Someone is telling me that PPA eliminated the need to rely on 95-1 for purposes of terminating a defined benefit plan. I've read that section of the act and the new rule is clearly limited to defined contribution plans. Has anyone heard anything suggesting that 95-1 no longer applies for terminating DBs?

Company is a partnership. Currently offers Section 125 plan for medical premiums to be paid pre-tax. Company also offers a stand alone Section 129 DCAP plan. Previously only NHCE's participated in the plan. However, recently an HCE had a child HCE does not own 5% of company and is not considered a Key employee but is considered an HCE. Given that no current NHCE's are participating, I would imagine that it's impossible for the HCE to utilize this benefit....am I correct? If that's the case is the only real solution to gross up said HCE's compensation to account for the tax implications?

An alternate payee for a QDRO is going to take her payment in cash - I can't remember - is this a code 2, waiving the 10% penalty? Thanks.

Quite often our loan administration group has situations where the final payment owed on a participant loan is a very small amount, e.g. less than $5.

This occurs for various reasons, such as additional accrued interest on delinquent loans, extra payments being made at some point, or payments being made off schedule during the course of the loan for one reason or another.

Can it be justifiable to have a policy under which these final loan payment amounts owed are simply written off? The thinking is that the extra administrative cost of processing the final payment of such de minimus amounts outweighs the benefit of collecting the final payment.

I know this would be contrary to the letter of the law but I was wondering if perhaps you could analogize it to the same principle the IRS has relied on in the EPCRS revenue procedures where the cost of doing something exactly right is weighed against the minimal benefit you obtain by being precise.

Also, from a real world perspective what is the likelihood of this being a significant issue in the eyes of the IRS or DOL? I am not sure if they look for these types of things or not in an audit.

Comments?

We have a situation with a deceased participant where the beneficiary is her estate. Does federal and state withholding still apply? Thanks

Hi - We have a plan which gave a loan out to an employee who promptly did not make one payment. So the loan is now in default. When do the earnings stop accruing? At the end of the cure period or do we continue to accrue intil we deem the distribution?

I have another question about defaulted loans. We have a plan which had a loan that defaulted. The 1099R was never issued since the trustee did not wish to have one issued. It has been a couple of years now. How long can we keep advising him about the loan in default & that a 1099R needs to be issued before there is a problem? Is there a program we can refer him to to take care of this issue?

Thanks for any insight or direction!

Would be interested in others' thoughts on this under 409A.

University leader has employment agreement that provides the individual the ability to select, at the time of termination, between the following "severance" benefits if involuntarily terminated:

1. traditional severance benefits of 12 months current salary paid out on a fixed schedule, or

2. ability to retreat to her tenured faculty position in separate department (with guaranteed research leave) at a fixed salary rate

I know the traditional severance benefits are potentially subject to 409A although they may qualify for the separation pay exception. My bigger question is how to think of the retreat to the tenured position and the research leave and, in partiuclar, the fact that the severance benefits are not set at the time the employment agreement was executed but instead gives the employee the ability to make that election at a later date.

Seems the discretion and lack of fixed benefits could be a problem. Any argument that deciding between true severance benefits and the ability for continued employment (albeit with a different department / employer) may be distinguishable? Thanks.

Hi - We took on a couple of plans that are a controlled group. Can anyone steer me towards where I can find information on controlled group issues? I am not as familiar as I would like to be on this subject. Thanks!

A plan was frozen to further investments in company stock and now is in the process of removing all company stock from the plan. Is a post-effective amendment to the S-8 required? It seems to me it is required based on the undertakings under Rule 415 and Item 512, correct?

Rev. Proc. 93-42 allows plans to perform coverage test once every three years (as long as there has been no big change). However, the instructions for the 5500 now say the following: "The instructions to the Schedule T provided that the Schedule T need not be filed every year if the employer was using the three-year testing cycle of Rev. Proc. 93-42. That exception does not apply to Part IV of the Schedule R."

My question is - does this mean you can no longer use the three-year testing cycle? I have not found anything that says Rev. Proc. 93-42 has been modified.

