plans with inconsistent testing methods (safe harbor and non-safe harbor) for testing purposes. Perhaps this is obvious, but does this provision preclude you from permissively aggregating the plans and test ing them on an aggregated basis using the the ADP test - In other words, ignoring the safe harbor provisions??

Seems like a fairly easy question but i cant find the answer...what is the deadline for discretionary plan amendments? is it the last day of the plan year or is it the deadline for filing tax returns?

We have a situation with a participant distribution. The participant had terminated employment, completed his distribution packet, sent it in, we processed the distribution appropriately (lump sum distribution to participant). The participant's spouse called the other day and informed us that the participant died 2 days after submitting the paperwork. She has the check, and wants to return it to the plan, then request the distribution herself as the beneficiary. We can't seem to find anything to say that this can be or cannot be done. Our concern is that the participant was actually alive at the time the distribution was requested - he died thereafter. Wouldn't the distribution need to go to his estate and be distributed per the terms of the will? As opposed to to the plan reissuing the distribution to his designated beneficiary?

Thanks for any thoughts, cites, etc!

J

Suppose a company sponsors a DB plan and a safe harbor 401(k). They have and always will make safe harbor nonelective contributions in the 401(k). Suppose they want to make the DB plan a floor offset plan. Could they use the SHNE contributions for the offset? In reality it would be 3% SHNE contributions and a 4.5% profit sharing contribution. If this is possible, would both plans need to provide 100% vesting immediately?

It seems our liability insurance (E & O) premiums keep on increasing. We are lucky we have never had any claims in 16 years.

Has any plan administrator ever submitted a claim on their E & O insurance? I know much depends on the amount, size of the firm etc., but what happens to the premium?

I am guessing a small plan administrator (250 plans) would get one shot. In other words a $6,000 premium may go to $35,000 if any substantial claim is ever made. That is if anyone would ever even insure you after a claim.

Just curious as we pay our premium for next year.

Plan has involuntary cash out provision under EGTRRA

Plan has automatic rollover provision for amounts over $1000 under the mandatory distribution amendment of code section 401(a)(31)(B)

Okay, I'm confused...

When a participant terminates with a balance under $1000 and over $200, and they do not respond to the paperwork it is my understanding that we are to force out their benefit in a cash payment.

If the benefit is over $1000 we are to force out their benefit using a direct rollover into an IRA

Of course, we can only do this if we have sent out the proper paperwork notifying them of this.

Does this sound right?

I'm looking at the amendments...one uses the term "forced cash outs" (EGTRRA), and one used Automatic Rollover of amounts over $1000.

I guess I know what to do with amounts of over $1000...roll them out into that IRA as long as the termed participant gets the proper notification.

It is not clear to me what to do with amounts over $200 and under $1000...can't rollover...so what??? Force out?

Please offer guidance...

Thank you.

I work in a daily environment for DC plans with Fidelity. I have been asked if we can have a master trust for about 40 plans on relius. I would like to know if anyone else has one custodial account for several different plans on relius. I can foresee the biggest issue to be reconciliation, followed closely by dividend allocation to individual plans. Does anyone have any insight how this might work?

Thanks for any insight you may share.

Curious to know what people do in practice.

Regarding year-end plan assets for form 5500 reporting do you allow a client to provide the amount of plan assets or do you require that the client also provide brokerage statements, etc. to support the values they report?

Thanks.

The Company has an ESOP and a 401(k). They are separate plans.

If participant A wants to use NUA or ten-year averaging, would A have to cash out both plans for the distribution to qualify as a lump sum distribution?

In other words, is the 401(k) the same "kind" of qualified plan as the ESOP (since they are both pension plans) for the purposes of determining a lump sum distribution?

(It probably doesn't matter, but for completeness, the Company is an S Corp owned 100% by the ESOP.)

And is there an IRS reference clarifying this?

Plan A is a DB plan that covers some of the HCEs at a law firm

Plan B is a DB plan that covers some of the NHCEs at a law firm

Plan B's sole reason for being is to be aggregated with plan A to allow plan A to meet 410(b) and 401(a)(4)

Plan A is 100% funded with respect to its AFTAP

Plan B is 65% funded with respect to its AFTAP

Both plans offer lump sums, but in 2008 plan B is precluded from payong them due to 436 restrictions. Does this raise an effective availability issue since Plan A, the plan covering only HCEs can continue to pay lump sums and plan B the plan covering NHCEs cannot?

I suspect it does

Hello,

I am struggling finding something that leads me in the right direction on this one.

Participant defers 10% of his $10,000 earnings from 1/1 - 6/30, into a 401(K) plan during the first 6 months of the plan year, and then takes a hardship and is suspended for the last 6 months of the plan year, but earns another $10K.

When performing ADP testing, Is only the $10K considered in determining his ADR, or is the full $20K used thus driving down his average to 5% for the year?

It would seem that you would not count the last $10K since he was not able to defer from it, but I cannot find anything that answers the question.

Thank you in advance for any insight you might have to offer.

Sincerely,

Andmik

IRS Notice 2008-21 gave us some relief for EOY vals for AFTAP purposes (i.e,. use 12/31/06 data) but I believe it's restricted to plans that will have an EOY val for 12/31/06, 12/31/07 & 12/31/08. So that appears to leave gaps for the following plans:

1. Plans new for 2007

2. Plan EOY vals for 2006 & 2007 but due to size requirements (over 100) now will be BOY vals in 2008.

Questions, are these clients SOL ? If the new 2007 plans are LLCs/Sole Props/Partnerships their income won't be determined for some time, would we have to do BOY vals on them ? (hate to do that with non-incorporated entities, so of which may be new entities with little income history).

On Q. #2, I do have one plan that grew from 40 participants slowly to just over 100 participants in recent years but is still an EOY valuation. Since they will be forced to do BOY vals in 2008 under PPA, I guess I wouldn't be able to use the EOY val AFTAP relief under above notice, right ?

All thougts and opinions welcomed. Thanks.

I am involved with an actuarial malpractice case and the question arose as to whether it is typical for a multi-employer plan actuary to provide a projection of how the credit balance might fare in future years?

Since the cents per hour rate is usually fixed, the credit balance becomes essential. Are there any articles or publications that discuss that this kind of projection is a good idea?

Regardless, have you typically provided these projections?

Thanks in advance for your response,

If a union wishes to start a multiemployer 401(k) plan for its members, will the plan be required to have both union and employer trustees, even if there are no employer contributions? A survey of the multiemployer 401(k)s out there leads me to say yes, and I'm assuming it's because the deferral is deemed to be an employer contribution pursuant to the employee's deferral selection, but is there another basis for it? Or are these plans jointly trusteed for no reason? Thanks.

Profit Sharing contributions were made on a comp. basis but the plan provides for permitted disparity.

Profit Sharing contributions were made qrtly but the plan says year-end.

Any suggestions on where to start to fix this?

We understand a correction is necessary, but this goes back years.

Thank you

I understood that when an HSA account was listed as benefit under a cafeteria plan arrangement, that it had to adhere to the rules of the cafeteria plan. Being locked in for the plan year unless a "Change of Status" occurs.

Am I correct that this has since changed? Is it a fact that an HSA contribution can be changed at any time by the participant?

If this is correct, can someone tell me where I can find this information so I can provide a copy to our processor?

I would very much appreciate your guidance.

Thank You

I am looking for a sanity check. The facts are that Mom died with a one-person qualified plan after her RBD. Four adult children are equal designated beneficiaries. Nothing was done prior to death to suggest that "separate accounts" were established.

1. Can "separate accounts" be created post-death for purposes of allowing each beneficiary to use his/her life expectancy in calculating MRDs starting with the year after the year of death? My recollection is that you can create the separate accounts post mortem, and if you create them prior to the end of the year of death, the MRDs for the beneficiaries for the following year will be based on their respective life expectancies (rather than the oldest beneficiary's life expectancy). I think you can even do it as late as Sept. 30 following the year of death, but then your stuck with the oldest beneficiary's life exepectancy for the first year after the year of death. Do you agree with any of this?

2. Suppose the plan is amended for EGTRRA, etc., then terminated. Can we dispense with establishing "separate accounts" at the plan level and simply do direct rollovers to four IRAs (one for each beneficiary) and each beneficiary can use his/her life expectancy in calculating MRDs from the IRA? In other words, is the division of the qualified plan account into 4 equal shares in connection with the rollovers the equivalent of creating "separate accounts"?

I've just uncovered a situation that is new to me. A client has rehired a previous plan participant and wants to cover her immediately. (In fact, he has permitted her to defer and already matched her deferrals.) Unfortunately, his plan was written with a one year hold out rule for employer contributions.

Is that something that can be self corrected to conform the document to the plan's operations?