Thanks!

I'm pretty sure that the cost of a lactation consultant for a healthy newborn is not reimbursable under a health care FSA. However, we're being challenged by a member and I can't locate anything in writing from the IRS. Publication 502 doesn't address it. Can anyone help point to something to help? Thanks!

Would a 401k plan satisfy the ACP safe harbor requirements if the following matching contributions were made to the plan for the same plan year?

1. Basic Safe harbor match

2. Additional discretionary match of 100% up to 4% in elective deferrals

I understand the limits for an additional match is that it cannot exceed 4% of comp and cannot match deferral contributions in excess of 6% of comp in order to still satisfy the ACP safe harbor requirements. Does the 4% & 6% limits apply to the additional match only or are they the aggregated limits when considering the basic safe harbor match?

Hi- I have another question about defaulted loans. We have a plan which had a loan that defaulted. The 1099R was never issued since the trustee did not wish to have one issued. It has been a couple of years now. How long can we keep advising him about the loan in default & that a 1099R needs to be issued before there is a problem? Is there a program we can refer him to to take care of this issue?

Hi - We have a plan which gave a loan out to an employee who promptly did not make one payment. So the loan is now in default. When do the earnings stop accruing? At the end of the cure period or do we continue to accrue intil we deem the distribution? Thanks for any insight/direction!

Currently, our office administers health/dependent care fsa accounts.

The Department of Insurance (DOI) does not require that we be licensed, however, for another state in which we do business, we are required to be licensed - part of the procedure requires a home state certification, which of course, requires us to be licensed in our home state.

A small portion of our health FSA business is non-ERISA plans and the DOI requires a bond equal to the greater of $100,000 or 10% of funds administered for non-ERISA plans that are not in a trust. The DOI doesn't care that the money is part of the general assets of the Employer - the bond is still required.

For those of you that administer health FSAs, if you have any ideas on how to get past this issue, please let us know.

Thanks.

In preparing a valuation are we allowed to assume the compensation limit will increase?

Hello, all. Some of my colleagues are telling me that I'm going way overboard with mandatory HIPAA training. We have self-funded plans and have been considering enrollment and dis-enrollment data to be PHI to the point that we're requiring our IT employees and payroll employees to complete the mandatory trainings. The only data that these people see are participants' plan elections and the resulting payroll deductions--nothing more.

Are we going overboard? What are you doing? Thanks!

A question came up to regarding a hardship distribution. The participant already took a loan. The participant has cumulative deferrals of $7900. The 401(k) source account has $8400 in the plan, which includes a loan balance of $1700. The plan only allows hardships from the 401(k) contributions. Some of us said that the most he could take for a hardship is $6700 (8400 - 1700 loan balance). Others said he could take all of the $7900 because the loan is not a distribution. The arguement that the people who said he could only take $6700 is because when they liquidate the funds in the 401(k) source account he only has $6700, and that they couldn't take it from another source because that would could trigger an audit.

I couldn't find anything in the regs that said that the participant could not take the $7900, even if some of it is being distributed from another contribution source.

What is the correct answer?

John Mak

The plan meets ADP and ACP safe harbor with 3% non-elective safe harbor contribution.

The plan also has a mandatory 15% match on the 1st 6% deferred. Can this match have a last day requirement and still meet ACP safe harbor with the 3% non-elective contribution.

Thanks.

I'm not an auditor, I'm not involved in retirement plan audits, but I have had someone looking to me for guidance ask a question that I can't answer.

This non qual has over 100 participants and is not in a Rabbi trust, but instead part of a secular trust. The plan is meant to operate very simialr to the company's 401(k) plan. The provisions are very similar. The questions is are we going down a path where ERISA has some hooks into this type of plan? A respected person my little world has said that they should file a 5500 and be audited. That sounds crazy to me.

I don't know all of the details, but imagine a 401(k) plan that excludes HCE because of ADP issues. Then imagine a non qualified plan that is put in place for these HCE that operates basically the same as the 401(k).

Any thoughts?